Regional Transportation District 1600 Blake Street Denver, CO 80202-1399 303-299-2303 Board of Directors Chair – Chuck Sisk, District 0 First Vice Chair – Larry Hoy, District J Second Vice Chair – Bill James, District A Secretary – Jeff Walker, District D Treasurer – Tom Tobiassen, District F Lorraine Anderson, District L Gary Lasater, District G Kent Bagley, District H Judy Lubow, District I Bruce Daly, District N Natalie Menten, District M Barbara Deadwyler, District B Angie Rivera-Malpiede, District C Dr. Claudia Folska, District E Paul Daniel Solano, District K AGENDA Financial Administration & Audit Tuesday, January 14, 2014 Rooms R, T, & D 5:30 PM Conference Dial-in # 303-299-2663 Conference ID: 15120 Financial Administration and Audit Committee Chaired by Jeff Walker A. Call to Order B. Recommended Actions • Resolution No. ____, Series of 2014 Appointment of Trustees to the RTD Pension Trust and Defined Contribution Plan C. Updates • Salaried Employee Defined Benefit Pension Plan Update (Howerter/Rael & Letson) • Represented Employee Defined Benefit Pension Plan Update (Howerter/Gabriel Roeder Smith) • November 2013 Monthly Financial Status Report (Howerter/MacLeod)
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Regional Transportation District 1600 Blake Street
Denver, CO 80202-1399
303-299-2303
Board of Directors
Chair – Chuck Sisk, District 0 First Vice Chair – Larry Hoy, District J Second Vice Chair – Bill James, District A Secretary – Jeff Walker, District D Treasurer – Tom Tobiassen, District F Lorraine Anderson, District L Gary Lasater, District G
Kent Bagley, District H Judy Lubow, District I
Bruce Daly, District N Natalie Menten, District M
Barbara Deadwyler, District B Angie Rivera-Malpiede, District C
Dr. Claudia Folska, District E Paul Daniel Solano, District K
AGENDA Financial Administration & Audit
Tuesday, January 14, 2014
Rooms R, T, & D
5:30 PM
Conference Dial-in # 303-299-2663
Conference ID: 15120
Financial Administration and Audit Committee
Chaired by Jeff Walker
A. Call to Order
B. Recommended Actions
• Resolution No. ____, Series of 2014 Appointment of Trustees to the RTD
Pension Trust and Defined Contribution Plan
C. Updates
• Salaried Employee Defined Benefit Pension Plan Update (Howerter/Rael &
Letson)
• Represented Employee Defined Benefit Pension Plan Update
(Howerter/Gabriel Roeder Smith)
• November 2013 Monthly Financial Status Report (Howerter/MacLeod)
D. Other Matters
E. Next Meeting Date - February 11, 2014
F. Adjourn
The following communication assistance is available for public meetings:
Language Interpreters
Sign-language Interpreters
Assisted listening devices
Please notify RTD of the communication assistance you require at least 48 business hours in advance of a
RTD meeting you wish to attend by calling 303.299.2307
THE CHAIR REQUESTS THAT ALL PAGERS AND CELL PHONES BE SILENCED DURING THE BOARD OF
DIRECTORS MEETING FOR THE REGIONAL TRANSPORTATION DISTRICT.
BOARD OF DIRECTORS REPORT
To:
Phillip A. Washington, General Manager
Date: January 9, 2014
From:
Terry L. Howerter,Chief Financial Officer
GM
Date:
January 9, 2014
Board Meeting Date: January 14, 2014
Subject:
Resolution No. ____, Series of 2014
Appointment of Trustees to the RTD
Pension Trust and Defined Contribution Plan
Resolution
RECOMMENDED ACTION
Prepared by:
Paula Perdue, Executive Director
Approved by:
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REGIONAL TRANSPORTATION DISTRICT
RESOLUTION No. _____ SERIES OF 2014
APPOINTMENT OF TRUSTEES TO THE RTD PENSION TRUST AND DEFINED CONTRIBUTION PLAN
Whereas, RTD maintains the RTD Pension Plan and Trust for salaried employees hired by RTD
before January 1, 2008 and the RTD Defined Contribution Plan and Trust (the Trusts) for employees hired on
or after January 1, 2008; and,
Whereas, RTD Board Directors and salaried staff serve as trustees for the Trusts; and,
Whereas on December 16, 2008 the RTD Board of Directory by Resolution No. 19 Series of 2008
amended Section 7.01 of the RTD Pension Trust regarding appointment of Trustees and provided that each
Trustee who is a member of the Board of Directors of RTD shall serve a term concurrent with his or her elected
term, and one senior management and one middle management Trustee shall each serve a three year, and one
senior management and one middle Trustee shall each serve a two year term; and
Whereas on January 8, 2008 the RTD Board of Directors adopted Resolution No. 1 Series of 2008
providing that a screening committee composed of the Board Chair, the Chair of the Salaried Employee Pension
Trust Fund and the Finance Chair will screen applications from the middle management salaried Employee
Class and the senior management salaried employee calls and will bring recommendations back to the Board;
and,
Whereas on November 10, 2010 Resolution No 27 series of 2010, the Board made additional
modifications to state that for reappointment of trustees who have served satisfactorily and in whose education
the Trusts have made substantial investments, it is not necessary to seek applications for renewal and the
application process established by the RTD Board of Directors in 2008 will be used on those occasions when
the Board finds it necessary or appropriate to appoint new salaried trustees to the Trusts; and,
Whereas the Board of Directors may establish shorter terms as may be necessary to maintain staggered
terms; and,
Whereas, the terms for Scott Reed and Lou Ha expired on 12/31/2013 each of whom has been
previously recommended by the screening committee; and
NOW THEREFORE BE IT RESOLVED THAT
1. The RTD Board of Directors wish to re-appoint Scott Reed to serve as a senior management Trustee on
the Boards of the Trusts with a new two-year term that will expire on 12-31-2015.
2. The RTD Board of Directors wishes to re-appoint Lou Ha to serve as a middle management Trustee on
the Boards of the Trusts with a new two year term that will expire on 12-31-2015.
1.B.1
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Passed and adopted by the Board of Directors of the Regional Transportation District this 21 day of January,
Attachment: RTD Board Presentation 1-2014_Salaried Employees' Pension Trust (1842 : Salaried Employee Defined Benefit Pension Plan
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January 1, 2013 Valuation Highlights
� Total participant count decreased by 8 (from 736 to 728)
� Plan closed to new participants on 1/1/2008
� Actuarial Accrued Liability increased by $7.8M (from $110.9M to $118.7M)
� Actuarial Value of Assets increased by $0.3M (from $103.9M to $104.2M)
� Unfunded Actuarial Accrued Liability increased by $7.5M (from $7.0M to $14.5M)
� 87.8% funded on an actuarial basis
� Recommended contribution increased by $0.5M from $3.9M to $4.4M
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Attachment: RTD Board Presentation 1-2014_Salaried Employees' Pension Trust (1842 : Salaried Employee Defined Benefit Pension Plan
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Long-Term Funding
� Effective with the 2013 Fiscal Year, the funding policy was changed from a percent of payroll (9% cap) to the recommended contribution amount up to a $3.1M annual cap
� Current funding policy is more prudent given the Plan’s decreasing active population and resulting reduction in future expected payroll
� If all actuarial assumptions are met each year, including a net investment return of 7.50% per year, and annual contributions equal the recommended contribution up to a $3.1M annual cap:
� The recommended contribution is projected to decrease from $4.4M in the 2014 Fiscal Year
� The recommended contribution is expected to exceed the $3.1M cap through the 2019 Fiscal Year and fall below the cap thereafter
� The Plan is projected to reach 100% funding in 2031
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Attachment: RTD Board Presentation 1-2014_Salaried Employees' Pension Trust (1842 : Salaried Employee Defined Benefit Pension Plan
Long-Term Funding (Continued)
� Per the investment consultant, the estimated 2013 return on investments through December 31st is 20.7% (net of fees)
� If the net return in 2013 is 20%, the Plan is projected to reach 100% funding in 2018 (13 years earlier), and RTD can expect to pay the $3.1M contribution cap through the 2016 Fiscal Year (3 fewer years), if all other actuarial assumptions are met
� Due to the Plan’s size and nature, future investment returns have a significant impact on projected liabilities – we will keep the Board apprised of the impact of the Plan’s investment performance on future costs
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Attachment: RTD Board Presentation 1-2014_Salaried Employees' Pension Trust (1842 : Salaried Employee Defined Benefit Pension Plan
GASB 67/68
� GASB 67 (financial accounting for the Plan) is effective for the Plan’s Fiscal Year ending December 31, 2014
� We will roll forward the January 1, 2014 valuation results to December 31, 2014
� Under GASB standards, the long-term investment return assumption must be sufficient to pay projected benefits and the Plan’s assets must be invested using a strategy to achieve this investment return
� Based on the Plan’s projections and new funding policy, the Plan’s assumed net investment return of 7.5% satisfies the new GASB standards
� GASB 68 (financial accounting for the Employer) is effective for RTD’s Fiscal Year ending December 31, 2015
� RTD may early adopt GASB 68 if desired – to show consistent reporting for the Plan and Employer
� We will provide the applicable disclosure information for 2014 (GASB 27 or GASB 68) along with the GASB 67 information for the Plan in February 2015
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Attachment: RTD Board Presentation 1-2014_Salaried Employees' Pension Trust (1842 : Salaried Employee Defined Benefit Pension Plan
Next Steps
� We will continue to monitor and review the following items going forward:
January 1, 2013 Valuation Highlights(the plan is in funding peril)
à Contributions are not sufficient to fund the liabilities
• Actuarial requirement is for 28.3%; 11.0% is scheduled for receipt
• Fund is projected to be fully depleted by 2032
à Actuarial Accrued Liability increased by $16.5M
• From $406.3M to $422.8M
à Actuarial Value of Assets decreased by $11.4M
• From $212.3M to $200.9M
• Market value increased from $194 M to $198 M
à Unfunded Actuarial Accrued Liability increased by $27.9M
• From $194.0M to $221.9M
• This raises the required contribution amount
• Scheduled contributions do not even cover the normal (annual) costs of the plan
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January 1, 2013 Valuation Highlights
à The normal cost is 13.15% of pay
• The scheduled contribution is 11% of pay
• New agreement does increase contributions over time
à Actuarially recommended contribution increased by $1.8M
• This ARC keeps increasing as payments are “missed”
à 47.5% funded on an actuarial basis
à Total active participant count decreased by 42
• From 1,720 to 1,678
• New hires will “bend down” the normal cost, so more funding can go to the unfunded accrued liability
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History of the Funded Ratio
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Valuation Date- January 1, Funded Ratio
2002 106.39%
2003 82.96
2004 91.09
2005 91.73
2006 89.06
2007 87.07
2008 86.03
2009 72.57
2010 73.08
2011 68.67
2012 52.24
2013 47.52
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The 11% scheduled contribution amount was insufficient, starting in 2003
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Plan Year Ended December 31,
Percentage of ARC contributed
2002 102.2%
2003 53.7
2004 60.9
2005 75.3
2006 64.2
2007 64.6
2008 67.8
2009 44.5
2010 59.0
2011 47.3
2012 33.5
2013 --
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Long-Term Funding-Reforms to improve the plan
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à Total ARC is 28.31% of payroll compared to the total scheduled contribution rate of 11.00% of payroll.
à Amendment #22 was adopted in 2010 with the following changes in effect for participants hired on or after January 1, 2011 (Tier 2):
• New benefit schedule listed in Section 6.01 of the Plan provisions
• Vesting is changed from 5 years to 10 years
• The benefit multiplier is changed from 2.5% to 1.0%
• Unreduced retirement is changed from age 55 with 20 years of service to age 60 with 20 years of service
• Early retirement reduction is changed from 5.0% from age 55 to 2.5% from age 60
• The maximum service included in the benefit calculation is reduced from 30 years to 25 years
• Sick and vacation payouts are no longer included in the pension benefit calculation
• Interest on employee contributions is changed from 5% to 3%
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Long-Term Funding-Reforms to improve the plan
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à On February 27, 2013, a tentative agreement was reached with the following schedule for contributions:
Year RTD Members Total
2013 12% 4% 16%
2014 12% 4% 16%
2015 13% 5% 18%
2016 13% 5% 18%
2017 13% 5% 18%
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Long-Term Funding (Continued)
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à If all actuarial assumptions are met each year, including a net investment return of 7.0% per year, and annual contributions equal those stated in the tentative agreement:
• Assets will be fully depleted by 2032
à Per the investment consultant, the estimated 2013 investments return is 14% • Incorporating this into the above projections, assets will be fully depleted by 2034
• To reach 100% funding by 2043, assets would need to earn over 14% per year through 2019
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RTD/ATU Summary
à Reforms have been enacted to reduce benefit accruals for new hires and to improve the funding of the plan
à Projections (based on an assumed 7% return) are not enough to ensure the plan will remain viable throughout the next 30 years.
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GASB 67/68
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à GASB 67 (financial accounting for the Plan) is effective for the Plan’s Fiscal Year ending December 31, 2014
• We will roll forward the January 1, 2014 valuation results to December 31, 2014
• Under GASB standards, the long-term investment return assumption must be sufficient to pay projected benefits and the Plan’s assets must be invested using a strategy to achieve this investment return
• It is possible that the discount rate used to determine the liability for RTD’s balance sheet will be less than the 7% (creating a higher unfunded liability than what the valuation will show)
à GASB 68 (financial accounting for the Employer) is effective for RTD’s Fiscal Year ending December 31, 2015
• We will provide the applicable disclosure information for 2014 (GASB 27 or GASB 68) along with the GASB 67 information for the Plan in February 2015
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BOARD OF DIRECTORS REPORT
To:
Phillip A. Washington, General Manager
Date: January 9, 2014
From:
Terry L. Howerter, Chief Financial Officer
GM
Date:
January 9, 2014
Board Meeting Date: January 14, 2014
Subject:
November 2013 Monthly Financial Status
Report (Howerter/MacLeod)
ATTACHMENTS:
113013 RTD MFS (PDF)
Prepared by:
Doug MacLeod, Manager
Approved by:
1.C.3
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BOARD OF DIRECTORS REPORT
INFO
X
2.9% 1.0% 8.5%
239 $92 $3,070
Sales & Use Tax
Ridership
2.0% 4.5% 4.3%
1,828 $4,691 $17,508
Actual vs. Prior Year 2013 Actual 2012 Actual Variance % Variance
Month
Bus 5,258 5,324 (66) -1.2%
West Line 368 - 368
Light Rail 1,537 1,656 (119) -7.2%
Revenue Service Boardings 7,163 6,980 183 2.6%
Mall Shuttle 1,104 1,045 59 5.6%
Other 93 96 (3) -3.1%
Month System-Wide Boardings 8,360 8,121 239 2.9%
Year-to-Date
Bus 58,238 58,897 (659) -1.1%
West Line 2,597 - 2,597
Light Rail 18,738 19,170 (432) -2.3%
Revenue Service Boardings 79,573 78,067 1,506 1.9%
Percent of Increase Year to Date 2.8% 2.2% 1.9% 1.2% 2.3% 2.7% 3.4% 3.8% 3.7% 3.9% 4.3% 4.3%
January 2013 includes $1,852,714 for taxes that were due in January and will be paid in February due to a vendor filing incorrect tax forms from August-December 2012