Call to Order
The3rd meeting of the Public Pension Oversight Board (PPOB) was held on Monday, March 24, 2014, at<MeetTime> 12:00 Noon, in Room 154 of the Capitol Annex. Representative Yonts, Chair, called the meeting to order.
Roll Call and Approval of the Minutes
The roll was called, and action was taken on the minutes upon a quorum being present.
Approval of Minutes
Representative Thompson moved that the Minutes of January 27, 2014, and February 24, 2014, be approved, which was seconded by Representative Linder. The minutes were approved without correction.
Guests: Lowell Reese, Kentucky Roll Call, Frankfort, Kentucky, was present but did not testify.
Chair Yonts stated that some members had session-related conflicts, but that the scheduled presentations would move forward. He also noted that there was a legislative update in the folders as to pending legislation relating to retirement.
Governmental Accounting Standards Board (GASB) 67/68 Impact and Implementation
Bill Thielen, Executive Director, Kentucky Retirement Systems discussed the new GASB standards effective in fiscal year 2015. These standards were released by the GASB in June 2012, which revised the accounting and financial reporting requirements previously set out in Statement Nos. 25 and 27, and the KRS would be implementing these new standards over the next two years. The purpose of the new standards is to enhance the pension related information and financial statements for pension plans and to standardize valuation practices. GASB 67 applies to plans like those administered by KRS: the multiple employer cost sharing plans such as the Kentucky Employees Retirement System (KERS) and County Employees Retirement System (CERS), and the single employer plan such as the State Police Retirement System (SPRS). GASB 68 applies to participating employers in both the multiple employer cost sharing plan and the single employer plan. GASB 67 becomes effective in fiscal year 2014. KRS will develop the required financial statement information and educational information for the employers in late summer and fall. GASB 68 will be effective in fiscal year 2015.
Mr. Thielen said that a hallmark of the new statements is that they separate the funding of plans from the accounting and reporting requirements. Previously, Statement Nos. 25 and 27, although they did not require funding reporting, defined the concept of actuarially required contribution (ARC), which became the de facto funding standard for pension plans. To comply with the GASB standards, a funding policy will need to be adopted. The ARC is no longer the de facto funding standard. The KERS board adopted a policy in August 2013, and most of the components of the policy are set by statute. However, the board additionally adopted a 100 percent funding goal and a five-year actuarial smoothing method as a part of the policy. Implementation of GASB 67 will require the KRS to enhance the financial statement disclosures by providing various types of information, such as net pension liability, which is the total pension liability–referred to as the actuarially accrued liability–minus the fiduciary net position or the market value of assets. Also, beginning with the implementation of GASB 67, ten-year schedules will be required that show-year-over year changes in the information provided.
Mr. Thielen stated that GASB 68 will require employers to include on their balance sheets and financial statements their proportionate share of the net pension liability, which is the unfunded accrued liability and pension expense. The net pension liability and the pension expense are the two important changes the employer will have to show on their balance sheets and financial statements, which will be a significant amount these employers will have to show for the first time on their financial statements. One result of the new standards is that they could have an effect on some employers’ banking contracts and loan agreements if a certain debt to asset ratio is required to be maintained, which is impacted by reporting the liabilities. GASB allows some flexibility in calculating the employer share of the net pension liability and pension expense, and KRS will likely use a proportionate percentage of payroll as the factor to calculate each employer’s proportionate share of the unfunded actuarial liability and pension expense. Over the next several months, KRS will be working to educate the 1,474 employers in the plans about their compliance with GASB 68 and provide them the information they need to comply with the new reporting requirements. KRS is not required to provide this assistance to the employers because the standards are the responsibility of each employer, but KRS can provide the information and eliminate the need for each employer to hire an actuary. The cost to KRS of providing the information to the employers will be part of the administrative expense rolled into the contribution rate paid by the employers.
In response to questions by Chair Yonts, Mr. Thielen said that not much information has been sent to the employers, but within the next month or two, KRS will begin sending the information. However, accountants across the state are familiar with the new changes and have begun to provide some general information. Percentage of payroll will be the method by which each employer’s proportionate share of the net pension, or unfunded, liability will be calculated. As an example, if the total payroll for KERS nonhazardous is $1.5 billion and if the employer has $100 million of that payroll, then the proportionate ratio will be the same in terms of the employer’s share of the unfunded liability for the plan. As to a question about fully funding the ARC under Senate Bill 2, Mr. Thielen said KRS will continue calculating, under the KRS funding policy, the contribution rate in the same manner used for some time, regardless of the terms used by the new GASB standards. Chair Yonts asked that KRS share with PPOB the same information that is provided to employers advising them of the new standards, and that KRS also forward to PPOB any comments received by the KRS from the employers on the standards.
Responding to a question by Mr. Bennett, Mr. Thielen said that the new GASB standards will not change the percentages of funding and liability and that KRS has already been reporting the information is required to be reported. The major change is the manner that the information is required to be presented on the financial statements. The reports will still show the funded status and the employer contribution rate as a percentage of payroll, which will be developed in the same manner as it is currently. Essentially there will be no critical changes to the way the information is reported.
Chair Yonts stated that KTRS has indicated that the GASB standards will impact the unfunded liability reported in that system. Mr. Thielen stated he did not know how it would impact the KTRS because he was unaware of how that system would implement the new standards. Chair Yonts asked that the KRS advise PPOB in advance of the 2015 session if there was a statutory change needed to accommodate the implementation of these new standards so that hearings could be held. Mr. Thielen said that the largest impact will be on the employers having to report the full liability on their financial statement, when previously they were only required to report their annual contributions. The rating agencies have likely taken into account the new reporting, which will not have a significant impact on bond ratings, but some bank covenants may be impacted if this is perceived as a change in debt ratio.
Mr. Thielen gave an investment update, which Chair Yonts asked be provided to PPOB at each meeting. Mr. Thielen stated that the updated performance statistics show that as of the end of February, the KRS pension plan was up 2.39 percent for the month, and that for the fiscal year to date it is up 9.93 percent. The one year total return was 10.91 percent, and the three year total return was 7.36 percent, which is just below the 7.75 percent assumed rate of return. The five year total return was 14.03 percent, but the ten year total return was 6.19 percent, which is slightly less than the assumed rate but is continuing to improve and still takes into account the 2008-09 recession.
Review of Kentucky Retirement Systems Agencies
Brad Gross provided an overview on agency participation in the KERS and CERS. He gave an overview of the different systems in KRS and the agencies that participate in them. Membership numbers are broken out by those members in the hazardous and nonhazardous plans. In the KERS nonhazardous plan, which includes active members, inactive members, and retirees, the total membership is about 118,000, while the total hazardous membership is about 9,251. In the CERS nonhazardous plan, the total membership is about 193,808, while the total CERS hazardous membership is 16,865. SPRS is the smaller system, with about 2,377 members. This is a total of approximately 340,300 participants across all of the systems, with the CERS as the largest.
Mr. Gross stated that KRS 61.520 outlines the two-step process by which an agency can enter KERS. The first step is that the KRS Board makes a determination of whether an agency is eligible and qualified to participate, and the second step is that the agency has to pursue an executive order from the Governor directing the agency to participate in KERS. This process has been in place since 2003, and prior to that time, only the executive order was required from the Governor to participate in KERS. The statute also provides that once an agency begins participating it must continue to participate for as long as it remains qualified, which is one of the changes implemented by HB 461 in 2003. KRS can require that an agency seek a private letter ruling from the federal government as to whether the agency can qualify to participate in a governmental plan. Participation in CERS is a different process. Historically, the only requirements for an agency to participate in CERS was that an agency had to adopt an order authorizing participation, which was presented to the KRS Board, and the KRS Board would determine if the agency could participate and then approve or deny the participation. However, in 2002, a new provision was added relating to health insurance requiring any new CERS agency entering after April 9, 2002, to have an irrevocable contract with the state health insurance plan to participate in CERS.
KRS 78.530 states that, once an agency participates, it must continue to participate, with one exception being participation under KRS 78.535. An agency participating in CERS can exclude certain areas of their agency that are semi-independent, such as a hospital or a 911 center. Mr. Gross said the KRS Board ultimately has the authority to determine who is or is not eligible to participate in CERS, and as with KERS participation, the agency can be required to seek a private letter ruling from the federal government as to whether they are eligible to participate in a governmental plan. An example of a private letter ruling being required for participation was when the Kentucky League of Cities requested to participate in CERS.
He said that 70 percent of the employee population that participates in KERS is in the traditional P-1 state agencies under the state personnel system. Other agencies that participate are regional mental health agencies, which comprise about 10 percent of the population with 4,510 employees, non-teaching staff at regional universities, health departments, county attorneys, etc. Participating employees in non-P-1 state agencies is about 1,381 employees, or about 3 percent of the total population. CERS is a larger system, and has 1,125 agencies participating, with a total of more than 93,000. The largest group is the employees of local boards of education, with 48,634 members or 52 percent of the total population, followed by cities, with 16,817 or 18 percent of the total participation. The remainder is made up of fiscal courts, community action centers, circuit clerks, and special districts and boards. Mr. Gross pointed out that one city may have multiple participating codes, or different types of agency employees, whereas another city may only have a single code. So for example, police or sheriff’s departments may be coded as those types of agencies in one city, but be coded in the general “city” code in another.
Mr. Gross stated that once an agency begins participating in a retirement plan, the statute generally requires continued participation. However, there are a few exceptions in both the KERS and CERS plans contained in KRS Chapters 61 and 78. Within KERS there is a “parted employer” provision for when an agency gets taken over by a private corporation. Additionally, there is the requirement that an agency participate as long as they remain “qualified.” CERS has a provision that the board may terminate an agency’s participation if they fail to comply with statutory requirements, such as paying the employer contributions. The statute also provides that in lieu of terminating an agency’s participation for the failure to pay contributions, the board may file an action against the agency and get a court order to attach the general funds of the entity, or the board may suspend all employee benefit payments and refunds until all employer contributions are paid.
Other participation issues have occurred over time as employer contribution rates have increased, and a number of agencies have called for the ability to withdraw from the systems. For example, the employer contribution rate for KERS nonhazardous has grown over time from 7.04 percent in FY 1981-82 to 30.84 percent in FY 2014-15. Additionally, federal tax qualification requirements are coming out that may impact the issue of agency participation and termination, and several recent court cases provide an insight into the desire of some agencies to withdraw from the systems.
Mr. Gross stated that the state-administered retirement systems are qualified governmental plans and are exempt from ERISA. The systems’ plans do not participate in the Pension Benefit Guarantee Corporation, which is where private pension plans pay insurance premiums so if the plan ceases to exist or the entity goes bankrupt there is an insurance mechanism to pay some portion of the benefit out to the individual. The Internal Revenue Service published an advance notice of proposed rulemaking regarding the definition of a governmental plan. In the rule making process, the federal government will be defining what constitutes a state or a political subdivision of a state, and will likely describe factors and develop a test as to what constitutes an instrumentality of a state or a political subdivision of a state, which will give some guidance on the issue. However, the rulemaking process has not been released and become official.
The National Association of State Retirement Administrators (NASRA) and the National Council on Teacher Retirement (NCTR), conducted a survey that indicated that 85 percent of the responding systems in the survey had employers other than the state participating in the plans. The survey also documented that of that 85 percent, about 70 percent have employers that are not the traditional units of government, such as cities, counties, or school districts, but include charter schools, private universities, and employers created pursuant to a statute as for-profit or non-profit corporations performing a state function. Mr. Gross noted that the survey results demonstrate that Kentucky is not the only state dealing with the issue of which agencies are eligible to participate, or should participate, in public pension plans.
Greg Woosley discussed three primary cases pending in different forums relating to agency participation. He said there were two factors driving the court cases and the agencies’ desire to cease participating in the KRS: (1) the rising costs to the participating agencies in the form of larger employer contribution rates; and (2) the inability of these agencies to terminate participation because of the existing statutory proscription. The agencies that have taken action to get out of participation in the systems are Kentucky River Community Care (KRCC), Bluegrass Oakwood (BG Oakwood), and Seven County Services (SCS). Each of the court cases and the agency’s means to terminate participation is a little different. KRCC has reduced itself down to a one employee agency and has created an “alter ego” employment agency called Go-Hire, through which it has hired back most, if not all, of the KRCC employees to continue doing business. Oakwood has created a new subsidiary agency, Oakwood Community Services (OCS), and going forward wants to hire new employees and / or transfer existing employees to this new subsidiary agency. Finally, SCS has filed bankruptcy and is attempting to discharge any obligations owed to the systems. As background, Mr. Woosley indicated that all three cases deal with agencies that were initially designated as mental health and mental retardation boards, which are now referred to as community mental health centers, and that these boards and centers provide mental health services to indigent and dependent patients that were historically provided by the state.
The first case is Board of Kentucky Retirement Systems v. Kentucky River Community Care and Go-Hire Employment and Development. The agency in this case, KRCC, is a nonprofit Kentucky corporation and a designated community mental health center, which is organized and operated out of Breathitt County. KRCC was brought into the KERS by executive order of the governor in 1966, and prior to the beginning of litigation, had about 400-500 employees. In 2010, KRCC formed Go-Hire Employment and Development (Go-Hire) as an employment agency to provide workforce training and employees, which appears were employees directly supplied to KRCC. Go-Hire began managing personnel for KRCC in January, 2011, and in March of that year, all of the employees of KRCC were terminated and personnel action forms were sent to the KERS on the terminations. Almost immediately, most of the employees were then re-hired through Go-Hire, and these “new” employees were not enrolled in the KERS, and employee and employer contributions were not deducted and submitted to the KRS. Also, numerous requests were made to the KERS by the fired employees for account refunds.
KRS filed a declaratory judgment action in Franklin Circuit Court in May, 2011, and alleged that Go-Hire is an “alter ego” of KRCC, that the employees of Go-Hire are de facto employees of KRCC, and that the employees are therefore subject to the contribution requirements. In addition to filing the action, both KRCC and Go-Hire were served with discovery requests for information on what transpired between the two corporations and the employees.
Subsequently, KRCC and Go-Hire filed motions to dismiss the suit arguing that it was not a participant in the KERS, that there was no statutory provision for the KRS board’s de facto employee theory, and that the board had no authority to force an agency to participate without an executive order. The KRS board responded to the motions and argued that the statute provides that once a department begins participating in the system it cannot withdraw, and that Go-Hire was formed by KRCC for the sole purpose of avoiding payment of the employer contributions to effectively withdrawn from participation. The KRS board also alleged that the executive staff and Go-Hire board were shared with KRCC, and that the employees of Go-Hire serve the same functions as when employed by KRCC. They further argued that the KRS board has the authority to determine whether a person is an employee of a participating agency.
The motions to dismiss filed by KRCC and Go-Hire were denied. In denying the motions, the court essentially acknowledged that KRCC was a participating member, that the statutes provided they could not discontinue their membership, and that the KRS Board has the authority to determine who was an employee. However, the court was careful to point out that because of the current posture of the case, with the limited discovery and with the standard of review on a motion to dismiss requiring the court to take all allegations by the retirement systems as true, the KRS Board had stated a claim upon which relief could be granted and a dismissal of the proceedings at that time would be improper. The court ordered KRCC and Go-Hire to produce the discovery materials that had been requested, and the case is currently pending in Franklin Circuit Court.
Mr. Woosley stated that a second case, Bluegrass Oakwood and Oakwood Community Services v. Kentucky Employees Retirement Systems and Board of Kentucky Employees Retirement Systems, is a similar case that deals with a regional mental health and mental retardation board or community health center. The first agency that participated was the Bluegrass Mental Health and Mental Retardation Board (Bluegrass), a non-profit corporation formed in 1971 out of the consolidation of two other boards that were two of the original 1966 regional boards for providing services. Bluegrass is now a designated community mental health center under the Cabinet for Health and Family Services. In 2006, Bluegrass formed a second corporation called Bluegrass Oakwood (BG Oakwood) to perform services at the Somerset facility, an intermediate care facility providing mental health services for individuals with developmental and behavioral disabilities and other dependent individuals. BG Oakwood provided the services at the facility until approximately 2011, when BG Oakwood formed another subsidiary corporation, Oakwood Community Services (OCS). In the case, it is alleged that OCS was formed for the purposes of employing new hires to provide the services at the Somerset facility or to accept any transferring employees from BG Oakwood to OCS.
Prior to 2006, employees of the Cabinet for Health and Family Services (CHFS) provided the services at the Somerset facility and participated in KERS as CHFS employees. So, at that time, all the employees of BG Oakwood were also participants in the KERS. When BG Oakwood formed OCS in 2011, and since that time, the services at that facility have been performed by a mix of employees of BG Oakwood who participate in KERS, and employees of OCS, who are not participating members of KERS. BG Oakwood and OCS filed a petition for declaration of rights and asked the court if the formation of OCS and electing to not participate in KERS was permissible. After limited discovery, two separate motions were filed by BG Oakwood and OCS for partial summary judgments, one arguing that the new employees hired through OCS would not be required to participate in KERS, and the second arguing that employees that wanted to transfer from BG Oakwood to OCS would not be required to participate in KERS. In the motions, BG Oakwood and OCS argued that OCS was never eligible to participate in the KERS because they were never determined to be a qualified department or agency by the KRS Board, that no executive order was issued designating that the entity participate, that the positions at OCS did not exist at the time BGMHMR was included in the system and they were therefore not initially required to participate. Consequently, BG Oakwood and OCS argued that employees in positions at OCS were not required to participate and therefore all the new or transferred employees were not qualified or required to participate in the KERS.
The KERS Board’s response to these arguments was that once a department begins to participate in the system it cannot withdraw, that BGMHMR was originally a member agency of the KERS and took steps to enroll employees in the KERS when it formed BR Oakwood and contracted to provide the services at the Somerset facility, and that, according to documents, BG Oakwood had created OCS for the purpose of improving its operating position in the industry with respect to the employee benefit package and that employees would be enrolled in a 401(k) plan to avoid participation in the KERS. The KERS board also alleged in their response that the management, directors, and employees were shared between BG Oakwood and OCS and served in and performed the same functions as when employed by BG Oakwood, and that it was the KERS board that determined whether a person is an employee eligible to participate in the retirement system.
The court granted the motions for summary judgment and noted that OCS was not initially required to participate in KERS, and that it could not be compelled to participate without the statutory preconditions being met. Consequently, any new hires of OCS are not required to participate in the KERS, and the same analysis applied to transferring employees as new employees. Therefore, the essence of the court’s rulings was that all employees of OCS were not required to participate in the KERS, whether new or transferred. The court’s rulings have been appealed by the KERS board to the Kentucky Court of Appeals, which is currently pending.
Mr. Woosley stated that the third case, In re: Seven County Services, Inc., is a bankruptcy case that was filed in the Western District of Kentucky Bankruptcy Court, and that the process of this case is very different from the first two cases. Seven County Services (SCS) is a non-profit Kentucky corporation formed in 1978 to provide behavioral and mental health services in the seven county region around Louisville. SCS has more than 1,000 employees and an operational budget of about $100 million. As with the previously discussed agencies, SCS is a designated community mental health center by the Cabinet for Health and Family Services and began participating in the KERS by executive order in 1978. SCS is a successor corporation in that it took over the contracts from an entity that was originally called Region Eight, which later became River Region, both of which are non-profit corporations formed in 1966 and 1976, respectively, to provide mental health and mental retardation services.
SCS filed bankruptcy in the Western District and listed the KERS as its primary creditor because of the debt and financial distress caused by the rising employer contribution rates to KERS. In its filing, SCS sought a determination by the court that it had an executory contract with KERS and that, under the bankruptcy code, it was eligible to reject that contract and have it discharged. After filing bankruptcy, SCS ceased making contributions to KERS for its employees, with the exception of about 300 Central State Hospital employees who continue to participate in KERS. Through an adversary proceeding, KERS “intervened” in the case and has moved the court to dismiss the bankruptcy petition. SCS has responded with its own motions to dismiss KERS adversary proceedings and for a declaration from the court that it is not eligible to participate in KERS plan and cannot be required to participate, or alternatively, that it is entitled to withdraw from the plan because the KERS plan is not a governmental plan and is governed by the Employee Retirement Income Security Act (ERISA) and that ERISA withdrawal provisions should apply. Conversely, KERS is seeking a declaration that SCS is a governmental unit and not a person and that SCS is therefore not eligible to be a Chapter 11 bankruptcy debtor. KERS is also requesting an injunction to require SCS to resume making its employer contribution payments.
SCS argues that Region Eight originally fought participation in KERS and that the Kentucky Court of Appeals found Region Eight was not a state agency and therefore not required to participate. KERS argues that the statutes were later amended to expand the definition agencies that could participate and that the changes were made specifically by the General Assembly to include quasi-governmental agencies, such as Region Eight, that the Court of Appeals had previously held were not eligible to participate. SCS also argues that River Region filed for Chapter 11 bankruptcy in 1978, and that the Western District adjudicated River Region as an eligible bankrupt. However, as with the state statutes, KERS argues that the bankruptcy code has been amended since the River Region bankruptcy and that the current definitions are different than when River Region was declared as an eligible bankrupt in 1978.
KERS also argues that there is no executory contract, or any contract, between SCS and KERS, but there are merely statutory obligations for SCS to submit employer contributions as part of its participation in the retirement plans. The main argument by KERS is that SCS is a governmental unit and not a person under the definitions of Chapter 11 and are therefore not an eligible debtor under the code. In support of this argument, KERS asserts that it is a governmental plan exempt from ERISA, and that SCS’s participation does not affect the KERS plan’s qualified status. KERS also alleges that SCS has attributes of a governmental agency in that it was formed for a public purpose, is tax exempt, receives a majority of its operating funds from tax revenues, can request taxes be imposed for its operations, and that it possesses, or at least has argued that it is entitled to, sovereign immunity. SCS argues that it is not a governmental unit under the bankruptcy code, but rather is a private corporation and therefore eligible for a Chapter 11 filing. SCS argues that it is not a department under KRS Chapter 61, is not a part of state government, a political subdivision, or an agency or instrument of the state, and is therefore not a qualified participant under the IRS test of what entities can participate in governmental plans. SCS also argues that it because it cannot participate in a governmental plan, ERISA should control whether it is allowed to withdraw from participation in the KERS plan, and that because of the presence of quasi-governmental agencies in the plan, the KERS plan is not a governmental plan and SCS can terminate its participation. A trial was held in mid-March on the central issues in the case; however, no opinion has been issued at this time.
Mr. Gross stated that the employer contribution rates for the KERS nonhazardous plan for 2014-15 is 38.77 percent of payroll, and that according to the retirement systems actuary, if SCS is released of its obligations through bankruptcy, the employer rate would increase by 2.75 percent over the next twenty years. Further, the KRS actuary has concluded that if all mental health centers were relieved of the obligation to participate, through a bankruptcy proceeding or otherwise, the rate would increase up to an additional 6.5 percent of payroll over the long term, which is why the outcome of the three discussed cases is so important.
Mr. Gross indicated that there have been some legislative proposals in the last couple of years to allow some or all agencies to discontinue participation for either new hires or a combination of new hires and current employees. For example, SB 201 in the 2012 Regular Session would have allowed regional mental health agencies to discontinue participation in KERS for new hires, and in 2013, SB 168 would have allowed the Kentucky Retirement Systems and Teachers Retirement System to discontinue participation for new hires provided an actuarial study was completed, the employer offered an alternative retirement plan, and the employer paid the full actuarial cost for discontinuing participation for the new hires. Similarly, in 2014, SB 216 would allow certain agencies to voluntarily discontinue participation in the KERS and CERS plans provided that they pay the actuarial costs for no longer participating, and establishes a single process for both plans where the board can require an agency to discontinue participation if it is no longer eligible to participate in the governmental plan or if the agency fails to pay the employer contribution rates. Those agencies that could potentially voluntarily discontinue participation in KERS would be the mental health agencies and quasi-state agencies such as the Commonwealth Credit Union, Kentucky Employers’ Mutual Insurance, and other non-stock, non-profit corporations.
Chair Yonts asked if there was a timeline for a federal bankruptcy judge to render a decision, and Mr. Thielen indicated that he was not aware of any timeline, but that the judge at the conclusion of the case gave the parties until April 8, 2014, to file proposed findings of fact and conclusions of law. Chair Yonts also indicated that SB 216 would be taken up in the next House State Government Committee meeting, for discussion only, and asked Mr. Thielen if SB 216 were passed into law what message would it send to a bankruptcy judge and how many more agencies are likely to follow the actions of these other entities that have questions pending before the courts. Mr. Thielen said that there were 13 mental health and mental retardation agencies that could follow the actions of the agencies currently pending in the courts. Mr. Thielen indicated that he was unsure of the effect it would have on the judge, and that the retirement board had taken no official position regarding SB 216. However, the board indicated that the legislation should be monitored to make sure that it did not adversely impact the systems, and that the proposed legislation may help prepare for any new IRS guidelines, which some of the participating agencies would potentially not qualify under. Mr. Thielen said that the new guidelines may provide that currently participating entities would be grandfathered in to governmental plans, but that no new entities would be permitted to join in the future or the guidelines may require a process for dealing with those entities and SB 216 would provide that process.
Mr. Thielen said the other mental health and mental retardation entities are watching the outcome of the current lawsuits and could take similar action. According to the actuary, the overall contribution rate increase for the systems over a 20 year period would be about $2.4 billion if all of those entities ceased participating.
There being no further business or discussion, the meeting adjourned at approximately 1:30 p.m.