HomeMy Public PortalAbout11-15-1993 •
PROCEEDINGS OF THE COMMON COUNCIL OF THE
CITY OF RICHMOND. INDIANA. SERVING AS A BOARD
IN CHARGE OF THE OPERATION OF THE RICHMOND POWER & LIGHT PLANT
MONDAY. NOVEMBER 15. 1993
1 The Common Council of the City of Richmond, Indiana, serving as a Board in charge of the operations of the
2 Richmond Power & Light Plant met in regular session at 7 p.m. Monday, November 15, 1993, in the Municipal
3 Building in said City. Councilperson Brookbank presided with the following Councilmembers in attendance:
4 Elstro, Lundy,Donat,McBride, Parker,Allen, Dickman and Hutton. The following business was had to-wit:
5
6 APPROVAL OF MINUTES OFNOVEMBER 1.1993
7
8 Councilmember McBride moved to approve the minutes of the previous meeting, second by Councilmember
9 Hutton and the motion was carried by a unanimous voice vote.
10
11 APPROVAL OF BILLS. INVESTMENTS AND TRANSFERS
12
13 Upon recommendation of the Finance Committee,Councilmember Allen moved to approve the following bills for
14 payment,seconded by Councilmember McBride and on unanimous voice vote the motion carried.
15
16 Bills Already Paid
17 Payroll and Deductions 223,721.97
18
19 Investments Purchased From:
20 Cash Operating Fund 900,000.00
21 Bond Sinking Fund
22 Utility Bond Reserve Fund
23 Depreciation Reserve Fund 618,684.90
24 Consumer Deposit Fund
25 Cash Reserve Fund
26 Insurance Reserve Fund
27 Group Insurance Fund
28 Total Investments
29
30
31 Transfer to City in Lieu of Taxes
32
33 Loan to City of Richmond for;
34 Purchase of former Wayne Corp.
35
36
37 Transfer from Payroll Ded.to:
38 Cash Operating Fund
39
40
41 Transfers from Depreciation Reserve to:
42 Cash Operating Fund
43
44 Transfers from Consumer Deposit to:
45 Cash Operating Fund
46
47 Transfers from Utility Bond Reserve Fund to;
48 Bond Sinking Fund
49
50 Transfers from Cash Operating
51 Interest and Bond Principal
52 Bond Sinking Fund
53 Cash Reserve Fund
54 Utility Bond Sinking Fund
55 Depreciation Reserve Fund
56 Insurance Reserve Fund
57 Consumer Deposit Fund
58
59 Interest and Bond Principal
60
61 End of Month Petty Cash
62 Revenue Bonds
63 Interest Coupons Redeemed
64 Bond Coupons
65 Miscellaneous Bills Already Paid 115,779.63
Total Prepaid Invoices 1,858,186.50
Total Bills Not Paid 420,854.57
Grand Total 2,279,041.07
RP&L Minutes Cont'd
November 15, 1993
Page 2
1 REMARKS BY THE CHAIRPERSON
2
3 Chairperson Brookbank read a letter into the record received from George Sowers, attorney for Bill Clarke, in
4 asking to appear before the Board to request reasonable separation benefits for his client which are customary for
5 others in positions of comparable responsibilities. He said since he had a prior commitment and is unable to
6 attend this meeting, he asked that his request be honored at Council's December 6 meeting. He added that since
7 Clarke's wife, Nancy, had suffered an injury in April 1993 and has not been released from medical care he asked
8 that Clarke's salary and medical insurance be continued until a final decision is reached on separation benefits.
9
10 Chairperson Brookbank commented that all Councilmembers had received copies of the letter from Sowers.
11 Councilmember Donat noted that this is still a personnel issue, adding that it is not in the Board's job description
12 to discuss this matter unless it is in executive session. Chairperson Brookbank asked both General Manager
13 Irving Huffman and Jim Daugherty if they had retained or got advice from Barnes & Thornburg and in particular
14 Reed Scism on this matter. Huffman responded that he confers with Scism on all labor matters with RP & L and
15 does that to be consistent with the agreement the utility has with its employees. Milligan said this Board can have
16 executive session to review a current employee's status but cannot review Clarke's status in executive session.
17 However, if Clarke's attorney threatens litigation that triggers the opportunity to meet in executive session to
18 respond to the litigation or threat and consider possible settlement offers. He added that the letter from Sowers
19 does not indicate that to be the case. He said that Huffman, by letter, has fired Clarke so the matter has been
20 determined. Councilmember Donat said she had discussed this issue with Charles Braddock, the attorney hired
21 for her by the Concerned Citizens Coalition, when she called to tell him the prior executive session had been
22 canceled. At that time, she said, he told her it was legal to have an executive session and confirmed that he
23 should know this because he helped write the statute.
24
25 In answer to Councilmember Parker's question as to whether or not Nancy Clarke's injury is covered by insurance
26 until she is released, Daugherty said the Clarkes have coverage on any claim until November and as far as this
27 injury is concerned they have another 30 days to submit all claims. Councilmember Dickman voiced his concern
28 about whether or not there would be a risk in waiting until December 6 to deal with this matter. Councilmember
29 Lundy said she still thinks this is a personnel issue. Councilmember Elstro agreed. Councilmember Lundy
30 commented that Council is in touch with Clarke and is working with him.
31
32 Milligan commented that this is the public's business and the law is very clear about what is to be taken up in
33 executive session, noting that whenever information is received in the capacity as a Board it is a public matter and
34 the Board has to comply with the statute. Huffman said he would like to receive a copy of the letter since the copy
35 he had was loaned to him by Councilmember Elstro. Chairperson Brookbank suggested that Huffman talk with
36 Sowers about securing a copy for the RP&L files.
37
38 Councilmember Donat stated again that this is a policy-making Board and she felt this could be an improper
39 action to discuss personnel issues. Directing her comments to Chairperson Brookbank she said she, along with
40 several of her colleagues, felt that this is not in the Board's jurisdiction and added that Brookbank as the
41 Chairperson should know that and should abide by that and make sure that the Board abides by the rules.
42 Chairperson Brookbank responded by saying that this Board is the employer of the General Manager of RP & L,
43 noting that there have been some unusual firings in the past two years involving the right hand men under
44 Huffman.She added that she feels it is time to take a closer look at this issue which involves five No. 2 men in two
45 years. She mentioned Clarke and Barker, both dismissed under unusual circumstances. Councilmember Donat
46 commented that by discussing this it could be opening RP & L up to some litigation and this issue needs to be
47 taken care of in executive session. She noted that Sowers should not be informing Council that members should
48 meet with him but Council should be informing him of a meeting and the proper place is in executive session, not
49 in public. Huffman said he wished to correct Chairperson Brookbank, noting that she had indicated that Barker
50 was fired. He added that Barker resigned and there was no termination of him on his part.
51
52 UNFINISHED BUSINESS
53
54 Chairperson Brookbank stated that for the past several years the Board has voted to give $10,000 to the Small
55 Business Development Center with offices in the Richmond/Wayne County Chamber of Commerce. Doug Peters,
56 director of the SBDC, gave a review of where the funding comes from, complying with a request made by
57 Councilmember Parker. He noted that $40,000 comes from Wayne County; $2,000 from Wayne County REMC;
58 $500 from Fayette Union REMC; $2,000 from Indiana Gas Co.; $1,000 from Indiana-American Water Co.; $2,500
59 from the Connersville Chamber of Commerce; $500 from the Rush County Chamber of Commerce; $1,500 from
60 the Rush County Industrial Development Corporation; $250 from Fayette Bank and Trust; $500 from the Union
61 County National Bank; $500 from Star Bank in Connersville; $500 from Fayette Federal Savings; $500 from Fifth
62 Third in Connersville; and $500 from the Unions Savings and Loan Association. He said Hoosier Energy provides
63 one staff person each year with a scholarship to the Indiana Economic Development and the local Chamber
64 provides office space valued at about$30,000 per year.A total of$30,000 is also received from the state to cover
65 personnel operation.
Councilmember McBride said this Board has contributed to SBDC in the past and he felt it was more beneficial to
the business community than Economic Development. Councilmember Hutton said that years ago this Board got
into trouble with the State Board of Accounts when, as a Board, it was giving the money to small business.
RP&L Minutes Cont'd
November 15, 1993
Page 3 •
1 She added that she thought when the Board gave the money to the City totaling$1.6million that the$10,000 was
2 included. Huffman said it was indicated that the SBDC was to be paid out of the $150,000 which was given for
3 Economic Development. Chairperson Brookbank said that was correct, adding that what was needed'now was an
4 appropriation for SBDC. Councilmember McBride moved to pay the $10,000. Councilmember Parker said he
5 needed a clarification. Councilmember Hutton said the motion is to take the $10,000 out of the$150,000. Milligan
6 explained that Grimes said the $10,000 check for 1993 was drawn on the RP & L account directly to the SBDC
7 and came out of the$150,000.
8
9 Huffman said there is some confusion in that RP & L's interpretation is that you can transfer what was in one
10 specified account as of June 30 and what was in that account was a little over $1,881,000.Any money over and
11 above that amount, he said, there has to be declared an emergency and the money has to be earmarked by
12 special ordinance to transfer the remaining portion that the Board is asking for over and above that. Milligan said
13 this $10,000 doesn't have anything to do with that and that discussion is irrelevant to the $10,000 motion that
14 Councilmember McBride had on the floor.
15
16 Councilmember Allen asked Councilmember Hutton to clarify her statement. Councilmember Hutton answered
17 that three or four years ago the Board was told that RP & L was not supposed to be writing the check,that it had
18 to come from the City because RP& L is not supposed to be giving money. Councilmember McBride noted that in
19 the past the Board had voted to give $150,000 to Economic Development and $10,000 of that was earmarked for
20 SBDC. That amount is no longer contributed to Economic Development and was not appropriated this year.
21 Councilmember Hutton said the Board cannot earmark $10,000 out of the light plant budget for small.business,
22 that is what the State Board of Accounts told RP&L. Milligan said it was paid directly at Hershel Philpot's request,
23 adding that he knows from talking with the State Board of Accounts,with regard to RP & L,there is no problem in
24 RP & L paying directly to SBDC. Councilmember McBride commented that his motion stood, second by Dickman
25 and the motion was carried on a roll call vote of 7 to 2 with Councilmembers Elstro and Donat voting against.
26
27 Directing his question to Peters, Councilmember Elstro asked if everybody else is giving $500 to $1,000, why is
28 he getting $10,000 out of RP & L? Peters answered that efforts are centered here in the RP & L service area,
29 adding that during his August presentation for funding he assumed he had laid it out exactly where this money is
30 being spent. He noted that Huffman is a member of the SBDC advisory board.
31
32 STREET LIGHT COMMITTEE REPORT
33
34 Councilmember McBride said he had a street light project in the mill with Robert Hankosky at RP & L and was
35 about ready for the presentation to the Board of Works. Councilmember Elstro asked if it was for the parking lot
36 on South Eighth Street and Councilmember McBride responded it was on North 17th Street. Councilmember
37 Elstro asked Councilmember McBride about a petition for the South Eighth Street project and asked to see it.
38
39 REPORT BY GENERAL MANAGER
40
41 Huffman said bids had been received at the November 1 meeting for a 55-foot material handling aerial device
42 bucket truck and one of the four bidders did not submit a price.Those bids varied from $109,000 to$129,000. He
43 said in reviewing the specifications one of the things specified was one two-man bucket.Two bids had only
44 one-man buckets.The one bidder with the two-man bucket is the highest bidder at$129,686 less the trade in of
45 $11,500 bringing the total amount to$118,186. Huffman said based upon the added versatility and the added
46 safety he feels this is the best bid and it is his recommendation that the bid be awarded to Duco Simon Telelech.
47 •
48 Councilmember McBride asked if the City would buy the old unit what would be the cost, adding that it was his
49 feeling it would be more economical for the City if RP &L would just give the truck to the Board of Works for the
50 City's use. Huffman said he felt it would be more practical for the City to pay RP&L$11,500 for the unit which
51 would mean that RP&L would not lose money on it. Councilmember McBride said he couldn't make that offer but
52 noticed that Ernie Jarvis,director of Public Works,was in the audience.Jarvis said it is a vehicle that the City
53 could use because it is larger than the one now being used. He said he would like to make an offer of accepting
54 the RP &L truck and selling the small one,turning that money over to RP&L. Huffman said he would assume
55 that amount would be less, adding that it made him wonder where the additional funds would come from. He said
56 he will do whatever the Board wants. He said he will approach the supplier with the thought of RP.& L keeping the
57 old truck until the new one comes in. Until that point, he said, it could be left open with the supplier as to whether
58 he sees that truck, noting that the deliver date is in six months. Huffman said he could keep the options open until
59 just before delivery date and some determination could be made at that point.
60
61 Councilmember Hutton moved to accept Huffman's recommendation,second by Councilmember Parker with an
62 amendment made by Councilmember Allen to leave the options open as suggested. Huffman said that was to
63 serve notice that if something isn't done at the notification of delivery RP& L will let the truck go for the trade in
64 because there has to be some kind of termination date.The motion was carried on a unanimous voice vote.
65 •
Huffman turned the meeting over to Jim Daugherty, human relations director at RP& L,who noted that each
Councilmember had been given a copy of the pension bonus formula he was asking the Board to endorse which
showed the calculation for 1991, 1992 and the proposed calculation to be used this year.
•
RP&L Minutes Cont't • • - -
November 15, 1993 - - .
• Page 4
• •
•
•
1 Councilmember Hutton asked if there was an annual cost of living increase in the payout of the plan. Daugherty
2 responded that there never has been, noting that the only increases given were in 1986 and 1989 in the way of
3 liberalization of the formula and the bonus program was started in 1991. Councilmember Parker asked what steps
4 have been taken to see that this plan is properly funded and not over or under funded. Daugherty said the funding
5 has not changed since the late 1960s, adding that the plan started in 1968 and the funding was set by union
6 contract of 8 percent of total payroll. He said it hasn't changed in the 17 years he has been with RP&L.
7
8 Huffman explained that RP& L has a defined benefit in the payout as well as a defined deposit but there is no
9 regulator as many pension plans have. He said the plan changed in 1968 when it was evident the utility did not
10 have to fund as much into it and wasn't funding what it had indicated it should be funding.As a result the plan,
11 along with the two percent interest money that was pegged into it,was a very poor one.With the new plan,
12 Huffman said,the Board said it was going to put so much money into it and even went back and all the money
13 received prior in not funding it in lesser payments was appropriated to be transfer money to the new plan. So,that
14 money was reinstated into the plan and the decision was made that they wanted employees to have a plan and to
15 have a specific amount being put into it.They also wanted the plan set up, he said,so that it didn't get robbed or
16 taken away in the future and that is why in the original agreement, and there was an employee's association at that
17 time,it is spelled out.When IBEW 1395 represented hourly employees, RP& L took from that original employment
18 association agreement and drafted the present plan. Most of that, Huffman said,comes from the old employee
19 contract and that benefit had been given to all employees as a percentage of the salary that would be paid into the
20 plan which makes that become employee money. It was their retirement and set up that way so it would stay so
21 that nobody could come along later and extract money from it. In the present union agreement,Huffman said,the
22 contract spells out that what is put in there by the company is in the form of salary to the employee and, in addition,
23 it says what the employee pays. He said the money is earmarked for the benefit of the retirees.
24
25 Councilmember Parker said the Board needs to make sure that the amount of money it takes to fund the program
26 properly is placed in there but he is concerned about continuing to go back and readjust it up. He likened it to the
27 firemen and police pension in that every year these are funded because by state statute it is required to fund it as if
28 everybody who is eligible for retirement will retire. He added that that has never happened and never will,then at
29 the end of the year the Council line items that and transfers it out then uses it for something else. He said he thinks
30 it is unfair to the taxpayer in that case to have to fund a pension program that's not really going to be used and it is
31 unfair to the ratepayer to fund a pension program that is not totally utilized and unfair to the employees who are
32 presently working to have some of this extra money put away as a bonus.
33 -
34 He said he would like to see this pension plan funded properly so that those people who retire know what they're
35 going to get when they retire and are assured they are going to get it. Huffman said he had not finished his
36 statement, adding that the regulator before was what was deposited. Under this plan, he said, a regulator is needed
37 and the initial intent was that as the plan becomes healthy enough to liberalize it RP & L will be able to increase it.
38 He said that has been done twice and he is looking for a regulator because one is needed. He said interest rates a
39 few years ago were 14 percent and are now 8 percent, noting that the way the economy is it may go to 6 percent.
40
41 Huffman said Bankers Life and Principal have been asked to study the plan and suggest how to improve it. He said
42 they would like to come up with a new formula recommendation no later than the first part of the second quarter so
43 something can be done on the September anniversary date.
44
45 Councilmember McBride said he is concerned about those who retired prior to 1968. Huffman said two different
46 actuaries stated that when the pension plan is liberalized it is done from that day forward and you do not go back
47 and pick up anything. He said that advice has been followed twice and this time RP&L is saying its past service
48 liability has decreased,several have died and there are lesser numbers.The utility wants to pick this up because
49 the plan is healthy enough to do it and these people have retired on 1970s incomes and RP & L is trying to
50 liberalize this so people do get an increase. Daugherty interjected that they do get this bonus if it is approved.
51
52 Councilmember Allen said she saw no authorization in the 72-page plan to allow for this. Huffman responded that
53 the plan is to be managed by the utility.Councilmember Allen asked if that meant he was the administrator.
54 Daugherty said they are the third party administrator and have actuary status. Huffman said RP.& L is trying to give
55 the employees their money in the form of a Christmas gift to tide them over before the liberalization. He added that
56 when you give anything to an employee on a regular basis it establishes an obligation but not on a one-time basis
57 such as this. -
58
59 In answer to a question by Councilmember McBride, Huffman said the ratepayers contribute indirectly to the
60 pension fund,adding that as part of the rate schedule it is the same as they pay for the salaries and this can be
61 looked at as the retired salary. Councilmember Dickman said a comment was made that nobody said the plan was
62 overfunded, but RP& L is saying you should bonus out the money because they have excess money. Daugherty
63 said the word from the actuaries is that it is a healthy plan which gives some room to do some things but the utility
64 is not exactly sure at what levels.That is why RP& L asked for the survey. Huffman said somewhere you have to
65 make a determination what is good so you have to come up with a range. He said many plans are funded at the
150 percent level and he thinks RP& L's plan is right on target, noting that he is going to retire on that and he
wants to get his share.He said when this plan was adopted they had investigated P.E.R.F.but felt this was the best
plan available.
RP&L Minutes Cont'd
November 15, 1993
Page 5
1 Huffman said it is RP & L's hope that the plan will be liberalized but still will need a regulator. However, he added,
2 if the plan is liberalized there will be less money available which will be in the reserve or excess. He added that
3 nobody with any knowledge of the plan has ever said it is overfunded, noting that the State Board of Accounts
4 indicated that the plan is funded at the 150 percent level and there are many plans funded at that level. He said it
5 was indicated that the City's plan is also funded at the 150 percent level. He cautioned that you have to think of
6 future liabilities when you think in terms of that funding and it is not just simply that there is$5 million in the plan.
7 He said he's glad that amount is in there because only 8 percent interest is being received on that money today,
8 while a few years ago there was $2 million in it and 13 percent interest was being received, noting that was a
9 healthy situation. Now,he said, interest rates are coming down and it is good to have that reserve.
10•
11 The plan was set up by the original Board, Huffman said, to benefit the retired employees and RP & L wants to
12 get that benefit out to them. He added that this is a stop gap measure which will cost the plan $44,000,calling it a
13 drop in the bucket. However, when the plan is liberalized, he said, the past service liability increases
14 tremendously and there has to be a good reserve.This bonus is a one shot deal, Huffman said, and doesn't have
15 to be done every year. He said if you earmark that$44,000 and say you're going to pay a certain benefit formula
16 then the past service liability increases and you have to be concerned about that in the actuarial study.
17
18 Councilmember Parker said he understands that those people taking the survey will come back to the Board in
19 September and give some type of a regulator so the plan may remain healthy for eternity but he doesn't want to
20 overfund it.
21
22 Councilmember Allen asked about the statement made by Huffman that when the Principal people were here they
23 shared detailed information about what they saw in the future as far as the plan was concerned. Daugherty said
24 the purpose for their visit pertained mainly to new products that they are offering in investment lines.
25 Councilmember Allen said in reading the plan document she couldn't find anything that allowed for a payoff.
26 Daugherty said that has to be done on an annual basis and filed with the IRS, adding that he reviewed only this
27 week from Principal an amendment which will be presented to IRS for last year's bonus which RP&L has paid.
28
29 Noting that the had read the plan in its entirety, Councilmember Allen said she saw that the plan was dated and
30 signed by Huffman in August 1992. Daugherty said that was probably the last amendment. However,
31 Councilmember Allen said the only amendment she saw was the 3 percent bonus that RP&L paid in September
32 1991. Daugherty said the other one is in the process now. Councilmember Allen said she had spent much time
33 going over the plan and she agreed with Councilmember Parker that this Board needs to set a policy, not going
34 year by year according to the last financial statement. She said it seems an additional$5 million in there is above
35 and beyond what the current obligations are.
36
37 Daugherty said she was correct but an actuary will remind her that you don't fund pension plans on a current
38 basis,that you must accrue for future liabilities for everyone in the plan. He added that the figure she looked at
39 represents the amount of money needed to buy an annuity for each retiree that is already retired-a lifetime
40 annuity at today's market prices. He said it also has in it the present day value for the people who have not retired
41 yet, both vested and unvested,and does not include what those projections are for future accrued liabilities.
42
43 Councilmember Allen said under the actuarial evaluation involved, as of September 1, 1991,the current deposit
44 necessary to fund the plan was indicated as zero and the current plan of the frozen initial liability she understands
45 came from previous plans into this plan. Daugherty said any time there is any change in the plan at all,whether it
46 be legal or what,that type of change will be there.Councilmember Allen responded that it has changed from what
47 it was in 1988 and the$157,000 is now down to$55,000.She said she understands why it happened because the
48 contract says that RP&L must pay 8 percent of this money into the plan and that is the reason that the frozen
49 initial liabilities decreased and the plan assets have increased, noting that is the way she read it. Daugherty said
50 he has seen that figure go down to zero then jump back up to over$1 million so he doesn't know from year to
51 year what that figure is going to be.
52
53 Daugherty said any time that goes to a negative figure there is a clause that they will switch actuarial
54 asssumptions and they will go to a completely different method. He added that he has no idea what that would do
55 to change the figures, noting that only an actuary could speak wisely on that issue. Councilmeber Allen said she
56 knows it is a complicated issue but she feels the retired employees of RP &L as well as the current ones need to
57 know that there is enough money so that their benefits are not going to be taken away. Huffman agreed,adding
58 that is why he has been very emphatic in what he has been saying all along in that there is a sizeable amount of
59 money in that plan.
60
61 Councilmember Allen said there was$2.7 million in 1986 and now there is$5.2 million, noting that is over$2 1/2
62 million in five years that has gone into the plan that was not needed according to the liability and benefits.She
63 said Huffman is always saying that for every$1 million that RP&L spends, and this is spent money, that the
64 ratepayers are absorbing some of that money. She asked Huffman if this$21/2 million was absorbed by the
65 ratepayers.
•
RP&L Minutes Cont'd
November 15, 1993 •
Page 6
•
•
•
1 Huffman said this is his contract to the employees and was given by a previous Board and there is no savings to
2 the ratepayer. He said this is an obligation that the ratepayers have.The intent, he said, is that as this plan
3 becomes more healthy, and it has been indicated it is healthy, and there is a study underway, RP&L wants to
4 get out the maximum and is going to increase it the first of the year. He said RP&L is going to be coming to this
5 Board to get the plan liberalized, adding there will be an actuarial study and a presentation showing it is healthy.
6
7 He said it is going to leave the plan healthy because that previous Board said it didn't want RP&L coming back
8 and asking for more money. He added that once a benefit is given to an employee it can't be taken back which
9 means the utility has to be careful that it doesn't over extend it.
10
11 Huffman said RP&L has to project what is going to happen five years from now, noting that this plan is 25 years
12 old. He said he was a party to what was done back in 1968, adding that they had gone through the high inflation
13 and had a lot of good interest money but the past service liability kept increasing. He said that is why they say this
14 plan is funded at the 150 percent level but that is if you cut the plan off today.
15
16 Councilmember Allen asked about the people who retired who chose lump sum distributions. Daugherty said their
17 monthly benefits decreased, adding that they could only take out their contributions plus the intererest that it had
18 accrued. Huffman added that it had been set up that way purposefully because RP& L wanted to have a plan
19 where it has the active payroll retirees and the inactive,which are the retirees on the payroll. He explained that
20 they could take the money that they had in the plan and could get that in a lump sum,but RP& L wanted to have
21 something so that the family had an income for the rest of their lives.
22
23 Councilmember Allen said the 1994 budget has over$5 million for payroll and the pension figure that was
24 budgeted was $475,000 which is more than 8 percent of the total figures.She asked if RP &L could not do
25 some funding there aside from what was probably in the contract.Councilmember Dickman said that at one time
26 you could pay less into the fund and it would still be healthy and viable which would allow it not to be so
27 overfunded as it is today.
28
29 Daugherty responded that-the contract does not say it will be funded 8 percent of the union contract employees. It
30 just says that RP&L will fund it 8 percent of the payroll and RP& L also has that verbal commitment to any other
31 employee that comes to work there. He said that is the way the plan was set up to operate,the way it was funded
32 and according to what Council said it was supposed to do.
33
34 Councilmember Dickman asked if the plan had ever been funded in a single year more than 8 percent of the
35 payroll. Daughery said it is 8 percent by the company and 3 percent by the employee. He said there was a
36 mistake in one of the State Board of Accounts report that indicated it was funded 9 percent one year,but that was
37 an error. Councilmember Dickman asked if the liberalization plan in January will have any effect on the retirement
38 plan. Daugherty answered that it would.
39
40 Daugherty said he asked the actuaries to do a study because of the employees who retired prior to 9/1/86 who
41 didn't get the first two liberalizations. He said he asked the actuaries to study what it will take to bring them so they
42 will receive an increase and then see if anything is left so everyone will be on the same level.The only reason
43 they did not get it in 1986 was that it was not recommended by the two independent firms that did the study of the
44 plan at that time. Daugherty said they will take a look at the study when it is completed and see where they stand.
45
46 Councilmember Allen said it would seem to be more prudent to wait until the first of the year until the study is
47 complete and give something at that point which could be done on a positive day to day basis. Daugherty
48 commented that all RP&L was asking here is a drop in a bucket for an annual increase to 83 people.
49
50 In answer to a question by Councilmember Lundy about the current contract, Daugherty said it ends September
51 1994. She said it has been said that the RP& L pension fund as well as that of the City is overfunded,then she
52 asked who determined what is overfunded.
53 •
54 Daugherty said the State Board of Accounts has indicated RP& L's plan was funded by 150 some percent of
55 current obligations, adding that every month that goes by that obligation increases. He said RP& L has asked
56 actuaries to study the plan and come to this Board and make recommendations as to what level would make this
57 thing even out.
58
59 Councilmember Lundy said if the study is expected in January,she felt that this Board should go albng with the
60 present bonus and wait until the study is done then pro-rate the difference. Daugherty said that is not necessary,
61 adding that this is a small item compared to what the liberalization of the plan will be when it comes.
62 •
63 He said this Board did this in 1991 at a cost of$13,888.31,and in 1992,out of the assets of the plan,the cost was
64 $28,959.21, and if it..is•approved tonight it will cost$44,107.16. He reminded the Board that it is being taken out of.
65 a fund of several million dollars. -
•
•
•
RP&L Minutes Cont'd
November 15, 1993 -
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Page 7
1 Councilmember McBride moved to adopt the liberalization pension plan,second by Councilmember Hutton and
2 the motion was adopted on an 8-1 voice vote with Chairperson Brookbank voting against it.
3
4 Councilmember Elstro commented that he had received a fax of a letter from Milligan dated 10/26/93 pertaining to
5 the Indiana Utility Regulating Commission and asked Milligan why and who advised him to do that. Milligan
6 responded that the request was made by the Citizens Finance Advisory Committee in their report to the City that
7 there be a forum for continued discussion and examination of a number of issues that they found in reviewing the
8 light plant.He said an individual member of that Committee"asked him what that forum could be and this letter
9 was in response to that individual. He added that the Mayor had presented the findings of the Committee to each
10 department head in the City's budget making process. He said there were observations in there about every City
11 department and this was part of the ongoing process of implementing,or at least evaluating as many of those
12 observations by that study committee as possible.
13
14 Councilmember Elstro asked Milligan if he was endorsing this to be done. Milligan answered that he was giving a
15 legal opinion as to a forum for that and as attorney for the light-plant Board and to the Mayor he is not personally
16 involved and was not expressing his personal preference one way or the other. He added that people seeking
17 information as to what they can do under the law, and particularly that study committee,advocated that that be
18 investigated.Milligan said he was simply informing individuals that that is the way it could be investigated.
19
20 Councilmember Donat said the letter was addressed to whom it may concern.She asked Milligan if he thought
21 Huffman and everyone on this Board should be concerned about the letter and the possibility of being taken out
22- from under the auspides of the IURC.Milligan responded that the letter was addressed to whom it may concern
23 and it was mailed to the members of the Citizens Financial Advisory Committee and to Chairperson Brookbank as
24 chairperson of the RP&L Board.A copy was also mailed to Emmett Smelser,publisher of the Palladium-Item
25 who had asked Milligan specifically about that particular issue in an interview at one time.
26 _
27 Councilmember Donat said she maintained that it concerned those on the Board and Huffman. She asked
28 Milligan to read the letter. He responded that he was not the one who had brought up the subject. Chairperson
29 Brookbank asked Councilmember Elstro to read it. Councilmember Donat supplied a copy of the letter to Milligan
30 who asked Chairperson Brookbank if it was her wish to have the letter read.She responded in the affirmative. (A
31 copy-of the Fetter in its entirety is in the City Clerk's file).
32
33 In part,the letter noted that the Committee's report recommended an establishment of a forum for public debate
34 on the continued desirability of RP& L remaining under the auspices of the IRUC.The question could go-to the
35 County election board May 3, 1994, if it receives a petition signed by five percent of the registered voters which
36 means it wauld require a minimum of 967 signatures and if the majority vote is in favor the utility is removed.
37
38 Councilmember Donat asked Milligan if he would draft the petition, how it would be circulated and who would be
39 taking care of making sure it was brought to the proper authorities to be put on the May ballot. Milligan said it
40 would be entirely up to those persons circulating that petition. Councilmember Donat asked if he would be
41 involved in doing that. Milligan answered that he did not envision being involved in it because it would be an
42 initiative of citizens in this community who are concerned about how RP&L business is being handled. He said
43 he does not envision being a part of that because it will not be an administrative initiative of Mayor Cornett but a
44 citizen based initiative and as the City Attorney he said he has simply responded to a request about information
45 about city workings and the way various things can be handled.
46
47 Chairperson Brookbank reminded the Board that the issue had been discussed at a previous Board meeting and
48 members had talked about putting it on the ballot last fall, noting that it was the summer of 1992 when the issue
49 had been brought up.
50
51 ADJOURNMENT_
52
53 On a motion duly made,seconded and passed,the meeting was adjourned.
54
55 _
56
57 -
58 Jane R. Brookbank, Chairperson
59. -
60' -
61
62 ATTEST:
63 Norma Carnes, City Clerk
64
65