Controversial Retirement Board change to be revised

A proposed change that has divided the town’s Retirement Board is now in a state of flux, as its proponents say they will rewrite it and reintroduce it this summer.

The Board of Selectmen convened a special meeting last Wednesday, May 15, to consider the proposal from the board to increase its membership from five to seven. But the change was approved by that board by only a three-to-two margin, with the two town employees on the board voting against it. It will now not be brought before the selectmen, as had been expected, for a vote at their 10 a.m. meeting today, May 23.

The five-person Retirement Board is tasked with investing the town’s retirement funds to pay pensions to town employees. Under the town charter, the investments are expected to provide most of the funding for retirements, and what can’t be covered by the returns from those investments is made up for within the town budget. With the town’s retirement obligations becoming more and more of a budget issue, scrutiny of the board is increasing.

The proposed change has shown a split in the board, with two members who are volunteers from within the community asking to expand the board to seven members, and the two members who are town employees, the ones who will receive the pensions, objecting. However, those two board members aren’t objecting to the expansion in of itself, but rather its makeup, as the two residents have called for two more members of the community with financial expertise to be added and to not add any new representatives of town employees at the same time.

The fifth board member, town Comptroller Peter Mynarski, voted with the two residents pushing for the expansion.

At the May 15 meeting, the proponents of the change pushed the selectmen take action so it could be on the call for the Representative Town Meeting (RTM) June meeting, which is the last one until September. Typically, the selectmen hear an item and then vote on it at their next meeting, but as of Tuesday the change was not expected to be added to the agenda for this week’s meeting, removing any chance of it being heard by the RTM before September, at the earliest.

Proposal to be adjusted

In an e-mail to the Post on Tuesday, Retirement Board member Larry Simon said the proposal will likely be revised and the board might consider if there should be separate investment and administrative boards. He cited the “discomfort with changing the current structure” of the board’s administrative side and said he expected changes this summer.

Board chairman John Chadwick and Mr. Simon, a longtime member of the town’s Board of Estimate and Taxation before joining the Retirement Board, were on hand May 15 to advocate for the change. Mr. Chadwick said with the continued diversification of the town’s investment of the retirement money, it makes sense to have additional expertise available.

“We’ve been working the past few years to change the investments of the plan so we have more investments outside of just straight stocks and bonds and into what are typically known as alternative investments,” Mr. Chadwick said. “They are areas such as mezzanine financing, venture capital and properties that are not straight equities. The result of that is that the plan has grown increasingly more complicated, and now we have nine or 10 of those outside investments, with more likely to come. The objective overall is to have something in the area of 25% or perhaps a bit more than that in alternative investments so if the stock and bond market go down again together, we won’t have 100% invested there.”

Greenwich police Capt. Mark Kordick, one of the two town employees on the board, said this was being done over the objections of the town employees whom the money in the retirement fund is for. He advocated for either no change or something closer to the traditional setup, which had an equal number of town employees and community members, with the comptroller as the fifth vote.

Mr. Chadwick said they wanted to be looking for people in town with in-depth and long-term investment experience “with a long background to bring to bear as to where we should be going with the plan and be sounding boards to bounce ideas off of.” If those people are impossible to find, Mr. Chadwick said, he suggested looking for people with experience running corporations in senior positions.

Equal balance?

Selectman Drew Marzullo asked the proponents if they could get the expertise they were looking for while still holding true to the current balance on the board by adding one citizen from town and one union member instead of two citizens with financial backgrounds. Current retirement board member Kevin Coyner is a member of the Greenwich Fire Department and has a background in financial services.

“My feeling is that Mr. Coyner is the exception, not the rule,” Mr. Chadwick said.

Citing his belief that the proposed change would create a “balance issue,” Mr. Marzullo also floated the idea of adding four members to the board, bringing in two citizens with expertise as well as two union members. But Mr. Chadwick expressed reluctance to that.

“Having nine members becomes like a church board and everyone has a voice,” Mr. Chadwick said.

Mr. Chadwick asked Mr. Marzullo what role he believed two additional union representatives could provide, and Capt. Kordick answered, “To fairly represent the interests of the trustees.”

“Seven is better than five, but a larger number is inherently bad, got it,” Mr. Kordick said with a clear note of sarcasm in response to Mr. Chadwick and Mr. Simon’s reluctance to adopt Mr. Marzullo’s idea.

“My proposal was seven, so if I couldn’t get seven I might go to nine,” Mr. Simon granted. “I don’t think we can survive as well with five . … From my point of view I would rather have two people with investment expertise. There are a lot of different investment opportunities out there. Making a small difference in the return is paramount to reducing the town’s tax liability.”

Mr. Simon contended that on the five-person board, when there is a disagreement, Mr. Mynarski, as comptroller, “almost always votes with the two citizens.” But even with that, he claimed there are “almost no votes that are three-to-two” and most votes are unanimous.

“I don’t think we on the board have any real conflicts,” Mr. Simon said. “Our goal is to administer the plan as written and enforce the current policy. We don’t create policy.”

Employee concerns

Ultimately, if the selectmen do approve the change, it faces a hurdle in the RTM.

According to Town Attorney Wayne Fox, the change would have to be approved by a majority of the entire membership of the body, not just a majority of those voting. That means the change would have to receive 115 votes or more to be approved. This would not be a charter change that would require a public referendum, Mr. Fox said, but it could end up going that way if it was desired.

First Selectman Peter Tesei mentioned the belief that a change in the composition of the board was a “first step” toward changing benefits received by town employees. He stressed that the benefits are set by contract with employees and would be changed only through negotiation with the unions. Mr. Tesei reported town employees asking him if the new majority could change that, and called continued efforts to portray the proposal as a change in benefits or loss of pensions “fear mongering.”

“There are people who just want to be informed and people who, on any issue, deliberately deceive based upon lack of information or misunderstanding of the information,” Mr. Tesei said.

Capt. Kordick said, “Call this fear mongering if you like, but it seems odd to me that the other members of the Retirement Board have this strange objection to maintaining democratic balance on the board. With due respect to my colleagues, I’m not buying the expertise argument, because we have authority as a board in the charter to hire any experts we want to hire. We could hire Warren Buffett himself if he would take the job to be investment adviser to the Retirement Board. I guarantee you that someone we’re paying is likely to do a better job for us than more citizen volunteers. I certainly don’t feel a pressing need for the board to do this.”

Capt. Kordick said every town employee he had spoken to on the issue thinks it is “an outrageous attempt to usurp the board’s authority.” He told the Post on Tuesday that he felt the Retirement Board had exceeded its authority by even approving the motion to bring the proposal to the selectmen.

“I have not talked to a single town employee, except for Pete Mynarski, who thinks this is a good idea,” Capt. Kordick said.

Board of Estimate and Taxation (BET) member Sean Goldrick also objected to the change, saying it was happening just as the BET was considering changes in the board in response to what it saw as long-term underperformance in the return on investment and a “lack of accountability” to the BET. Mr. Goldrick is one of the BET’s two liaisons to the Retirement Board, and he said his feelings were echoed by his colleague Gregory Bedrosian, who was unable to attend the May 15 selectmen’s meeting.

“I think this is being pushed forward too precipitously,” Mr. Goldrick said. “The BET might want to have input on this. Mr. Bedrosian and I have not been attending all these meetings all these months for our health. It’s not because we have fun doing it. We have serious concerns.”

Mr. Goldrick said neither he nor Mr. Bedrosian was informed that this was coming forward from Mr. Chadwick and Mr. Simon until the town publicly noticed the meeting, and he had not had a chance to consult with the BET on it first. He advised “acting prudently” and waiting to get input from labor representatives as well as both BET caucuses before this went any further.

 

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