Nov 24. 2008 — It's good to start the fiscal year off on the right foot, and it never hurts to get a $10 million check from the government, either.
The Government Employees' Retirement System reported its finances to its board of trustees Monday. While many boards are getting numbers written in red ink, GERS' numbers reflect a surplus for the first month of fiscal year 2009.
In addition to the fiscal good news, the board approved a contract with Benton Construction for a new headquarters building on St. Croix. (See "GERS to Complete St. Croix Headquarters Building in Less Than a Year.")
The board also heard status reports on the system's steps toward going paperless and proposed changes to one of its historic properties.
GERS officials warned that the system's good financial news may only be a flash in the pan.
"The primary reason why the system had a surplus of $3.7 million for the month is we received $10,292,000 from the government of the Virgin Islands, which represents a [conditional] three-percent increase in employer contributions," Joe Boschulte, the system's CFO, told the board.
The Legislature approved the increase for FY 2008 last year, according to Boschulte, who said the funds largely went to annuity payments.
Total cash received for the period ending Oct. 31 was $22.8 million, which includes a total employer-retirement contribution of $16.8 million and employee contributions of $2.9 million. Total disbursements for the same period were $19.1 million, leaving a net receipt of $3.7 million, according to the CFO's report.
The system typically runs a deficit on a month-to-month basis of between $4 million and $4.5 million, according to Boschulte.
The government currently contributes 17.5 percent of salary to the system for its employees, and employees contribute 8 percent, or 8.5 percent for those hired after Oct. 1, 2005.
Before the legislative action, the government's contribution was 14.5 percent. The payment represented a conditional 3-percent increase for 2008, said Austin Nibbs, GERS Administrator, who believes the same increase may be in question for FY 2009.
"We are expecting 17.5 percent every fiscal year," Nibbs said.
The actuarial numbers indicate that the total contributions combined should be about 43 percent of payroll, he said.
"Presently it is about 20 to 25 percent," Nibbs said. "Actuarially, we are underfunded."
Leonard Smollete, a retired guidance counselor, attended the board meeting because of his concerns about the health of the system. The Legislature passed an increase for employee contributions to the system from 8 to 8.5 percent in 2005, which GERS has not yet implemented, he said.
"The law is on the books, but we have not implemented it yet," Nibbs said. "We are in the process of implementing it in the next two to three months."
The funding will be retroactive, he said, but some kind of installment scheme would have to be employed for those who could not afford paying a lump sum.
GERS disbursed $3.9 million in personal loans, mortgages and retiree loans to its constituents during the period, according to Boschulte, who anticipates increased demand for loans during the month of December.
No West Indian Company dividends were included in the receivables for this period, due in part to the timing-of-payments structure in GERS' agreement with the company, which manages the GERS-owned Havensight Mall, he said.
"We anticipate a payment soon," Boschulte said.
With the completion of a scanning and imaging project for its files, GERS is close to going paperless, the administrator reported.
"We have crossed a milestone," Nibbs said, forecasting that the system will be entirely electronic within two years.
Employees will be able to use a computer to access their files, and the system can start disposing of hard copies, freeing up space that has been used for file storage. The file-retention policy has not been firmed up as yet, according to Nibbs.
"We are looking for space — we have a space problem," he said.
The system hopes to add its moniker soon to some famous real estate. According to GERS correspondence with West Indian Company CEO Edward E. Thomas, GERS signs may soon replace the company's name on the West Indian Company "White House," which is a registered historic landmark. The change is pending approval from the Historic Preservation Commission, according to the administrator's report.
Trustees present at Monday's meeting included Yvonne E. Bowsky, Carver C. Farrow, Raymond T. James (by teleconference), Chairman Vincent G. Liger and Leona E. Smith.
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