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HomeMy WebLinkAbout05. Adopt new Board Policy BP 047 - Deferred Compensation Plan Page 1 of 6 Item 5. CENTRAL SAN BOARD OF DIRECTORS POSITION PAPER MEETING DATE: MAY 20, 2021 SUBJECT: ADOPT NEW BOARD POLICY BP 047 - DEFERRED COMPENSATION PLAN SUBMITTED BY: INITIATING DEPARTMENT: KEVIN MIZUNO, FINANCE MANAGER ADMINISTRATION-FINANCE REVIEWED BY: TEJI O'MALLEY, HUMAN RESOURCES AND ORGANIZATIONAL DEVELOPMENT MANAGER PHILIP LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION Roger S. Bailey General Manager ISSUE Adoption of new Board policies requires approval from the Board of Directors. Following recommendation for approval by the Deferred Compensation Advisory Committee, it is recommended that the Board adopt the attached Deferred Compensation Plan Board Policy(BP 047)to provide greater clarity on the role of the Board, General Manager, Advisory Committee, and Plan Administrator with respect to Deferred Compensation Plan matters. BACKGROUND During 2020, one of the goals undertaken by District staff and the Deferred Compensation Advisory Committee (Advisory Committee)was to review and revise existing administrative procedures to more accurately reflect Central San's current organizational structure and to solidify the scope of Advisory Committee member responsibilities. During this review process, staff identified that the Advisory Committee's administrative procedures were last reviewed in 2012. At that time, an administrative procedures document was presented to and approved by the Board, which is no longer required for internal administrative procedures documents. As a result of turnover of several core staff members involved in the administration of the Deferred Compensation Plan since then, this document required significant revisions to bring it up to date. After reviewing the document with and receiving feedback from May 20, 2021 Regular Board Meeting Agenda Packet- Page 44 of 457 Page 2 of 6 the Advisory Committee at its quarterly meetings during 2020, the final draft of the Administrative Procedures document was reviewed and approved by the Advisory Committee on February 3, 2021. Following approval by the Advisory Committee, the Administrative Procedures document was presented to and discussed with the Finance Committee at its March 23, 2021 meeting given its historical involvement in the Deferred Compensation Plan and as its predecessor document was approved by the Board in 2012. Following the implementation of feedback from the Finance Committee, the revised and final Administrative Procedures document was approved by the General Manager on April 5, 2021. Prospectively, this document will be reviewed at least every two years by staff and the Advisory Committee and presented to the General Manager for approval, which is a normal practice for Central San's Administrative Procedures. Central San generally develops an overarching Board Policy for each Administrative Procedures document. While the goal of Board Policies is to summarize the significant policy-level matters which must be approved by the governing body,Administrative Procedures outline more granular process details and are maintained by the General Manager. Accordingly, since no such document currently exists in the usual form, staff has developed the attached Deferred Compensation Plan Board Policy(BP 047)to steer the policy objectives of the Deferred Compensation Plan and its Advisory Committee and serve as an umbrella and authoritative source document for the newly revised Administrative Procedures document. While the attached Board Policy was reviewed and approved by the Advisory Committee at their February 3, 2021 meeting, it was not presented to the Finance Committee on March 23, 2021 as the Administration Committee is the normal body charged with reviewing and recommending new or revisions to existing Board Policies. By implementing this new Board Policy, the Deferred Compensation Plan will become more formalized in accordance with current District standards. Furthermore, staff is confident the Board Policy will provide improved guidance and transparency to all stakeholders, including: staff involved in administration of the Plan, the Plan's third-party administrator, the Advisory Committee members, as well as current and prospective Plan participants. ALTERNATIVES/CONSIDERATIONS The Board may elect not to adopt the attached Board Policy(BP), which is not recommended. While there is an AP in place, there is currently no BP over the Deferred Compensation Plan. Consequently, this may result in staff referring back to a 1982 position paper that was approved by the Board via minute motion. This position paper contains outdated language, and also deviates from Central San's modern protocol for governance and administration using the BP and AP format. FINANCIAL IMPACTS There are no financial impacts to Central San associated with the adoption of the attached Board Policy. COMMITTEE RECOMMENDATION The Administration Committee reviewed the proposed policy on May 4, 2021 and recommended approval with a few modifications that have been incorporated into the BP being presented to the Board today. Modifications were requested in the "Role of the General Manager" as well as the "Role of the Advisory Committee" sections to more clearly define their roles and powers as they pertain to the Deferred Compensation Plan and to remove the "Periodic Review" section at the end. Furthermore, it was requested that a "Role of the Plan Administrator' section be added to define who the Plan Administrator is and their role as it pertains to internal administrative matters. May 20, 2021 Regular Board Meeting Agenda Packet- Page 45 of 457 Page 3 of 6 RECOMMENDED BOARD ACTION Adopt Board Policy BP 047 - Deferred Compensation Plan. Strategic Plan Tie-In GOAL THREE: Fiscal Responsibility Strategy 1—Maintain financial stability and sustainability, Strategy 2—Ensure integrity and transparency in financial management GOAL FOUR: Workforce Development Strategy 3—Inspire employee engagement ATTACHMENTS: 1. Proposed Board Policy BP 047 May 20, 2021 Regular Board Meeting Agenda Packet- Page 46 of 457 Page 4 of 6 Number: BP 047 Authority: Board of Directors Effective: May 6, 2021 '--- Revised: Reviewed: Initiating Dept/Div: Administration/Finance CENTRALSAN BOARD POLICY DEFERRED COMPENSATION PLAN PURPOSE Central Contra Costa Sanitary District's (Central San's) Deferred Compensation Plan (the Plan) provides a valued employee benefit for its employees and the accumulated fund balance represents a significant monetary value. Accordingly, this policy shall clarify the role, authority, and responsibility of the Board of Directors (Board), the Deferred Compensation Plan Advisory Committee (Advisory Committee), the General Manager, and the Plan Administrator in overseeing and administering the Plan. SCOPE This policy shall apply to the 457(b) deferred compensation, the 401(a) money purchase, and the 401(h) retiree health accounts plans, which collectively comprise the Plan. BACKGROUND Central San established the Plan in 1976 after voluntarily withdrawing from participation in the Federal Social Security System. The Plan is administered by the District which has the sole authority to enforce the Plan and is responsible for the operation of the Plan in accordance with its terms. In 1982 the Board established the Advisory Committee to oversee the Plan and facilitate internal administrative matters. POLICY I. Role of the Board of Directors As the governing body of Central San, the Board has the sole authority to adopt and amend Plan documents and execute an agreement(s) with third-party administrators (TPA) to administer employee retirement benefits covered under the Plan. The Board shall receive an Annual Report from the Advisory Committee highlighting plan performance and other relevant matters demonstrating fiduciary oversight over the Plan. May 20, 2021 Regular Board Meeting Agenda Packet- Page 47 of 457 Page 5 of 6 Number: BP 047 DEFERRED COMPENSATION PLAN Page 2 of 3 II. Role of the General Manager The General Manager has the sole authority to enact and amend the Deferred Compensation Plan Administrative Procedures, which provides direction and guidance to staff to ensure the directives of the Board and requirements of the Plan are being met. The Administrative Procedures shall provide guidance on the appointment, terms, meetings, and other matters of the Advisory Committee not specifically addressed by this Board Policy. The General Manager shall also be responsible for communicating any changes or important information about the administration of the Plan to the Board and ensuring the Plan Administrator is adequately carrying out their responsibilities. III. Role of the Advisory Committee The Advisory Committee shall facilitate the internal administration of the Plan and advise on any major actions impacting the Plan and its participants prior to recommendation to the Board and/or General Manager. It is comprised of Plan participant employees that are representative of the Central San's employee groups and organizational units as further outlined in the Administrative Procedures enacted by the General Manager. The six major roles of the Advisory Committee are described further as follows: 1. Internal Administration of the Plan The Committee shall be responsible for developing, maintaining, and adhering the Administrative Procedures within the provisions of the Plan agreement with the selected third-party administrator (TPA). The Administrative Procedures will outline protocols for the facilitation of routine business in regards to the Plan and further clarify the roles and responsibilities of the Advisory Committee, Plan Administrator, staff, and TPA. The Administrative Procedures and any subsequent revisions thereto must be authorized by the General Manager prior to taking effect. 2. Participant Education The Advisory Committee shall develop information summarizing the Plan to be made available to all employees. Information contained in this plan summary shall be periodically reviewed by the Advisory Committee for accuracy and relevance. Beyond overseeing the dissemination and availability plan summary information, the Advisory Committee shall periodically review and assess educational and outreach efforts to ensure employees are adequately informed of Plan benefits, provisions, changes, and other significant matters. May 20, 2021 Regular Board Meeting Agenda Packet- Page 48 of 457 Page 6 of 6 Number: BP 047 DEFERRED COMPENSATION PLAN Page 3 of 3 3. Fiduciary Oversight The Advisory Committee shall act in a fiduciary oversight capacity over the Plan overseeing the activities of the TPA and working to obtain appropriate value for Plan participants consistent with other governmental deferred compensation plans of like size. 4. Emergency Withdrawals Requests for unforeseen emergency withdrawals of funds from the Plan must be reviewed by the Advisory Committee. Any such withdrawals must be authorized by the Advisory Committee in advance. 5. Investment Performance The Advisory Committee shall monitor and assess the quarterly, annual, and inception-to-date investment performance of the Plan and select and revise the investment design features of the Plan as necessary. Design features may include the number of and types of investment alternatives available to Plan participants. 6. Annual Report The Advisory Committee shall submit an Annual Report to the Board which will summarize the Plan's investment performance, education and outreach efforts, and performance of the TPA. The report will also describe activities of the Advisory Committee and, if applicable, provide recommendations for change to the Plan document. IV. Role of the Plan Administrator Central San's Finance Manager shall serve as the Plan Administrator, responsible for managing the day-to-day administrative affairs of the Plan including, but not limited to the following: serving as the primary contact with the TPA; ensuring participant contributions to the trust are made pursuant to plan and legal requirements; facilitating timely reviews of participant emergency withdrawal and loan requests; monitoring and enforcing limits on participant deferrals, catch-ups, loans and emergency withdrawals; etc. The Plan Administrator shall also serve as the Chair of the Advisory Committee, responsible for facilitating orderly meetings of the Advisory Committee necessary to comply with this Board Policy and the associated Administrative Procedures enacted by the General Manager. The Human Resources & Organizational Development Manager shall serve as the Deputy Plan Administrator, with all the responsibilities and powers of the Plan Administrator in the event the Finance Manager position is vacant. [Original retained by the Secretary of the District] May 20, 2021 Regular Board Meeting Agenda Packet- Page 49 of 457