By Michael J. Tooley
Diocesan Fiscal Officer

Ogdensburg - The Lay Employees’ Retirement Committee held its annual meeting Oct. 28 at the Diocesan Central Offices in Ogdensburg.

After reviewing all information presented to it at the meeting, the committee unanimously approved a recommendation to Bishop LaValley to maintain a contrition rate of 9% of lay employee salaries to support the Plan in 2011-12. Bishop LaValley approved this recommendation.  

After introductions and approval of the minutes of the previous meeting the Plan’s actuary, Mr. Carmine DeRubeis of Frank J. Walters & Associates, presented highlights of the Plan’s actuarial valuation as of July 1, 2011. The valuation showed the required contribution in 2011-12 to be $908,940, significantly lower than that of one year earlier ($1,411,325). This results in a required contribution rate of 7.4% before applying advance contributions.

The main factor for this difference is the decision of the diocese to amend the Plan benefit design effective July 1, 2011, for all active and future employees. The benefit accrual factor for employees changed from 1.6% of salary to 1.28% of salary paid after July 1, 2011, and the calculation of the retirement benefit was changed from Final Average Salary (average of highest five years of salary) to Career Average Salary.

The valuation also showed that after applying advance contributions from prior years the calculated net contribution rate for 2011-12 is 5.4%. However, Mr. DeRubeis presented to the committee forecasts of the required contribution rates over the next three and ten years which demonstrated the need to maintain the 9% contribution rate applied to lay employee salaries paid by diocesan employers to support the Plan. Even in maintaining a 9% contribution rate it is possible that the contribution rate could rise above 10% within the next three years, depending upon investment return on the Plan’s portfolio during that time. Another factor in suggesting to the committee continuing the 9% contribution rate is the fact that the Plan is 87% funded as of July 1, 2011. This is an improvement as compared to one year earlier, when the Plan was 77% funded. While improvement is welcome, the committee still seeks to achieve full funding of the Plan in the future.

Mr. DeRubeis also stated that the market value of Plan assets available to pay benefits to current retirees is more than sufficient as of July 1, 2011, as the market value is 175% of projected liabilities to current retirees.
Michael Valenti of Manning & Napier Advisors, Inc., the Plan’s primary investment manager, shared investment performance of the Plan’s portfolio for the 2010-11 fiscal year, as well as for the first three months of the 2011-12 year. In 2010-11 the investment portfolio showed a rate of return of 21.6%, an excellent result which is in excess of the target rate of 8% used as an actuarial assumption. The portfolio balance as of June 30, 2011 was $25,057,688, which is $3.7 million below the present value of future Plan benefits.

Mr. Valenti stated his firm’s opinion that the country will experience a slow to no growth economy for the next 12 to 24 months, but even in such an environment there is opportunity to make money in the financial markets. Manning & Napier Advisors believes the Plan’s investment portfolio is positioned to do well, based on its long term view of the value of growth stocks.

Investment performance was down approximately 10% in the quarter ending September 30, 2011, but subsequent to that time there has been some recovery in the markets. Investors should be braced for continued volatility in the markets in the near future.

Michael Tooley, Diocesan Fiscal Officer, presented financial statements for the fiscal year ended June 30, 2011, as well as for prior years, to the committee. The Plan increased its net assets by $4,047,855 in the 2010-11 fiscal year, the second year in a row that net assets increased after the severe loss experienced in 2008-09 (-$7.95 million). The market value of Plan investments is $25.26 million, versus its book value of $22.64 million.
Since its inception in 1967 the Plan has generated $46.36 million in revenue, and paid out $21.43 million in benefits and administrative expenses. 60% of the total revenue is generated from investment income and market value appreciation, 40% from employer contributions.

Members of the Lay Employees’ Retirement Committee are: Mary Lou Kilian (chairperson), Editor/General Manager, North Country Catholic; Rev. Christopher Carrara, Pastor, St. Peter’s Church, Lowville; Cynthia Elliott, Catholic Charities; Msgr. John Murphy, Moderator of the Curia; Lisa Parsons, Principal, Immaculate Heart Central Jr./Sr. High School, Watertown; Joan Rufa, Principal, Trinity Catholic School, Massena; Rev. Alan Shnob, Pastor, St. Augustine’s Church, Peru; Colleen Steele, Administrator, St. Joseph’s Home, Ogdensburg.