MINUTES

EMPLOYMENT BENEFITS COMMITTEE

January 27, 2011

Members Present

Don Clothier / Scott Moses
Debbie Copp / Jannie Porter
Brenda Freese - Chair / Will Wayne
Frank Lawler / Frances Wen
Sue-Anna Miller

Members Absent Guest Attendees

Suzanne Gilmore / Ben Taylor, RV Kuhns (via telephone)
Alisa Dougless / Paul Arcaroli, OU Human Resources
Don Harrison / Marcy Fleming, OU Human Resources
Chad Johnson
Simone Pulat
Justin Wert

Ex Officio Members

Barbara Abercrombie

Julius Hilburn

Nick Kelly

The meeting was called to order by the Chair at 1:30 pm.

I.  Approval of Minutes

·  The December 2010 minutes were approved with one minor change to the second bullet in item two. The corrected bullet will read:

The RPMC will meet once more prior to winter break. Although most employee feedback has been positive, the committee will delay a recommendation to the Regents until March 2011 in order to address issues submitted through the website.

II.  Master Record-Keeper Update

·  Julius Hilburn informed the group that the Retirement Plans Management Committee (RPMC) has received many comments from the campus community. He offered the following updates:

·  The RPMC went back and reviewed the reasons behind the decision to redesign the plans.

·  Changes in the regulatory environment

·  Current plan structure is administratively complex

·  Best practices in Plan Management and Administration have evolved

·  A desire to improve participant experiences and investment outcomes.

·  Julius noted that there are approximately 10,000 individuals in the plan. Moving to the new platform will allow OU members to enjoy group purchasing power. The savings generated will be savings to the members, not OU.

·  A brief history was given of actions taken to date, ending with the initiation of campus discussion of the new plan in October 2010.

·  There has been some discussion as to what led the RPMC to choose Fidelity over other vendors.

·  The RPMC decided it would be in the best interest of all members to select a vendor that could offer a variety of investment families.

·  TIAA CREF offers annuities that cannot be managed by another vendor.

·  Vanguard does not have the capability to offer anything but Vanguard products.

·  Fidelity was able to put a TIAA CREF traditional annuity option in the Tier 3 lineup.

·  A review of the proposed core investment lineup was given.

·  Tier 1: Default Option: Target Date Retirement Funds (Fidelity Freedom Funds)

·  Tier 2: Index Options (5 options plus 2 additional options to be considered by the RPMC in January)

·  Tier 3: Actively Managed Options (9 options, including a traditional TIAA CREF annuity option)

·  Tier 4: Self-Directed Brokerage Window (Fidelity Brokerage Link – Over 190 Investment Families – Over 3,000 Choices)

·  Some funds in Tier 4 do have transaction fees.

·  During the transition period all members will be asked to make new elections. Those who do not make the new elections will be defaulted into the Tier 1 – Target Date Retirement fund.

·  The RPMC will continue to consider additional products if underrepresented classes are identified.

·  Ben Taylor of RV Kuhns informed the group that there should be a stable value fund available in all plans.

·  The following overview was provided for plan costs:

·  There is an annual $48 per participant fee and $30 in revenue sharing.

·  All plan revenues and revenue sharing will be used to pay plan costs.

·  As assets in the Fidelity platform grow, fees and/or revenue sharing will be reduced.

·  Participant Benefits:

·  reduced fees

·  increased assets at time of retirement

·  online enrollment

·  loans/hardship withdraws

·  onsite education

·  active oversight of core investment lineup

·  Julius concluded his presentation by asking that the EBC be prepared to make an official recommendation to the Board of Regents at the February meeting.

III. 2012 Benefits Outlook

·  Nick Kelly gave a presentation on the health insurance outlook in 2012. He reviewed the renewal increases and impacts of those increases for all years OU has been with BCBS.

·  The projected increase for 2012 is 7% to 9% for the PPO/HCA and 10% - 14% for the HMO.

·  If premiums increase by 7.7% in 2012, as they did for 2011, it will add an additional $5 million to the budget.

·  Based on the previous two increases the HMO premium should surpass the PPO in 2012.

·  Human Resources is engaged in discussions with BCBS regarding strategies to reduce costs in 2012.

·  In addition to discussions with BCBS there is the option of going to market with an RFP. However, going to market poses the following challenges:

·  Very expensive and time consuming

·  May not get significantly better pricing

·  Difficulty analyzing multiple plans in an environment where we are exploring a variety of significant changes

·  BCBS has committed to providing plan-specific 2012 renewal numbers by the end of February.

·  Human Resources, in conjunction with Segal Consulting, will meet with BCBS in February to discuss various plan models for the coming year. Details of the models will be available at the March EBC meeting.

·  Potential changes will be evaluated based on the following:

·  Market Position

·  Cost

·  Member impact

·  Ability to communicate and implement

·  In addition to evaluating plan design changes Human Resources will also evaluate the following regarding contribution strategy:

·  Can/should Tiers be consolidated or salary limits otherwise changed?

·  On which plan or average of plans should the University base its funding?

·  Are members paying a competitive amount for each category of coverage?

·  Nick concluded the presentation by informing the group that pharmacy design changes should be a part of all plans and the pharmacy benefits should be relatively consistent across all plans. Additionally wellness incentives should be integrated into all plans.

·  Julius commented that at this point he recommends OU continue to work aggressively with BCBS to reach a mutually agreeable arrangement for the next year.

IV. RFP Update

·  Human Resources is currently preparing to go to market and request proposals for AD&D, Life, and Vision insurance. It is anticipated the requests will be sent out in late February.

V.  Other Business

·  The next regularly scheduled EBC meeting will be Thursday, February 17, 2011.


The meeting was adjourned at 3:30 p.m.