Leonard Muzyn's TVARS Blog

The United States Court of Appeals for the Sixth Circuit has scheduled to hear oral arguments regarding the TVARS case on January 31, 2018. See notice here . TVA has recently further tightened its grip on TVARS: On October 30, 2017, the three TVA-appointed and the one lame duck elected board directors extended the term of retiree director Allen Stokes for up to a year past the expiration of his current term which ends on October 31, 2018. See meeting transcript here . On November 6, 2017, the three TVA-appointed and the one retiree board directors boycott a meeting to discuss and vote on a proposed amendment to provide for the election of the retiree director by retirees. On December 4, 2017, with a majority of the TVARS Board controlled by the three TVA-appointed and the retiree directors, the TVARS Board chose two TVA-appointed directors to assume the positions of Chairman and Vice-Chairman. This is the first time I can remember a TVA-appointed director holding the position o

Retiree COLAs: 1.84% for original, cash balance, and supplemental pension benefits based on 2.09% CPI increase less 0.25%. Current Employee Interest Rates: 6.0% on Cash Balance accounts for those hired before January 1, 1996 based on 6.0% minimum. 4.75% on Cash Balance accounts for those hired on or after January 1, 1996 based on minimum of assumed investment return of 6.75% less 2.0%. 4.75% on fixed annuity accounts based on minimum of assumed investment return of 6.75% less 2.0%. These were approved this afternoon at the December 4, 2017 quarterly TVARS Board Meeting.

The Branstetter, Stranch & Jennings law firm continues to fight on behalf of TVA employees and retirees against TVA and TVARS. Oral arguments have been scheduled for January 31, 2018 in Cincinnati, Ohio. Please see Notice of Oral Argument filed on November 27, 2017 . The Branstetter, Stranch & Jennings law firm previously submitted documents to the court explaining that the Court should decide what the TVARS rules mean, that the 2009 TVARS amendments are invalid because the TVARS Board failed to give proper notice, and that the TVARS Board made unlawful debits from the excess COLA account for 2009-2013. Please see Appelant's Reply Brief filed on August 28, 2017 for details. As I have from the beginning, I continue to side with TVA employees and retirees and believe that the 2009 amendments are invalid. Unfortunately, a majority of the TVARS Board continues to disagree with me. This illustrates just how long over due is the 2018 TVARS Accountability Improvement Plan whic

November 28, 2017 DeWitt Burleson, TVARA Valley Wide President TVARA Board Directors TVARA Chapter Officers Dear Mr. Burleson, Directors, and Chapter Officers, Few have recognized just how underfunded TVARS has become and that your TVARS benefits have already eroded. This was brought about by inadequate TVARS funding requests and TVA under-funding over the last 10 years. TVA planning does not fully recognize the need for adequate annual TVARS retirement funding. Without adequate funding requests and a TVA catch-up plan, we both fear and anticipate additional cuts. Most at risk are long term TVA employees and retirees who depend on a pension. A TVARS Board Member’s job is to clearly represent funding needs and the benefits required for all members, not just a specific group. We are asking whether retirees support the priorities in this plan. Broadly stated these priorities fall into two groups, governance and funding. Current governance allowed the funding to fall t

On Monday November 6, a Special TVARS Board meeting was held to discuss and vote on a proposed rule amendment to improve TVARS governance and provide more accountability to TVA retirees. Sam DeLay, Jim Hovious and I proposed an amendment which provides for election of the TVA retiree director (the 7th director) by all TVA retiree members of the system. It ensures that the 7th director seat will always be occupied by a TVA retiree. The 7th director is key to ensuring that the TVARS Board follows good governance practices and meets the needs of all TVARS constituents. Our proposed amendment also stipulates that the 7th director must be free of any financial ties or business relationships with TVA, with the exception of receiving a TVARS pension. The actual proposed amendment can be read here . A roll-call of those in attendance was taken: PRESENT:  Sam DeLay; Jim Hovious: Leonard Muzyn ABSENT:  Brian Child; Allen Stokes; Wilson Taylor; Tammy Wilson We were unable to conduct bus

Mr. Pat Brackett, TVARS Executive Secretary 865-632-8578 pdbrackett@tva.gov I spoke with TVARS Executive Secretary Pat Brackett today and he said that TVA Retirees can contact Allen Stokes or other TVARS Board Directors through TVARS. If you send an email, you may want to call for confirmation that your email was received and that it was delivered to the appropriate TVARS Director. It is likely that emails from outside TVA become trapped in spam filters.

Sam DeLay, Jim Hovious and I called for a Special Meeting to be held on November 6 to discuss and vote on amending the TVARS Rules to improve TVARS governance and provide more accountability to TVA retirees. We propose that the TVA retiree TVARS Board Director (the 7th director), currently selected by the other 6 directors, instead be elected by the entire retiree population commencing with the term beginning November 1, 2018. This is the term immediately following the expiration of Allen Stokes’ current term. We also propose to amend the rules to stipulate that the 7th director be free of any financial ties or business relationships with TVA, with the exception of receiving a TVARS pension. These proposals would: ensure that the board always has a full complement of seven members, including a TVA retiree; and reduce the likelihood of a conflict of interest arising with the 7th Director. Four votes are required to approve our amendment. We hope that the current TVA retiree d

On Monday October 30, with less than 36 hours remaining in Tony Troyani's term, and with retiree member Allen Stokes ignoring my request that he attend, the TVARS Board voted 4-2 against allowing all retirees to vote for the retiree TVARS Board member (aka the 7th member). The meeting was specifically called by Wilson Taylor, Tammy Wilson and Brian Child to occur prior to the expiration of Tony Troyani's term to vote on their proposal to change the rules to keep Allen Stokes on the TVARS Board indefinitely. Jim Hovious and I proposed retiree voting as an amendment by substitution to the original proposal, allowing it to be voted on first. Voting FOR retiree voting:  Leonard Muzyn; Jim Hovious Voting AGAINST retiree voting:  Tony Troyani, Wilson Taylor, Tammy Wilson, Brian Child ABSENT:  Allen Stokes Sam DeLay, the employee elected member who defeated Tony Toyani, stated in his campaign statement that he supported allowing retirees to vote for the retiree board member. H

Click here to see the Appellants' Reply Brief filed on August 28, 2017. This appeal is a continuation of the lawsuit filed in 2010 on behalf of employees and retirees by the Branstetter, Stranch & Jennings law firm. This lawsuit was filed in reaction to the TVARS 2009 rule amendments. Court rulings on this lawsuit could also have implications for TVARS amendments passed after 2009. It is very ironic that a majority of the TVARS Board forced these amendments over my strong objections and vote against, and yet my name appears as the lead defendant. I encouraged and supported the filing of a lawsuit on behalf of employees and retirees soon after the 2009 amendments were passed. In 2010, the Branstetter, Stranch & Jennings law firm filed such a lawsuit. This lawsuit named the TVARS Board directors individually as defendants. I was listed first. The defendants were later changed to TVA and TVARS, but the case name with me as lead defendant stuck.  

On August 23, 2017, the TVA Board approved TVA’s $300 million contribution to the TVA Retirement System for fiscal year 2018.  The TVA Board also approved an additional one-time $500 million contribution to be made this fiscal year (fiscal year 2017). This additional $500 million, plus annual credited interest, can be used by TVA in lieu of contributions at any future time at TVA's discretion. (See Section 9B5 on page 64 of TVARS' rules .) It does not increase TVA's long-term funding commitment to TVARS.   The United States Government Accountability Office (GAO) has already pointed out in its March 2017 report that TVA's long-term funding commitment is not enough to ensure the plan’s full funding.  The GAO specifically stated that TVA should “propose, and work with the TVARS board to adopt, funding rules designed to ensure the plan’s full funding.”  (See the GAO’s recommendations for executive action on page 34 of their March 2017 report .)  Why will TVA not work

Employees who are TVARS members will elect a director from the four candidates listed below for a three-year term on the TVARS Board.  The term will run from November 1, 2017, through October 31, 2020. Sam DeLay  – Senior Program Manager, Energy Use Technology, Enterprise Research and Technology Innovation, Chattanooga Andrew McFalls  – Unit Operator, Power Operations, Bull Run Fossil Plant Jerry Snyder  – Specialist, Senior System Operator, Transmission Operations and Power Supply, Chattanooga Tony Troyani  – Senior Instrument Mechanic Foreman, Power Operations, Cumberland Fossil Plant Click on the names above to view detailed candidate information. Election-America, Inc., an independent election firm, will handle the voting process this year.  Election ballots will be mailed to employees’ home addresses, and employees will also receive voting information at work by e-mail directly from Election-America. Employees will be able to vote online or by phone during the elect

TVARS will accept nominations through Monday, July 10, for a three-year term as an elected member of the TVARS Board of Directors. The term will run from November 1, 2017, through October 31, 2020. Any employee who is a TVARS member is eligible to run for election. The TVARS Board consists of seven members:  three appointed by TVA, three elected by employees who are TVARS members, and one who is selected by the other six. The TVARS Board is responsible for the administration of the System and the 401(k) Plan. The board holds quarterly meetings and other special-called meetings, as necessary, throughout the year in order to conduct business, and each director serves on various board committees. For more information on the duties and responsibilities of directors of the TVARS Board, please see the TVARS Governance Policy . Nominations are made by petition. Signatures of 25 employees who are TVARS members are required. The required form of the nominating petition must be used. Nomin

I made the following motion at the June 15, 2017 TVA Retirement System (TVARS) Board meeting: Whereas the TVARS Board wishes to amend its rules and regulations to meet the funding recommendations in the March 2017 GAO Report to Congress , the TVARS Board hereby approves amending the system’s rules and regulations to specify that the annual “accrued liability contribution” be determined using a fixed amortization period of 20 years beginning in fiscal year 2018 instead of the currently specified 30-year rolling amortization period. I then stated the following in support of the motion: This amendment would eliminate TVARS’ funding shortfall in 20 years. Per the GAO's report, 15 to 20 years is the maximum period recommended by a Blue Ribbon Panel commissioned by the Society of Actuaries. The GAO report indicates that TVA officials have stated a goal to fully fund the pension within 20 years, but that TVA has not identified such a goal or milestones in its performance plan

TVA Retirement System (TVARS) Board members Jim Hovious and I continue working towards the reform needed to secure the stable financial futures of both TVA and TVARS.  We are again urging the TVARS Board to approve an amendment to the rules which will ensure the pension plan achieves full funding. We are now supported in our efforts by the recommendations of the March 2017 GAO Report to Congress  on TVA.  Our proposed amendment would eliminate the funding shortfall in 20 years.  Per the GAO's report, 15 to 20 years is the maximum period recommended by a Blue Ribbon Panel commissioned by the Society of Actuaries.  The GAO report indicates that TVA officials have stated a goal to fully fund the pension within 20 years, but that TVA has not identified such a goal or milestones in its performance plan or report.  In contrast to TVA's stated goal, TVA officials told the GAO that TVA does not plan to contribute more than the TVARS Rules require.  This will essentially pass today&

ACTION ALERT-PLEASE PARTICIPATE  From: Mike Moseley, President, TVARC Subject: TVARC Action Alert: GAO Says Fully Fund TVA Pension Plan The Tennessee Valley Authority Retirees Coalition (TVARC) requests support from TVARC members, members of TVA Retiree Chapters, our Unions, readers and senders of Facebook and Twitter messages and other contacts to send a message to our Tennessee Valley members of Congress. Please read this message and then go to http://www.nrln.org/congress.html#/54 to respond to this important Action Alert. Background  The U.S. Government Accountability Office (GAO) was asked by Congress to review the Tennessee Valley Authority’s (TVA) plan for debt reduction and to make recommendations: the first was that TVA must better communicate its plans for overall debt reduction and second, the GOA specifically recommends that TVA take steps to have its retirement system adopt funding rules designed to ensure the pension plan’s full funding. (See the GAO’s Report her

Recommendations for Executive Action  We recommend that the Board of Directors ensure that TVA take the following two actions: better document and communicate its goals to reduce its debt and unfunded pension liabilities in its performance plans and reports, including detailed strategies for achieving these goals. propose, and work with the TVARS board to adopt, funding rules designed to ensure the plan’s full funding. Click  here  to read the full GAO report publicly released on April 24, 2017. Additional Excerpts TVA agreed with the first recommendation and neither agreed nor disagreed with the second. GAO believes that action is needed as discussed in the report. TVA officials told us that the agency does not plan to contribute more than the TVARS Rules require and that it plans to continue to treat its unfunded pension liabilities as regulatory assets, deferring pension costs for recovery through rates in the future. However, the TVARS Rules do not provide for fu

The March 2017 final order and judgment in the TVA pension lawsuit has been appealed to the United States Court of Appeals for the Sixth Circuit. See the notice here .

Per TVA's 2016 10-K financial statement , the pension funded ratio improved slightly in 2016 primarily due to these three major components: gain of $960 million due to pension benefit reductions gain of $733 million due to investment returns loss of $1.2 billion due primarily to the reduction in the discount rate from 4.50% to 3.65% Per TVA's sensitivity analysis, a quarter point change in the discount rate can be expected to change the pension liability by $388 million. While a reduction in the discount rate works to worsen the pension funded ratio, an increase in the discount rate would work to improve it.

Judge Trauger has ruled for TVA in the pension lawsuit.  The Order can be read here . The Court’s Memorandum Opinion can be read here . T he Entry of Judgment can be read here .

In eight years, with a 4-3 majority of the TVARS Board voting to reduce benefits in 2009 and again in 2016, TVA's pension funded ratio declined from 77% to 55%. TVA has now embarked upon a twenty-year funding plan which was approved by a 4-3 majority of the TVARS Board in 2016 along with the most recent benefit reductions. Loyalton, CA reduced their retirees' pensions by 60%. They are 40% funded. See the Fox Business video  here . Note that Loyalton pulled out of CalPERS and has quit meeting its funding obligations to CalPERS. That is what led to the cuts.