The Noble Service: Fiduciary Duties of Trustees Christel Slaughter, Ph.D.

1. The Noble Service:Fiduciary Duties of TrusteesChristel Slaughter, Ph.D. SSA Consultants www.consultssa.com

2. Noble Service • If we had no board we would have faster decisions, issues handled directly and no more soggy sandwiches! • Instead, your noble service means that: • Governance is in your hands • Your time and talent advances the organization • Your decisions have value and impact for many years to come • You are part of something that is much larger than you – you are part of a public trust

3. What is your board service like? An enriching, frustrating, exhilarating experience It connects you with those who will add new dimensions to your life You give hope and a future to many who have dedicated their life to public service Oh and the PERKS! What about the soggy sandwiches!!

4. Yours is a unique role… You hold the legal and financial responsibility for the organization You do not run the day-to-day operations, you ensure that the Executive Director manages the human and financial resources of the organization effectively, appropriately, and honestly

5. From your perspective, what does the job entail? You are an… Ambassador Compliance officer Policy-maker Advocate

6. Board or bored? Be there – awake, attending Come prepared Treat all information discussed or exchanged in confidence Ensure appropriate financial, legal, and personnel review systems and procedures are in place and followed; read laws, bylaws and articles of incorporation Respect staff and their time and understand the boundaries between board and staff

7. Keep the mission alive Spend 10-15 minutes at each meeting listening to a retiree or employee’s situation, concerns, successes, etc. Consider the realities of the employees’ and retirees’ situations Ensure good turnover on the board to develop deep and diverse understandings of the mission

8. Abusing your power as a trustee

9. Duty of Loyalty Everyone must leave their other “hat” back at the office Uphold the mission – for those you serve It is perilous to sit on a board with someone who does not understand this and puts their personal/other interests above that of the Plan and the members

10. Subtle forms of abuse of power… Asking for inordinate detail or explanation from staff Using the meetings as a platform rather than working outside of the meeting End run of the Executive Director/micromanagement

11. How does your board make decisions? Strength in consensus May frustrate some who have a deeper level of understanding of the financial, organizational or investment analysis than others Avoid auto-ratification of one member or the ED; respect others’ time, but don’t succumb to group-think

12. Subvert mediocrity • Amazing frequency - • make decisions related to millions of dollars but… • squabble over a $2500 expenditure or • Executive Director’s salary that is probably a fraction of what it should be

13. The CEO, ED, Director…why they burnout… Too many bosses Unclear expectations Poor or no evaluation of performance Micromanagement rather than governance Lack of rewards including pay Insufficient appreciation for a job well done or challenges ahead

14. What is affecting our retirement systems today – national and state level? • “Retirement Envy” • Demographic changes • Dialing for dollars in a tight fiscal environment • Is this different from the past?

15. State government in the ‘70’s Edwin Edwards increased state spending by over 163% 10% annual merit increases at LSU for three years in a row Spending general fund dollars and creating new state jobs was the norm What happened to the retirement systems?

16. State government in the ‘80’s • 1988 Buddy Roemer was elected • $1.3 billion deficit • “Reformers are in power – a new day for Louisiana” What happened to the retirement systems?

17. State government in the ‘90’s Tight budgets Do more with less Do less How can we perform our mission and do less? What happened to retirement systems?

18. Today’s realities Laying off LSU/state employees Education reform and pressures edging out long term teachers Charter schools with different models Police/fire academies that do not fill up Health care benefits are remarkably expensive Total spend is oriented toward benefits rather than base pay and employees need to pay their rent

19. Disruptive Transformations • Significant periodic transitions that are highly disruptive to an industry or economic sector • Brought on by: • new technology, • customer needs/demand,and • cost pressures • Many examples in our lifetime, such as healthcare, financial institutions, the media…

20. Transformation vs. Lots of change How do you know which one you are experiencing?

21. Similarities Both feel uncomfortable You look for something to hold on to – search for answers You feel tired New questions arise with no answers It is hard to prioritize Stress is sometimes debilitating

22. Differences Transformational • A seismic shift in how we do business • A reinvention of who we are and what we do • Those who are inside are sometimes the last to know Lots of Change • New competitors • Automation of processes • Technological solutions create efficiencies or speed • Thought leaders figure out the change from within

23. What does the future hold? Possible restructuring of some of the retirement/benefit systems Challenging years ahead New opportunities and ways of serving

24. Solutions

25. Go back to your core… Why do we exist? Who are our customers? What do they expect from us? Do we have a sustainable business model? Get outside experts and actuaries to run various scenarios

26. How do we cope? Survive and thrive? Ramp up your communications Support one another and cope with stress Re-examine practices Determine needed adaptations and retool, realign, revise Be willing to absolutely stop or start activities

27. Survival It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change. Charles Darwin