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Meeting of the Board of Directors of the Pension Benefit Guaranty Corporation December 10, 2015


Department of Labor Thomas E. Perez, Secretary of Labor and Chair of the PBGC Board of Directors Phyllis C. Borzi, Assistant Secretary of Labor, Employee Benefits Security Administration Judy Mares, Deputy Assistant Secretary of Labor, Employee Benefits Security Administration Ali Khawar, Counselor to the Secretary, Department of Labor Hilary Duke, Division Chief, Office of Policy and Research, Employee Benefits Security Administration Nicole Swift, Employee Benefits Law Specialist, Employee Benefits Security Administration  

Department of the Treasury
Amias Gerety, Acting Assistant Secretary for Financial Institutions
Patricia Kao, Director, Office of Financial Institutions Policy
Philip Quinn, Senior Policy Analyst, Office of Financial Institutions Policy

Department of Commerce
Penny Pritzker, Secretary of Commerce
Rick Lattimer, Policy Analyst, Economics and Statistics Administration

W. Thomas Reeder, Director
Alice Maroni, Chief Management Officer
Ann Orr, Chief of Staff
Judith Starr, General Counsel and Secretary to the Board
Patricia Kelly, Chief Financial Officer
Michael Rae, Deputy Chief Policy Officer
Chris Bone, Director, Policy Research and Analysis Department
Bernice Lemaire, Acting Chief Risk Officer

PBGC Office of Inspector General
Bob Westbrooks, Inspector General
Bill Owens, Chief of Staff
Patrick Byer, Principal, CliftonLarsonAllen LLP
George Fallon, Principal, CliftonLarsonAllen LLP
Marlon Perry, Principal, CliftonLarsonAllen LLP

PBGC Participant and Plan Sponsor Advocate
Constance Donovan, Participant and Plan Sponsor Advocate

Following an executive session with the PBGC Director, the Chair opened the meeting at 3:09.  He welcomed the attendees, including PBGC's new Director, W. Thomas Reeder, who was attending his first Board meeting.  Before proceeding to business, the Chair presented a framed resolution signed by all three Board Members to Chief Management Officer Alice Maroni, expressing the Board's deep appreciation for her service as Acting Director.  The meeting then proceeded in accordance with the established agenda (Attachment 1).

Director Reeder reported on the improvements in internal controls demonstrated by the FY 2015 audit results, including the downgrading of two material weaknesses and closure of approximately half the open audit recommendations.  He affirmed his strong interest in addressing the remaining open recommendations, and discussed the Corporation's ongoing efforts at establishing an enterprise risk management program.  He also reported on the timetable for the Smaller Managers Pilot Program.

The Chair discussed with Director Reeder the effects of the latest congressional increases in single employer premiums and the Director shared his observations and concerns.

Inspector General Westbrooks discussed the financial audit, the OIG's recent semiannual report to Congress, and a congressional request his office recently received.  He commended PBGC for its progress in addressing audit recommendations and advised that areas where future progress can be made include IT security, IT modernization in the benefits calculation area, and oversight of professional contract staff.  Inspector Westbrooks also expressed his interest in working with PBGC to become a federal leader in enterprise risk management.

Marlon Perry, principal of CliftonLarsonAllen, the independent auditor, informed the Board that PBGC has done a good job at enhancing some its controls and processes.  In addition to downgrading two of the material weaknesses to significant deficiencies, the auditors were able to eliminate one significant deficiency.   He advised the Board that the opinion on the financial statements is unmodified but the internal controls opinion is adverse, although clear progress is being made on the latter. The auditors also will keep their eyes on calculation of premium income because of late-breaking errors that have been found in the last two years.

Secretary Pritzker observed that PBGC's $76 billion deficit must be a priority.  Other priorities should include creating an internal controls culture to address the adverse internal controls opinion, and establishing a model enterprise risk management program.

There being no further business, the Chair wished everyone a happy holiday and the meeting concluded at 3:30 p.m.

Attachment 1
Thursday, December 10, 2015
2:30 p.m. - 3:30 p.m.

I. Board Member Executive Session with Director Reeder
II. Introduction by Secretary Perez
III. Director's Report
IV. OIG Update and Required Auditor Communication

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