Financials
We are the stewards of our clients’ money. We take that responsibility seriously. We are not in business to make a profit. The challenge is to do the best job we can as efficiently and cost effectively as we can. With a focus on utilizing technology, problem solving, project management, resource management, and standardization wherever possible, we’ve been able to not only meet our budgets these past few years, but come in well under.
Operating Budget
Our revenue is derived from service billing. Expenses are associated with Farm Credit Foundations operations. Sound budget management practices have resulted in positive net results for the last three out of four years. This has enabled Foundations to establish a reserve account.
2010
2009
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2008
2007
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Reserve AccountBeginning with 2008 year-end results, the Plan Sponsor Committee placed excess operating funds into a reserve account, using the funds to pay unexpected employer costs, such as 401(k) administrative fees in 2009. The reserve account is in a well-funded position at this time and will be used as “seed” capital for the proposed 4.25 Service Corporation, significantly reducing all employers’ capital investment at the time of formation.
Reserve Account Balance
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Settlor BudgetSound budget management extends to additional expenses beyond the operations budget. Settlor costs are direct pass through expenses related to the establishment, design or termination of a benefit plan. Examples include: Plan Sponsor Committee fees, actuary fees to determine FAS liabilities and expenses, legal fees, and fiduciary insurance fees. 2010 expenses were significantly under budget. Major contributing factors were higher than anticipated 401(k) plan forfeitures and the utilization of $146,000 of reserve funds.
2010 Settlor Expenses
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Workforce Management
The Workforce Management team offers services on a user-pay basis to Foundations employers, as well as entities throughout the System. Services include compensation analysis and design, affirmation action plans, a performance management online system and consulting support, employment relations and compliance services.
2010
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2009
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2008
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Benefit Plans
Product management disciplines are critical in controlling the escalating cost of benefits and vendor services. Balancing competitive positioning and cost management is a challenge in today’s environment. Ongoing efforts in this arena are having a positive impact.
401(k) Retirement Plans
Pooling 401(k) assets has yielded an annual savings of $1 million in investment management fees.
Life Insurance
Renewal negotiations for the 2010-2012 contract with Minnesota Life produced a 21% decrease in the basic life rate for an annual savings of $170,000.
Disability
Negotiations with Hartford produced a 10% reduction in rates for the 2010-2012 long-term disability contract for an annual savings of $160,000.
Dental
Negotiations resulted in a 4% reduction in Delta Dental’s administrative fee for a savings of $10,000 in 2010; fees were capped for 2011 and 2012.
Medical
With BlueCross BlueShield of Illinois, Foundations was able to secure no increase to medical administrative fees for 2010 and a 2% cap on fee increases through 2012.