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HomeMy WebLinkAbout05-14-2008 Minutes Minutes of the Regular Meeting of the CITY OF OCOEE GENERAL EMPLOYEES' PENSION BOARD Held on May 14, 2008 At 150 N. Lakeshore Drive Ocoee, FL 34761 AGENDA ITEM I. CALL TO ORDER- Chairman Wagner A. Chairman Russ Wagner called the meeting to order at 10:07 a.m. in the Commission Chambers in City Hall. The roll was called and a quorum declared present. Present were Trustees Terry Reed, Jean Grafton, Russ Wagner, Tom Hendrix and Wendy West. Also present were H. Lee Denner, Attorney; Jim Carnicella, Human Resources Director/Plan Administrator; Mike Welker, Bogdahn Consulting; and Doug Lozen, Foster& Foster. B. Approval of Minutes from Regular Session dated November 7, 2007 and Minutes from Special Session dated December 13, 2007 Chairman Russ Wagner called for review of the Minutes as stated. There being no additions or corrections, it was, on motion made by Trustee Grafton, seconded by Trustee Hendrix, unanimously too RESOLVED that the Minutes of the Regular Session of the Board of Trustees of the General Employees' Pension Board of November 7, 2007 and Minutes of the Special Session of the Board of Trustees of the General Employees' Pension Board of December 13, 2007,be and are hereby approved. AGENDA ITEM II. NEW BUSINESS A. Investment Consultant Report—Michael Welker, Bogdahn Consulting, LLC Mike Welker started by speaking briefly about some house keeping issues concerning the transition. He reported that the Growth Fund of America and the Alger fund have been really difficult to transition and were still with Merrill Lynch but believes it is close to being solved. He said the agreements were sent to all the Money Managers, fully executed, along with a copy of the current Investment Policy Statement. Mr. Welker then began going over the Investment Performance Review for the First Quarter of 2008. Mike Welker reported that the stock market, domestically and internationally, was not a good place to be in the first quarter and went on to explain. He said every sector of the S&P 500 was down for the quarter so there was nowhere to hide and everything that worked last year didn't work in the first quarter. Mr. Welker then went over the asset allocation of the portfolio as of December 31, 2007 and March 31, 2008. He reported the total fund was at $14,950,000.00 net of fees, which was down 6% for the quarter and the benchmark was down 5.13% so the fund underperformed the benchmark, which put us in the 70`h percentile. He said the fiscal year to date was down 6.648% compared to 5.91% and briefly explained. He asked if there were any questions. There being none, he finished by saying the performance was a little light because the General Employees Pension Board Quarterly Meeting,May 14,2008 Page 2 of 7 Growth Fund did alright but Alger did not and the value product from Trusco underperformed so that is what drove the performance for this quarter. Chairman Wagner asked how the fund would have done had the transition been completed. Mike Welker said ICC Multi Cap was down 5%, Index was down 10% for the quarter and Rockwood was about even so it probably would have outperformed slightly by about 1.5% to 2% and went on to explain. He said the next report should have a full quarter with the investment changes the Board made and should give us a better picture going forward. Mike Welker then spoke about the Investment Policy Statement. He said since the last Board Meeting the City Commission approved the Ordinance allowing the Board to basically invest in whatever they deemed appropriate, taking in consideration all the different asset classes of the portfolio, which now would allow us to invest in the Voyageur fund and maybe the Baring fund but are still working on some documents. He went on to say the only thing that changed in the Policy Statement were two paragraphs, which reflect the change in the authorized investments and went on to explain. Mr. Welker said the new Investment Policy Statement would need to be adopted and signed and then he would distribute a copy to the Managers so they have the most up to date Policy Statement. He asked the Board if there were any further questions regarding the Policy Statement, to which there were none. Mr. Welker then explained about the private placement memorandum, which he said basically gives you no protection. He stated Voyageur wrote a side agreement that would supersede the memorandum and basically lift everything the Attorney wants to put in the separate account agreement, which will protect the Board and the fund. He said Barings has not sent in the side agreement yet and if they don't do so in the next couple of weeks or can't get a resolution soon, he will bring an alternate to the next meeting so we are not held up any longer. Mike Welker apologized for how long the transition was taking and reported that Merrill Lynch shut their doors so they are now out of the consulting business, which has made it very hard to get data from them. Mike Welker mentioned the letter Trustee Grafton received regarding 12b-1 fees and said those fees are not being collected at Merrill as the assets have been moved over. Attorney Dehner asked Mr. Welker if he was recommending the Board adopt the new Investment Policy Statement provided today and if it was to supersede the previous one in its entirety, to which Mr. Welker responded yes. On motion made by Trustee Grafton, seconded by Trustee Hendrix unanimously RESOLVED that the Board of Trustees of the General Employees' Pension Board, pursuant to the recommendation of the Investment Consultant, adopt the Investment Policy Statement amended May 14, 2008 as presented by Bogdahn Consulting and supersedes the previous Investment Policy Statement in its entirety. Attorney Denner said as Mike Welker indicated he would take care of getting the signatures needed and following through with the required filings regarding the new Investment Policy Statement. Mr. Welker acknowledged he would. Mike Welker mentioned there was one other product he wanted to bring to the Board at the next meeting, which is to potentially invest in an income alternative investment. He said right now General Employees Pension Board Quarterly Meeting,May 14,2008 Page 3 of 7 the income it is paying off the individual securities is about a 13.5% net of fee return and went on to explain. B. Discuss Fifth Third Bank's Conversion Guide—Jim Carnicella, Plan Administrator Plan Administrator Carnicella spoke about the Fifth Third Bank Conversion Guide and asked Mike Welker to review the document and make recommendations as to how to fill it out. While Mr. Welker looked over the Guide Jim Carnicella asked if the Board wanted to continue with the meeting by moving on to the next item, to which the Board agreed. C. Actuary Report—Doug Lozen,Foster & Foster Doug Lozen began going over the 2007 Valuation Report, which he said reviews the experience for the last fiscal year and sets the funding requirements for the City for the fiscal year beginning October 1, 2008. He explained why the City's percent of payroll changes and spoke about unfunded liability. He stated the unfunded liability came down more than expected and went on to explain. Discussion ensued. Chairman Wagner asked Mr. Lozen if the Board authorizes this report and the City goes ahead and budgets this amount, what happens if it is over or under estimated. Mr. Lozen said if the assumptions in the plan in the long run are different from reality they will do another experience study to see if something needs to be trued up but our plan has typically had a history of gains, which is why the funded ratio is pretty high. Doug Lozen moved on to the market value of assets, which he stated increased about 2.5 million making it just shy of 16 million and went on to explain. He said the plan was more than 100% funded. Discussion (hor ensued. Mr. Lozen then went over the actuarial return and explained why they smooth assets over four years. He said three out of four years have beaten the 8% assumption but it is unknown at this point what 2008 will bring. He said actuarially, unless you have a double digit negative or positive return there is not going to be a big fluctuation in funding requirements. Doug Lozen asked if the Board had any questions. Chairman Wagner thanked Mr. Lozen and said it was a good presentation. Discussion ensued. Attorney Dehner stated if the report was acceptable to the Board it would need to be approved by a motion. On motion made by Trustee Grafton, seconded by Trustee Hendrix unanimously RESOLVED that the 2007 Actuarial Valuation Report for the General Employees' Pension Plan as presented by Foster& Foster, be and are hereby approved. Attorney Denner stated the Board needed to determine the total expected annual rate of return for the fund for the current year, each of the next several years and the long term thereafter based on Mr. Welker's recommendation. Mike Welker said he was comfortable with the 8% assumption. On motion made by Trustee Hendrix, seconded by Trustee Grafton unanimously RESOLVED that the General Employees' Pension Board has determined, based on the recommendations of the consultant, the total expected annual rate of return for the current year, each of the next several years and the long term thereafter will be 8% net of investment related expenses. General Employees Pension Board Quarterly Meeting,May 14,2008 Page 4 of 7 After a brief discussion concerning the assumption, Mike Welker explained why 8% was a good assumption. Attorney Dehner spoke about the assumption and the letter that needed to be filed with Mr. Slavin at the Bureau of Local Retirement Systems. Plan Administrator Jim Carnicella spoke about prior service credit being provided to employees that were employed prior to the current plan being instituted and then subsequently came back to work for the City and now covered under the current plan by counting those years of service as credit in the present plan. He then turned it over to Doug Lozen to go over the study Foster & Foster did regarding this issue. Doug Lozen spoke about the analysis dated March 7, 2008. Discussion ensued. Jim Carnicella asked why there would be any cost to implement prior service credit. Mr. Lozen briefly explained. Plan Administrator Carnicella said he would recommend the Board go forward with prior service credit and said he didn't think this would happen very often. Trustee Grafton advised she thought there was some discussion a few years ago and it was decided the employee could count those years if it was funded by the employee. Further discussion ensued. Trustee Grafton asked Attorney Dehner if there was any problem moving forward with the Board approving prior service credit, to which Attorney Dehner stated no. Attorney Denner clarified this would pertain to anyone employed by the City and a member of the prior plan who terminated employment and then became reemployed after the effective date of the current defined benefit plan would be credited with their prior service. On a motion made by Trustee Grafton, seconded by Trustee Reed unanimously RESOLVED to move forward with prior service credit for anyone employed by the City and a member of the prior plan who subsequently terminated employment and then became reemployed after the effective date of the current defined benefit plan would be credited with their years of service served prior to the implementation of the current plan and to have Plan Administrator Carnicella get with Attorney Dehner to draw up the Ordinance. Plan Administrator Carnicella advised the Board that Mike Welker had completed reviewing Fifth Third Bank's Conversion Guide and would like to address it at this time. Mr. Welker said these are the standard forms Fifth Third sends to everyone wanting to know who to take direction from, basically who the authorized signers are associated with the plan. He suggested Plan Administrator Carnicella be listed as one, along with one Trustee and said the contact information would be the same. Chairman Wagner asked Attorney Dehner if there was any Board Member that would be more appropriate to list in addition to the Plan Administrator, to which Attorney Dehner said it could be any Trustee designated by the Board. After a brief discussion it was decided Chairman/Trustee Russ Wagner and Secretary/Trustee Jean Grafton would be listed as the authorized signers. AGENDA ITEM III. OLD BUSINESS A. Actuarial Contract—Jim Carnicella, Plan Administrator Plan Administrator Carnicella stated he would recommend the Board go forward regarding the Actuarial Services Agreement with Foster & Foster. Chairman Wagner asked if the Attorney had reviewed the Agreement, to which the Attorney Dehner stated yes. Chairman Wagner asked General Employees Pension Board Quarterly Meeting,May 14,2008 Page 5 of 7 if there were any questions before moving forward with the motion. There being none, on motion made by Trustee Grafton, seconded by Trustee West unanimously RESOLVED that the Actuarial Services Agreement with Foster & Foster for the General Employees' Pension be and are hereby approved as presented. AGENDA ITEM IV. OTHER BUSINESS A. Payment of Invoices Invoices were included in the packet for the Board to approve. After a brief discussion, on motion made by Trustee Hendrix, seconded by Trustee West, unanimously RESOLVED to approve that the bills and other charges and fees be and are hereby approved for payment as presented. AGENDA ITEM V. ATTORNEY COMMENTS—H. Lee Dehner, Esq. Attorney Dehner said he wanted to mention the federal legislation amendment that is pending which would provide essentially all public employees the same benefit provided to public safety officers under the Pension Protection Act with respect to the $3,000 in premiums paid for health insurance and long term care insurance and said he would keep the Board posted on this matter. Discussion ensued. Attorney Denner reminded the Board to file their financial disclosure by July 1, 2008. He spoke about the fine for not doing so and suggested the Board keep proof of their filing. After a brief discussion, Chairman Wagner suggested that any member who still needed to file their disclosure should stop by the City Clerk's office after this meeting. AGENDA ITEM VI. PLAN ADMNISTRATOR COMMENTS—Jim Carnicella A. Liability Insurance Jim Carnicella spoke about fiduciary liability coverage. Mr. Carnicella said the Board would either need to get the City Commission to approve being self insured or what he recommends to the Board is to consider paying for the coverage and to have Attorney Denner review and approve it. He went on to explain. Discussion ensued. Chairman Wagner asked how common it was for Boards to have this type of insurance coverage. Attorney Denner said it is typical and went on to explain there is a potential personal liability for Trustees on the Board. Attorney Denner said the Trustee protection is afforded by obtaining an endorsement for waiver of recourse and further explained why they needed to have the endorsement added. Discussion ensued. Attorney Denner said there is a mutual interest for the City and the Board to have the coverage but said there weren't very many companies out there that provided this type of coverage. After further discussion, Trustee Grafton asked who would pay for the coverage. Plan Administrator Carnicella said he would recommend the City pay for it. Chairman Wagner asked if the Board wanted to move forward to give Jim the latitude to pick the most competitive General Employees Pension Board Quarterly Meeting,May 14,2008 Page 6 of 7 company providing the endorsement for waiver of recourse and to have Attorney Denner review it. On a motion made by Trustee Hendrix, seconded by Trustee Grafton unanimously RESOLVED to approve to have Plan Administrator Carnicella bind the Fiduciary Liability Insurance coverage with the waiver of recourse endorsement based on his determination along with the Attorney of what is in the best interest of the Board of Trustees of the General Employees' Pension. B. Summary Plan Description Not addressed at this point(see Comments From Trustees below). C. CAPPP Certification, Prior Service Issue and Resolution to Authorize Disbursement Jim Carnicella stated he appreciated the Board allowing him to attend the CAPPP Certification Program. He reported he had passed and was half way through completing the certification process. Chairman Wagner asked if there was a training or conference coming up. Discussion ensued and it was determined that a conference was coming up in June 2008. Further discussion ensued regarding what travel expenses would be covered. Jim Carnicella said he would check on the City's travel policy to see if an overnight stay would be covered because of where the conference was located and would get back to the Board. Discussion ensued about which Board Members would be attending. Plan Administrator Carnicella, Trustee West, Trustee Reed and Chairman Wagner said they would not be attending. Trustee Grafton and Trustee Hendrix said they may be attending but Trustee Grafton said she would like to review the agenda first. Mr. Carnicella said he would keep in touch with Trustee Grafton & Trustee Hendrix and let them know what he found out. Prior Service Issue and Resolution to Authorize Disbursement were address earlier in this meeting. AGENDA ITEM VII. COMMENTS FROM TRUSTEES Trustee Grafton inquired if the Summary Plan Description was approved at the last meeting. Plan Administrator Carnicella said no, that the Attorney had to edit the document with the changes recently approved by the City Commission. Trustee Grafton recalled talking about removing the reference to disability but said there was still some mention of it in the document. Attorney Denner replied he thought it had been taken out but must have missed some. Trustee Grafton asked if the Summary Plan Description was waiting on something else. Attorney Dehner said he was waiting for the last Ordinance to pass and will double check that those changes were all included in the document. Attorney Dehner said the Board could move forward to approve the Summary Plan Description striking the reference to disability payments and attach exhibit B, which Doug Lozen will provide concerning the actuarial and financial data, and then the Chairman could sign and date it so the document could be distributed to the employees. Trustee Grafton asked about the Operating Rules and Procedures. Plan Administrator Carnicella said he would go over the Operating Rules and Procedures and chat with Attorney Dehner and General Employees Pension Board Quarterly Meeting,May 14,2008 Page 7 of 7 then bring it back to the Board to discuss at the next meeting. Chairman Wagner asked Mr. Carnicella to get a copy of the most recent document to the Board Members so they could review it before the next meeting. On motion made by Trustee Grafton, seconded by Trustee West RESOLVED to approve the Summary Plan Description striking all reference to disability payments. Trustee Grafton stated she had received a letter from the Attorney suggesting the Board obtain from each firm providing money management consulting, auditing, legal or actuarial services a current certificate of insurance or a copy of the declaration page from their E&O insurance policy showing the coverage and that the coverage was still in force, which should be repeated each year. Discussion ensued. Trustee Grafton asked if Plan Administrator Carnicella would be taking care of obtaining these documents, to which Jim Carnicella said yes. AGENDA ITEM VIII. SET AGENDA FOR NEXT MEETING Chairman Wagner stated the next meeting was scheduled for August 6, 2008 at 10:00 a.m. and asked if the Board had any other items to address on the agenda other than what was previously addressed in this meeting. AGENDA ITEM IX. ADJOURN There being no other business, the meeting was adjourned at 11:57 a.m. Respectfully submitted by Ap o ed by• Debbie Bertling HR Analyst Russell B. Wagner, airman L