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HomeMy WebLinkAbout01-11-2007 Joint Special Session Minutes Minutes of the Joint Special Session of the CITY OF OCOEE GENERAL EMPLOYEES’ PENSION BOARD AND POLICE OFFICERS’/FIREFIGHTERS’ PENSION BOARD Held on January 11, 2007 At 150 N. Lakeshore Drive Ocoee, FL 34761 AGENDA ITEM I. CALL TO ORDER – Chairman Wagner & Chairman Brown A. Chairman Russ Wagner & Chairman Brown called the joint meeting to order at 9:07 a.m. in the Commission Chambers in City Hall. The roll for the General Employees’ Pension Board was called and a quorum declared present. Present were Trustees Russ Wagner, Tom Hendrix, Jean Grafton, Terry Reed, and Wendy West. The roll for the Police Officers’/Firefighters’ Pension Board was called and a quorum was declared present once Trustee Julian arrived (Trustee Colby Julian arrived at 9:45 a.m.). Present were Trustees Charlie Brown, James Coschignano and Colby Julian. Absent were Trustees Ken Strickland and Nora Gledich. Also present were H. Lee Dehner, Attorney; Jim Carnicella, Human Resources Director/Plan Administrator; Brad Heinrichs, Consulting Actuary, Foster & Foster; and Larry Cole, Monitor, Merrill Lynch. AGENDA ITEM II. NEW BUSINESS A.Actuary Report – Brad Heinrichs, Foster & Foster Brad Heinrichs reported that he had the 10/1/06 Actuarial Evaluation Reports for both the General Employees’ Pension Plan and the Police Officers’/Firefighters’ Pension Plan. Mr. Heinrichs stated that for both plans the contribution requirements went down as a percentage of payroll. He stated that the 4 year average investment return exceeded the 8% assumption for both plans (General Employees’ Plan was 8.3% and the Police Officers’/Firefighters’ Plan was 8.6%). He also reported that the 2006 return did not meet the 8% benchmark and that next year both plans will be dropping off a double digit return and will be replaced with this fiscal year. Brad Heinrichs stated that the plan had a higher turnover rate than expected for employees not vested and went on to explain why this was a positive thing for the plan. He also reported that one negative thing that has happened is the participants received higher than anticipated pay increases, which was projected at 6% (General Employees’ was at 8.6% and the Police Officers’/Firefighters’ was at 12.4%). Brad Heinrich reported the contribution requirements for the Police Officers’/Firefighters’ Pension went down from 19.6% to 18% of payroll and the General Employees’ Pension contribution requirements went down from 10.1% to 9.4% of payroll. Mr. Heinrichs reported that the plans are well funded and in good standing and went in to further detail. Brad Heinrichs advised the Boards that Foster & Foster is putting together an online benefit calculation module. He said this will allow participants to go online and enter in information to get calculations, which will produce the projected retirement benefit and options for the participant based on the information that was entered. He reported Foster & Foster charges $16.00 per active participant per year for unlimited use of the service (based on the number of participants this would be approximately $2800 per year for the General Employees’ Pension) and it is currently up and running. General Employees’ Pension Board And Police Officers’/Firefighters’ Pension Board Joint Special Session, January 11, 2007 Page 2 of 5 Trustee Wagner said that if the Board wanted to do this, it would need to be very user friendly so that the average participant would be able to use it. Jim Carnicella stated that if the Boards wanted him do so, he would look at the online module to see if it was something we wanted to use and to analyze the costs and make a recommendation to the Boards. Trustee Grafton asked who would have access to this, to which Mr. Heinrichs replied that usually it would be the Board, Plan Administrator and Participants but said it could be set up however they wanted it. Brad Heinrichs went on to explain that it doesn’t store the information that is entered and it has disclaimers on it due to the possibility of erroneous information being entered. Trustee Wagner asked if there were any other questions of Mr. Heinrichs to which Mr. Carnicella asked for Brad to explain why the personal evaluations were so late this year. Brad Heinrichs stated that when they do the member’s statements the actuarial evaluations are done at the same time and they weren’t signed until recently but he wasn’t sure when Foster & Foster received the financial information from the City. Attorney Dehner stated that if the Evaluation Reports are acceptable to the Boards they should be approved by a motion. And so on motion made by Trustee Hendrix, seconded by Trustee Grafton, it was unanimously RESOLVED that the Actuarial Evaluation Reports for the General Employees’ Pension Plan as presented by Brad Heinrichs be and are hereby approved. On motion made by Trustee Coschignano, seconded by Trustee Julian, it was unanimously RESOLVED that the Actuarial Evaluation Reports for the Police Officers’/Firefighters’ Pension Plan as presented by Brad Heinrichs be and are hereby approved. Attorney Dehner said that with the receipt of this report the Boards would need to make the determination based on recommendations of Larry as the investment consultant and input from Brad on what the total expected annual rate of return for the funds would be for the current year, each of the next several years and the long term thereafter. Attorney Dehner stated this would need to be made by motion and then provided to the Division of Retirement. Attorney Dehner asked that the Boards receive a recommendation from Larry Cole on that. Mr. Cole stated that he would say 8% net and Dehner asked if Brad was ok with that, which he stated he was fine with it. On motion made by Trustee Grafton, seconded by Trustee Hendrix, it was unanimously RESOLVED that the General Employees’ Pension Board has determined, based on the recommendations made, 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. On motion made by Trustee Julian, seconded by Trustee Coschignano, it was unanimously RESOLVED that the Police Officers’/Firefighters’ Pension Board determined, based on the recommendations made, 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 And Police Officers’/Firefighters’ Pension Board Joint Special Session, January 11, 2007 Page 3 of 5 B.Money Manager/Custodian Recommendations – Larry Cole, Merrill Lynch Larry Cole handed out information to the Boards and suggested the Boards focus on one asset class at a time, if everyone was in agreement, and went over the money manager analysis in detail. Attorney Dehner cautioned the Boards about going with someone that was not recommended by the Money Manager. Mr. Cole suggested the Boards pick two firms from each category and interview them or go into an index product. Larry Cole said that the Boards could elect to have Alger and one other manager here to interview if that is what they wished to do. Trustee Brown asked if Sawgrass was the only one not recommended by them to which Mr. Cole answered Sawgrass and Trusco. Trustee Coschignano asked if Mr. Cole had a favorite to which he replied Evergreen. Further discussion ensued. Mr. Cole said the he would approach Evergreen with their questions and report back to the Board at the next meeting if the Board would like for him to pursue that. Larry Cole continued going over the handouts. Trustee Wagner stated that before they voted on splitting up funds they needed to know if they were looking to split them up or were they looking for another Trusco. Mr. Cole said that there are not many out there like Trusco and that you don’t see plans with only one money manager, typically they have several. Discussion ensued. Trustee Coschignano asked if the Boards picked one of the two to manage Small Cap is there someone in charge of the money, to which Mr. Cole stated absolutely. Larry Cole stated that if a separate manager were picked there would be a contract with that firm and a change to the investment policy to direct them. Trustee Coschignano asked if there is a cost to contract with this manager separately, which Larry said yes but that they are trying to find the best managers for the investment class and that every quarter there would be a review of the firms. Trustee Wagner asked to go back to whether the direction the Board was taking is to split the funds and stated that he was comfortable leaving Fixed with Trusco. Attorney Dehner said he recommends the Boards interview the firms they are considering. Mr. Cole continued with the presentation and further discussion ensued. Trustee Wagner stated that the Board needed to vote on the two firms they were going to interview for each asset class And so on motion made by Trustee Grafton, and to have them come to the meeting in February. seconded by Trustee Hendrix, it was unanimously RESOLVED that the General Employees’ Pension Board would interview Evergreen & Alger and Alliance & TransAmerica. On motion made by Trustee Coschignano, seconded by Trustee Julian, it was unanimously RESOLVED that the Police Officers’/Firefighters’ Pension Board would interview Evergreen & Alger and Alliance & TransAmerica. After a brief discussion, Plan Administrator Carnicella confirmed the Boards would have a joint meeting on February 7, 2007 and it was agreed that the meeting would start at 9:00 a.m. Mr. Carnicella also advised the Police Officers’/Firefighters’ Pension Board that there needed to be a And so on motion made by Trustee motion for the experience study to be done by the actuary. Julian, seconded by Trustee Coschignano, it was unanimously RESOLVED that the Police Officers’/Firefighters’ Pension Board direct Foster & Foster to make an experience study. General Employees’ Pension Board And Police Officers’/Firefighters’ Pension Board Joint Special Session, January 11, 2007 Page 4 of 5 C. Discussion/Action/Alternatives and possible RFQ – H. Lee Dehner, Esq. a.Money Manager b. Investment Consultant c.Actuary d.Audit of the Pension Plan Due to time constraints, Plan Administrator Carnicella suggested the Board put off #c until another time. Trustee Wagner stated that he agreed with Mr. Carnicella’s recommendation to put this off but would like to know how common it is for Boards to go out for RFQs and the proper course of action that they should be taking from a fiduciary role and asked for comments from the Board. Trustee Grafton asked about auditing the plan and asked Attorney Dehner what they would be looking at. Attorney Dehner said as far as investments they would determine whether it was in compliance with policy and ordinance and evaluate investment performance and went into some detail. Trustee Grafton stated that if it was appropriate for the Board to have an audit, she would like to move forward with that. Attorney Dehner said the Board would need to direct him to send RFP’s out concerning audits so the Board could hear directly from them. Trustee Wagner suggested Attorney Dehner come back with information about how often this is done and the costs involved so they could talk about it at the next meeting and it was agreed. D.Discussion/Revisions regarding Investment Policy, Jim Carnicella, HR Director/Plan Administrator This item was moved up ahead of Item B on the Agenda. Plan Administrator Carnicella stated that as a result of the last quarterly meeting at least for the General Employees’ Pension Board they questioned the Investment Policy as it relates to a couple of items. Mr. Carnicella said that it may be best to go over the Investment Policy before the Boards make any changes and asked Larry Cole and Attorney Dehner to summarize the investment strategy with the Boards. Larry Cole spoke about information provided to the Boards and about the Investment Policy and Statutes. Mr. Cole stated that he and Attorney Dehner review this and they are here to help the plans meet their goals. Mr. Cole said that he went over the Investment Policies and was not recommending real estate at this time due to the plan size and costs associated. Larry Cole suggested some recommendations to the Boards regarding investments but said that he doesn’t really have any major recommendations for change in the Investment Policy. Discussions ensued. AGENDA ITEM III. ATTORNEY COMMENTS – H. Lee Dehner, Esq. Attorney Dehner asked Larry Cole to give the Board an update on the SCC, if there were any changes in his firm and the accounts they gained or lost and the issues involved in those situations. Larry Cole stated that there was nothing to update concerning the SCC and further explained. Mr. Cole said that they are continuing to make changes in their firm and one change was that Jeff Swanson left/resigned from the firm and Al was hired a little over a year ago and was able to take over most of those accounts. Larry Cole said that as for accounts they gained or lost, they lost six relationships and pick up three relationships. Mr. Cole reported that they lost a couple due to poor performance and went in to some detail. Mr. Cole stated that he is confident they are still one of the best players out there. General Employees’ Pension Board And Police Officers’/Firefighters’ Pension Board Joint Special Session, January 11, 2007 Page 5 of 5 AGENDA ITEM IV. PLAN ADMINISTRATOR COMMENTS – Jim Carnicella None AGENDA ITEM V. COMMENTS FROM TRUSTEES None AGENDA ITEM VI. SET AGENDA FOR NEXT MEETING Not addressed. AGENDA ITEM VII. ADJOURN There being no other business, the meeting was adjourned at 11:54 a.m. Respectfully submitted by Approved by: Debbie Bertling ______________________________ HR Analyst Russell Wagner, Chairman General Employees’ Pension Board Approved by: _______________________________ Charlie Brown, Chairman Police Officers’/Firefighters’ Pension Board