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HomeMy WebLinkAbout02-09-1994 Minutes GENERAL EMPLOYEES' RETIREMENT TRUST FUND (PENSION MEETING) February 9, 1994 The meeting was called to order at 9:00 a.m. in the Community Center by Acting Chairman Miller. PRESENT: Acting Chairman Miller, Members Grafton, Oliver, and Waldrop. Also present were Attorney Lee Delmer, Actuary Ward Foster, and Clerk/Stenographer Lewis. ABSENT: Chairman Lewis. APPROVAL OF MINUTES Member Oliver, seconded by Member Waldrop, moved to approve the minutes of January 17, 1994 meeting as presented. Motion carried 4-0. QUESTIONS AND COMMENTS FROM THE AUDIENCE There were no questions or comments from the audience at this time. Consideration/Adoption Of Amendments To OPERATING RULES AND PROCEDURES And Selected Provisions Secretary Grafton suggested the following changes to the Operating Rules and Procedures and Selected Provisions with recommended changes in italics: Page 5 1) 2.2 AGENDAS AND OTHER MEETING MATERIALS A published agenda shall be prepared for each regular and special meeting of the Board. The agenda shall set forth those items upon which the Board anticipates taking action or discussing. Each agenda item shall have attached to it backup material necessary for discussion or action by the Board. Each agenda shall also inform members of the public that should they wish to appeal any decision made by the Board that they will need a record of the proceedings and that they may need to insure a verbatim record is taken at the person's expense, which includes testimony and evidence upon which the appeal is based. In addition, the agenda should also include a notice to members of the public offering to provide assistance to those who are disabled, should they need assistance in order to attend the meeting. A copy of the agenda shall be posted in a location in the Ocoee City Hall where notices of public meetings are customarily posted. All agendas and meeting materials are public records as defined in Chapter 119, Florida Statutes. (The order of this item was the only change.) Page 7 2) 2.7 COMMITTEE MEETINGS The Board, in the conduct of its business, may choose to appoint committees consisting of a lesser number of Trustees. Committees shall be appointed by the Chairperson. 1 General Employees' Retirement Trust Fund (Pension Meeting) February 9, 1994 Committee meetings consisting of two or more Trustees shall be conducted in accordance with the Government in the Sunshine Law. Committees consisting of one Trustee shall maintain records in accordance with the Public Records Act but need not conduct its business pursuant to a publicly noticed meeting. All reports of committees shall be reduced to writing and made a part of the official records of the Board. 3.2 ADOPTION PROCEDURES All rules to be adopted by the Fund shall be in writing and shall be adopted by a majority vote of the Board. The Board shall review its rules and regulations procedures on a periodic basis but not less than once a year. The rules and regulations procedures of the Fund shall be reproduced and made available to each member of the Fund. A copy of said rules shall also be maintained at the offices of the Pension Fund. Pages 8-9 5.1 MAIL A designee of the Board shall be responsible for opening, dating and transmitting mail. All mail received by the Board shall be dated, stamped and reviewed for any time limitations or response dates. The mail shall be placed in folders bearing the names of the recipient of the mail. Mail addressed to the Board in general and to no specific person shall be directed to a person designated by the Board. All official decisions of the Board shall be sent transmitted by mail or hand delivery. A "reading file" of all correspondence coming into and emanating from the Board shall be maintained on a monthly basis together with copies in any specific files as may be established. In all respects, the provisions of Chapter 119, Florida Statues, the Public Records Act, shall be observed. Pages 12-13 10.3 PERFORMANCE GOALS AND OBJECTIVES The Board shall establish performance goals and objectives for each investment manager in each class of investment and shall establish expected rates of return. The performance goals and objectives shall be reduced to writing in an Investment Policy Statement and shall be referred to in the contract between the Board and the manager. The performance goals and objectives shall be reviewed on not less than an annual basis and shall be compared to the actual performance of an investment manager to determine compliance with the goals and objectives set by the Board. Pages 13-14 10.6 WRITTEN CONTRACTS Each investment manager shall enter into a written contract with the Board. Each contract shall include an acknowledgment by the investment manager that it is familiar with the ordinances of the City of Ocoee and the provisions of Chapter 112, Florida Statutes. The contracts shall also provide that the investment manager shall make no purchases which are prohibited by law and in the event such purchase is made, shall make the Fund whole for any loss incurred in the divestiture of said investment. The Coe 2 ihr General Employees' Retirement Trust Fund (Pension Meeting) February 9, 1994 contract shall also provide that the laws of Florida shall govern and that venue for any legal action shall be in Orange County, Florida. All written contracts shall set forth a specific duration, but in no event shall any contract be terminable on more than 30 days written notice. Each contract shall set forth with specificity the fees charged by the investment manager to the Fund. All investment manager contracts shall further set forth that the investment manager is registered as an investment manager (if such registration is legally required) and is otherwise qualified by law to engage in the management of the assets which are the subject of the contract. All written contracts shall be reviewed by the Board attorney who shall approve the form and correctness of each such contract. All written contracts shall be executed by the Chairperson and Secretary of the Board. Page 14 10.7 REPORTING All investment managers and performance monitors of the Fund shall report on not less than a quarterly basis. The investment managers and monitors may, however, be directed by the Trustees to report on a more frequent basis. All such reports shall be in writing and shall be presented in person by a representative of the investment manager or performance monitor who has authority to make discretionary decisions with regard to the Trust's account and to settle claims and disputes arising from the contract. All such investment managers and performance monitors shall make these presentations in person at a regular meeting of the Board and shall bear their own costs and expenses in traveling to Board meetings. The performance monitors shall attend each quarterly meeting of the Board and shall report, in writing, the progress of each performance monitor-and investment manager. The performance monitor shall also make written recommendations at each quarterly meeting regarding retention of or change in investment managers or recommended changes in investment policy. Attorney Dehner said his office will revise the Operating Rules and Procedures for Board approval. He would contact Chairperson Lewis to discuss the issues with him. If there were no additional comments he would bring the document to the next meeting for adoption. If Chairperson Lewis had questionable issue he would return with two drafts for the Board. Secretary Grafton asked if these changes will include the selected provisions. Attorney Dehner suggested holding off on the selected provisions until adoption of the Operating Rules, then using a strict fail-safe rule so the selected provisions will be verbatim. Ms. Grafton asked about distribution of the summary plan to new employees. Mr. Dehner said new employees will receive the summary plan as it currently is until such time it is changed, and at that time doing an interim distribution, normally in March. There are two exhibits in the document, 1) Names and addresses of trustees; and 2) Summary of the Actuarial and Financial Data; both of which must be updated. Actuary Foster was asked to provide a new exhibit on the Financial and Actuarial data page. The updated list of Trustees will add Ricky Waldrop and remove Judy Henry. The 3 General Employees' Retirement Trust Fund (Pension Meeting) February 9, 1994 document should then be ready for adoption at the March 21, 1994,in order to present it to Personnel Director Psaledakis with instructions to distribute from that date forward. Both Attorney Dehner and Secretary Grafton will review the summary plan to determine whether revisions should be included in that document. Ms. Grafton pointed out that the revision is taking a very long time and she would like to press and have this done. Member Waldrop asked if the taping of the minutes could be held up in court and if the tapes were to be maintained as permanent records. Attorney Delmer said the taping of the meeting had been discussed earlier. The Board is not required to tape the meetings, but if taped, the tape becomes part of the public record. If a person makes a claim to the Board and they have business before the Board, as they are told on the agenda per State law, they have the responsibility to have a verbatim transcript, which means a court reporter, in the event they may want to appeal the decision. Member Grafton seconded b Member Oliver moved after knowing the liabilities as explained by Attorney Dehner to the Board to taa the meetin's to ensure that the minutes will be transcribed accuratel . Motion carried 3-1. Member Waldro• voted "nay." Secretary Grafton said the minutes had reflected Ms. McDougal had suggested hiring a growth manager, in addition to their firm which is a value manager, as an investment manager. Attorney Dehner said the Board did not have enough money for two managers. Actuary Foster said this is not considered until there is $10,000,000. Mr. Dehner said the recommendation had been, in order to reduce volatility in the investment returns, to consider having the equity funds managed by a growth style and a value style. One way to do that would be to hire two separate managers. As the Board was not large enough for this, an alternative would be to select a firm that offers both methods. Actuary Foster said the Board might consider hiring a growth manager. He also said Sun Bank was doing a consistently good job in this area. He suggested holding off until the June quarterly report is in, and if the performance doesn't hold, it may be appropriate to see what is available rather than getting into a multi-manager situation. The Actuary firm would present current data on approximately 45 funds with different manager setup and would bring to the Board a ranking of these funds. Actuary Foster presented the Board with the results of a survey on approximately 25 municipal plans that his firm monitors. He suggested waiting until the March meeting to see the Money Manager Report, if improvements were not seen the contribution requirements will be influenced and is something that should be avoided. Member Waldrop expressed concern over the returns the Board is receiving. Mr. Foster agreed, saying the Board was receiving half the return of other banks. There were other good managers which have an equity co-mingled fund that is doing well. He said the good thing about co-mingled funds is that, even if you have a small exposure to stocks as a dollar amount, by being in the co-mingled fund you can be well diversified and get returns that $10,000,000 get, as it is all invested together. Some of the 4 (aw General Employees' Retirement Trust Fund (Pension Meeting) February 9, 1994 problems such as high commissions is not a problem in the co-mingled funds. Attorney Dehner named several banks that had gone to the value in growth funds as a new development in the market place to enable small funds to take advantage of two different styles of funding. Secretary Grafton asked if the Board had gone with Sun Bank several years ago would the Board's funds have been used in the co-mingled way without instruction of the Board. Actuary Foster said Sun Bank would have asked for the Board's instruction. He also said the Board determines the mix. Secretary Grafton asked Actuary Foster if the last minutes, bottom of page four (4), reflected his statement accurately concerning the investment performance. Mr. Foster said it was probably accurate, that The Investment Counsel Company had a very bad quarter that had dragged down the year. The return for the year had been 8% which he considered to be acceptable from the Actuarial standpoint as to the assumption. Once again it was pointed out they were hired because they had a good historic record. Member Waldrop asked if were not 8.7% and Mr. Foster explained on a market value basis it was 8% for the year and 8.7% was the average for the whole time The Investment Counsel Company was acting manager. He pointed out it was the quarter that had caused TICC the problem. Cry Attorney Dehner said based on three things it would be appropriate for the Board to address this issue further: 1) From the time The Investment Counsel Company was retained the Board is not trading any longer at 6-10 cents a share, it is trading at 20-30 cents a share as a result of the change in the way TICC was able to do their transactions; 2) Other firms offer two different styles in the market place; and 3) most importantly, Actuary Foster's Performance Reports and his contents to the Board. He was not suggesting the Board make a decision immediately but the issue deserved further discussion. Attorney Dehner requested Actuary Foster to bring statistics and data to the Board with respect to other managers that have the different products, including data showing the difference in the styles of value versus growth and what the effects of returns are. The Board can then address it and make a determination. Mr. Denner did not think the issue should wait until the June meeting. Secretary Grafton directed on the Board's behalf that Actuary Foster bring this data and statistics to the next meeting. Mr. Denner said the Board had discussed problems with transactions of cost and effect and had directed him (Attorney Dehner/Actuary Foster?) to look for rebate brokers, or recapture brokers pursuant to Grants' advice to the Board that he can only get a lower cost if he contracted independently with the broker to do the Board's trade. He said Mr. Foster was working on this now and the Board might want to hold off until the outcome and discussion of the next meeting. He would not recommend involving further time and expense of contacting a separate broker when the Board might end up not using them in four or five months. This item was placed on hold until the next meeting. (••• 5 General Employees' Retirement Trust Fund (Pension Meeting) February 9, 1994 Upon Attorney Dehner's recommendation the Board will meet at 9:00 A.M., March 21, 1994 with Actuary Foster and himself, and schedule a 10:00 A.M. meeting with The Investment Counsel. ACTUARY Actuary Foster said the report "Transferring Between Plans" will be given during the Joint Board Meeting. He said there was discussion at the last meeting regarding the procedure for investigating benefit improvements such as increasing benefit rate. In that discussion, the Board had talked about meeting with membership first to get some ideas on what improvements interest them. After reporting their desires, Actuary would do a study to determine the costs of implementing the improvement(s) or combination thereof. The Board had not directed him to look at benefit improvements across the board until a future meeting. With the current costs it would be difficult to persuade the City to improve benefits based on the investment experience. Acting Chairperson Miller said it was good to get feedback of those belonging to the Plan. MONEY MANAGER The Money Manager was absent. No report was given. OTHER BUSINESS Secretary Grafton said Larry Kelly has resigned from the City. He was requesting a refund of contributions which will be approximately $1800. Secretary Grafton,seconded by Member Oliver, moved to refund of contributions in an amount not to exceed '.2 000 based on fi• res from City Finance Department, to Larry Kelly. Motion carried 4-0. ADJOURNMENT - To Reconvene in Joint Pension Board Meeting The meeting was adjourned at 10:15 a.m. JOINT BOARD/GENERAL EMPLOYEES PENSION BOARD PRESENT: Members Gledich, Grafton, Miller, Oliver, Strosnider, Waldrop, Williams, and Wilson. Also present were Attorney Denner, Actuary Foster, and Clerk/Stenographer Lewis. ABSENT: Chairman Lewis and Chairman Reed. In the absence of Chairman Lewis, Acting Chairperson Strosnider opened the meeting at 10:26 a.m., and introduced Attorney Denner. L 6 thy General Employees' Retirement Trust Fund (Pension Meeting) February 9, 1994 DISCUSSION OF CONSIDERATIONS DURING THE GENERAL EMPLOYEES' MEETING Attorney Dehner said the purpose of the Joint Board Meeting was to consider the common considerations of each Board in preparing a proposed ordinance to the City: 1.) Legal (The language that needs to be in the Plan by the end of this year.) 2.) Family Medical Leave Act 3.) Cross-Over Provision Between Plans The Police/Fire Plan includes the disability issue which excludes pre-existing conditions for disability entitlement, but it is not covered under the General Plan. FAMILY MEDICAL LEAVE Attorney Definer said it is the responsibility of the Personnel Department to decide who was entitled to Family Medical Leave (FML). Under Federal Law, the potential for FML is 12 weeks of every 12 month period. The concern from the pension side is the impact on credited service toward vesting, because when an employee is on family medical unpaid leave time they are not working for the City and are not contributing to the Plan. Attorney Dehner said the Boards must coordinate record keeping with the City so Board records indicate when someone is on Family Medical Leave time. Tracking is very important to avoid crediting someone with that time as it would be possible for someone who had been empoyed five years to use a year and a quarter (1 1/4) of leave time. The Board should also consider whether to provide an opportunity for a person returning from Family Medical Leave to buy the accredited service time. Mr. Dehner suggested the employee be given an opportunity to buy back time during a specific period each year, i.e., between March 1 - April 30. The cost of the actuarial fee for the calculation would be paid by the employee. Attorney Dehner said if the Board approved the changes the Ordinance and structure must be amended. Member Gledich said extending the period from one year to 24 months would help people financially and keep them in the plan. She asked from an investment standpoint if it would be beneficial to the plan to get the money into the plan. Actuary Foster said if it was received earlier and was based upon the calculation at the rate of interest is 8% and the fund generates better than an 8% return that extra gain benefits the other members. It would also benefit the member making the deposit because then the amount required to buy back would be less. He said there are advantages to imposing a time limit, such as easier verification of leave. Attorney Definer suggested placing a cap on amount of buy back time to include a lump sum payment. He said records should be subject to verification with City records to avoid the potential for dispute. Member Miller asked Actuary Foster if, in the report generated, it will indicate cost to the member should they pay back in increments. Actuary Foster agreed this arrangement is possible. He did not recommend giving a calculation of what the buy back is 7 General Employees' Retirement Trust Fund (Pension Meeting) February 9, 1994 on April 30 of a given year, and then another amount a year later because of changes in an employee's salary average. Secretary Grafton asked if the Boards needed to agree by consensus or if it was necessary to have a motion from each Board in order to give direction. Attorney Dehner said the City would like to see a harmonious provision between the two plans. The Boards could direct him to return with a proposed Ordinance based on Board decision on each of the issues discussed. He suggested changes regarding language, changing 12 months to 24 months, and to include changes of buy back time. Member Miller asked if the wording will include that it is the responsibility of the employee to pay the actuarial fee involved in the calculation of their payment, whether it is the first year or the second year. Attorney Dehner said the changes will be reflected in the proposed Ordinance. Both Boards recommended that a brochure containing the information regarding the employee's responsibility toward their pension, vesting rights, accrued time, etc. be supplied the Personnel Department to be distributed to an employee comtemplating Family Medical Leave. ROLL OVER DISTRIBUTIONS Attorney Definer said roll over contributions were included in both documents. It is legal terminology and is not subject to change by the Boards. For Board consideration: 1. Should it count toward vesting? 2. Should it cap the total that can be purchased? 3. Should it change from 12 months to 24 months? CROSS-OVER PROVISIONS Attorney Dehner explained the reason the Boards were discussing this is to address the situation in which an employee who is not yet vested in the General Plan becomes a Police Officer. Under the present plan an employee who transfers from the General Fund to the Police Fund loses the earned credits toward vesting. Both Boards wish to consider plan members to be employees of the City of Ocoee and have them retain their time earned toward vesting. If this is done decisions must be made regarding specific issues. 1. Which accrual rate will be used at the time of retirement? The General Plan may have an accrual rate of two percent and the Police/Fire Plan may have two and one-half percent. Which formula will be used? 2. Determine the average years final compensation. Will the Board apply his career high years in the City under the General Plan or the high years in the Police/Fire Plan. Actuary Foster presented a Retirement Systems Effect of Transfers on Plan Costs and explained there were two ways it can be handled. 8 General Employees' Retirement Trust Fund (Pension Meeting) lbw February 9, 1994 1) To treat someone who transfers from one plan to another as if they terminated employment with the City. On that basis, their benefit is fixed on the Plan which they leave based on the average earnings in the benefits that is in effect at the time they terminate employment. And the benefit at the time they leave is paid at the retirement age in the Plan they left. Then the employee begins accruing benefits in the other plan. If they are not vested in the first Plan, they can get additional years of service that will be counted toward vesting. 2) Consider the service only in the Plan that the member leaves and the actual salary average that is used for benefits purposes is yet to be determined, based upon whatever salary average they have when they finally terminate employment with the City. The problem with this is it is unknown what the long term liability is in the Plan that the member transferred from. Actuary Foster explained the cost effects of transfers on a plan. Attorney Denner explained that certain benefit improvements must be funded which will benefit a limited number of Plan members. Improving the accrual rate benefits everyone. This is a situation where spending money benefits only those that make the cross-over. Member Gledich asked if there were statistics on how many people cross-over. Secretary Grafton said Actuary Foster was doing studies on three (3) employees. Secretary Grafton asked if the opportunity will be given to those who have already retired should the Plan change to provide medical benefits or medical insurance. Attorney Denner said they could be and if such an improvement is approved the wording must be included in the plan. Member Oliver said there was more she would like to know more about the changes and what impact this will have on the Board. Member Strosnider said he would like more time to think about it. Secretary Grafton asked if these options just discussed should be included in the draft of the proposed ordinance. Attorney Denner said the Board needed to make some decisions first, as it would become more confusing to have several different drafts. The current draft has the basic vesting proposal but included none of the details. Secretary Grafton asked if the Board took action today approving the following: to allow people to transfer, retain vesting time from the General Fund, and as an employee of the City freeze their benefits at the time they leave, would that change for those people who have transferred already should the Board want to change this again in a year. Actuary Foster said they would be included. Attorney Dehner said you would have to make it retroactive. Member Waldrop asked about the improvements requesting a meeting with membership to find out what they preferred before budget time. Actuary Foster said they could do a study to determine the costs of increasing the benefit rate from 2% to 21/4% or 21/2%. The other thing was to reduce the earnings averaging period from five (5) years to three (3)years and providing 9 General Employees' Retirement Trust Fund (Pension Meeting) February 9, 1994 a benefit supplement of$100 per month at retirement. The Board directed Actuary Foster to prepare this study for the next meeting in March. OTHER BUSINESS Secretary Grafton announced that the City Manager had just received a letter of resignation from Chairman Lewis. The General Employees Pension Board did not have a vice president. Member Oliver. seconded by Member Waldro• moved to nominate and a•.oint Member Miller as Chairman. Motion carried 4-0. ADJOURNMENT The meeting adjourned at 12:05 p.m. Respectfully submitted, Judie F. Lewis Clerk/Stenographer L 10