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HomeMy WebLinkAbout02-13-1995 Minutes THE CITY OF OCOEE GENERAL EMPLOYEES' RETIREMENT TRUST FUND (PENSION MEETING) - February 13, 1995 Chairman Miller called the meeting of the City of Ocoee General Employees' Retirement Trust Fund to order at 10:05 a.m. in the training room of the Community Center. The roll was called and a quorum declared present. PRESENT: Chairman Miller, Members Grafton, Oliver, and Waldrop. Also present were Actuary Foster, Attorney Christiansen, and Clerk/Stenographer Lewis. ABSENT: Member Shiver had resigned and a new member had not yet been appointed to the Board. APPROVAL OF THE MINUTES Member Oliver, seconded by Secretary Grafton, moved to approve the minutes of November 21, 1994 as presented. Motion carried 4-0. QUESTIONS/COMMENTS FROM AUDIENCE None REPORTS ATTORNEY Attorney Christiansen explained the revisions in the Investment Policy Statement and Item G, on page 4 - The Requirement For Reporting of the Proxies had been the only addition to the Statement. The guidelines and performance, etc. were the same as when the Fund had used The Investment Council. Philip Wood said that the Investment Policy Statement followed the general standard and SunBank was comfortable working under it. Member Waldrop, seconded by Member Oliver, moved to accept the Investment Policy Statement, as revised. Motion carried 4-0. The forms were signed and presented to Mr. Wood during the meeting. Attorney Christiansen requested a signed copy of the Proxy Voting Policy. ACTUARY REPORT WAS GIVEN LATER IN THE MEETING MONEY MANAGER Philip Robert introduced Dianne Garcia, the Administrative Officer over day to day maintenance of all the administration details, and said that SunBank had received all of the assets. He also said there had been confusion with the prior Investment Manager delivering some of the shares. Mr. Robert explained that the S&P 500 was up about 21/2% and had done about 31/2% in both the high grade equity and high grade equity income fund. The bonds were up about 1.8% for the month and the strategy for liquidating the rest of the assets had been a piece meal liquidation. SunBank had not wanted to sell everything at once, or transfer cash in order to take Low advantage of some of the stocks in the portfolio which seemed undervalued and could not The City of Ocoee General Employees' Retirement Trust Fund February 13, 1995 substantially appreciate over the next six months. The stocks would be liquidated during a rise in the market. Bonds were finally having a good year and 1995 should be returning to a more historical norm for the investment returns, making 8% a more reasonable assumption to achieve. Bonds would probably see fixed income returns from 6 to 9% this year. Interest rates had stabilized and this will be a reasonable assumption. The equity market, after having a horrible year in 1994, should again return to more normalized returns. In reviewing the guidelines, approximately 60% was in fixed income and about 40% in equities. Actuary Foster arrived for the meeting at 10:13 a.m. Mr. Roberts said that the Fund had started out on a good year. The mutual funds were priced daily and most of the stock funds were up, the growth fund is up over 5' % through February 10, 1995. The value fund is up over 6%, and the market is up about 5.1%. No written report was submitted but a full report will be provided at the next meeting. Mr. Roberts reported on the portfolio and said the statements had been designed for a personal trust client and did not provide a lot of true information for the Board, other than transaction detail and market value. The carrying value will be the costs, on the most part, of the securities and the co-mingled fund that the Fund owned in the portfolio. Ms. Garcia responded to Member Waldrop's question, and said that a journal will be given to the Board showing a breakdown on the accumulative effect of the transactions. Ms. Garcia announced that SunBank would be converting to a Trust Accounting System and explained the appearance of the new written reports. ACTUARY Actuary Foster reviewed the Performance Report during the time period that the Investment Council had been acting as the manager (2 years 8 months, ending December 31, 1994). The transfers had been made at the end of the month and SunBank had begun to invest in their co- mingled funds around January 9, 1995. Last month had been a month with a lot of activity. An analysis of the investment performance of the City of Ocoee Municipal General Employees' Retirement Trust Fund for the period from May 1, 1992 through December 31, 1994, had been completed. The average annual rate of return for the Fund during this period was 4.9%. This rate of return failed to outperform the composite index of market indicators (40% S&P 500 Composite Stock Index, 55% Lehman Brothers Government/Corporate Bond Index, and 5% U.S. Treasury Bills) which registered a return of 6.1%. During the one year period ending December 31, 1994, the Fund registered an -0.7% rate of return (compared with -1.3% for the composite index of market indicators) and ranked in the 22nd percentile of the Cadence Universe of investment managers. The equity portion of the Lir 2 The City of Ocoee General Employees' Retirement Trust Fund litay February 13, 1995 Fund outperformed the S&P 500 (2.3% vs. 1.3%) and ranked in the 17th percentile for the one year period. Actuary Foster said he believed that the Board had made a good move and he was looking forward to good numbers from SunBank. He will present an isolated report on how SunBank is doing and also include the longer history. The Fund will be having a much lower commission. Actuary Foster said that he had met with Administrative Services Director Beamer on February 1, 1995, and she expressed the City's concern about the actuarial information that they were getting from the Board. The City is already into that fiscal year when they receive the report and if it is a bad news report then the costs are probably higher than those budgeted. The City must then scramble for the money and so would prefer to have a dollar projection into the year beginning twelve months after the valuation date. Until recently the position of the Division of Retirement had been that the dollar funding requirements for a succeeding year could not be projected. There had been such an outcry from Cities that are trying to budget legitimate dollar amounts for the next fiscal year that they've softened their position and now Funds are allowed to project dollar amounts for a year other than the year following the valuation date. For 1995 this is done by applying the salary scale ,, assumption developed in the 1994 report. The 1996-97 dollar amount will be determined in the October 1, 1995 valuation. In response to Secretary Grafton's question, Actuary Foster said that the City could not be required to pay more than that amount, even if additional personnel had been hired. Actuary Foster presented a proposed change in the method of reporting and said that this did not violate anything from the Division of Retirement. He said that upon Board approval a copy of the letter will be sent to Director Beamer and also to the State for review, along with the valuation report. This is considered an acceptable method. Member Waldrop asked if the Actuary was using 9.9%, instead of 8%, and Actuary Foster said that what the 9.9% represented was the contribution amount expressed as a percentage of the payroll of the members in the plan. The City is essentially putting 10 cents (9.9 cents) in the Plan for every dollar that the City pays the employees in salary. The reason that it stays at 9.9% is that when you are projecting another year, the Actuary is projecting the payroll to increase. Next time that a valuation is done that percentage will be smaller or larger, and all that was needed to keep it stable was eight percent. The City's funding rate is 9.9%. 3 The City of Ocoee General Employees' Retirement Trust Fund February 13, 1995 Secretary Grafton, seconded by Member Oliver, moved to adopt the new valuation method per the February 10, 1995 letter presented by Actuary Foster. Motion carried 4-0. Discussion ensued on changing the benefit improvements of the Plan. Actuary Foster said if the Board changed the benefit now, that it would give the City plenty of time to budget the precise dollar amount at a higher funding rate. Attorney Christiansen said a proposal could be taken to the City, pointing out that they are putting 17% in the Police and Fire and only 9.9% for the General Employees and ask that the number be more equalized. Chairman Miller said the City was developing its budget and they must fast-track the proposal. Actuary Foster said that he would look at 2'4% and 21/2% and send a letter showing the projection to the Fund. Secretary Grafton asked if a change in benefit would affect members that are already retired and Actuary Foster said only if the Board wants to target those people. Typically benefit improvements do not extend to retired people but it would be a decision for the Board. Discussion ensued on the pros/cons on giving those already retired this improvement. Attorney Christiansen said that from time to time the Board may want to look at a cost of living increase for the retirees. Chairman Miller said that, at one point, the City had been looking at other things such as hospitalization, with the City taking on the costs. Attorney Christiansen said they would send the study and the proposed ordinance to staff for review, and ask to be placed on a City Commission agenda. He would show the comparison between Police and Fire which the City is currently giving 17.5% of payroll to them and only 9.9% to the General Employees. This will be a catchup Ordinance. In response to Chairman Miller's question, Actuary Foster said that he would contact the Board this week with the results of the study. Secretary Grafton, seconded by Member Oliver, moved to direct Actuary Foster to do a benefit improvements study and Attorney Christiansen to prepare an Ordinance at 21/2% and send a letter to the City Manager, with an explanation of the basis of the proposal, and a request that it be placed on the agenda. Motion carried 4-0. OTHER BUSINESS BILLS AUTHORIZED FOR PAYMENT Secretary Grafton explained for the record that the Board had not received an invoice from Foster & Foster. An additional bill had been received from Christiansen and Dehner. Ms. Grafton requested approval of the Board to present to SunBank for payment, the following bills: 4 The City of Ocoee General Employees' Retirement Trust Fund February 13, 1995 1. Christiansen & Delmer, P.A. $815.11 Correspondence for Society to transfer to SunBank and telephone conference with Kurt Wood and J. Duff. $ 30.00 Facsimile charges $ 3.00 TOTAL $845.11 2. Judie Lewis, Recording Secretary November 11, 1994 $ 22.07 Preparation of minutes, agenda, etc. $ 19.62 November 15 & 21, 1994 and December 7, 1994 $ 29.43 Food and paper supplies - Mini-conference 2/1/95 $ 20.75 TOTAL $ 91.87 3. City of Ocoee November: Copies 280 - $5.60 Postage $1.73 December: Postage $1.04 TOTAL $ 8.37 Member Waldrop, seconded by Member Oliver, moved to approve payment of the bills presented for Christiansen & Delmer, P.A. for $845.11, Judie Lewis for $91.87, and the City of Ocoee for $8.37, as presented. Motion carried 4-0. Secretary Grafton said that Brent Little had resigned on February 10, 1995, and had requested a Refund of Contributions for $2,774.01, before taxes. Mr. Little had not been a vested employee. Discussion ensued regarding the forms used by the Board. Member Waldrop, seconded by Member Oliver, moved to authorize payment from the Fund for a Return of Contributions in the amount of $2774.01 to Brent Little. Motion carried 4-0. MEETING DATES The Board will meet in the Commission Chamber Conference Room and selected the following dates: Monday, May 8; Wednesday, August 9; and Wednesday, November 1, 1995 with the General Employees' Fund meeting at 10:00 a.m., Joint Board at 11:00 a.m., and the Police/Fire Board at 1:00 p.m. Lir 5 The City of Ocoee General Employees' Retirement Trust Fund February 13, 1995 RECESS 11:21 - 11:26 a.m. The Board had recessed so that Attorney Christiansen and Actuary Foster could confer with their offices regarding the dates; both confirmed that there was no conflict. ADJOURNMENT The meeting was adjourned at 11:30 a.m. Respectfully submitted, -76 .d.e..e. Y 4/e.....;_J ie F. Lewis Clerk/Stenographer L 6