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HomeMy WebLinkAbout11-29-1995 Minutes THE CITY OF OCOEE GENERAL EMPLOYEES' Loy RETIREMENT TRUST FUND (PENSION BOARD MEETING) - November 29, 1995 Acting Chairman Grafton called the meeting of the City of Ocoee General Employees' Retirement Trust Fund to order at 4:15 p.m. in the Commission Chamber Conference Room of City Hall. The roll was called and a quorum declared present. PRESENT: Chairman Miller, Members Dabbs, Grafton, and Waldrop. Also present were Actuary Garrett, Attorney Dehner, Money Manager Ballew, and Clerk/Stenographer Lewis. ABSENT: Member Oliver. Member Miller arrived at 4:18 p.m. and took the Chair. APPROVAL OF MINUTES Member Waldrop, seconded by Member Dabbs, moved to a. 'rove the Minutes of the September 14, 1995 General Employees' Retirement Trust Fund meeting as presented. Motion carried 3-0. QUESTIONS/COMMENTS FROM AUDIENCE Member certificates were distributed to Kenny Bruce and Fred Ostrander, and Peggy (610 Psaledalds. OTHER BUSINESS MEMBERSHIP LIST Secretary Grafton presented a list of board members and asked that they notify her of any changes. REQUEST FOR RETURN OF CONTRIBUTIONS Secretary Grafton said that Korvin Hunter had terminated from the City, and that he was requesting a refund of his contributions. Ms. Grafton said that his contributions were $987.13. Member Waldrop, seconded by Chairman Miller, moved to authorize a refund in contributions in the amount of $987.13. Motion carried 4-0. ORDINANCE UPDATE - Secretary Grafton requested a final draft of the ordinance so that it could be placed on the City Commission meeting agenda. She also said that the Fund could not proceed with the international investment until passing of the ordinance. Attorney Dehner explained that passing of the ordinance would give the Board the authority to revisit the investment policy which was directing bank power. The Board should discuss the issue at the next Board meeting after the ordinance passes or, only for that purpose, call a special meeting. In response to Attorney Dehner, Actuary Garrett confirmed that international securities would be invested through a mutual or a co-mingled fund at this time, as opposed to individual issues. Pursuant to the request of the City Manager, Attorney Dehner said that a provision had been added to the ordinance to have a 10% percent total fund asset value limitational when going into General Employees' Retirement Trust Fund November 29, 1995 international securities. The City Manager had also requested that they report to the City on the Fund's international experience five (5) years from the date of the ordinance. Secretary Grafton said that Administrative Services Director Beamer had a concern that 10% percent that the Fund invested now is o.k., that the City could probably survive if we had to cover our losses (if we lost anything) but 10% percent of what we have 10 years from now is something that the City would be at a loss to cover. DISCUSSION RE:CONFERENCES - Secretary Grafton said that Member Dabbs would be attending the February FPPTA Conference at Greenlefe, and asked to be notified if there were other members interested in attending that conference. PRE-RETIREMENT SEMINAR - Recording Secretary Lewis presented a tentative program for the Pre-Retirement Seminar, "What You Should Know Before You Retire", scheduled for February 7, 21, and March 6, 1996, 5:30 - 7:30 p.m. in the City Hall Commission Chambers. BILLS AUTHORIZED FOR PAYMENT Secretary Grafton presented the bills for payment, and then requested approval of the Board to present to SunBank for payment, the following bills: 1. Christiansen & Dehner Professional Services Rendered $ 1324.99 2. City of Ocoee July: Copies 491 $12.28 Postage $ 6.11 August: Copies 220 $5.50 Postage $8.47 September: Copies 317 $7.93 Postage $0.87 Phone Calls $5.93 October: None TOTAL: $ 47.09 3. Judie Lewis, Recording Secretary Secretarial Services $126.31 4. Foster & Foster, Inc. Actuarial Services, analysis and report of Investment Performance for the quarter ending September 30, 1995. $4,975.00 cre 2 General Employees' Retirement Trust Fund November 29, 1995 Member Waldro s seconded b Member Dabbs moved to a. •rove .a ment of the bills as presented. Motion carried 4-0. REPORTS MONEY MANAGER Money Manager Ballew announced the following: 1) That the SunBank name had changed to SunTrust. It was only a name change, and there had been no structural changes. 2) That instead of filling in for Phillip Robert, he would now be the investment officer for the Board's account. 3) That through a misunderstanding a portion of the Fund's investments had been shifted into international spending which had appeared on the October, 1995 statement. He said that when the performance has been done for the next quarter, that he would be looking into this and see what, if any, damage had been done to the performance from this incident. He also said that there would be no adverse loss to the Fund. Money Manager Ballew presented the Investment Performance Report, and said that the markets had been good in the third quarter. Stocks, in particular, had been real strong again. Bonds had sort of leveled out because the rates had been more stable during this period. Most cry of the Fund's returns were from bonds. The end of October had been a down month in the market but November had come back real strong. There was a lot of optimism about the market agreement that Congress and President Clinton were trying to work out. Mr. Ballew said that he thinks in terms of short term concerns about stocks, with the economy having slowed down, that earnings for this fourth quarter and maybe the first quarter or two of '96 might be a little off. There may be some disappointments and it remained to be seen as to how companies do in a sluggish economy. He said that they, as money manager, think that stocks will do well again in '96 but they did not think that it would be another 30% percent year. Attorney Dehner said that the police and fire board had discussed the Investment Policy regarding equity, and that it is reflected in the minutes on September 14, 1995 allowing SunTrust to go as high as 50% in possible equity but that that had not been re-written in the Statement. In response to Attorney Dehner, Money Manager Ballew confirmed that date. Mr. Dehner said that the written policy had not been amended, and that he recommended waiting before amending it until they saw whether other international would come up. Secretary Grafton confirmed that it was o.k. for Mr. Ballew to go ahead even though it is not written in the Statement. Attorney Dehner said yes because it was on the record and Attorney Christiansen had made that notation. It will appear on the written Statement for the meeting in January. Money Manager Ballew said that we should be out of international and that we should 3 General Employees' Retirement Trust Fund November 29, 1995 have roughly 50% in stocks. It would not appear in this report because this performance had been through September 30. The change had not been made in September. Money Manager Ballew presented the Investment Performance Report for the period ending September 30, 1995, as follows: Cumulative Investment Performance 3 Mos. 9 Mos. Ended Ended 09/30/95 09/30/95 Total Time Weighted Return 4.15% 17.88% Current Asset Allocation Equities 39.60% Fixed Income 56.77% Cash Equivalents 3.63% Comparisons High Grade Equity Fund 6.82% 24.43% High Grade Equity Income Fund 7.98% 27.72% Standard and Poor's 500 7.95% 29.77% High Grade Bond Fund 1.89% 12.94% Lehman Govt./Corp. Bond Index 1.91% 13.93% 91 Day U.S. Treasury Bills 1.41% 4.29% Consumer Price Index 0.30% 2.02% Money Manager Ballew said that the investment results had been a gain of approximately $250,000 for the nine months ending September 30, 1995. PERFORMANCE MONITOR Performance Monitor Garrett explained that the fund had accumulated up to $1.8 million, and how the funds would have accumulated at 40% S&P500 and 55% Lehman Brothers Govt/Corporate Bond cash. He said that we seem to be a little bit ahead of this but not far off goal. SunBank's report shows the Time Weighted Returns, quarterly returns at 4.15%, and the Monitor had rounded that up to 4.2%; it matched what the index of 40% Stocks and 55% Bonds 4 General Employees' Retirement Trust Fund November 29, 1995 would have performed over the quarter. Over the period of time since January 1st the fund was up 18.1% on the Time Weighted Number and that balance makes up that (?). We were trailing but not trailing by a lot. The Fund was in the 47% percentile and was above the median. The match to the index was also at that same local and roughly half the managers in this Universe had not beaten that index. The Time Weighted Returns of the Equity portion of the Fund alone showed an 8% return which had out performed the S&P500 over the quarter; this portion of the Fund was up 28.4% over the nine month period ending September 30, 1995. The market was up 29.7% so the Fund was slightly trailing the S&P in this area. The percentile rank of the performance of the Equity Fund had been approximately in the 50th percentile. Again, the Fund had beaten out the other managers. Again, the S&P500 had been right around that same ball park. The quarterly performance, Time Weighted for the Fixed Income portion, recognizes the cash sitting there, and paid bills. Also, the full contributions and where they are invested, here we made a deposit, Index is 90% bonds, 10% cash, and it returned 1.8% compared to that Index. Over a longer period of time this portion of the funds had been up 12.4% since January 1, and the Index had been up to 9%. cow There is very little volatility occurring. There were no violations. SunBank's report showed the cost value allocation, the Market Value allocation guidelines, also the guidelines to cost value. ACTUARY Actuary Garrett presented the regular annual actuarial valuation of the Fund, and said that a correction on the cover page in "... FISCAL YEAR ENDING SEPTEMBER 30, 1997" rather than "... September 30, 1996." He said that a correction should also be made to page 2, "fund, certain changes in the methodology and assumptions were made." Mr. Garrett said that the actuarial valuation as performed of October 1, 1995, and the contribution amount developed in this valuation is applicable to the City's fiscal year ending September 30, 1997. The contribution requirements compared with those developed in the October 1, 1994 actuarial valuation are as follows: Valuation Date 10/1/94 10/1/95 Applicable Fiscal Year 9/30/96 9/30/97 Total Required Contribution $403,665 $452,862 5 General Employees' Retirement Trust Fund November 29, 1995 % of Total Annual Payroll 14.9% 15.3% Member Contributions 135,058 147,649 Balance From City 268,607 305,213 % of Total Annual Payroll 9.9% 10.3% Actuary Garrett said that as can be seen, the Total Required Contribution has increased both as a dollar amount and when expressed as a percentage of Total Annual Payroll. Approximately 70% of the increase in the dollar amount is a result of a 9.3% increase in the Total Annual Payroll ($2,785,834 in 1995 as compared to $2,548,268 in 1994.) The remainder of the increase in the dollar amount and the increase in the percentage are the net result of changes in the actuarial assumptions and methodologies. He also presented a description of the changes and their effect. In connection with this year's actuarial valuation of the fund, certain changes in the methodology and assumptions were made. At the direction of the Division of Retirement, the mortality table had been changed from the UP 1984 Mortality Table to the 1983 Group Annuity Mortality Table. Additionally, the method of developing Actuarial Assets for funding purposes had been changed from a four year smoothing technique which considers the rations of market value to cost value to a four year averaging technique which specifically considers the average .market value return for the most recent four years. This change is intended to eliminate anomalies in Actuarial Asset values which are attributable to changes in investment managers and investment methods (e.g., a change from individual securities to commingled funds), and provide more stable costs. The balance of the Report presented additional details of the actuarial valuation and the general operation of the Fund. Secretary Grafton, seconded by Member Waldrop, moved to accept the change in methodology assumption, and to accept the valuation report as presented. Motion carried 4-0. Consensus was reached to schedule the next Board meeting date for January 15, 1996, 3:30 p.m. RECESS - 5:35 P.M. Chairman Miller reconvened the meeting with membership at 6:50 p.m. PRESENT: Chairman Miller, Members Dabbs, Grafton, Oliver, and Waldrop. Also present were Actuary Garrett, Attorney Dehner, Money Manager Ballew, and Clerk/Stenographer Lewis. 6 General Employees' Retirement Trust Fund November 29, 1995 ABSENT: None DISTRIBUTION OF MEMBER CERTIFICATES Secretary Grafton said that she had distributed membership certificates to all those who were present, and the others will be distributed from City Hall. DISCUSSION OF BENEFIT IMPROVEMENTS TO THE PLAN Secretary Grafton reported that the Fund had just decided to go international with some of the investments, as international funds are currently performing better than domestic funds. Chairman Miller said that the investments had done really well in the past nine (9) months, and the Board looked forward to much better returns than what the members had seen in the past couple of years. She said that they feel confident of doing that with SunTrust as the Money Manager. The international scope is that the Plan is not going whole bit and dumping everything into international but we were going up to 10% percent of the Fund's assets. The City Commission will be voting on that ordinance with a second reading on December 19, 1995. Chairman Miller introduced Attorney Dehner, Actuary Garrett, Money Manager Ballew, and the Board members. ATTORNEY COMMENTS Attorney Dehner explained that outside of the investments as mentioned, there were some compliance changes as part of the ordinance, Federal/State compliance items that were technical in nature that would not have any substantial impact on the Plan. Mr. Dehner said that in the Administration category, which hopefully was going to bring in more money and enable improvements of benefits without increased costs to the City or to the members or in combination therewith, is this pursuant to the advice of the investment advisors that fund the employees is to ask the City to allow us through passing the ordinance to go to 10% percent of the Fund in international investments, the goal there being to enhance the investment returns. Chairman Miller said that the Fund was pushing two million dollars, and the members had better things to look forward to with the investments that SunTrust is able to do, and they were working from a much broader base. Actuary Garrett explained that the Board had authorized SunBank to go up to 50% exposure on equities. Studies pointed out that if individuals want to invest in their own retirement they were typically very conservative and if the members themselves had to take this two million dollars in assets (or close to $2M) and invest it, things would typically be CD's, or treasury bills, which were safe, secure things that don't really appreciate as much as the currently invested stocks and bonds. Mr. Garrett said that by hiring a professional money manager with full discretion on how the assets are invested, and then giving him policy guidelines that allow him to invest liberally, you would say for a pension with a 50% exposure to equities, you would General Employees' Retirement Trust Fund November 29, 1995 allow for a lot better probabilities of having gains or added money into the Fund due to investment returns rather than just enough or just what they expect. Mr. Garrett said that they assume that the assets grow at 8% per year in actuarial valuation but hopefully the Fund was now set with SunBank to beat that every year. Member Dabbs explained that historically money is made in the stock market over time, and that is why he supported the 10% from 40 to 50% in equities. This Fund was there for the long haul. He explained that the Board was not going to put enough of the money at risk to cause a problem, and felt that is was their duty to do the best they could with their dollars. The Fund was diversified in stocks, bonds, some treasuries, and very little cash. The membership was given an opportunity to ask questions of the Board and the Fund's advisors. Chairman Miller announced the dates and topics for the pre-retirement seminar and encouraged member participation. ADJOURNMENT Chairman Miller adjourned the meeting at 7:10 p.m. Respectfully submitted, ttaiiLL Ju ' Lewis, Clerk/Stenographer a:\wp60\GE 1129.95\j fl tray 8