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HomeMy WebLinkAbout11-14-1996 Minutes r L THE CITY OF OCOEE GENERAL EMPLOYEES' RETIREMENT TRUST FUND (PENSION BOARD MEETING) - November 14, 1996 Acting Chairperson Grafton called the meeting of the City of Ocoee General Employees' Retirement Trust Fund to order at 3:20 p.m. in the Commission Chambers Conference Room of City Hall. The roll was called and a quorum declared present. PRESENT: Acting Chairperson Grafton, Members Carter, Murphy, and Oliver. Also present were Actuary Foster, Attorney Denner, Money Manager Ballew, Administrative Officer Garcia, and Clerk/Stenographer Lewis. ABSENT: Member Dabbs. ELECTION OF CHAIRPERSON Member Oliver nominated Member Dabbs for the position of Chairperson that also resulted in a consensus by the Board. APPROVAL OF MINUTES Clerk Stenographer Lewis asked for a correction on page 1, Approval of Minutes of the August 13, 1996 meeting to read "In response to Clerk Stenographer Lewis, Member Oliver said that Chairman Miller had seconded the motion on page 6..." rather than "... Chairman Miller said that she had seconded ..." Member Oliver, seconded by Chairman Grafton, moved to approve the Minutes of the August 13, 1996 as corrected, and to approve the Minutes of September 20, and October 8, 1996 General Employees' Retirement Trust Fund meetings as presented. Motion carried unanimously. RECESS - 3:25 P.M. - 3:30 P.M. OTHER BUSINESS DISCUSSION/ADOPTION OF REVISIONS SUMMARY PLAN DESCRIPTION - Attorney Dehner said that he would revise and incorporate the new Plan provisions in the Summary Plan Description. He will send a draft for review by the Trustees prior to adoption at the next meeting, and then to be distributed to the members. In response to Mr. Dehner, Clerk Stenographer Lewis said that she will provide him with a new Members roster. Mr. Dehner asked that the Actuary provide him with a summary of the actuarial and financial data (a new schedule "B"). He suggested placing Discussion/Review of the Operating Rules and Procedures on the next meeting agenda. Chairperson Grafton asked that they look into their process right after elections, and expressed concern about the number needed for an affirmative vote in accordance with the Rules & Regulations to pass anything. She said that they had set up a Canvassing Board with only two people, and that we must do something different for solving our election problems. L General Employees' Retirement Trust Fund November 14, 1996 RESOLUTION RE:SIGNATURES AUTHORIZING DISBURSEMENT Chairperson Grafton read the resolution regarding signatures authorizing disbursement that is required by the Custodian. Each Member signed two original documents (one each - Plan and Custodian). Member Carter, seconded by Member Oliver, moved to adopt the Resolution as presented. Motion carried 4-0. DISCUSS/SET 1997 MEETING DATES Discussion ensued about meeting times and dates. The consensus of the Board was reached to meet at 7:30 a.m. on the following 1997 dates: Monday, February 10 Wednesday, May 6 Wednesday, August 6 Monday, November 17 BILLS AUTHORIZED FOR PAYMENT Chairperson Grafton presented the bills for payment, and then requested approval of the Board to present to SunTrust for payment, the following bills: 1. Christiansen & Dehner Professional Services Rendered $ 1719.60 2. Judie Lewis, Recording Secretary Secretarial Services $49.05 3. Foster & Foster, Inc. Actuarial Services, analysis and report of Investment Performance for the Quarter ending September 30, 1996. $5,000.00 4. City of Ocoee September: Phone calls/Fax $8.30 October: Postage $19.52 TOTAL: $27.82 5. SunTrust Administrative Services Fee $4,564.23 Member Oliver, seconded by Member Carter, moved to approve payment of the bills as presented. Motion carried 4-0. Chairperson Grafton said that Russ Wagner had inquired as to why it was necessary that he 2 General Employees' Retirement Trust Fund November 14, 1996 place money back into the Plan as it had been placed there for him in prior employment with the City. Attorney Dehner said that in the previous plan, all contributions were made by the City but that once an employee terminated, those monies were spread upon the fund to increase its value for the remaining employees rather than being held in perpetuity for that employee in case he/she returned to the employee of the City. The current Plan provides a buy-back opportunity. REPORTS ACTUARY Actuary Foster presented the regular annual actuarial valuation of the Fund performed as of October 1, 1996. The contribution amount developed in the valuation was applicable to the City's fiscal year ended September 30, 1998. The contribution requirements compared with those developed in the October 1, 1995 actuarial valuations were as follows: Valuation Date 10/1/95 10/1/96 Applicable Fiscal Year 9/30/97 9/30/98 Total Required Contribution $452,862 $486,811 11 % of Total Annual Payroll 15.3% 14.4% Member Contributions 147,649 169,165 Balance From City 305,213 317,646 % of Total Annual Payroll 10.3% 9.4% As can be seen, the Total Required Contribution had increased as a dollar amount but had decreased when expressed as a percentage of Total Annual Payroll. The increase in the dollar amount was due to a 14.6% increase in Total Annual Payroll. The decrease in Total Required Contribution when expressed as a percentage was attributable to favorable actuarial experience over the past 12 months. The primary components of favorable experience were an investment return of 8.8% (Actuarial Assets Basis) compared with the 8.0% assumed rates of return and the average increase in members' salaries was less than the assumed rate. The balance of the Report presented additional details of the actuarial valuation and the general operation of the Fund. Actuary Foster said that the Plan had come from 27 to 75% 3 General Employees' Retirement Trust Fund (kw November 14, 1996 in more than five years that made a big cushion between past service liability. It had been a good year and there had been good actuarial experience. Action to accept the report was made later in the meeting but for sake of clarity is shown here. Member Grafton, seconded by Member Oliver, moved to accept the Actuarial Valuation Re•ort as of October 1, 1996 as •resented. Motion carried unanimousl . Actuary Foster will forward the report to the Division of Retirement. MONEY MANAGER Money Manager Ballew presented the following: 1) A Merrill Lynch Graph Chart. 2) An S&P500: Relative Performance by Sector - general information. 3) An STI Classic International Equity Fund Chart 4) The Investment Performance Report Ending September 30, 1996. Mr. Ballew explained the style and format of the report as the Board had two new members. Administrative Officer Garcia left the meeting at 4:38 p.m. Mr. Ballew announced that they were creating a product to meet the needs of those clients that would like exposure in the small and mid-cap products but not foreign stocks. The Plan already had money in an International Fund but this Plan did not have exposure to small and mid-size companies. He said that we were still concentrated in large high quality stocks but it was a diversification play, long term, small and mid-size companies giving a better return than large companies. Those groups by themselves were more volatile but when piecing a little piece of each of those asset classes into a bigger Plan you could smooth out the return. The current ordinance which does not allow this exposure would need changing, and then the Board could govern it at the Policy level. He will provide information about exposure of small and mid-size stocks at the next meeting. In response to Chairperson Grafton's request for guidance on whether the Plan needed to address that in order to change the portfolio, Attorney Dehner said that they had discussed this issue when they had gone forth with the re-draft, and the Board had decided to maintain the top in rankings. The Fire and Police Board had removed the restriction to go into small and mid- caps. PERFORMANCE MONITOR Performance Monitor Foster presented an analysis of the investment performance of the Fund for the period from January 1, 1995 through September 30, 1996. He said that the rate of return for the quarter was 2.4%. This rate of return matched the composite index of market indicators (50% S&P 500 Composite Stock Index, 45% Lehman Brothers Government/Corporate Bond 4110, 4 General Employees' Retirement Trust Fund November 14, 1996 Index, and 5% U.S. Treasury Bills) which also registered a return of 2.4%. The rate of return of the Total Fund outperformed the composite index (13.6% vs. 12.1%) and ranked in the 15th percentile of the Cadence Universe of investment managers for the one year period ended September 30, 1996. The equity portion of the Fund outperformed the S&P 500 over the latest one year period (22.0% vs. 20.2%) and ranked in the 17th percentile of the Cadence Universe. Actuary Foster commended the Money Managers on doing a good job, and said that the Board had made a good decision. In response to a memo dated October 31, 1996 from Clerk Stenographer Lewis stating that a general employee would like the minutes to reflect additional information such as the percentage performance for the quarter, as compared to the same quarter last year, the percentage performance for the quarter also in dollar figures, and a statement of fees for the same periods, Actuary Foster said most of the information was in the Money Manager's report but they generate the reports to provide that information. They did have all the history. Actuary Foster said that the members might want to know that the benefits that they receive from the program are independent of the performance of the Fund. It just makes it easier to Fund when you're getting this kind of good performance but whether we have a 20% return or a 5% return, in a given year, doesn't change the benefits. It was not like an individual account type plan where the better the Manager does, the better they do in terms of benefits. A copy of the request was provided to Money Manager Ballew. The Fund had crested the two million mark, and discussion ensued about benefit improvements in the Plan. A special meeting was scheduled for Wednesday, December 11, 1996, 7:30 a.m. to discuss and approve the Board's recommendation on such improvements to the City. RECESS -5:03 p.m. -Acting Chairperson Grafton reconvened the meeting with membership at 5:20 p.m. PRESENT: Chairperson Dabbs (arrived at 5:49 p.m.), Acting Chairperson Grafton, Members Carter, Murphy, and Oliver. Also present were Actuary Foster, Attorney Dehner, and Clerk/Stenographer Lewis. ABSENT: None DISTRIBUTION OF MEMBER CERTIFICATES Chairperson Grafton said that she had distributed membership certificates to all those who were present, and the others will be distributed from City Hall. Actuary Foster reported that the certificates should reflect the day, month, and year of birth and employment rather than if someone was employed on the first day of the month, the previous month was used for calculation. He asked that each employee verify this data. 5 General Employees' Retirement Trust Fund November 14, 1996 QUESTIONS/COMMENTS FROM AUDIENCE None DISCUSSION OF BENEFIT IMPROVEMENTS TO THE PLAN Lengthy discussion ensued about ways to improve employee benefits. Actuary Foster said that of all the benefit improvements that the Board could consider, the benefit rate was the most uniform, nondiscriminatory type of improvement, and it also increased the death benefits and any other vesting benefits. Chairperson Grafton reported that Attorney Denner had furnished a summary on how each City in our area did their calculations, and inquired as to how they could measure (size, area, etc.) cities of the same size as Ocoee to what everyone else was doing. Attorney Dehner said that it varied. Different city administrators were interested in different comparisons. Sometimes they were interested in cities in similar population, sometimes they were interested in cities in the county in the geographical area, and it was something as we moved forward in finding out what comparisons the City administration would like to see. He said that the Board's decision on their recommendation to the membership should be supported by a vast majority vote. In response to Chairperson Grafton, Attorney Dehner said that it would be necessary for the Actuary to do a calculation to determine what the gap should be between the General Plan and the Police/Fire Plan. Essentially, the test was that State monies provided for the Fire and Police Plan were buying a value of additional benefits for Fire and Police versus General Employees. There does need to be a gap. The Police/Fire Plan continues to have an earlier retirement age, and also a higher accrual rate but when the proposals are formulated by each of the Boards, the Actuary would do a calculation to make that determination. Attorney Dehner said that another question was whether the employees were willing to fund any of the increased cost to derive a higher accrual rate. He explained that the ordinance would need changing if the Board improved the benefit and raised the accrual rate or increased member funding. Also, in response to Chairperson Grafton, Attorney Dehner said they would have to go before membership as a vote (getting a mass majority) to see if the Plan members were willing to increase to 51/2% or whatever percent of their salary. He suggested sending two recommendations to membership - "A" and "B." "A" might be to increase the accrual rate to 21/2% coupled with some increase in member contributions, and "B" might be to increase the accrual rate to 2'/a% with no increase in member contributions. We would not want to propose this to City Commission for adoption and have over half of members of the Plan in the audience saying "we don't want it." We would have wasted a lot of time and money. Chairperson Grafton said, and confirmed by the Attorney, that if we did that a new hire must be informed by Personnel that as a condition of employment they must give x% of their salary to the Pension 6 General Employees' Retirement Trust Fund November 14, 1996 Board. Marian Green, an employee in the City Clerk's department, said that her observation from many of the younger people was an objection to having any more monies taken out of their salary. Member Murphy agreed with Ms. Green. Attorney Dehner explained that they had talked earlier about how the Plan was being administered, our favorable experience in over 5 years. He said that this Plan, as compared with other General Employee Plans in the State, General Employees that are in the FRS, is very competitive, and probably in terms of benefits, in the top quartile of General Employees Plans. Actuary Foster said that he could have the study ready by the December 11th meeting. Member Carter said that to the City it was going to be very important. He suggested looking at alternatives as Ocoee already had better benefits. Mr. Foster suggested they do a survey with membership. He said that in the early '70's it was not even beginning to fund the Plan, and they started to look at real costs. This Plan from day one had been required to meet standard. He also said that if we do this for the '97-98 year that we will know what the impacts will be. Member Dabbs arrived to the meeting at 5:49 p.m., and was informed that he had been appointed Chairperson of the Board. The Chair was accepted (at 5:55 p.m.) by Mr. Dabbs who was brought up to date on what had occurred earlier in the meeting. Action to adopt the actuarial report was taken here. Member Murphy encouraged mounting a PR campaign, especially if they were asking Plan members to contribute more. While several Board members wanted to improve methods to inform Plan members about their benefits, Clerk Stenographer Lewis said that the Board had held a Pre-Retirement Seminar earlier in the year, and the employees' newsletter announced meetings, as well as the benefits of each Plan. Member Murphy suggested that when a new hire comes on board with the City, they are required to check off or sign a statement. Member Oliver, seconded by Member Grafton, moved that Foster& Foster Inc. to do stud with the following: 1� Increasing the multiplier .25%i 21 To accept three (3) of the best 10 years; 11 Flat dollars a month supplement for retirees only; and 41 Include figures for employees that have already retired. Motion carried 5-0. ,• 7 General Employees' Retirement Trust Fund November 14, 1996 ATTORNEY COMMENTS Attorney Denner had no additional comments. ADJOURNMENT Chairperson Dabbs adjourned the meeting at 6:17 p.m. Respectfully submitted, J • e Lewis, Clerk/Stenographer a:\wp60\GE 111496.M\jfl L 8