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HomeMy WebLinkAbout02-14-2001 Minutes Minutes of the Quarterly Meeting of the CITY OF OCOEE GENERAL EMPLOYEES PENSION BOARD Held on February 14,2001 At 150 N.Lakeshore Drive Ocoee,Florida 34761 The meeting was called to order at 10:08 a.m.by Chairman Dabbs. Present were Trustees Cornell,Ison,Oliver,and Smith and it was noted that a quorum was present. Chairman Dabbs advised that the minutes of the meeting of the Board of Trustees held November 8,2000,had been circulated to all Trustees for review. Before asking the Trustees for approval of the minutes,Chairman Dabbs indicated that he knew of at least one correction to those minutes. The correction needed to be made to the bottom of page three of the minutes where it states "the actuarial report was given by Lee Foster..."It should be changed to read,"the actuarial report was given by Ward Foster." Before approval of the minutes,Chairman Dabbs chose to deviate from the agenda to mention that Jo Ann Lacey,representing West Orange Secretarial Services,Inc.,was in attendance at his invitation. He advised he had visited with her a month ago and had intended to get notice of that meeting into the packet sent to the Trustees so they could be aware of the conversation regarding contracting with her to take the minutes at the Board meetings. He indicated that due to a miscommunication between him and Trustee Cornell,it had not been sent as planned. The memo had been included for each of them today. He had wanted the Trustees to have the opportunity in advance of the meeting to peruse the memo because, though he had been charged with the responsibility of hiring someone for this position,the rate quoted was higher than had been authorized and that he was not trying to operate independently. The rate quoted was $25.00 per hour if Ms.Lacey comes to the meetings and takes the minutes,transcribes them,and gets them back in good order. The rate would be$22.00 per hour if tapes of the meeting were taken to her for transcription. Chairman Dabbs opened the floor to discussion. Trustee Ison commented that he had read the memorandum and offered his appreciation to Chairman Dabbs for working on this. He then made a motion that Ms.Lacey be hired at the$25.00 per hour rate so that all of the work could be handled by her in its entirety. Trustee Smith seconded the motion. It was,on motion duly made and seconded,unanimously adopted. RESOLVED,that Jo Ann Lacey,West Orange Secretarial Services,Inc., be hired as Recording Secretary,at the rate of$25.00 per hour. Ms.Lacey was invited to tell the Trustees something about herself. She indicated that she had been in the area for thirty years,having owned and operated her secretarial service for the past nine years, and that she looks forward to working with the Board. Chairman Dabbs thanked the members of the Board of Trustees for their vote of confidence and reminded them that when they make comments or motions to the Board,they should first identify themselves before speaking so their names could be properly recorded. Attorney Lee Dehner advised Ms. Lacey that he would be preparing a contract to be presented to the Board for the rate of$25.00 per hour. A brief conversation ensued in which Ms. Lacey and Attorney Dehner determined that the contract would actually be with the corporation,West Orange Secretarial Services,Inc. Attorney Dehner advised that there were two things that Ms.Lacey needed to know according to Florida Law. One is that the original tape needs to be maintained for the public record. It is not to be destroyed. The second is that it is not to be a verbatim transcript. He also advised that the minutes should state what transpired and,since the minutes are disbursed to the membership,they should clearly describe what was discussed. 1 (ris. Chairman Dabbs advised Ms.Lacey to do the minutes this first time and,after review by the Trustees,she would be advised if they are acceptable as presented or if the Trustees would prefer to have them done a different way. Attorney Dehner indicated that the minutes of the meeting of November 8, 2000,which had been transcribed by Chairman Dabbs,could be used as an example. Trustee Oliver expressed the appreciation of the Board to Chairman Dabbs for doing the minutes the last several meetings. Chairman Dabbs returned to the agenda for discussion and approval of the minutes of the last meeting. Other than the correction previously noted,there were no additions or corrections. It was,on motion made by Trustee Oliver and seconded by Trustee Cornell,unanimously adopted. RESOLVED,that the minutes of the meeting of the Board of Trustees of the General Employees Pension Board,are hereby approved. The money manager's report from TRUSCO Capital Management was called for from representatives Tim Nash and Diane Garcia. Quarterly reports were distributed to those present. Mr. Nash began their report by advising the Board that the market lately had been a wild ride,different from 1999. Smallcap and midcap stocks had double-digit returns,while technology stocks were in negative territory,down 39%,and the S&P 500 was down 9.1%. Limited caps were up 12%for the year. With these fluctuations,diversification is rewarded. The major market indices shows that the Russell 1000, which is the new benchmark for the fund,was down 9.0%for 2000. The Sector Indices shows that 30 year treasury bonds were one of the best performers of the year,up 12%. To give an idea of what is going on in the marketplace,it was noted that the Federal Reserve has had six interest rate increases in the last year. Where there are problems are in Fed Funds Futures where there will probably be another 1/4 to'A percent cut in the next year. It is a volatile marketplace in which lower interest rates may promote improvement. Cr Mr.Nash noted again that diversification is important. He commented that even G.E. and Wal- Mart stocks are down 13%and that long-term rates will be coming down,probably in June or July. The Lehman Aggregate Index was up 11.63%overall for 2000. Corporate bonds have the highest rate of return with AAA averaging 5%. The entire performance for the City of Ocoee General Defined Benefit Pension Plan is up 12.08%for the year. Fixed Income and SunTrust Bonds up 10-3/4%for year. Mr.Nash advised that the Finova Bonds had been repaid[$13,241.86]. These bonds were not high quality. They are out of the portfolio and the loss has been reimbursed to the fund. Chairman Dabbs indicated that that was item B under old business on the agenda and,if discussed now,will not need to be addressed again according to schedule. Mr.Nash invited questions about the investment report. Chairman Dabbs advised Mr.Nash that it appeared he could take the report for the previous quarter and see that the same things are happening now as then. He asked for the Board's edification, information about the President's proposed tax cut and how that tax cut would effect the investment environment,and stated that,in his opinion,it doesn't seem to be fiscally prudent. Mr.Nash responded that the President's tax cut could be a plus for the marketplace and U.S. economy. Mr.Greenspan,of the Federal Reserve,reduced the interest rate and gave his stamp of approval. The economy is slowing and they are trying to keep inflation in check. If the interest rates increase again, people will have to take more money out of their pockets and then you will see the importance of the tax reduction which gives immediate cash to workers from a retroactive standpoint as is expected to be retroactive to January. Chairman Dabbs thanked Mr.Nash for his information. He then invited Mr.Jeffrey Swanson from Merrill Lynch Consulting Services to make his presentation. (ro Mr.Swanson noted that$6.4 million is the total of contributions which have been put in over time and the value is now over$7 million. He also noted that since 1999 the value has been increasing 2 quarterly and has generated a positive cash flow. 2000 was not a bad year for all stocks,though car NASDAQ technology stocks were down about 50%from the high in the middle of the year. Looking back over the five years prior to 2000,the NASDAQ was also down. The STI Growth Fund held well even though the technology stocks hit the skids,down 16%for the last quarter. The portfolio for the full plan held up quite well,down 2%. The S&P 500 were down 8%on the quarter. Small caps were also down. The international market made a nice come back. The Balanced Portfolio Returns have been above average with good performance over the last two quarters. The one-year number improved 5%. The average mark for these returns is determined by the average for approximately 1600 portfolios universally. The goal is for this fund to stay above the average. The fund has done quite well,even though the last quarter wasn't a very good quarter. Looking at all areas,on the long term,the fund is above average. Chairman Dabbs mentioned that he thought the allocation was to be 60-40,stating that the equity portion appeared to be only 43%. Trustee Cornell questioned why the objective is not being met and whether it was a performance issue or a market issue. Mr.Swanson advised that it was due to three reasons:market,performance and also policy issues.He stated that the policy is very conservative and the goal very aggressive. Chairman Dabbs questioned whether the policy said that is should be in the top 25 or top 30%. Attorney Dehner responded that it was to be in the top one-third. Mr.Swanson verified that figure and stated that the goals should be realistic and obtainable. Chairman Dabbs stated that he remembered Craig recommending the top one- third and wondered if everyone was really working along the same lines. Trustee Ison stated that the goal of being in the top 33%over a five-year period of time seemed to be a realistic achievement and that there are money managers who have maintained that goal. Trustee Cornell inquired of Mr. Swanson if he suggested that the policy to changed to the top 50%. Mr. Swanson responded that the account has been in the top one-half,or the top one-third and though he agrees with the comments being made,however,whether in the top third or the top half is really not much different as our goal is aggressive and our direction to the money manager is conservative. Trustee Smith asked for clarification of that answer and specifically asked if there are managers out there to handle these funds who can consistently perform in the top-third. Mr.Swanson affirmed that response,however,again referred to the policy of this Board. Chairman Dabbs reiterated his statement that he understood the primary objective would be the top one-third as indicated in the minutes of the November 2000 meeting. This was a goal that everyone seemed to agree upon,including Mr.Nash and Mr. Swanson,and now the suggestion appeared to be the top one-half is a good benchmark. He further stated that this is a difference of 17 points and he considers that to be a significant amount. Though mentioning to the money manager that he wanted to be fair,he also indicated his disappointment to Mr. Swanson that he is hearing two different things from him and that Mr.Nash is agreeing with Mr. Swanson that this is reasonable. He then asked the Board members if there is a need to again change the policy that was just changed to reflect the top-half. Trustee Smith commented that the policy is not unreasonable,that there are managers out there that are managing funds who have the same basic investment strategy as this Board and they are performing in the top one-third,that we were in the top one-third last time and there were no vehement objections from the money manager. Trustee Cornell stated that the Board cannot continue to change the policy as a result of non- performance from a money manager who fails to do what the Board wants. The policy has been changed from the top 20,to the top one-third and now,perhaps to the top one-half. She commented that at some point the Board has got to draw the line and give clear directive to the money manager,that the Board will not continue to change its policy to accommodate a non-performing manager. (trirFurther comment from Chairman Dabbs is that his understanding of Mr. Swanson's response is that if our goal is very aggressive,but the direction to the money manager is very conservative. If so,it seems that this Board needs to take some sort of action and cannot fire a man if the Board ties his hands for 3 the investments if it is going to take a miracle or an act of God for him to reach the goal. Trustee Ison (09 stated that he would like to cut this to the bottom line and,in the way of a motion,request Attorney Dehner,on the May 9 agenda,to give the Board a simple outline to the procedures to select a new money manager. Seconded by Trustee Smith,passed by a vote of 3-2,it is hereby RESOLVED that Attorney Dehner is directed to give this Board guidelines as to the proper procedure for choosing a new money manager and for those guidelines to be presented as an Agenda item at the May 9,2001 meeting. Further discussion from Chairman Dabbs is that the Board needs to determine why the objective is not being met,that there is nowhere in the reports that says the policy is conservative and the goal aggressive,so anyone looking at that could still not see if it was accurate. Trustee Oliver stated that they previously had a company that did really well and all of a sudden their investments got into an altogether different area and they were let go and it really changed everything. She stated that she would like to know that the funds that are being compared are like funds and questioned whether if compared with a$100 Million fund with like assets,is something different as compared to one with$7 Million or$10 Million. Mr.Swanson responded that the percentages are correct,no matter what the funds are or what their allocations may be. Trustee Ison stated that,should this Board decide to change its money manager,that it consider those in the range of$6 to$10 Million funds and their performance in the top-third over a five- year period of time. Moving on to Item II on the Agenda,Summary Plan Description,Chairman Dabbs indicated that all of the Trustees have the Plan,that it has been reviewed in its entirety by Trustee Cornell,and appears to be in order. Calling for any comments or additions or changes to the Plan,there being none,Trustee Cornell motioned that the Summary Plan as presented by Attorney Dehner,be adopted. Seconded by Trustee Smith,it was unanimously adopted. RESOLVED,that the Summary Plan,prepared by Attorney Dehner,be adopted as presented. Under Item III on the Agenda,Ward Foster was scheduled to present a Survey Discussion re: Supplemental Insurance. Mr.Foster was delayed so the Board moved on to the Discussion of Records Storage. Chairman Dabbs indicated that the former City Manager had not been interested in having the Board records stored next to his secretary's office and that there had been the suggestion that off-site storage facilities be rented. Trustee Cornell indicated that the purging of the files has not yet been completed. Chairman Dabbs indicated that the Board needed some direction as to the course of action to be taken. Trustee Smith suggested that Chairman Dabbs approach the new City Manager to see if he would have any problem with the records being stored as originally suggested. Chairman Dabbs indicated that he would approach the new administration and asked that this be tabled until the May meeting. He also advised Trustee Cornell to let him know when a process was organized to purge the records and he would assist with that. Trustee Cornell advised that she is determining through archives what must be kept and what can be destroyed. Once determined,the appropriate course is to shred the disposable records and that a shredder is now available. Item C. Drop Plan Application,Ordinance and Summary Plan. Attorney Dehner has provided documents for the Board. Chairman Dabbs indicated that the items in this presentation were sufficient to be emailed to the employees and Trustee Cornell indicated she would handle that using the disk provided by Attorney Dehner. Item D. Finova Bonds. Chairman Dabbs indicated the final amount for these bonds was $13,241.86. He thanked Merrill Lynch and TRUSCO for working out the amount and reimbursing those funds. 4 Item IV,A.Payment of Bills. Chairman Dabbs indicated to the Board that they have been presented with a list of the bills. He asked for any additions or comments about the bills. Trustee Cornell commented that there are charges pending for telephone calls from the human resources department directly to Attorney Dehner. Her concern was not because of direct calls being made to the attorney,but that the Board needs to be apprised of what the problems are and whether they are problems that need to be addressed at the Board meetings. She also stated that she feels that perhaps there should be a motion to have everything come through a Board member and to prohibit others from contracting the attorney unless it is through a Board member. Trustee Ison agreed,adding that the Chairperson should be the first one contacted and,in his or her absence,the next perssnin line or the next and on downs the line. Trustee Smith stated that he believes the employees shoultUve the right to contact legal counsel directly. Attorney Dehner was asked for input on the subject. He responded,particularly in respect to a call from the former City Manager,in which he was advised that the topic brought up was indicated by the City Manager to be an improvement. Mr.Dehner indicated to him that if there is an improvement,it must be before the Board. If there is an issue that is before the Board or coming before the Board,then he feels it is appropriate to discuss it if there is a question about it. If it is regarding some new issue that has not before the Board,he would advise that it needs to come before the Board before h- - - that is what he uses for a guideline. Trustee Ison stated again that he feels it is very important that some Boa when someone is contacting the attorney,that there will be a charge for it,and that that may need to be put on the agenda at the next meeting. It is not a question of th billing,but the Board certainly needs to know if there is an emergency situation. C indicated his respectful disagreement stating that while technically this may be corn create an adversarial position. Trustee Ison made a motion,seconded by Trustee vote of 4-1 and RESOLVED that Fund Members need to contact the Board Chairperson or another Board member about any problem or question prior to contacting legal counsel with the intent of this resolution to be ensuring the Board be made aware of any issue that may need to be placed on a Board meeting agenda. Chairman Dabbs moved on to discussion of any correspondence that needed to be reviewed. Trustee Cornell advised that there was a renewal for Errors and Omissions insurance. Chairman Dabbs stated that he was sure everyone on the Board wanted the insurance and asked that it be included with the previously listed bills for payment when that motion is made. Trustee Cornell continued and advised of the required statement of financial disclosure which is to be sent to the Supervisor of Elections by each Trustee. Attorney Dehner advised that in addition,now when a Trustee steps down it is also necessary to file a financial disclosure and he will make the forms available and those stepping down this year will file one for 2001. The Board was also reminded of an approved attorney fee increase to$210.00 per hour, effective January 1,2001. Trustee Cornell advised that the investment policy statement has been filed. Attorney Dehner also advised that a copy of the portfolio needs to be sent,at least annually to the Bureau of Program Services,Division of Retirement,but he has a note that it will be sent quarterly by TRUSCO. They will be added to the mailing list and will receive a copy just as do the Board Members. Motion was made by Trustee Ison,seconded by Trustee Oliver,to approve payment of bills as presented,including the addition of the premium for Errors and Omissions insurance. It was unanimously adopted. RESOLVED that the list of bills would be paid as presented. The Agenda for the meeting scheduled for May 9,2001 will include information on the money manager search procedure and records storage/disposal. The survey discussion will be tabled until the next meeting to be presented by Ward Foster. 5 When asked about any other comments or discussion,Trustee Ison mentioned that he is continually running into City employees with questions. One of the questions was raised by Robert Howell who wants to know if there is an 30-year and Out plan being considered for general employees. Chairman Dabbs stated that this was not covered in the current budget but the Board thinks it is a good idea. The former city manager said he couldn't fund it because of the performance of the fund but there may be some money in the next budget and there would be an amendment to the old retirement program,if it is finally adopted by the Board. It will then go through the process of having it included as an Agenda for the City Commission. Chairman Dabbs reminded each Trustee that if there is any other item that needs to be added to the Agenda for the May 9,2001 meeting,they should contact Trustee Cornell to have it added. There being no further business to come before the meeting,it was,on motion duly made and seconded,unanimously adjourned at 11:42 a.m. Respectfully submitted, Jo Ann Lacey Recording Secretary of the Meeting L Co 6