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HomeMy WebLinkAbout11-10-2004 Minutes General Employees Pension Board Board Meeting—November 10,2004 Page 1 L Minutes of the Quarterly Meeting of the CITY OF OCOEE GENERAL EMPLOYEES PENSION_ BOARD Held on November 10, 2004 At 150 N. Lakeshore Drive Ocoee, FL 34761 Vice Chairperson Ed Bishop called the meeting to order at 10:08 a.m. He then called the roll. Trustees Jerry Sauerwein,Jean Grafton,Thomas A. Hendrix, Sr. and Mary Anne Swickerath were all present, constituting a quorum. Attending the meeting by invitation were Attorney H. Lee Denner, Mike Sebesta representing TRUSCO, Michael Callahan representing Merrill Lynch, Ward Foster representing Foster&Foster, Inc., and Jo Ann Lacey, Recording Secretary of the Meeting. Three General Employee Members were also in attendance. Vice Chairperson Bishop, on behalf of the Board, extended a welcome to Trustee Thomas A. Hendrix, Sr., newly appointed by the City Commission to complete former Chairperson Tom Ison's term. He asked Trustee Hendrix to tell the Board about himself. Trustee Hendrix greeted the Board and said that he has been an Ocoee resident since 1959, is married to Anne and has three sons. He said he is self-employed and has been a Truitee for the Hartle Bowness Trust for the last ten years. He assured the Board that he would do his best in replacing Tom Ison. Vice Chairperson Bishop then called for review of the Minutes of the Quarterly Meeting held on August 11, 2004. Copies of those Minutes had been previously circulated to the Trustees. The Trustees were asked if there were any corrections or additions to the Minutes. There being none, it was on motion by Trustee Grafton, seconded by Trustee Sauerwein,unanimously RESOLVED that the Minutes of the Quarterly Meeting of the Board of Trustees of the General Employees Pension Board of August 11,2004,be and they are hereby approved. Agenda Item II.A. called for the election of officers for the position of Chairperson and Vice Chairperson. After a brief discussion, Vice Chairperson Ed Bishop was nominated by Trustee Grafton for the position of Chairperson, seconded by Trustee Hendrix, it was unanimously RESOLVED that Trustee/Vice Chairperson Ed Bishop is hereby elected to serve as Chairperson of the City of Ocoee General Employees Pension Board, effective immediately. L General Employees Pension Board Board Meeting-November 10,2004 Page 2 Chairperson Bishop then called for nominations for the position of Vice Chairperson. After a brief discussion, Trustee Mary Ann Swickerath was nominated by Chairperson Bishop, seconded by Trustee Hendrix, it was unanimously RESOLVED that Trustee Mary Ann Swickerath is hereby elected to serve as Vice Chairperson of the City of Ocoee General Employees Pension Board,effective immediately. Chairperson Bishop then called upon Mr. Michael Sebesta, Managing Director, TRUSCO Capital Management for the Money Manager's Report. Mr. Sebesta greeted the Trustees and reported that things had generally slowed down in the market in the last quarter and that the S&P was down. He attributed this downturn to several factors. He said that the recent hurricanes had hit hard,that consumer confidence was down and that the Presidential election had also contributed. He then reported that, despite these factors,the fund was up 9.7%for the fiscal year. He advised that the short-term interest rates were up an additional .50 points and that it was expected for the Fed to raise the rate to 2.0%at their meeting later today. He said that the economy was self-sustaining and there was currently no apparent risk of recession. Mr. Sebesta stated that value stocks outperformed growth stocks but it is expected that will change and the growth stocks will begin a trend to outperform the value stocks. He reported that the energy sector was the biggest sector and that industrial, material, and telecom stocks were also up solidly while technology and healthcare stocks fell. He reported that the portfolio does have an overweight in stocks but assured the Board that the market is being watched carefully. He stated that consumer spending accounts for 2/3 of the GDP. He pointed out the inflation potential, citing the CPI (including oil)had spiked up during the year. Reporting on the value of the portfolio at the end of the quarter, also the fiscal year end, Mr. Sebesta was pleased to report a value of$10,509,349.76, as compared to $8,883,712.10 at 9/30/2003. He reported that the portfolio was down 0.19%for the quarter, for the fiscal year,that figure was+9.74%and for a ten year period, it was +9.55%. He called attention to the asset allocation which shows Equities of 57.1%, Fixed Income Bonds of 37.5%and cash of 5.4%. He reminded the Board that stocks had been moved into separate equity holdings for recapture and that had all been straightened out by the end of September with the internal systems now perfected. He advised that the individual listings for the Core Growth Holdings and the Relative Value Holdings are shown, starting on page 24, under Tab II, and that under Tab III there was a complete breakdown of the funds invested in mid-cap, small-cap, and international equity funds. Following a brief discussion of his report, Mr. Sebesta asked if there were any additional questions or comments. There being none, he thanked the Board for their attention. Chairperson Bishop called upon Mr. Michael Callahan, representing Merrill Lynch, for the Monitor's Report. Mr. Callahan greeted the Board and stated that he was making this presentation on behalf of Mr. Larry Cole. He stated that his report would be very similar General Employees Pension Board Board Meeting—November 10,2004 Page 3 (iv to that of Mr. Sebesta and he called the Board's attention to the Merrill Lynch report, Tab I and reported that the Market Value at 9/30/2004 was $10,504,160 (a slight variation from the value represented by TRUSCO),representing a return for the fiscal year of a bit over 9.5%. He indicated that this return was above average for the fund peer group. He reported that the equity portfolio drove the ship for the reporting period. Mr. Callahan then called attention to page 17, under Tab III of the report which showed that the fixed income portfolio returns for this fund were equal to or slightly better than the median for all except the 2 year period and on page 18, reported that the fixed income sector performance for the fund was 2.9%. He reported that this is the sector for which SEIX Investment is the Bond Manager. He cited an insert entitled"Fixed Income Manager Information"which showed a comparison of SEIX, as manager, against the Merrill Lynch benchmark. This report indicated that in the most recent periods and also in the longer 10 year period, SEIX had outperformed the benchmark and, in the 3, 5,and 7 year periods was just slightly lower than the benchmark. He said that Merrill Lynch has a comfortable opinion of SEIX and feels that it is a positive for TRUSCO. Continuing on with his report, Mr. Callahan mentioned the International returns. He stated that they have averaged nearly 24%per year for the last three years and that, if this trend continued, perhaps there should be consideration to increasing the International target to 15%. He reported that on the Investment Policy Checklist,the fund was almost totally in compliance,with the only exceptions related to the 3 to 5 year target indexes which covered the period when all of the returns were really sagging because of the extreme volatility in the market. Mr. Callahan asked the Board for any questions or comments. Following a brief discussion,he thanked the Board for their attention. Chairperson Bishop thanked Mr. Callahan for his report and then called on Mr. Ward Foster,representing Foster& Foster, Inc, for presentation of the Actuarial Valuation Report as of October 1, 2004. Mr. Foster greeted the Trustees and stated that the purpose of the annual report, which gives a snapshot as of October 1, 2004, was for budgeting purposes. He reported that $1,166,594 would be required, a total of 18.9%of the annual payroll required for the budgeting period. He stated that this was due to less favorable actuarial experiences during last 12 months. Mr. Foster called attention to page 13 of his report for the Actuarial Asset Valuation as of September 30, 2004 on which was indicated the details for determining the annualized rate of return for the prior four years, including those years ended 9/20/01 through 9/30/04. The rate of return was determined to be 1.56%. He explained that this number is low primarily due to the negative rate of returns for 2001 and 2002, even though 2003 and 2004 were positive. He said that investments now are on an upward trend and he feels optimistic and that annualized rate will continue to increase,particularly as each of the negative years is dropped. Mr. Foster stated that this Plan is well-funded and that all indications are that the economy has recovered and quarterly returns will begin to increase. General Employees Pension Board Board Meeting—November 10,2004 Page 4 L There was a general discussion among the Board Members and Mr. Foster about his report and, it was on motion made by Trustee Grafton and seconded by Trustee Bishop, unanimously RESOLVED,that the City of Ocoee Municipal General Employee's Retirement Trust Fund Actuarial Valuation Report as of October 1,2004, reporting Contributions Applicable To the City's Fiscal Year Ending September 30,2006, as presented by Foster& Foster,Inc., be and is hereby approved as presented. Chairperson Bishop,following direction from Attorney Denner, asked Mr. Foster for his recommendation on what the expected annual rate of return will be. Mr. Foster answered that would be 8%. Following a brief discussion, it was on motion made by Trustee Sauerwein and seconded by Trustee Hendrix, unanimously RESOLVED, that the Board has determined, based on the recommendations of its consultants,that the total expected annual rate of return for the current year and each of the next several years and the long term thereafter will be 8% net of investment related expenses. Attorney Denner reminded Secretary Grafton that the language of this motion should go into correspondence to be signed by the Chairman,to Charles Slavin, the State Actuary, with copies to the City and to Mr. Foster. Chairperson Bishop began a discussion regarding the status of proposed improvements to the benefits. He reported that the resolution made in the August meeting for this Board to recommend to the City Board of Commissioners an increase in the benefit rate multiplier from 2.5%to 3.0% and an additional monthly supplement had been pulled from the Agenda. He stated that the bottom line on this was that with a funding requirement of$302,254 it was cost prohibitive. He then asked the Trustees what they would like to do next. During a general discussion,the monthly supplement was mentioned, as was the increase in the benefit rate multiplier. Attorney Dehner reminded the Board Members that it was their duty to focus on those improvements which would benefit the most plan members. He added that the multiplier would benefit most members. Mr. Foster advised that a supplement would be a good feature and that he felt it would not be too difficult to make a case for it. He said if the City were to fund it, it would cost an additional 6/10%of payroll and, if the employees paid for it, it would require 7/10%. Most of the comments during the discussion favored the monthly supplement. It was suggested that this would require a lot of research. There was also some interest shown for the 30-and-out. It was pointed out that the 30-and-out would benefit very few members. There was discussion about a COLA but it was decided that that would be too General Employees Pension Board Board Meeting—November 10,2004 Page 5 cipe cost prohibitive at this time. Robert Howell, Utilities Dept., suggested that this all be tabled until the next meeting. Following a brief discussion among the Trustees, it was on motion made by Trustee Grafton,seconded by Trustee Sauerwein, unanimously RESOLVED,that Ward Foster of Foster& Foster,Inc., be and he is hereby directed to prepare a study as soon as possible to provide a monthly supplement,with a maximum benefit of$200,for current and future employees,not including vested terminated employees. Chairperson Bishop asked Attorney Denner for his comments regarding a"Re-hire Policy"and modifications to the Plan. Attorney Denner reminded the Board that they had previously discussed the implications of Federal and State Law and that if someone is interested in reemployment with the City,that rehiring must be done in accordance with State and Federal Law. He said that one of the main considerations would be whether or not payment of retirement benefits would continue and also, if the person is reemployed, would he/she be given the opportunity to participate in the Plan again for the second period of employment. Following a brief discussion, it was, on motion made by Trustee Grafton,seconded by Trustee Sauerwein,unanimously RESOLVED, that Attorney H. Lee Dehner be and he is hereby directed to prepare an Ordinance which will allow a retired employee, retired through normal retirement,to be re-hired by the City and to state that said employee,once re-hired,will be allowed to continue to receive payment of retirement benefits previously earned. The Ordinance will further state that the re- hired retiree will not be eligible for plan participation during the second period of employment. Chairperson Bishop then called for suggestions for setting meeting dates for 2005. Attorney Dehner read a list of suggested dates for 2005 and 2006. Those dates were as follows: 2005 - March 16 May 11 August 10 November 9 2006 - February 8 May 10 August 9 November 8 L 5 General Employees Pension Board Board Meeting—November 10,2004 Page 6 Following a brief discussion, it was, on motion made by Trustee Grafton, seconded by Chairperson Bishop, RESOLVED,that the Quarterly Meetings of the City of Ocoee General Employees Pension Board for 2005 will be held on March 16,May 11,August 10,and November 9,and that for 2006,said meetings will be held on February 8,May 10,August 9, and November 8. Chairperson Bishop then called on Attorney Denner for comments. Attorney Dehner stated that he had already discussed everything he needed to but did advise Trustee Hendrix that he would need to file the required statement of financial disclosure (1-F) with the Supervisor of Elections if he had not already done so. Chairperson Bishop, along with Secretary Grafton,then presented the Board Members with information regarding payment of bills. Following a brief discussion, it was on motion by Trustee Grafton,seconded by Trustee Bishop, unanimously RESOLVED that all invoices be approved and paid as presented. Chairperson Bishop called for any new business or comments from the Board. There being none,the meeting was adjourned at 12:52 p.m. Respectfully submitted, Jo Ann Lacey, Recording Secretary of the Meeting rdi.4kty Approved by: Ed Bishop, Chairperson L 6