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HomeMy WebLinkAbout03-16-2005 Minutes Minutes of the Quarterly Meeting of the CITY OF OCOEE GENERAL EMPLOYEES PENSION BOARD Held on March 16,2005 At 150 N. Lakeshore Drive Ocoee, FL 34761 Chairperson Ed Bishop called the meeting to order at 10:07 a.m. He then called the roll. Trustees Jean Grafton,and Mary Anne Swickerath were present,constituting a quorum.Trustee Thomas Hendrix was absent. It was noted that there was also a vacant chair due to the resignation of former Trustee Jerry Sauerwein in the interim since the last Pension Board meeting. Attending the meeting by invitation were Attorney H. Lee Definer,Mike Sebesta and Diane Garcia representing TRUSCO, Larry Cole representing Merrill Lynch, and Jo Ann Lacey,Recording Secretary of the Meeting. Four General Employee Members,Mayor Scott Vandergrift and City Clerk Beth Eikenberry were also in attendance. Chairperson Bishop then called for review of the Minutes of the Quarterly Meeting held on November 10,2004. 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. Trustee Swickerath stated that she had been absent from that meeting but was shown as being in attendance and asked that the minutes be changed accordingly. There being no other corrections or additions,it was on motion by Trustee Swickerath, seconded by Trustee Grafton,unanimously RESOLVED that the Minutes of the Quarterly Meeting of the Board of Trustees of the General Employees Pension Board of November 10,2004, be and they are hereby approved as amended. Chairperson Bishop then asked for the Money Manager's Report from the TRUSCO representatives. -Diane Garcia advised the Board that now that the investments of the Plan are individually managed they were being watched closely. She indicated that Larosh Coffman,Attorney,would be monitoring the individually managed accounts. She said that he has been set up to receive hard copies of the data and that there would soon be website access available for a"Portfolio View". She stated there were forms which would need to be approved for this access to be available and that she had not yet received those completed forms from the Board. She asked if they should be sent again. Trustee Grafton responded that she does have the forms in hand and will complete them in due course. Michael Sebesta then greeted the Board and advised that he would be reporting for the period ended December 31,2004,the 4th quarter of the calendar year and the 1s`quarter for the Plan's fiscal year. He called attention to page 3 of his report for the Market Snapshot of the quarter. He stated that it had been a strong quarter for every sector and for equity markets the S&P was up 9.2%. He said he hoped that the portfolio would be General Employees Pension Board Board Meeting—March 16,2005 Page 2 of 8 able to hold on to those gains for the current quarter. He reported that the EAFE index was up 15%,that international stocks were up over 20%from the previous year and were continuing to be a strong performing area. He stated that the small to mid-caps were outperforming large caps. He went on to say that energy had been the biggest driver and information technology had been the least. For an investment overview,Mr. Sebesta referred the Board to page 4 of his report. He stated that the economy had gained traction and was self-sustaining. He said that the Federal Reserve continues to raise short-term interest rates at a modest pace of.25 basis points every six weeks. He stated that there is some concern about the increase in the price of commodities,primarily oil,and that oil prices were nearing$55/barrel,an all time high. He reported that the overall employment market had changed very little and that job growth was good. Mr. Sebesta reported the portfolio value on December 31,2004 to be$11,339,603.41 and again advised that it had been a good quarter with the total portfolio being up 6.62%for that period. He stated that the trend was expected to continue and the hope was that the 8%actuarial assumption rate could be reached,or possibly surpassed,for the current fiscal year. Chairperson Bishop asked Mr. Sebesta about the international exposure in the portfolio. Mr. Sebesta advised that international was doing well now,primarily because of the depreciating U.S.dollar. He reminded the Board that the current maximum allowed in the Plan was 10%exposure and since the total investment at present was only 8.0%,he felt that they might add to that exposure. Mr. Sebesta called attention to page 26-29 of the TRUSCO report for commentaries and information about the bond funds. He reported that SEIX was now totally responsible for the institution fixed income investments. He also advised that TRUSCO had reversed their position about the maturity duration for the bonds and,with 31.8%of the bonds maturing in 0-1 years,they were now on a more neutral stand and were positioning for a flattening yield curve for future investments. He said they were also going to maintain a moderate overweight in TIPS with a 10%allocation as these securities increase in value if inflation goes up. He reported that TIPS is a new security class that was introduced domestically in 1997 and is part of the fixed income portfolio. He then called attention to the Corporate Governance section of his report,beginning on page 40. He said this section was for informational purposes and was based on information from ISS. Chairperson Bishop asked the Board if there were any questions or comments regarding Mr. Sebesta's report. There being none,he thanked Mr. Sebesta and then called on Mr. Larry Cole for the Monitor's Report. Mr. Cole greeted the Board and reported that the Plan was off to a good start for the first quarter of the new fiscal year with the value now at$11,339,620. He reported the asset allocation with the equity portfolio slightly under 60%and bonds slightly under 40%. He stated,as a reminder to TRUSCO,that the investment in equities could be as much as General Employees Pension Board Board Meeting—March 16,2005 Page 3 of 8 70%. He also mentioned that international was still at 8.0%when that could be higher to take advantage of the increased returns in that sector. He reported that mid-cap has improved slightly which has been beneficial for the portfolio. Attorney Delmer asked Mr. Sebesta why TRUSCO does not increase the equities to a higher percentage. Mr. Sebesta stated that the target is 60%. He said that they did not recommend going up to 70%now for the equities,that before the end of the quarter they would be making modest adjustments and that 62%is where it is expected to be. Mr. Cole advised that in most cases the funds were lower than the caps suggested by as much as 5%. Attorney Dehner asked if that 5%less was intentional. Mr. Sebesta reported that 62%was the intended investment,that most funds were at 62-63%,within a percent or two. Mr. Cole reported that there was not a wide disparity and that in the last quarter of the last year it did not help the portfolio but it probably would help now and since the policy is 70%,they could be somewhat more aggressive. Mr. Cole then called attention to the Performance Summary on page 5. He stated that at +6.6%,the fund was in the 65th percentile,a little below average but still below the target index. He added that the equity and fixed assets were a little above average. He reminded the Board that 1999,2000 and 2001 had been negative years and with the smoothing techniques used,those negative years would begin to drop out of the equations. He said he expected average returns to get up to 8%per year over the next few years. He added that TRUSCO should hit closer to the target. He reminded that they do have multiple disciplines which is a benefit not to have to pay individually for several managers to handle the different sectors of the portfolio. He stated that Merrill Lynch did not recommend any changes at this time. He also advised that SEIX was not looking so great and,at the moment, was being watched more closely. Mr. Cole reminded the Board that this entire Plan is changing as the value of the portfolio is much larger and TRUSCO now is not the same firm that was hired by the Board years ago. He said Merrill Lynch was aware of the changes and of the concerns of the Board. He said he would have available a comparison with other managers,using a total of six others,then if change was the pleasure of the Board, it would allow for the change to be handled faster. Mr. Cole then advised that Merrill Lynch would be increasing their fees by $5,000 per year,beginning on April 1,2005. He said this increase is necessary because their work had doubled since the investments had been removed from co-mingled funds in order to benefit from commission recapture. He advised that there had been a$1,600 recapture for the previous quarter and, if that remained around the same amount for all four• quarters, it would be more than sufficient to cover the Merrill Lynch increase. He called attention to page 22 of the report on which this recapture amount was indicated. He said that Merrill Lynch had made every attempt to avoid this increase but the analytics involved for the individual accounts made the expense impossible to absorb. C General Employees Pension Board Board Meeting—March 16,2005 Page 4 of 8 Attorney Denner advised that he would need to draft a new contract. Mr. Cole said that (rie he would send the proposed fee schedule to Attorney Dehner and that would be to increase the annual fee to$13,750.00 per year. Mr. Cole then went on to say that there were no exceptions to policy per the Investment Policy Checklist. He then reported on the Florida Fund listing and showed that this Plan is 38 out of the 93 plans represented for the last year. He said the last report had shown this as 42nd place and the one prior to that was 52m, so things were going in the right direction. He said that TRUSCO does do a good job and reminded that they do particularly well in down markets. He did add,though,that with the value of the fund increasing steadily, more options would be available. Trustee Grafton asked about increasing the international investments. Mr. Cole said he would think this would be a good time and that,with a cap of 10%available,he had expected the exposure to be closer to the 10%as international has had a great run for the last three years. Trustee Grafton then asked if perhaps the Board should increase that asset allocation to 15%. Mr.Cole advised that he would be cautious right now to suggest a long term increase but would review the subject. He stated that the average public pension fund in the country has 12-13%in international. Attorney Denner stated that this kind of change would require an Ordinance. Mr. Cole suggested that that Ordinance should be prepared to allow the leeway of up to 15-20%if determined to be beneficial with the flexibility to revise the percentage at any time. Following a brief discussion, it was decided that could be changed to 20%with a target of 15%and could be addressed at the next meeting. Chairperson Bishop asked if there were any questions.There was a brief discussion about having two or three money managers. Mr. Cole stated that TRUSCO was one firm with a lot of specialists and that they do a good job. Chairperson Bishop thanked Mr. Cole for his report. Chairperson Bishop moved on the next Agenda item which was regarding action to be taken on results of the January election to fill the Board vacancy. He advised that, in mid-December, former Trustee Jerry Sauerwein had notified the City Clerk's office that he was resigning from the Board. Because of the timing of the resignation the election was held in January,after the holidays. He stated that the City Clerk's office took one approach about the way the election was conducted and,following a protest to the election, it was determined that the correct policies and procedures for conducting the election may not have been followed. He then asked Attorney Denner how this should be handled. Attorney Definer advised that,unless the contest to the election results was withdrawn,he would suggest that a new election be held and that,after the election,the Operating Rules and Procedures should then be revisited and amended. a General Employees Pension Board Board Meeting—March 16,2005 Page 5 of 8 City Clerk Beth Eikenberry addressed the Board to say that she had researched the Ordinances and the Operating Rules and Procedures from 1994 were the only ones on file. She then intimated that there may also be problems with the legitimacy of other recent elections and that many may have been certified that had not gone by the set rules. She also pointed out that the position for which the election had been held would expire in September and wondered, if a new election were to be held, if it would be possible that the election could be for the period through September as well as be allowed to go through for the next full term. Attorney Dehner advised that the term would be automatic only until the time of the next scheduled termination date. Attorney Denner advised that he had received a letter dated February 20, 2005, from Nancy Cox asking the Board to review the election before certification of the results. Trustee Grafton advised that another employee had objected that there had not been enough time for the election. Attorney Dehner asked again if the Board felt that the election in question should be set aside and another be held. Chairperson Bishop recognized Russ Wagner to address the Board. Mr. Wagner, who introduced himself as the person whom had been elected, stated that he had come to the meeting today for the election to be certified and for him to take his seat as a duly elected member of this Board. He stated that he had not been informed of any problem. Chairperson Bishop stated that he had emailed Mr. Wagner. Mr. Wagner said again that he did not receive any notice of a problem. He stated that he felt it was unfair not to certify the election. He then asked Ms. Eikenberry for the results of the election which had not been mentioned. Ms. Eikenberry stated that there were three candidates. The results were 34 votes for Mr. Wagner, 15 votes for Ms. Eikenberry, and 6 votes for Ms. Cox. Ms. Cox addressed the Board to say that she had sent the letter and she stated very clearly that her feeling was that the election had not been handled properly. She said that there had not been enough time and not all of the employees were informed. Ms. Eikenberry said that all of the employees were advised. Mr. Wagner stated that he did not agree with having another election since he had had overwhelming support in the one being contested. Following additional discussion, Attorney Denner asked the Board if they would like to take a vote to certify the results in light of all of the information discussed at this meeting. Chairperson Bishop asked if there was any additional discussion. Attorney Dehner advised that it would be required that the results be confirmed by motion to certify the election and that it would take three votes from the Board for the certification. Following additional discussion, it was on motion by Trustee Mary Anne Swickerath, seconded by Trustee Jean Grafton,that the recent election be certified with"as is" results and that Mr. Wagner be welcomed to the Board. Following a vote of two for, one against,motion did not carry. Following the vote and additional discussion, it was on motion made by Trustee Grafton and seconded by Trustee Swickerath, unanimously c General Employees Pension Board Board Meeting—March 16,2005 Page 6 of 8 RESOLVED,that another election would be held according to the timetable prescnbed in the current Operating Rules and Procedures for the term to end September 30,2005,and that the City Clerk be advised to start the entire election process over with the election to be held as soon as possible,using the same nominees,as it had been determined that all of the proper rules had been followed through the nomination process. Trustee Grafton was called upon by Chairperson Bishop to discuss the Agenda item regarding the bi-annual review of the Operating Rules and Procedures. Trustee Grafton suggested that this Board hold a work session in the next few weeks to review the Operating Rules and Procedures,stating that this review was already six months late,and perhaps revisions could then be initiated at the next quarterly meeting.Attorney Denner suggested that the Trustees review the rules,making notes page by page for items that they felt would need to be discussed at the work session. Following a brief discussion, Trustee Grafton was asked to arrange the work session. The next Agenda item was regarding housing of Pension Board files. Chairperson Bishop stated that this had been one of the responsibilities of former Trustee Sauerwein and,with his resignation and with the many changes of personnel at City Hall,finding housing for the Pension Board files in a permanent location would need to be done. Trustee Grafton stated that,in the new fire house,space had been created for the City Clerk's office and that there should be room there for the Pension Board files and that those files could be made accessible to her as Board Secretary. Chairperson Bishop advised that files from H.R. would need to go there also. Following a brief discussion, it was decided that Trustee Grafton would meet with the City Clerk to work out placement of the files. Chairperson Bishop addressed the next Agenda item regarding the contract with West Orange Secretarial Services,Inc. He advised that Ms. Lacey had submitted a letter requesting termination of their contract effective April 16,2005. Ms.Lacey was asked about the proposed termination and she advised that transcribing the minutes required specific equipment which had previously been available on loan from the City Clerk's office and that equipment was no longer available,hence,the termination. There was a general discussion among the Board to determine if there was a way to provide the equipment. Ms. Eikenberry advised the Board that the transcription machine could now be available as there was one,recently repaired,which could be loaned out. With assurance that the machine could be made available when needed,according to a schedule convenient to the City Clerk's office,Ms. Lacey withdrew the resignation. Chairperson Bishop then initiated a discussion regarding the possibility of retaining a Pension Administrator. He advised this would be a third party contractual administrator. Ms. Eikenberry stated that she had previously dealt with a plan administrator and encouraged the Board to consider the possibility. Attorney Denner said a list of administrators could be obtained through the FPPTA. He stated that the administrator would not have to be local as meeting times could be scheduled. Following additional L General Employees Pension Board Board Meeting—March 16,2005 Page 7 of 8 discussion it was,on motion made by Trustee Grafton and seconded by Trustee Swickerath,unanimously RESOLVED to pursue a contractual pension administrator based on a list compiled by Attorney H. Lee Dehner from the FPPTA and then choose no less than three firms from the list and send out requests for proposals. Under New Business on the Agenda, Chairperson Bishop reported on the status of proposed improvements to the Plan benefits. He stated that, last August,the Board had recommended a change in the multiplier,the cost of which would be $300,000+/-to the City and the process was begun to have this item on the Agenda for the October Commission meeting. He advised that the item had been pulled from the Agenda as the City Manager did not want it on the Agenda until there had been some research and comparisons with other communities to see how the City of Ocoee ranked with them. He reported that a listing had been compiled for 21 communities and the results were that 18 had greater multipliers,2 were the same,and 1 was lower that the City of Ocoee. Chairperson Bishop reported that the other proposed improvement was for a monthly supplement,with a maximum of$200 per month per retiree,was also to be considered. He stated that Foster&Foster had determined the cost of this improvement would be $140,000+/-. Chairperson Bishop said that he had met with the City Manager in the • week just prior to this meeting and this,too,would not be addressed at present. Beth Eikenberry advised that a wage and compensation study including information regarding fringe benefits was going on at present and should be completed within 90 days [by June] and after that was completed more decisions could be made about improvements. She said that the general feeling was that a salary increase was more desirable than a pension benefit increase. Following additional discussion,Trustee Swickerath suggested that this benefit be reconsidered after the study in process is completed. Chairperson Bishop then called on Attorney Denner for a review of the proposed Ordinance regarding rehire of retirees. Attorney Dehner called attention to the draft that he had provided regarding Reemployment After Retirement. He said he was providing the draft for review only at this time,that it would not need to be a separate Ordinance, that it will be brought back with other Ordinances later in the year. Secretary Jean Grafton then discussed the bills which had been included with the Trustee's meeting packets. She stated that no others had been received and requested that the bills be paid as presented. Following a brief discussion,it was on motion by Trustee Grafton,seconded by Trustee Swickerath,unanimously R Resolved that all invoices be approved and paid as presented. Chairperson Bishop then asked Secretary Grafton to report on any correspondence she had. Secretary Grafton advised there was none so Chairperson Bishop then moved on to ask Attorney Dehner for any comments. 7 General Employees Pension Board Board Meeting—March 16,2005 Page 8 of 8 (tar Attorney Dehner stated that there were some amendments which would need to be addressed if certain items currently being considered by the Federal government are passed,particularly relating to mandatory distribution of funds which would require extra administration. He also mentioned that all of the amendments could be done at one time, including any change the Board may want in investment provisions,particularly in the case of the international sector of the portfolio. Attorney Dehner reminded also that, in the case of the new election that will be done to fill the Board vacancy, H.R. should retain custody of the ballots. Chairperson Bishop then advised that he would be resigning from this Board, effective April 1, 2005. He said that he has taken on a different position with the City as an accounting manager and with the time factor and all that needs to be done for this position,he will not be able to continue his duties with this Board. He stated that he will be submitting his resignation in writing. Chairperson Bishop called for any new business or comments from the Board. There being none,the meeting was adjourned at 12:12 p.m. Respectfully submitted, Jo Ann Lacey, Recording Secretary of the Meeting Ae/ ig4e )hdAeY‹ Approve y: (10