HomeMy WebLinkAbout02-05-2020 MinutesCITY OF OCOEE
MUNICIPAL GENERAL EMPLOYEES' RETIREMENT TRUST FUND
BOARD OF TRUSTEES
QUARTERLY MEETING MINUTES
City Hall, Commission Chambers
Wednesday, February 5, 2020, at 10:OOAM
TRUSTEES PRESENT: Gequita Cowan, Chair
Robert Briggs, Vice Chair
Stefanie Wilson, Secretary
Patricia Gleason
Jean Grafton
TRUSTEES ABSENT: None
OTHERS PRESENT: Tim Nash, AndCo Consulting
Pedro Herrera, Sugarman & Susskind
Doug Lozen, Foster & Foster
Kim Kilgore, Foster & Foster
Members of the Plan
1. Call to Order— Gequita Cowan called the meeting to order at 10:10am.
2. Roll Call — As reflected above.
3. Public Comments — None
4. Approval of Minutes
The Board voted to approve the minutes from the November 6 2019 quarterly meeting,
upon motion by Robert Brings and second by Jean Grafton; motion carried 5-0
5. Consent Agenda
a. Warrants #66, #67, #68, #69 and #70 for ratification.
b. Quarterly fund activity report for November 1, 2019 to January 29, 2020.
The Board voted to approve the consent agenda as presented upon motion by Jean
Grafton and second by Robert Briggs; motion carried 5-0.
6. New Business — None
7. Old Business — None.
8. Reports (Attorney/Consultants)
a. Foster & Foster, Actuary, Doug Lozen
i. October 1, 2019, valuation report
1. Doug Lozen stated the good news was the City contribution would
be dropping from 8.87% of payroll to 6.49% of payroll.
2. Doug Lozen commented the assumption changes/methods
approved by the Board at the last meeting reflected in the valuation
in the column named "new assumption."
3. Doug Lozen commented due to an amortization charge base
established in 2009 being fully paid off, the fund was in a good
place.
4. Doug Lozen reviewed the annualized rate of return for the prior four
(4) year average of 8.27% which exceeded the 7.75% assumption.
5. Doug Lozen reviewed the Unfunded Actuarial Accrued Liability
(UAAL) with an annual payment of $144,901 and outstanding
balance of $2,000,867.
6. Doug Lozen recommended keeping ahead of the curve without
breaking the bank by lowering the assumed rate of return to 7% and
consolidate the UAAL for a 5- to 10-year payoff for the next
valuation.
7. Doug Lozen stated the 7% return assumption for next year's
valuation would keep the City in the 8% to 10% contribution range.
8. Tim Nash commented the broad market data was stating around
6.00% for this market blend.
9. Robert Briggs asked how the funded ratio would change with the
actuary's recommendations. Doug Lozen stated it would be around
92% and should increase each year after that.
The Board approved the October 1, 2020 valuation to lower the assumed rate of return to
7.00% and consolidate the UAAL balance using the schedule which would not impact the
City'spayment, upon motion by Robert Briggs and second by Pat Gleason; motion carried
5-0.
The Board approved the October 1, 2019, valuation report as presented, upon motion by
Robert Brims and second by Pat Gleason; motion carried 5-0.
The Board voted the declaration rate of return for the plan at 7.4% for the next year, the
next several years, and the long-term thereafter net of investment related expenses, upon
motion by Robert Briggs and second by Stefanie Wilson; motion carried 5-0.
AndCo Consulting, Investment Consultant, Tim Nash
i. Quarterly Report as of December 31, 2019
1. Tim Nash reviewed the handout of S&P 500 total return index
history of the drawdowns of greater than 5% since index pre -crisis
peak.
2. Tim Nash reviewed the market environment during the past quarter.
3. Tim Nash reviewed the schedule of investable assets with market
value gains of $24,586,800 for the past 10 years.
4. Tim Nash reviewed the letter from AndCo Consulting's CEO who
would like to thank their long-term clients.
5. Tim Nash commented the asset allocation would need a little
adjustment to bring back in compliance with policy.
6. Tim Nash reviewed the financial reconciliation for the past quarter
with a beginning total market balance of $41,409,301 and ending
market value of $43,083,441.
7. The total fund gross returns for the quarter were 4.73%. Trailing
returns for 1, 3, and 5-year periods were 19.72%, 9.82%, and
7.29%, respectively. Since inception (4/1/04), gross returns were
6.82%.
8. Tim Nash reviewed each investment manager's performance for
the past quarter. Tim Nash commented it was time to move on from
GAMCO Investment.
9. Tim Nash reviewed the fund's total performance compared to 620
public pension plans showing the Ocoee portfolio was in the top of
the pack.
10. Tim Nash reviewed the compliance checklist for each investment
manager noting the equity compliance was brought down by
GAMCO's performance.
11. Tim Nash reviewed a letter from GAMCO with respect to the fees
being decreased to 55 basis points retroactive to October 1, 2019.
Large Cap Value Equity Manager Analysis as of December 31, 2019
1. The following firms were considered in the search for a Large Cap
Equity Manager: Brandywine, DePrince, Race & Zollo, Dodge &
Cox, Mellon, Vanguard and GAMCO.
2. Tim Nash reviewed the locations, fees, number of holdings and fund
size of each manager.
3. Tim Nash compared the current portfolio of each investment as it
pertained to the composition, characteristics, GICS sector
percentages and market capitalization.
4. Tim Nash reviewed the trailing performance and rank of each
investment from 1 year to 10 years showing De Prince, Race &
Zollo Large Cap Value with the highest 1-year return of 28.74% and
Brandywine Dynamic Large Cap Value with the highest 10-year
return of 14.00%.
5. Tim Nash recommended the Board invest in the Brandywine
Dynamic Large Cap Value Fund.
6. Jean Grafton commented that GAMCO could turn around and get
smart and maybe we should hold on.
7. Tim Nash stated GAMCO focused on buying low and it took time to
perform. Tim further stated that GAMCO had been given enough
time to perform and they might be successful in time, but could the
plan afford to wait.
The Board approved the recommendation of the investment consultant to terminate the
investment with GAMCO and engage with Brandywine to serve as the Large Cap Manager
for the Fund, upon motion by Robert Briggs and second by Jean Grafton; motion carried
5-0.
The Board approved the engagement with CAPIS to handle the transition of assets from
GAMCO to Brandywine upon motion by Stefanie Wilson and second by Pat Gleason;
motion carried 5-0.
iii. Global Fixed Income (Bond) review
1. Tim Nash stated he had brought a Global Fixed Income review for
the replacement of Templeton. Tim further stated there was no
need to implement today and review could be now or at the next
quarterly meeting.
2. Robert Briggs asked for a percentage of the portfolio Templeton
held. Tim Nash commented Templeton held less than 5% of the
total portfolio.
3. Robert Briggs asked how long GAMCO was watched before the
change was recommended. Tim Nash commented watches
typically lasted three months.
4. Robert Briggs recommended to keep Templeton on watch and
allow them a little longer time to bring up their performance.
5. Tim Nash stated he would bring the analysis to the next meeting
just in case the Board wanted to review.
6. By consensus, the Board agreed to put Templeton Investment on
watch.
iv. Investment Policy Statement (IPS)
1. Tim Nash reviewed the red -lined changes on the current IPS. Tim
also reviewed the Addendums to the IPS for Agincourt Capital
Management and Gamco for the Board to approve.
The Board approved the Investment Policy Statement as presented, upon motion by
Robert Briggs and second by Stefanie Wilson; motion carried 5-0.
c. Sugarman & Susskind, Board Attorney, Pedro Herrera
i. Proposed Ordinance Approved
1. Pedro Herrera stated the Proposed Ordinance clarifying the rights
and benefits for non -vested members and the crediting of interest
to the DROP accounts was approved on January 7, 2020.
ii. SECURE Act
1. Pedro Herrera reviewed the SECURE Act commenting the most
significant changes were to defined contribution plans, and the most
significant change to the defined benefit plans was the Required
Minimum Distribution (RMD) age would now be 72 instead of 70.5.
2. Pedro Herrera commented if a member reached age 70.5 on or
after January 1, 2020, they would fall under the new rule.
3. Pedro reviewed the change in rules for inherited IRA funds which
must be withdrawn within 10 years following death of the original
IRA owner with some exceptions for a spouse and minor children.
4. Pedro Herrera commented there would need to be a revision to the
Ordinance to provide for the change of the RMD age.
iii. Online Notary
1. Pedro Herrera commented there was a change to the State Notary
law allowing for remote online notarization. Pedro stated all benefit
processing forms which needed to be notarized would need to be
updated with specific language to allow for online notary.
iv. Reviewed fiduciary bill
1. Pedro Herrera reviewed SB1270 proposed in the Senate
commenting it sought to codify the fiduciary duty of Boards to the
entity in which they served. Pedro commented there was a
potential for conflict. Pedro reviewed the training that would be
required under SB1270. Pedro commented he was unsure if it
would pass, but they had articulated their concern.
9. Staff Reports, Discussion, and Action
a. Foster & Foster, Kim Kilgore, Plan Administrator
i. Updated Travel Policy
1. Kim Kilgore reviewed the updated travel policy with the addition for
a trustee to be paid per diem in accordance with the U.S. General
Services Administration schedule for meals when traveling.
The Board approved the Travel Policy as presented upon motion by Stefanie Wilson and
second by Robert Briggs; motion carried 5-0
ii. Educational Opportunities
1. Kim Kilgore reviewed the upcoming FPPTA conference.
10. Trustees' Reports, Discussion and Action
a. Gequita Cowan suggested the Board go paperless for quarterly meetings going
forward. Gequita further commented if the trustees had a tablet or laptop, they
could bring to meeting to view the agenda packet online. Kim Kilgore stated she
could bring some hard copies of the agenda packet to the next meeting.
b. By consensus, the trustees would bring their personal laptop or tablet to the next
meeting to view agenda packet materials online.
c. Gequita Cowan suggested the Board review the Operating Rules and Procedures
for any updates needed.
11. Adjournment — The meeting adjourned at 12:20pm.
12. Next Meeting — Wednesday, May 6, 2020 @ 10:00 a.m., quarterly meeting.
Respectfully submitted by:
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Name: Kim Kilgore ""—'Na e. Gequita Cowan
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Title: Plan Administrator Titl Chair