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Home My WebLink About08-05-2020 MinutesCITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES' RETIREMENT TRUST FUND BOARD OF TRUSTEES QUARTERLY MEETING MINUTES City Hall, Commission Chambers Wednesday, August 5, 2020 at 10:OOAM Governor Ron DeSantis signed Executive Order 20-69 which suspends all statutes that require a quorum to be present in person or require a local government body to meet at a specific public place. It also provides that local government bodies may utilize communications media technology, such as telephonic and video conferencing, as provided in section 120.54(5)(b)2, Florida Statutes. Under Executive Order 20-69, the board meeting was held via video conference using Zoom. 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 Jeanine Bittinger, Saltmarsh, Cleaveland & Gund Richard Cristini, Saltmarsh, Cleaveland & Gund Doug Lczen, Foster & Foster Kim Kilgore, Foster & Foster 1. Call to Order— Gequita Cowan called the meeting to order at 10:08AM. 2. Roll Call — As reflected above. 3. Public Comments — None. 4. Approval of Minutes The Board voted to approve the minutes from the May 6, 2020, quarterly meeting, upon motion by Jean Grafton and second by Robert Briggs; motion carried 5-0. 5. Consent Aaenda a. Warrants #76 and #77 for ratification. b. Quarterly fund activity report for April 30, 2020 to July 29, 2020. The Board voted to approve the consent agenda as presented, upon motion by Robert Briggs and second by Jean Grafton; motion carried 5-0. 6. New Business — None. 7. Old Business — None. 8. Reports (Attorney/Consultants) a. Saltmarsh, Cleaveland & Gund, Jeanine Bittinger/Richard Cristini, Board Auditors i. September 30, 2019 Audit 1. Jeanine Bittinger reviewed the statement of changes in the fund value for the fiscal year ending September 30, 2019, with a net position of $41,438,700 compared to $40,765,953 as of September 30, 2018. 2. Jeanine Bittinger reviewed the summary of the fund's investments by cost and fair value compared to the past fiscal year ending September 30, 2018. 3. Jeanine Bittinger reviewed the plan's investments appreciated and depreciated values during the fiscal years ending 2018 and 2019. 4. Jeanine Bittinger commented the percent of net position of the investment expense was .28% and administrative expense was .30% for the fiscal year ending September 30, 2019. a. Jeanine Bittinger commented the plan's fiduciary net position as a percentage of the total pension liability was 98.02%. 5. Jeanine Bittinger reviewed the current discount rate of 7.40% and the City's net pension liability with rate 1 % lower (6.40%) or 1 % higher (8.40%). Jeanine stated the actuary used a four-year average smoothing method for the market value return in the valuation. b. Jeanine Bittinger reviewed the schedule of funding ratios for the last seven fiscal years. Jeanine commented the plan's funded status had been very good. 6. Jeanine Bittinger reviewed the schedule of investment returns of the fund for the last seven fiscal years. 7. Jeanine Bittinger commented they found no misstatements in the financial material audited for the fund. The Board voted to approve the audit as presented, upon motion by Stefanie Wilson and second by Jean Grafton: motion carried 5-0. AndCo Consulting, Tim Nash, Investment Consultant i. Quarterly Report as of June 30, 2020 1. Tim Nash reviewed the market environment during the past quarter, commenting all asset classes did extremely well. Tim commented large, mid, and small -cap growth stocks did better than value stocks. 2. Tim Nash commented companies able to use a technological advantage amid the COVID-19 pandemic did very well. Tim also discussed the success of boat and RV sales as people had strived to get out of their homes while maintaining social distance. 3. Pedro Herrera asked Tim Nash how the housing market was doing. Tim commented the demand for homes was strong and the quality of outstanding mortgage debt was relatively high compared to 2008. 4. The asset allocation as of June 30, 2020 was Domestic Equity at 56.8%, Domestic Fixed Income at 20.6%, Real Estate at 11.4%, International Equity at 6.1 %, Global Fixed income at 3.8% and Cash at 1.3%. Tim stated the portfolio would need to be rebalanced to bring back to the policy targets. 5. Tim reviewed the financial reconciliation for the past quarter with a beginning total market balance of $36,528,146 and ending market value of $41,678,002. 6. The total fund gross returns for the quarter were 14.37%. Trailing returns for 1, 3, and 5-year periods were 3.35%, 6.51 %, and 6.50%, respectively. Since inception (4/1/04), gross returns were 6.80%. 7. Tim Nash discussed the performance of the investment managers, commenting the transition to Brandywine was completed in June so no returns were shown in the report, but Brandywine was up 18.6% for the quarter. ii. International Equity review 1. Tim Nash reviewed the international equity investment in the portfolio, commenting Dodge & Cox did very well for the quarter but had struggled in the long term. 2. Tim Nash reviewed American Funds Europacific Growth R6 Fund and WCM Focused International Fund as possible replacements for the Dodge & Cox International Stock Fund investment. 3. Tim Nash reviewed the returns, up/down capture ratio, expense ratio, GICS sector attribution/allocation and portfolio characteristics of both the American Funds Europacific Growth and WCM Focused International funds. 4. Tim Nash commented 15% of the portfolio (approximately $6 million) was allocated to Dodge & Cox. Tim recommended terminating the Dodge & Cox value fund and splitting the dollars equally between American Funds EuroPacific Growth and the WCM Focused International Fund. The Board voted to approve the recommendation to liquidate the Dodge & Cox International Stock Fund and allocate 15% of the portfolio split equally between the American Funds Europacific Growth R6 Fund and WCM Focus International Fund, upon motion by Jean Grafton and second by Stefanie Wilson; motion carried 5-0. iii. Global Non -Core Fixed Income review 1. Tim Nash proposed a new global fixed income portfolio for consideration. The Board voted to approve the recommendation to liquidate all units of the Templeton Global Bond Fund and allocate 5% of the total fund with 2.5% to the PIMCO Global Bond Fund (Hedged) and 2.5% to the PIMCO Diversified Global Income Fund, upon motion by Jean Grafton and second by Stefanie Wilson; motion carried 5-0. 2. Tim Nash stated he will prepare a new Investment Policy Statement for the next meeting. Foster & Foster, Doug Lozen, Actuary i. Studies to be performed 1. Doug Lozen commented the plan currently does not have a disability benefit provision and he needed a proposed benefit suggestion to cost out. 2. Doug Lozen stated disability benefits vary from plan to plan. Pedro Herrera commented most Non -Line -of -Duty (NLOD) benefits are tied to a vesting requirement whereas service -connected benefits are available from day one of a member's employment. 3. Stefanie Wilson commented short-term and long-term disability plans are currently available for active members. Pedro Herrera commented the pension plan's disability benefit would kick in once a member has terminated employment with the City due to an inability to do the job. 4. Doug Lozen commented adding a basic disability provision would not be costly to the plan and suggested keeping it simple, providing Line -of -Duty (LOD) disability benefits to members from date of hire and having a vesting requirement for members to receive NLOD benefits. Doug stated the cost for a study would not exceed $1,500. 5. Doug Lozen commented the plan has three different vesting periods depending on the member's classification and date of hire. Jean Grafton proposed leaving members out of the study who do not make employee contributions to the fund. The Board agreed by consensus to include active employees only in the study 6. Doug Lozen reviewed proposed disability benefit with the Board. Doug commented the disability benefit would be for contributing members only and would include LOD and NLOD disabilities. Doug commented the NLOD benefit would be linked to the plan's current five- and seven-year vesting requirements. Doug stated the benefit would be based on a member's accrued benefit rather than a guaranteed minimum, payable for life with ten year's certain and survivor options included. The Board voted to approve Foster & Foster to perform a study to determine the costs of adding disability benefits to the plan, upon motion by Stefanie Wilson and second by Jean Grafton; motion carried 5-0. d. Sugarman & Susskind, Pedro Herrera, Board Attorney i. Proposed ordinance — SECURE Act Pedro Herrera commented the purpose of the proposed Ordinance amendment was to comply with the Internal Revenue Code (IRC) with respect to the addition of the SECURE (Setting Every Community Up for Retirement Enhancement) Act. Pedro stated there would be no cost impact to the plan, but it was required for IRC compliance. Pedro commented the Required Minimum Distribution (RMD) age was raised from 70'/z to 72. The Board voted to accept the amendment, recommend it to City Council for enactment, and ask Foster & Foster to provide a letter of no impact, upon motion by Jean Grafton and second by Stefanie Wilson; motion carried 5-0. ii. Pedro Herrera reviewed the Governor's executive order that was extended to allow boards to meet virtually until September 1, 2020. iii. Pedro Herrera reminded the Board that financial disclosures were due July 1, 2020. Kim Kilgore commented all trustees filed their financial disclosures on time. iv. Pedro Herrera discussed upcoming educational opportunities. 9. Staff Reports. Discussion. and Action a. Foster & Foster, Kim Kilgore, Plan Administrator i. Educational opportunities 1. Kim Kilgore advised the Board that she would let them know if the FPPTA Annual Conference was cancelled. 10. Trustees' Reports, Discussion, and Action — None. 11. Adjournment — The meeting adjourned at 12:10PM. 12. Next Meeting — Wednesday, November 4, 2020 at 10:OOAM, quarterly meeting Respectfully submitted by: Kim Kilgore, Plan Administrator Approved by: A,C,A,-, qu G to Cowan, lozff) Date Approved by the Pension Board: