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HomeMy WebLinkAbout05-04-2022 MinutesCITY OF • • MUNICIPAL GENERAL EMPLOYEES' RETIREMENT TRUST FUN BOARD OF QUARTERLY MEETING MINUTES City Hall, Commission Chambers 150 North Lakeshore Drive, Ocoee, FL 34761 Wednesday, May 4, 2022 - 10:OOAM TRUSTEES PRESENT: Gequita Cowan, Chair Robert Briggs, Vice Chair Patricia Gleason TRUSTEES ABSENT: Tammy Brown Gary Gleason OTHERS PRESENT: Pedro Herrera, Sugarman & Susskind (via Zoom) Kim Kilgore, Foster & Foster Chrissy Stoker, Foster & Foster Doug Lozen, Foster & Foster Brad Hess, AndCo Consulting 1. Call to Order — Gequita Cowan called the meeting to order at 10:05AM and a quorum was determined. 2. Roll Call — As reflected above. 3. Public Comments — None. 4. Approval of Minutes a. February 2, 2022, quarterly meeting The February 2, 2022, quarterly meeting minutes were approved as presented, upon motion by Robert Briggs and second by Patricia Gleason; motion carried 3-0. 5. Consent Agenda a. Warrants #93, #94, and #95 for ratification b. New invoices for payment approval — None. c. Quarterly fund activity report for January 27, 2022, through April 27, 2022 The Board approved the consent agenda as presented, upon motion by Patricia Gleason and second by Robert Briggs; motion carried 3-0. 6. New Business a. Foster & Foster fee proposal i. Doug Lozen commented he was present to discuss the fee proposal and he would not bill the Board for his visit. Doug stated many fees had not changed in many years. Doug added the firm was increasing fees for several reasons, one of which was to retain the best employees to guarantee they provided the best service. ii. Doug Lozen reviewed the scope of actuarial service provided over the last 30+ years. iii. Doug Lozen commented the plan administration and actuarial fees combined were approximately $65,000 per year which included the cost of the portal. Doug commented if the fee proposal were accepted, the cost for these services would increase by approximately 5%, or $68,000 per year. Doug commented after the initial increase on 10/1/2022, there would be annual increases based on the Consumer Price Index (CPI) beginning 10/1/2023. iv. Robert Briggs asked which CPI would be used. Doug Lozen commented it would be the CPI -All Urban Consumer Index. v. Doug Lozen commented the first CPI billing change would become effective in fiscal year 2023-2024 and then they would use the 1-year CPI measurement from June 30th and apply it to the upcoming fiscal year. The Board approved the Foster & Foster fee proposal for actuarial and administrative services as presented, upon motion by Robert Briggs and second by Patricia Gleason; motion carried 3-0. vi. Doug Lozen commented the Police & Fire pension boards approved the purchase of the portal, so once it was up and running and they were billed, the General plan would receive a 10% discount. Doug commented he would let the Board know when that occurred. vii. Kim Kilgore commented the Information Portal was another item being offered. Kim commented this was an informational web page for the membership to reference for pension -related documents. Kim commented there was a one-time setup fee of $700, and the website would be maintained quarterly. viii. Gequita Cowan asked if the two portals could be linked. Chrissy Stoker commented this could be done. Chrissy added the members would have generic logins for the Information Portal so there would be no hang-ups with logins, as all usernames and passwords would be the same. ix. Kim Kilgore and Chrissy Stoker reviewed the documents posted to the Information Portal. Gequita Cowan commented this webpage would be another opportunity for members to obtain additional pension information. x. Robert Briggs asked about the early retirement reduction. Robert asked if the reduction could be changed from a true actuarial percentage to a fixed percentage. Doug Lozen commented they could do a study to see the cost of changing the early retirement reduction for a cost not to exceed $750. xi. Kim Kilgore reminded the Board the early retirement reduction was built into the portal, so any calculations run by members would reflect the reduction. xii. Gequita Cowan asked how changing the reduction factor would impact the members. Doug Lozen commented even a flat 5% reduction was better than a true actuarial reduction. Doug reminded the Board the City would need to approve this change if the Board decided to move forward. xiii. Gequita Cowan commented she wanted to look at the possibility of adding a Cost -of -Living -Adjustment (COLA) so there was something in place to go along with inflation. Robert Briggs and Patricia Gleason agreed that a COLA should be considered. Gequita commented she had spoken with the City Manager, and he was in support of the Board doing this. xiv. Doug Lozen commented he could run COLA studies, but he would first need to determine how much of an increase would be considered and how the COLA should be set up. Gequita Cowan asked if there was an average COLA. Doug commented there was not and described various COLA scenarios he had seen. Doug commented COLAs were not cheap and he would need to know how much of an increase in funding the City could tolerate before moving forward with a study. xv. Doug Lozen and the Board discussed different COLA structures, how a COLA would affect the City's funding requirement, when a COLA would go into effect, and which members would be affected. Doug commented applying it to current retirees in addition to future retirees would cause the City's funding requirement to increase significantly. xvi. Doug proposed an Ad Hoc COLA, with future normal retirees receiving a 1 % COLA annually for life, and current retirees receiving a one-time COLA at a rate of 2% for each year of retirement up to 10% maximum. Doug commented the fee for the study would not exceed $1,000. The Board voted to approve the actuary to prepare a COLA study to see the cost of allocating a 1% annual lifetime COLA for all future normal retirees beginning one year after retirement and a one-time increase for current retirees of 2% for each year of retirement, up to a 10% maximum increase, for a cost not to exceed $1,000, upon motion by Robert Briggs and second by Patricia Gleason; motion carried 3-0. xvii. Kim Kilgore commented the Board needed to approve the purchase of the Information Portal, which was a one-time fee of $700. Kim commented the fee included the initial setup and all future quarterly updates. The Board voted to approve the purchase of the Information Portal for a one-time fee of $700, upon motion by Robert Briggs and second by Patricia Gleason; motion carried 3-0. 7. Old Business — None. 8. Reports (Attorney/Consultants a. AndCo Consulting, Brad Hess, Investment Consultant i. Quarterly Report as of March 31, 2022 1. Brad Hess gave an overview of the market environment over the quarter. 2. The market value of assets as of 3/31/2022 was $49,592,239. 3. Brad Hess reviewed the asset allocation compliance, commenting everything was in -line with the investment policy targets and he had no recommendations to rebalance this quarter. 4. Brad Hess reviewed the financial reconciliation of the fund. 5. The total fund net returns for the quarter were-6.04%. Trailing returns for the 3, 5, and 10-year periods were 9.74%, 8.81 % and 8.32%, respectively. Since inception (4/1/04), gross returns were 7.07%. 6. Brad Hess reviewed the performance of each manager. ii. International Value Equity Manager Analysis 1. Robert Briggs asked how much was currently invested in international equity. Brad Hess commented roughly 15% was invested which was approximately $6.8 million as of 3/31/2022. 2. Brad Hess stated he brought international value options for the Board's consideration to complement American EuroPacific Growth and reduce the fund's risk in the international equity space. Brad commented the international value options were less volatile than high growth options. 3. Robert Briggs asked if they would need to change the IPS. Brad Hess commented they would not need to amend the IPS. 4. Brad Hess recommended the Board to take money out of EuroPacific Growth and put it into the value side for a more balanced approach. 5. Brad Hess gave an overview of the international value equity asset class. Brad reviewed the firm and investment option information for each manager and discussed the management fees associated with each. Brad commented all the firms selected were well -established. Brad gave a brief portfolio comparison and reviewed the trailing performance of each portfolio. 6. Brad Hess recommended the Board to take half of the assets from EuroPacific Growth and half of the assets from WCM and put those funds into the Dodge & Cox International Stock fund. Brad commented Dodge & Cox had low management fees and complemented the current portfolio while giving them exposure to sectors they did not currently have exposure to. The Board voted to take half of the assets from EuroPacific Growth and half of the assets from WCM and put the funds into the Dodge & Cox International Stock fund as recommended by the investment consultant, upon motion by Robert Briggs and second by Patricia Gleason; motion carried 3-0. 7. Pedro Herrera asked if the IPS would need to be changed. Brad Hess commented the IPS did not need to be updated with this change. b. Sugarman & Susskind, Pedro Herrera, Board Attorney i. Pedro Herrera gave a legislative update. Pedro reviewed a bill that proposed to make COVID-19 a presumptive disease for purposes of line -of -duty disability or pre -retirement death benefits for first responders, but it did not pass. Pedro stated this would likely be reintroduced at the next session. Pedro commented there were no other changes that affected the plan. ii. Pedro Herrera reminded the trustees to file their financial disclosure forms by July 1. Pedro commented they should receive the form in the mail in early June. Pedro reviewed how penalties were assessed for late submissions. iii. Pedro Herrera advised the Board his firm was developing a cyber security policy so he would tailor this policy for the Board's consideration at the next meeting. 9. Staff Reports, Discussion, and Action a. Foster & Foster, Kim Kilgore/Chrissy Stoker, Plan Administrators i. Update on overpaid member 1. Kim Kilgore gave an update on a retired member who was overpaid a total of $8,279.05. Kim commented when the member retired she chose a Social Security option which was scheduled to be reduced on 3/1/2021 but the reduction was not applied on time, resulting in several months of overpayments. Kim commented this likely happened during the custodial transition from Fifth Third to Salem Trust, as the future change date was not communicated to the new custodian. 2. Kim Kilgore commented upon auditing the pension plan, the error was discovered, and the member was contacted. Kim commented the member already paid back a lump sum for overpayments made in 2021, and the member would pay the remaining amount on 9/1/2022. 3. Pedro Herrera asked if the payments were corrected and if other adjustments going forward would be made on time. Chrissy Stoker commented she added all future change dates to her calendar to ensure this did not happen again. ii. Educational Opportunities 1. Chrissy Stoker reviewed the upcoming FPPTA 38th Annual Conference. Chrissy commented at the last meeting Gequita Cowan, Patricia Gleason, Gary Gleason, and Tammy Brown stated their interest in attending. Chrissy asked the present Board members if they still planned to attend. Gequita and Patricia commented they planned to attend. Gequita commented she would commute to the conference. Patricia stated she would stay at the host hotel. iii. Chrissy Stoker advised the Board the fiduciary liability policy that was approved at the previous meeting contingent upon receiving other quotes was the lowest quoted policy, so coverage had been bound. 10. Trustees' Reports, Discussion, and Action/City Liaison — None. 11. Adjournment — The meeting adjourned at 11:42AM. 12. Next Meeting — Wednesday, August 3, 2022, at 10:OOAM, quarterly meeting Respectfully submitted by: Chrissy Stoker, an Administrator Date Approved by the Pension Board: Approved by: Gequit Cowan, Ch . ,