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HomeMy WebLinkAbout08-03-2022 MinutesCITY OF OCOEE MUNICIPAL EMPLOYEES' BOARD OF QUARTERLY City Hall, Commission Chambers • • Avenue, • •.. , FL 34761 Wednesday, August 3, 2022 - 10:OOAM TRUSTEES PRESENT: Gequita Cowan, Chair Robert Briggs, Vice Chair Patricia Gleason Gary Gleason TRUSTEES ABSENT: Tammy Brown OTHERS PRESENT: Pedro Herrera, Sugarman & Susskind Chuck Landers, Saltmarsh, Cleaveland & Gund Doug Lozen, Foster & Foster Chrissy Stoker, Foster & Foster Brad Hess, AndCo Consulting Members of the Plan 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. May 4, 2022, quarterly meeting The May 4, 2022, quarterly meeting minutes were approved as presented, upon motion by Robert Briggs and second by Gary Gleason; motion carried 4-0. 5. Consent Agenda The Board approved the consent agenda as presented, upon motion by Robert Briggs and second by Patricia Gleason; motion carried 4-0. 6. New Business a. Update on Trustee terms i. Chrissy Stoker commented Patricia Gleason was Commission -appointed and her term would expire on 9/30/2022. Chrissy commented her reappointment would be considered at the Commission's August meeting and she would let the Board know the outcome. ii. Chrissy Stoker commented Gequita Cowan was Member -elected, and her term would expire on 9130/2022. Chrissy commented the City was handling the nomination process and would handle an election if required. b. Reselection of 5th Trustee i. Chrissy Stoker commented Robert Briggs was the 5th Trustee and his term would also expire on 9/30/2022. Gequita Cowan commented they should wait to reselect the 5th Trustee until the next meeting. Chrissy commented she would add this to the next meeting agenda. 7. Old Business — None. 8. Reaorts (Attornev/Consultants a. Saltmarsh, Cleaveland & Gund, Chuck Landers, Board Auditor i. September 30, 2021, audit 1. Chuck Landers introduced himself and stated he was here to present the draft audit for the year ended 9/30/2021. Chuck commented if approved, the management representation letter would be signed, and his firm would issue the final report. Chuck stated they issued an unmodified opinion. 2. Chuck Landers reviewed the assets and liabilities of the fund. Chuck commented the net position restricted for pensions increased from $43,507,125 to $51,386,285 through 9/30/2021. 3. Chuck Landers reviewed the additions and deductions from net position, commenting the total net increase in net position as of 9/30/2021 was $7,879,160. 4. Chuck Landers reviewed the notes to the financial statements, commenting as of 9/30/2021 the cost of the plan's investments was approximately $41.9 million compared to the fair market value of $51.4 million, compared to the prior year costs of $36.2 million and $43.3 million, respectively, for the individual investment categories. 5. Chuck Landers commented as of 9/30/2021, $545,880 was designated for DROP accounts. 6. Chuck Landers reviewed the City had a negative net pension liability, which meant a net pension asset of $2,407,086. Chuck commented the fiduciary net position as a percentage of total pension liability (asset) was 104.9%. 7. Chuck Landers reviewed the impact on the City's net pension liability if the assumed rate of return was adjusted to 6.0% and 8.0%, respectively. 8. Chuck Landers reviewed the investment returns over the last nine (9) years. 9. Chuck Landers reviewed the Plan was at 0.25% for investment expenses and 0.22% for administrative expenses. Chuck commented the Plan should be below a total of 1.0% for these expenses. The Board voted to approve the September 30, 2021, audited financial statements as presented, upon motion by Robert Briggs and second by Patricia Gleason; motion carried 4-0. b. Foster & Foster, Doug Lozen, Board Actuary i. Fixed early retirement reduction cost study 1. Doug Lozen reviewed the Plan's current early retirement reduction, commenting it was dependent on assumptions for life expectancy and interest, which was considered a true actuarial reduction. 2. Doug Lozen reviewed the funding requirements for FY 2022-2023 with the current Plan provisions. 3. Doug Lozen reviewed Scenario A, commenting if the City agreed to a flat 5.0% early retirement reduction, the funding requirement would increase to approximately $845,000 per year, or approximately 1.5% as a percentage of payroll. 4. Doug Lozen reviewed Scenario B, commenting if the City agreed to a flat 4.0% reduction, the funding requirement would increase to approximately $918,000 per year. 5. Doug Lozen reviewed Scenario C, commenting if the City agreed to a flat 3.0% reduction, their funding requirement would increase to approximately $992,000 per year. 6. Doug Lozen commented if the City passed this as a benefit enhancement, there was no guarantee it would be beneficial, as it was contingent upon members electing to retire early and draw an immediate benefit as opposed to deferring. 7. Doug Lozen commented the City's cost would be higher if the reduction resulted in people retiring earlier. On the other hand, if people did not retire early, the City would still be funding for it, so they would have an actuarial gain. Doug commented if City was putting in extra money each year to fund it, but people were not taking advantage of it, the City would have a credit. 8. Doug Lozen commented the only members who would benefit from a fixed early retirement reduction were those who actually took early retirement. ii. Cost -of -Living -Adjustments (COLA) cost study 1. Doug Lozen commented the current Plan provisions cost the City approximately $691,000 per year, which was approximately 6.97% of payroll. 2. Doug Lozen reviewed Scenario D, which would provide for a lifetime 1.0% automatic COLA for future Normal retirees beginning one (1) year after retirement. Doug commented this scenario would increase the City's funding requirement by approximately $170,000 per year. 3. Doug Lozen reviewed Scenario E,,which would provide fora one-time increase for all current retirees, beneficiaries, and DROP participants, equal to 2.0% for each full year of retirement, up to a maximum increase of 10.0%. Doug commented this scenario applied to current retirees only, not future retirees. Gequita Cowan commented if they wanted to establish a reoccurring COLA, they would have to do something else, as this scenario was a one-time increase only. Doug commented this was correct and would increase the City's funding requirement by approximately $190,000 per year. 4. Doug Lozen commented the scenarios in the study were separate, so if they wanted a combination, the City's cost would increase even more as there would be a compounding effect. 5. The Board and Doug Lozen further discussed the studies. Gequita Cowan commented she would talk to the City Manager to determine how much the City would consider contributing. 6. Pedro Herrera commented no formal action was needed at this time and this could be discussed at a future meeting. Gequita Cowan asked Chrissy Stoker to add this to the next meeting agenda. c. AndCo Consulting, Brad Hess, Investment Consultant i. Quarterly Report as of June 30, 2022 1. Brad Hess gave an overview of the market environment over the quarter. 2. Brad Hess reviewed the schedule of investable assets over the last ten (10) years. 3. Brad Hess reviewed the asset allocation compliance, commenting overall they were in -line with the investment policy targets. 4. Brad Hess recommended to put in a $1 million redemption request to the ARA Core Property Fund. Robert Briggs asked if they could back out once the redemption request was placed. Brad commented they could not. Brad commented it would take a couple of quarters for them to get the proceeds and put the money to work. The Board voted to put in a redemption request for $1 million from the American Core Property Fund and keep the funds in cash until they determined where to invest it, as recommended by AndCo, upon motion by Robert Briggs and second by Patricia Gleason; motion carried 4-0. 5. Pedro Herrera commented they would be notified when the money was received, and they would work with Brad Hess to invest it at that time. Brad commented the monies would be invested according to the Investment Policy Statement. 6. Brad Hess stated he only implemented half of the motion from the last meeting to move money out of both EuroPacific Growth and WCM and into Dodge & Cox, commenting he had only moved the money out of EuroPacific Growth. Brad apologized for this oversight and commented he had since moved the money out of WCM and into Dodge & Cox. Brad confirmed the Plan was not disadvantaged by this omission. 7. Brad Hess reviewed the financial reconciliation of the fund. 8. The Market Value of Assets as of 6/30/2022 was $44,346,317. 9. The total fund net returns for the quarter were-9.85%. Trailing returns for the 3, 5, and 10-year periods were 4.71 %, 5.93% and 7.41%, respectively. Since inception (4/1/04), gross returns were 6.70%. 10. Brad Hess reviewed the performance of each manager. 11. Brad Hess reviewed the fiscal year returns going back to 2015. 12. Gequita Cowan commented part of their agreement with AndCo included an educational seminar and it would be nice to have one to get the Board more educated, especially for the newer trustees. Brad Hess commented he would be happy to provide education at the next meeting or he could come for a special meeting. Robert Briggs commented if it were given in a public session, some of the Plan members could attend also. Pedro Herrera commented in Deltona they held the education session before the regular meeting, and this was a good way to get plan participants involved in the pension and get some information. By consensus, the Board agreed to hold an educational session at 9:OOAM before the next regular meeting. d. Sugarman & Susskind, Pedro Herrera, Board Attorney i. Pedro Herrera commented overall he had no news to report. ii. Pedro Herrera reminded the Trustees to file their financial disclosure forms if they had not already done so. iii. Pedro Herrera commented his firm was working on a cyber security policy and he would bring this to the November meeting to present to the Board. Pedro briefly discussed cyber security. iv. Gequita Cowan and Pedro Herrera discussed a public records request for all DROP participant information. Pedro commented unfortunately public records requests needed to be fulfilled and all the information requested was a public record. 9. Staff Reports, Discussion, and Action a. Foster & Foster, Chrissy Stoker, Plan Administrator i. Chrissy Stoker reviewed the upcoming FPPTA Fall Trustees School. Gequita Cowan, Patricia Gleason, Robert Briggs, and Gary Gleason commented they planned to attend. Chrissy commented she would reach out to Tammy Brown to see if she wanted to attend. Chrissy reminded the Board the trustee schools offered CPPT courses, so anyone wanting to enter the program or take the next level of courses should let her know. Chrissy reviewed the CPPT certificate holders were Gequita Cowan, Robert Briggs, and Patricia Gleason, and both Tammy Brown and Gary Gleason passed Basic so if they attended, they would take Intermediate - level courses. Chrissy reminded the Board effective 7/1/2022 the reimbursement rate for mileage increased to $0.625. ii. Chrissy Stoker commented the Information Portal that was purchased at the last meeting was operational and would continue to be updated quarterly. Chrissy commented this was the site that contained pension meeting agendas, minutes, investment reports, actuarial valuations, benefit processing forms, and other pension documents. Chrissy commented the Information Portal now contained a link members could click to open a new window and navigate to the member portal to run benefit estimates. Gequita Cowan requested the link to the Information Portal not open in a new window, as it would leave the member portal window open which contained personal information. Chrissy commented she would work with the coder on the portal to determine if this could be changed. iii. Chrissy Stoker provided an update on an overpaid member, commenting Kim Kilgore was working with the member to collect the remaining amount due to the pension plan for overpayments received since March 2021. Chrissy commented she would confirm at the next meeting that the funds were paid back into the Plan. 10. Trustees' Reports, Discussion, and Action/City Liaison a. Gequita Cowan commented the portals were well -received by the Membership. 11. Adjournment —The meeting adjourned at 11:46AM. 12. Next Meeting — Wednesday, November 2, 2022, at 10:OOAM, quarterly meeting Respectfully submitted by: 4 a` Chrissy Stoke(, Plan Administrator Date Approved by the Pension Board: Approved by: Ge ui Cowan,21 hai `tea. '.".....