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HomeMy WebLinkAbout02-13-2008 Minutes Minutes of the Regular Meeting of the CITY OF OCOEE GENERAL EMPLOYEES’ PENSION BOARD Held on February 13, 2008 At 150 N. Lakeshore Drive Ocoee, FL 34761 AGENDA ITEM I. CALL TO ORDER - Chairman Wagner A. Chairman Russ Wagner called the meeting to order at 8:07 a.m. in the Commission Chambers in City Hall. The roll was called and a quorum declared present. Present were Trustees Terry Reed, Jean Grafton, Russ Wagner and Tom Hendrix. Absent was Wendy West. Also present were H. Lee Dehner, Attorney; Mike Welker, Bogdahn Consulting; Doug Lozen, Foster & Foster; and Shane Coldren, Trusco Capital Management. Jim Carnicella, Human Resources Director/Plan Administrator arrived at 8:15 a.m. B. Approval of Minutes from Special Session dated October 3, 2007 Chairman Wagner called for review of the Minutes and noted a typo, approximately in the middle of page 5, which read “Attorney Dehner sated” instead of “Attorney Dehner stated”. Chairman Wagner also recommended in the future the minutes be produced in a manner that would make it easier to read, such as more paragraphs. There being only one correction to the Minutes noted by Chairman Wagner (the correction to the Minutes being the word stated instead on motion made by Trustee Reed, of sated) and no other additions or corrections, it was, seconded by Trustee Hendrix, unanimously RESOLVED that the Minutes of the Special Session of the Board of Trustees of the General Employees’ Pension Board of October 3, 2007, be and are hereby approved as stated. AGENDA ITEM II. NEW BUSINESS A. Investment Consultant Report – Michael Welker, Bogdahn Consulting, LLC Mike Welker said he will go through the report first and then, if possible, there were some Policy Statements he would like to have the Board sign so he could get them sent out to the Money Managers. He reported that Attorney Dehner did a lot of work getting most of the contracts signed but noted there was one issue still outstanding, the Custodial Agreement with Fifth Third Bank, as it had not been received. Discussion ensued. Mr. Welker began going over the Quarterly Review for the Fourth Quarter of 2007. He reported that some depreciation in the fund was due to withdrawals out of the account and some because of the volatility in the stock market. (Plan Administrator Carnicella arrived at 8:15 a.m.) Mike Welker continued and said the total fund was down .53% but noted that the total fund benchmark th was .83%, which put the plan in the 17 percentile so we actually fared pretty well for the General Employees Pension Board Quarterly Meeting, February 13, 2008 Page 2 of 7 quarter. He stated it was a good year and went on to explain. Mike Welker continued to go over the report. He went on to say he wanted to follow up on the Fifth Third issue concerning the contract now that Mr. Carnicella had arrived. Plan Administrator Carnicella said he received the contract, to which Mike Welker advised he would get it taken care of and start working with Kimberly Kutlenios, the contact for Fifth Third. Discussion ensued. Chairman Wagner stated that Shane Coldren with Trusco Capital Management was here with a brief report and asked to have him speak next. Mr. Coldren introduced himself and said he was here to meet with the Police Officers’ and Firefighters’ Pension Board later today. He spoke about some of the things that were going on in their firm and began to go over the Trusco Fourth Quarter 2007 Report handed out to the Board. Shane Coldren spoke about the changes at Trusco and concluded by saying they appreciated the relationship and hoped to have the opportunity to talk to this Board again in the future. He said to let them know if there was anything Trusco could do to help with the transition. Appreciations were exchanged. Mike Welker said Mr. Coldren mentioned Trusco ran a piece of the portfolio but was not in charge of the asset allocation, that the previous consultant was, and went on to explain. Plan Administrator Carnicella stated Foster & Foster was not on the Agenda but asked the Board to give Doug Lozen an opportunity to speak before proceeding with the meeting. The Board agreed. Mr. Lozen said he brought the member statements with him and gave them to Trustee Grafton for distribution. He reported Foster & Foster was currently in the process of completing the 2007 Actuarial Valuation and should have it to the Board within the next thirty days. He stated he would come back to the next quarterly meeting with a full presentation and would be here to answer any questions that might come up at today’s meeting. B. Actuarial Contract – Jim Carnicella, HR Director/Plan Administrator Plan Administrator Carnicella said the current contract with Foster & Foster had expired. He said Foster & Foster would like the Board, in some fashion, to continue the contract and mentioned there were new terms and probably new conditions. He asked if the Board wanted to consider those terms or if they would like to do an RFP for Actuarial Services. Plan Administrator Carnicella went on to say he had some comments about a few of the terms but doesn’t believe the Board had a chance to go over the contract. He suggested the Board discuss their rules and regulations before deciding what terms and conditions they want in a contract with the Actuary. He talked about how many times a member could request their evaluation before being charged. Trustee Grafton stated the action the Board took previously was to allow up to two evaluations per member paid for by the plan. Trustee Grafton stated this was because some people were frivolously asking for evaluations and went on to explain. Plan Administrator Carnicella advised that a member recently had three evaluations done but in error was not asked to pay up front. He stated the three charges were on Foster & Foster’s invoice and then continued talking about fees and charges. Plan Administrator Carnicella mentioned Attorney Dehner sent him a copy of the Rules and Regulations for the General Employees’ Pension and said he would like to do the same thing Charlie Brown did for his Board. He stated Trustee/Chairman Brown put a binder together for the Police Officers’ & Firefighters’ Pension Board Members, which included documents like their ordinance, the statutes, etc. and said he would like to put one together for this Board. General Employees Pension Board Quarterly Meeting, February 13, 2008 Page 3 of 7 Trustee Grafton asked about the software Foster & Foster was going to make available about a year ago. Plan Administrator said there was a discussion and recalls a cost associated with it but didn’t remember where they left off. He turned it over to Doug Lozen to respond. Doug Lozen said he would like to deal with the request for a fee increase issue first. He stated Foster & Foster approached all of their clients with exactly the same proposal. He said the fee increase does not change the underlying contract for services. He said the contract for services has not expired, what expired was simply the guarantee period for the last fee schedule. Doug Lozen reported that Foster & Foster actually picked up more clients from their nearest competitor because their rates are about the cheapest in the state and went on to explain. He asked if there were any questions. Plan Administrator Carnicella mentioned the member statements not being provided timely and after some discussion Doug Lozen explained that once Foster and Foster received the data, the statements were provided to the Board in about three weeks instead of the sixty days they are typically allowed. Mr. Lozen mentioned Foster & Foster would have the Actuarial Valuation Report done in about a month, which would still be within the sixty days. After a brief discussion, Plan Administrator Carnicella explained that supposedly there was an email sent to Trustee Grafton but was sent to an email address no longer in use. He mentioned he was copied on an email Foster & Foster sent to the Police Officers’ & Firefighters’ Pension Board but since he was not their Plan Administrator he ignored it. He said it wasn’t until Debbie Bertling contacted Foster & Foster and found out they hadn’t received the information did we know there was a problem. Mr. Carnicella suggested the Board give direction to whomever they do business with to go through Human Resources since he is the Plan Administrator for the General Employees’ Pension and that way he can make sure it happens. Trustee Wagner stated the Board made Jim Carnicella their Plan Administrator, so if it wasn’t clear to the consultants before it should be now and suggested in the future he and/or Trustee Grafton be copied since it sounded like there was a communication problem. Chairman Wagner continued talking about the fee issue. He suggested Plan Administrator Carnicella get the information Doug Lozen mentioned earlier concerning a fee comparison they did. He said everything is going up but before the Board takes any further action he would like to see the information. A brief discussion ensued. Plan Administrator Carnicella said he would enjoy the opportunity to chat with Foster & Foster about their proposal and is hoping he can come back to the Board with a recommendation as a result of that discussion. Mr. Carnicella mentioned the software issue again. Doug Lozen said the software was there ready to go and typically the Plan Administrator distributes the information with the user password and website but didn’t know if that had been done yet. Doug Lozen mentioned there was a free trial period for the software and after that the cost would be $16.00 per member, per year, with a maximum of $2,000.00 annually. Plan Administrator believes he thought at the time the cost of $2,000.00 a year was more than the value being provided. Discussion ensued. Plan Administrator Carnicella said he would meet with Doug Lozen or Brad Heinrich of Foster & Foster and come back to the Board at the next meeting with a recommendation regarding their fees. Doug Lozen stated he had a recommendation to make, if it was not too presumptuous. He said the agreement for services hasn’t changed and upon mutual agreement can be terminated with a 30-day notice. He went on to say his recommendation was that a motion be made for approval of the proposed fee structure. Mr. Lozen said he would email the comparison Foster & General Employees Pension Board Quarterly Meeting, February 13, 2008 Page 4 of 7 Foster developed off the website from the Division of Retirement and if it turned out in the next quarter the Board finds he is incorrect and their fees are not the cheapest or right at the very bottom they can have further discussions but he would like a motion today to approve the fee structure with the understanding that they are not obligated to anything and can terminate services. Chairman Wagner stated the Board just received Foster & Foster’s fee structure but he would still like Plan Administrator Carnicella to get with Mr. Lozen and suggested the Board determine this issue at the next meeting. Chairman Wagner asked if any Board Member wished to comment. Trustee Grafton said the Board had received rate increases from others in the past without having much time to review them first. After brief discussion Chairman Wagner asked to have this type of information sooner, to which Plan Administrator Carnicella said the document was dated February 11, 2008 and he got it to the Board as quickly as he could. Discussion ensued. Doug Lozen stated these were the numbers and Foster & Foster will obligate themselves to this fee structure for three . On motion made by Trustee Grafton, seconded by Trustee years. Further discussion ensued Hendrix, unanimously RESOLVED to accept the new fee structure from Foster and Foster for Actuarial Services provided and direct the Attorney to draw up a new contract. Trustee Hendrix asked if the Board needed to approve Foster & Foster’s invoice, to which Doug On motion made by Lozen stated the invoice submitted was not based on the new fee schedule. Trustee Hendrix, seconded by Trustee Grafton, unanimously RESOLVED to approve that the Foster and Foster invoice be and is hereby approved for payment as presented. AGENDA ITEM III. OLD BUSINESS A. Investment Policy Statement – Bogdahn Consulting, LLC Plan Administrator Jim Carnicella said Mike Welker was good enough to create the Investment Policy draft for the Board to sign and as soon as it was done he would get a copy to them and have it as part of the packet for the next meeting. Mike Welker spoke briefly and asked Attorney Dehner if the new ordinance to broaden investment authority was still going forward. Attorney Dehner stated yes and after speaking briefly about the Ordinance, Plan Administrator Carnicella confirmed it was moving forward. B. Report regarding Custodial arrangement – Bogdahn Consulting, LLC Plan Administrator Carnicella stated all the companies except Baring and Voyageur sent original contracts back for the Board to sign and advised he also received Fifth Third Bank’s signed contract. He then asked if Mike Welker had any comments. Mr. Welker said once all the parties have signed the contracts he would work on the transition and start moving everything. Plan Administrator Carnicella handed out a draft copy of the Summary Plan Description. Documents were given to the Board to sign and Trustee Grafton noted there was no place for the Secretary to sign, which Mike Welker acknowledged for the record. General Employees Pension Board Quarterly Meeting, February 13, 2008 Page 5 of 7 After a brief break was taken to obtain signatures, Chairman Wagner brought the meeting back to order and asked if anyone had anything further to discuss. There being no further questions, Plan Administrator Carnicella moved on to the payment of invoices. AGENDA ITEM IV. OTHER BUSINESS A. Payment of Invoices Plan Administrator Carnicella stated he recommended the Board approve the invoices included on motion in their packet and would be happy to answer any questions. After brief discussion, made by Trustee Reed, seconded by Trustee Grafton, unanimously RESOLVED to approve that the bills and other charges and fees be and are hereby approved for payment as presented. AGENDA ITEM V. ATTORNEY COMMENTS – H. Lee Dehner, Esq. Attorney Dehner reported there have been many Ordinance Amendments to the Plan and the last time a complete consolidation was done was in 1996. He recommended consolidating all the changes and went on to explain. Attorney Dehner mentioned reemployment. Plan Administrator Carnicella spoke about reemployment and asked the Board to possibly consider giving employees, who return to work for the City, credit for the time they worked prior to the plan currently in place. Trustee Grafton said she wasn’t aware they didn’t get credit until she attended a Conference recently and went on to talk about prior service. Doug Lozen asked questions about the City’s prior plan. Trustee Grafton said before the current plan, there was a non-contributory plan in place. Mr. Lozen said that was a gray area and asked Attorney Dehner to give some input. Attorney Dehner said the prior service issue would take an amendment to the plan and went on to explain. Plan Administrator Carnicella stated he would recommend the Board consider going forward with the amendment and have Doug Lozen look at the actuarial impact involved. Discussion ensued. Trustee Grafton spoke about prior experience concerning revising the Summary Plan Description and Operating Rules and Procedures. Plan Administrator Carnicella said with Attorney Dehner’s help he would get a fairly accurate document back to them. Chairman Wagner asked if the reemployment issue just needed to be a direction, to which Attorney Dehner said yes at this point. Attorney Dehner clarified the issue was in respect to individuals who were in the old non- contributory plan in existence prior to the current plan, as distinguished from anyone who was in the current plan, left, took their money out and then came back because those individuals would have to do a buy-back. Discussion ensued. Attorney Dehner then gave an update on Merrill Lynch. He said they had a conference call with eight or nine Attorneys about three weeks ago on the issue with respect to Merrill Lynch and whether there would be any litigation. He said there is still no hard evidence at this point, that any of the Attorneys would want to put in a complaint with their name on it. Attorney Dehner spoke about the SEC investigation and said they are watching the investigation, monitoring it and at some point may be discussing whether or not the Board wants to take action. General Employees Pension Board Quarterly Meeting, February 13, 2008 Page 6 of 7 Plan Administrator Carnicella spoke briefly about the recommendation he made to the Board concerning an audit and said since that time a lot more information has come out about Merrill Lynch. He said the Board might want to wait to see what happens first and apologized for possibly being a bit premature regarding the audit. Attorney Dehner then spoke briefly about a proposal still pending to extend the $3,000 pretax payments for retirees for health insurance and long term care insurance to all public employees. Brief discussion ensued. AGENDA ITEM VI. PLAN ADMNISTRATOR COMMENTS – Jim Carnicella A. January 14, 2008 Letter from Attorney regarding Social Security Numbers Attorney Dehner reported there was an amendment to Chapter 119 of the Florida Statutes affecting all public agencies regarding social security numbers and mentioned his memorandum dated January 14, 2008. Attorney Dehner spoke about the requirements and said his office is in the process of going through all the forms and deleting the need for social security wherever possible. He recommended that until the forms are revised, if we disseminate a form with the social security number on it, we attach a sheet with the legend on it. Trustee Grafton asked if this was something already being done by Human Resources, to which Plan Administrator Carnicella stated yes. Mr. Carnicella said it was actually being done by the City, Citywide and went on to explain. Plan Administrator Carnicella asked Attorney Dehner if what the City was doing would suffice for the Pension Boards. Attorney Dehner stated it has to be clear that the Board is covered and went on to explain. Jim Carnicella spoke about the issue further and said he would give the City Attorney a copy of Dehner’s memorandum and have Paul Rosenthal give Attorney Dehner a call. Attorney Dehner then mentioned the audit. He said it was his understanding at the time, the interest was to have an accounting firm do an audit of the pension fund not that they were looking for someone to audit Merrill Lynch. Trustee Grafton said that was her understanding as well. Plan Administrator Carnicella said he wasn’t at the meeting when they discussed the RFP and didn’t get the opportunity to tell the Board what else he thought they should look into, which was to find out as much as they could about what Merrill Lynch was up to. Attorney Dehner said with respect to the audit in regards to Merrill Lynch, if there is litigation taken as a class action the audit would be done as part of the class and the fund would not be on the hook alone but if they went on their own then the Board would need to retain someone who conducts that type of audit. B. Liability Insurance Plan Administrator Carnicella spoke briefly about FPPTA and mentioned getting more involved with the International Foundation because he thought it would give him a little broader perspective about things especially benefits. He mentioned the GASB review. He spoke about the issue of liability insurance being a big topic at one of the sessions he and Trustee Grafton recently attended and said he has challenged the company we are currently using to prove if there is an action taken against the Board they would be covered and went on to explain. Discussion ensued. Attorney Dehner asked to review the policy when Plan Administrator Carnicella had it all together because most policies do not adequately cover fiduciaries. Attorney Dehner spoke General Employees Pension Board Quarterly Meeting,February 13,2008 Page 7 of 7 about a Waiver of Recourse endorsement. Trustee Grafton mentioned the money for the insurance could not come from the plan. She stated it must come from the City or from them individually. Further discussion ensued. Attorney Dehner spoke about defense costs. Chairman Wagner asked how long it would take to get the policy information. Plan Administrator Carnicella said hopefully within days, that he would get the information in writing and send it to Attorney Denner to review. Chairman Wagner asked if there was anything else. Doug Lozen said since it looked like the Board might go forward with the online calculator software and it is billed annually, he asked if the Board wanted to pick an effective date for the billing. Plan Administrator suggested the Board consider the issue at the next meeting. Chairman Wagner stated he would like to know a little more information before they move forward with it. Discussion ensued. Trustee Grafton reported there were two people who left and started drawing their pensions based on the estimate. She said it was an error made by the previous person handling the paperwork but was corrected and hopefully this kind of thing would never happen again. Plan Administrator Carnicella spoke briefly about the issue. C. Summary Plan Description Plan Administrator Carnicella passed out a draft of the Summary Plan Description previously in the meeting and some discussion took place but this item was not addressed further. AGENDA ITEM VII. COMMENTS FROM TRUSTEES Chairman Wagner asked if there were any comments from Trustees. Trustee Grafton said she mentioned having a town meeting with the elected officials to discuss what the current movement was about, changing from a defined benefit plan to a defined contribution plan. Plan Administrator Carnicella said this City Commission and City Manager are committed to protect our benefits. He said that could change in the future but didn't believe it was necessary to have a town meeting in front of this City Commission. Discussion ensued. AGENDA ITEM VIII. SET AGENDA FOR NEXT MEETING Chairman Wagner stated the next meeting was set for May 14, 2008 and asked if the meeting would start at the regular time. Plan Administrator Carnicella replied yes, the meeting would start at 10:00 a.m., and said he appreciated them changing their schedule for him. AGENDA ITEM IX. ADJOURN There being no other business, the meeting was adjourned at 10:48 a.m. Respectfully submitted by Approved by: Debbie Bertling HR Analyst ' • - - -•• Teri.. ReQcS), V;c.e Chairman