Loading...
HomeMy WebLinkAbout01-26-2011 Minutes Minutes of the Regular Meeting of the CITY OF OCOEE GENERAL EMPLOYEES' RETIREMENT TRUST FUND BOARD OF TRUSTEES (GERB) Held on January 26, 2011 At 150 N. Lakeshore Drive Ocoee, FL 34761 AGENDA ITEM I. CALL TO ORDER — Chairman Wagner Chairman Russ Wagner called the meeting to order at 10:04 a.m. in the Commission Chambers in City Hall. A. Roll Call Chairman Wagner called the roll and a quorum was declared present. Present were Chairman Russ Wagner, Trustees David Wheeler, Jean Grafton, Wendy West and Pat Gleason. Also present were Mr. Jack Evatt of Bogdahn Consulting, LLC, Mr. Doug Lozen of Foster and Foster, and GERB Recording Secretary Stella McLeod. B. Approval of Minutes The chairman directed the board's attention to the minutes for the following meetings: the Regular Meeting of November 3, 2010 and the Special Meeting of December 21, 2010 (Exhibits #1, 2). Trustee Grafton offered a spelling correction to the November minutes. Upon the motion being made by Trustee Grafton and seconded by Trustee Gleason, and that motion having passed unanimously, the board RESOLVED to approve the minutes with corrections suggested by Trustee Grafton. AGENDA ITEM II. NEW BUSINESS A. Investment Consultant Report — Mr. Jack Evatt of Bogdahn Consulting, LLC Mr. Evatt distributed the written report to the board, including a copy for the recording secretary. The first half of the report covers general information about the market and the economy, and the second half covers specific information about the plan. He asked that the General Employees Retirement Board January 26, 2011 Page 2 of 9 board let him know if there was anything in particular they would like them to cover. The chairman said that Mr. Nash, who usually makes this presentation to the board, typically gives the board an overview of the market and the specifics of how Ocoee's funds performed. Mr. Evatt proceeded with giving the report. He said that the period being measured goes until the end of last year. He continued that the fourth quarter of last year was very much like a couple quarters prior to that. The equity markets were very strong, Mr. Evatt continued, which is a major distinction from fourth quarter of last year compared to what has been seen which has been seen in the past twelve months is really weakness in the fixed income market for the first time in a long time. Most people have been anticipating that, he said. The fourth quarter was really a good year in the equity market, but not so much in fixed income. For the 12 -month period 15.1% for the S &P 500, Barclay's US Aggregate up 6.5% which is still good, but it was probably around 10% last time this report was given to the board. Growth outperformed value in every capitalization. As the economy starts to move forward, companies that have a more cyclical nature tend to do better in the last quarter and for the year of 2010. He jumped ahead to page 12, specifically reviewing the chart. After weakness in the equity markets, Mr. Evatt said there follows a period of prosperity with regard to fixed income markets. This pattern was seen back during the Depression. Mr. Evatt added that money is being poured into fixed income markets as folks seek security for their money given the state of the equity markets. As people feel better, he said, they begin to put their money back into the equity markets. Chairman Wagner asked if the board should start funneling more money into equity. Mr. Evatt said that there are two main alternatives. He said the board could look at the fixed income market outside of the US. He added that they look at direct investment in real estate (the commercial side) which would yield an income stream. This option would also have some capital appreciation potential. Chairman Wagner asked why the plan had $800,000 to $900,000 in cash which was not generating any income. Mr. Evatt answered that there are two different sources of cash. One kind is the type of cash kept to pay bills and then there's the cash that the money managers have. He added that the real amount of cash that the plan has at the end of the year is closer to $200,000. Chairman Wagner restated the response for clarification: the plan keeps enough cash to take care of financial obligations, and the remainder is with the money managers. Mr. Evatt confirmed that this is true. Mr. Evatt referred the board to pages 13 and 14 which speak to this matter. Chairman Wagner asked Mr. Evatt about ICC which has something called Chemtura which cost the plan almost $200,000 in losses. Mr. Evatt asked if the board has ICC on the General Employees Retirement Board January 26, 2011 Page 3 of 9 agenda to speak with the board. The chairman responded that ICC is only obligated to come to the board once per year. He spoke about ICC's high performance last year. The chairman said that the fund has not done so well since they invested heavily in Chemtura. Mr. Evatt said that using the investment policy, they try and give the money managers a fair amount of latitude. He added that if the plan liked what the manager did before, then placing restrictions on them might not get the plan what the board is paying for. ICC's quarter was actually very good. Nevertheless, Mr. Evatt said that he would make a note to look into the matter. He said that he will have ICC schedule to come and speak with the board. Chairman Wagner addressed the board members about having the money manager come to speak with them. The members did not dissent about having the manager come and address the board. Mr. Evatt said that overall the plan has done very well. Mr. Evatt directed the board's attention to page 37. This is the time, he said, to discuss if there is any action that needs to be taken. For example, did the plan equal or exceed its 8% earnings assumption for the current 5 -year period? The plan did not. Over time, however, the bad years will drop off, and the plan will get more good years. For the 3 -year period the plan is close to the CPI at 3 %. The plan exceeded CPI for the 5 -year period. Chairman Wagner said last year the plan was in the top 13 percentile of all public plans. Was that all public plans in Florida, he asked? Mr. Evatt was unsure and said that he would get an answer for the board. For the last 5 years, the plan is in the 5 percentile which is great. The chairman asked if any of the board members had questions. They had no questions. Chairman Wagner thanked Mr. Evatt for his presentation. B. Actuarial Evaluation Report — Mr. Doug Lozen, Foster & Foster Mr. Lozen said that the City did very well for market returns for the year although that success will not be realized for 4 years. The City did exceptionally well and this will offset some loses in '08 and '09 although not completely. Mr. Lozen continued that there was an actuarial loss investment -wise that was almost entirely offset by high turnover and low pay increases (below long term assumptions). On page one of the report, Mr. Lozen noted that City payroll had actually decreased. There are fewer active members in the plan right now. Some members have gone into DROP, some have terminated, and other members have retired. From the City's perspective, they will not have to put a whole lot more dollars into the plan this year as opposed to what they put in last year. The City will probably have to put in about $1.4 million which is comparatively lower than many other plans. General Employees Retirement Board January 26, 2011 Page 4 of 9 Funding went up .36% compared to 2 to 4% with other plans. The City did exceptionally well here, Mr. Lozen reported. The funding rate may creep up, but not by a lot. The four -year average is 3.76 %. The plan is in for another year where the average is low compared to the 8 %. The City's required funding will go up next year but not by much. It would take a tremendously high return on investment to meet the 8% and Mr. Lozen said he does not think that will happen next year. Once investment losses have been paid down in 10 years, the City will be in the teens with regard to percentage of payroll to be paid into the fund. Mr. Lozen discussed the funded ratio (on page 24 of the report) which is assets keeping up with benefits promised to date. He also discussed the growth in assets compared to growth in paid benefits. The increased value of the market value of assets outpaced the growth of the promised benefits to date. That is good news, Mr. Lozen said. He solicited comments and questions from the board members. Chairman Wagner said that he had received a call from a reporter asking about the plan's unfunded liability. The chairman asked if there is an optimum number that the City's pension fund should approach regarding unfunded liability. He referred the chairman to page 24 of the report. Additionally, he put the matter in laymen's terms by saying that covered payment is $8.1 million and the unfunded liability is $7 million. He said it is as if the payoff for one's home is less than the one's earnings. If one made $81,000, one could afford a house that cost $70,000. That is the circumstance for the plan, Mr. Lozen said. Chairman Wagner asked if there is an optimal number. Mr. Lozen said that if the plan ended today, the City would be higher funded than 73 %. He referred the board to page 4 of the report to do what -if scenarios. If everyone were to be cashed out today, the City would be able to pay out 97% of its benefits promised. Further discussion ensued. Mr. Lozen asked if there were any other questions. Trustee Wheeler pointed out that the custodian bank is Fifth Third Bank and not SunTrust. Mr. Lozen said that he will make the change which will show in the next report. Chairman Wagner said that a whole bunch of stuff has been sent to Mr. Lozen's firm to get estimates and such. He thanked Mr. Lozen and said that the board would be consulting with him after the pension technician is hired. Attorney Dehner said if the report is accepted by the board, it must be approved by motion. Chairman Wagner said that he understood that if the board accepted the report it would obligate the City to funding for next year. He asked Mr. Lozen if there was any reason for the board to hold off adopting the numbers; if there was any other possible numbers that they General Employees Retirement Board January 26, 2011 Page 5 of 9 could derive based on all the information that Mr. Lozen has. Mr. Lozen said only if there are any corrections coming from the City for any of the data already submitted. Chairman Wagner said there are not any corrections coming. Mr. Lozen said there is no reason for revising the report. The board would be safe approving the report. Chairman Wagner asked the attorney if the board would be able to amend the report if the data needed to be corrected. The board attorney answered affirmatively. Trustee Wheeler asked if anyone in the City had reviewed the report. Chairman Wagner answered `no', but that they would not have the ability to change the report. A motion having been made by Trustee Wheeler and seconded by Trustee Grafton to accept the actuarial report as presented, and that motion having passed by unanimous vote, the board RESOLVED to accept the actuarial report as presented. The chairman said the report will be forwarded on to the City for inclusion in the budget report for next year. Attorney Dehner said that the board will need to make a determination based on Mr. Evatt's recommendation as to what the total annual rate of return will be for next year and the next several years with a letter to be signed by chairman and sent to Tallahassee, the board's actuary and the City. Mr. Evatt agreed that 8% is a reasonable recommendation. A motion having been made by Trustee Grafton and seconded by Trustee Gleason, and to accept 8% as the annual rate of return, and that motion having passed by unanimous vote, the board RESOLVED to use 8% as the annual rate of return. C. Amendments to Rules 14 & 17 of the Operating Rules and Procedures Chairman Wagner said that the board had discussed previously the possibility of making a change with regard to the board liaison. The chairman said when the city manager asked him how the liaison was appointed, the chairman found out that the city manager did not appoint the person. The board members suggested the language be changed to "the city manager will appoint the liaison ..." In Rule 17, the chairman suggested language stating that the board General Employees Retirement Board January 26, 2011 Page 6 of 9 can appoint a person to administer the plan (with the board being the plan administrator). The chairman also added `auditors' now that the board is having audits. Attorney Dehner said that a motion to amend both rules would be needed. Trustee Grafton asked if that could be done in one motion. The attorney replied in the affirmative. A motion having been made by Trustee Grafton and seconded by Trustee Gleason, to amend Operating Rules 14 and 17 with the changes recommended by the board chairman, and that motion having passed by unanimous vote, the board RESOLVED to amend the Operating Rules. Attorney Dehner said that the chairman could get the changes to his office and the attorney will revise the rules as prescribed by the motion. D. Service Eligibility Determination A commissioner has the following situation: he is vested in the City's pension program as an elected official and he has several years of prior service as a regular City employee (back in the 70's when the City had a pension plan that to which the employees did not contribute). The question is whether those previous years of service could be added as pensionable years of service for the commissioner. After outlining the matter, the chairman posed the question to the board for their input. Attorney Dehner said that it is for the board to interpret the ordinance, when he was asked his opinion by Trustee West. In his opinion, he added, there needs to be a distinction between general employee service and elected official service. Further discussion ensued. Chairman Wagner invited Mr. Doug Lozen (the City's actuary) to speak regarding implications of approving the addition of those previous years of service. Mr. Lozen said that the anticipated cost for this should be pretty small given that their pay is small compared to a general employee. If, however, a city employee later became a city commissioner, there's a potential to have higher costs to the fund down the road, Mr. Lozen concluded. Further discussion ensued. Chairman Wagner asked the attorney and actuary if they knew of any plan in Florida where commissioner retirement benefits were mixed in with general employee benefits. They both answered no. General Employees Retirement Board January 26, 2011 Page 7 of 9 A motion having been made by Chairman Wagner, and seconded by Trustee Grafton, to table the matter until the next reading so that further research can be done, and that motion having passed unanimously, the board RESOLVED to table the item. AGENDA ITEM III. OTHER BUSINESS A. Appointment of RMLO (records management liaison officer) Attorney Dehner said that the primary function is to be the liaison between the board and Tallahassee. Trustee Wheeler asked if the person hired as the pension technician could be the RMLO. Attorney Dehner replied affirmatively. A motion made by Trustee Wheeler, seconded by Trustee Grafton, to appoint the chairman as RMLO and adopt the GSL -1 records retention schedule, and that motion having passed unanimously, the board RESOLVED to appoint the board chairman as the RMLO. B. Fiduciary Liability Insurance Trustee Wheeler is getting quotes for the insurance given that the current coverage expires next month. The trustee said that the cost will not be any more than $5000. Attorney Dehner reminded the board to make sure there is a waiver of recourse endorsement which is paid for by the City. C. Payment of Invoices The chairman directed the board's attention to the list of all invoices paid along with an additional invoice that is not on the previous list which are items related to the board's trip to the FPPTA institute (attached). The chairman will have his secretary add those notices to the consolidated list. A motion made by Trustee Grafton, seconded by Trustee Wheeler, to ratify the invoices paid by the board including travel invoices, and that motion having passed unanimously, the board General Employees Retirement Board January 26, 2011 Page 8 of 9 RESOLVED to ratify the payment of invoices as listed in the board's meeting packet. D. Fund Activity Report Chairman Wagner directed the board's attention to the activity report prepared by Human Resources Specialist Debbie Bertling (attached). Further discussion ensued. Trustee Grafton asked if the Fifth Third report is being examined. Chairman Wagner said he was doing it. Trustee Grafton asked if anyone was checking on whether pensioners are still alive. She added that she would be willing to take on the task. E. FPPTA Schedule / Events Chairman Wagner noted that four board members will be going. Trustee Wheeler said he was able to get the government rate since he is a City employee. Trustee Gleason had a question about her check which says mileage and tolls although she will be riding with Trustee Grafton. Trustee Grafton said this is a scrivener's error and that though her check and Trustee Gleason's check say mileage and tolls, the checks are in differing amounts which demonstrates mileage and tolls being paid on only one of the checks. Trustee Wheeler said that he is on the waiting list for the FPPTA trip to New York. Further discussion about the trip ensued. F. Pension Technician Job Description Chairman Wagner presented the pension technician job description to the board. He solicited neighboring cities during the development of the job description. The job will be submitted as a budget amendment on February 15th and March 1St AGENDA ITEM IV. ATTORNEY COMMENTS — H. Lee Dehner, Esq. A. HELPS II The legislation is still pending with House Ways & Means Committee. Attorney Dehner said that he will keep the board updated. General Employees Retirement Board January 26, 2011 Page 9 of 9 House Bill 303 proposes to provide 1) a maximum benefit rate of 1.6% (the City's plan is at 3 %); 2) no normal retirement age below age 55; 3) there would no longer be DROP participation. It imposes a requirement on the board that a budget be established by the board and submitted to the City for approval; budget amendments would also need to be approved by the City. The plan sponsors would not be required to fund any more than 15% of payroll. Any additional amount would have to be paid by the membership. Further discussion ensued. AGENDA ITEM V. COMMENTS FROM TRUSTEES / CITY LIAISON None. AGENDA ITEM VI. DISCUSS AGENDA ITEMS FOR NEXT MEETING (May, 2011) Service Eligibility ICC Manager Bogdahn Consulting AGENDA ITEM VII. ADJOURNMENT There being no other business, the meeting was adjourned at 12:39 p. Respectfully submitted by: Ap18r ed by: Stella McLeod, Municipal Rec. Coordinator / G Recording C rk Russell B. Wagner, RB Chairman City of Ocoee Municipal General Employees' Retirement Trust Fund Activity from November 2010 through January 2011 DROP Participants - 1 Daniel Dingman - Entered DROP 12/1/10 (Currently being processed) Retirees - 2 Monthly Benefit Fred Ostrander - Retired 11/1/10 $2,360.88 (Retiree's Lifetime with 100% continued to Joint Annuitant) (Plus 10% PLOP option in the amount of $37,034.99) Richard Reiber - Retired 12/1/10 $857.66 (Retiree's Lifetime with 120 payments guaranteed) Refunded Contributions -1 (not vested) Refund Amount Kristen Rombeck $9,929.27 (Not vested - employed from 9/29/08 to 10/29/10) Rollover Contributions - 1 (not vested) Johnny Navarro $16,811.71 (Not vested - employed from 10/16/06 to 10/28/10) A SUMMARY OF INVOICES November, December, 2010 & January 2011 FOR PERIOD COMPANY TOTAL AMOUNT 8/04/10 + 9/15/10 Stella W. McLeod $ 137.50 09/30/10 Davidson, Jamieson & Cristini, P.I. $ 4,000.00 7/1/10 — 9/30/10 ICC Capital Management, Inc. $ 6,820.54 10/01/10 -- 10/31/10 Christiansen & Dehner, P.A. $ 130.00 11/01/10 — 11/3010 Christiansen & Dehner, P.A. $ 1,974.25 11/0310 + 12/21/10 Stella W. McLeod $ 157.50 7/10/10 — 12/31/10 Agincourt Capital Management $ 4,755.54 10/01/10 — 12/31/10 The Bogdahn Group $ 4,750.00 12/31/10 Christiansen & Dehner, P.A. $ 65.00 12/31/10 Fifth Third Bank $ 1,742.19 01/21/11 Foster & Foster, Inc. $11,108.00