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HomeMy WebLinkAbout08-23-1994 Minutes POLICE OFFICERS ' /FIREFIGHTERS' RETIREMENT TRUST FUND (PENSION MEETING) August 23, 1994 JOINT MEETING /GENERAL EMPLOYEES' /POLICE OFFICERS' /FIREFIGHTERS' PENSION BOARDS Chairman Reed called the Police Officers /Firefighters' Pension Board to order at 10:00 A.M. PRESENT: Chairman Reed, Members Gledich, Strosnider, Williams, and Wilson. Also present were Attorney Christiansen, Actuary Garrett, and Clerk/Stenographer Lewis. ABSENT: None. Chairman Reed announced that this was a joint session of the Police Officers' /Firefighters and the General Employees' Pension Boards. ACTUARY REPORT Mr. Garrett of Foster and Foster, Inc., presented the quarterly report as of June 30, 1994 for the General Plan and explained the analysis of the investment performance of the Plan. The average annual rate of return for the Fund during this period was 4.6%. This rate of return failed to outperform the composite index of market indicators (40 % S &P 500 Composite Stock Index, 55 % Lehman Brothers Government /Corporate Bond Index, and 5% U.S. Treasury Bills) which registered a return of 6.4%. During the one year period ending June 30, 1994, the Fund registered an -1.4% rate of return (compared with -0.1% for the composite index of market indicators) and ranked in the 71st percentile of the Cadence Universe of investment managers. The equity portion of the Fund failed to outperform the S &P 500 ( -2.4% vs 1.4 %) and ranked in the 82nd percentile for the one year period. Mr. Garrett presented the quarterly report for the Police /Fire Plan and explained the average annual rate of return for the Fund during this period was 3.9 %. This rate of return failed to outperform the composite index of market indicators (40% S &P 500 Composite Stock Index, 55 % Lehman Brothers Government /Corporate Bond Index, and 5% U.S. Treasury Bills) which registered a return of 6.4%. During the one year period ending June 30, 1994, the Fund registered a -1.8% rate of return (compared with -0.1% for the composite index) and ranked in the 77th percentile in the Cadence Universe of investment managers. The equity portion of the Fund failed to outperform the S &P 500 ( -4.0% vs. 1.4 %) and ranked in the 86th percentile for the one year period. ANALYSIS OF INVESTMENT FIRMS Actuary Garrett reported that only a limited number had responded and recommended that the Board hear the presentation of Davis Hamilton Jackson, Sun Bank, and Nationsbank. Member Oliver seconded b Secretar Grafton directed on behalf of the General Em . to ees' 4, 010, , Pension Board, that the Actuary contact Sun Bank, Davis Hamilton Jackson, and Nationsbank Police Officers/Firefighters Retirement Trust Fund Board Meeting August 23, 1994 re' ardin. broker • resentation at the Se s tember 28 1994 meetin.. Motion carried 4 -0. Chairman Reed, seconded by Member Strosnider, directed on behalf of the Police /Fire Pension Board, that the Actuary contact Sun Bank, Davis Hamilton Jackson, and Nationsbank re 'ardin. broker .resentation at the September 28 1994 meetin.. Motion carried 5 -0. MONEY MANAGER Greg Hoperaft, Vice President of The Investment Counsel Company, presented a list of municipal clients that the ICC had built over a long period of time and addressed reasons why the Board should continue with ICC. Member Williams asked who in the ICC makes the decision on how the Fund allocates the investment and Mr. Hoperaft said that there are five different people in the firm who make that decision. He will send a chart to Secretary Grafton of a one year rolling return at 3- 10 -15. Actuary Garrett pointed out that The Investment Counsel did a quality job on larger funds (in comparison to the size of the Ocoee Pension funds). Member Gledich left the meeting at 11:15 A.M. Chairman Miller announced the Pension Boards would meet on September 28, 1994 using the following schedule: at 9:00 a.m., General Employees' Board; 10:00 a.m., Joint Board to hear broker presentations; and the Police /Fire Board will meet one hour after adjournment of the Joint Board. RECESS (POLICE OFFICERS' /FIREFIGHTERS' BOARD) 12:00 - 1:00 P.M. The meeting was reconvened at 1:00 p.m. by Chairman Reed. PRESENT: Chairman Reed, Members Gledich, Strosnider, Williams, and Wilson. Also present were Attorney Dehner, Actuary Garrett, and Clerk/Stenographer Lewis. ABSENT: None. APPROVAL OF MINUTES Attorney Christiansen asked for a correction on page 10 to read "Attorney Delmer explained ... " Member Gledich seconded by Member Strosnider, moved to an grove the minutes of May 16, 1994 as corrected. Motion carried 5 -0. Vern Brown of the Police Department was introduced by Chairman Reed who said he was resigning from the department on September 7, 1994. After discussion with the Board regarding options, Mr. Brown said he would be leaving his pension contributions in the plan. %kw 2 Police Officers/Firefighters Retirement Trust Fund Board Meeting `, August 23, 1994 DISCUSSION /ADOPTION OF SUMMARY PLAN DESCRIPTION Attorney Christiansen explained the Summary Plan Description included the changes the Board had requested during the May 16, 1994 meeting. Chairman Reed said the Summary Plan Description had already been distributed in order for members to appear at the meeting with possible changes or questions. Attorney Christiansen recommended the Board request each member sign a form indicating they have received a Summary Plan Description. Attorney Christiansen explained that it is necessary to duplicate and distribute to members the Summary Plan Description as the Board will be asked on the Annual Report whether it has been done. The legal requirement is that the Description must be given out to everyone but the signed form would be proof that the member, in fact, had received it. Member Strosnider, seconded by Member Wilson, moved to adopt the Summary Plan Description, as presented. Motion carried 5 -0. DISCUSSION /ADOPTION OF FORMS Attorney Christiansen presented a package of forms for handling various administrative matters of the Pension Plan. Each form was discussed with the Board requesting minor changes and adding the social security number on selected forms. Attorney Christiansen will prepare the forms for final approval at the September meeting. REPORTS ,`, ATTORNEY INVESTMENT QUALITY Attorney Christiansen explained that the investment provision that is in the Pension Plan, pursuant to the interpretation of Chapter 185, that the Fund has to invest in stocks and bonds that are rated in the top three quality grades. The Board is doing that now. It has always been the State's interpretation that of the language in Chapter 185 that that top three grades applies to stock and it applies to bonds which is what the Board has been meeting. The City of Jacksonville's Police Plan decided that the language in the State Statute was not so clear as to pull in that top three grades requirement for equity. The Statute actually says is that the securities have to be rated in the top three quality grades. Rated applies to bonds, rank applies to stocks so they have determined that that does not apply to stocks. Jacksonville has changed their Plan document to allow their manager to invest in lower graded equities (below the top three grades). Mr. Christiansen said he was going to get further clarification and did not recommend the Plan to make a change until it is clear from Tallahassee that the Board is not going to get in a bind with them next year when State money rolls around. It maybe an opportunity to reduce the Fund's returns if it is allowed to invest in stocks that are lower than the top three grades. He suggested putting the matter off until a future meeting. LANGUAGE IN PLAN RE:MILITARY DUTY Attorney Christiansen said that the language in the Police /Fire Plan regarding a break in service for military time currently states that when a person on military leave comes back the 3 Police Officers/Firefighters Retirement Trust Fund Board Meeting August 23, 1994 employee can put in the contribution that they would have made while on leave and had left their contributions in the Plan at the time the member began the leave. The police officer can put in the contributions that they would have made for the time gone and would have received credited service for the time they were in the military. Chapter 185, the definition section, dealing with this particular issue does not provide that police officers, (but does provide for firefighters) are required to put contributions in when they come back under the scenario given. Tallahassee is now saying that the definitions in Chapter 185 are strictly explicitable to local law plans such as the Police /Fire Plan. What Tallahassee was telling the Board is that what is in the plan now, with respect to Police Officers, is not going to pass muster anymore and must change the provision to allow the police officer that comes back under the circumstances described, as long as the officer comes back in a year, can get credited service of time in the military and does not have to put any money in the Plan. Mr. Christiansen recommended that the Board go ahead and make the change so as to not risk State money. Member Gledich, seconded by Member Wilson, moved to make the change for both Firefighters and Police Officers in Chapters 175 and 185 to be e I ual for break in service milita . Motion carried 5 -0. SALARY CAP USED IN CALCULATION OF PENSION BENEFITS Attorney Christiansen reported that the Internal Revenue Service (IRS) passed a provision which placed a cap on the amount of salary that can be used in the calculation of pension benefits not to exceed an annual salary of $150,000. Anyone who is a member of the Plan as of 1996 would be exempt from the cap. He recommended waiting until the end of 1995 to incorporate the $150,000 cap in the plan as the IRS may change the rules again. ADMINISTRATIVE LEAVE FOR EDUCATIONAL CONFERENCES Chairman Reed explained that a letter had been written to the Personnel Director regarding an allowance for administrative leave to attend educational conferences. A letter had been received from the City saying it no longer gives employees leave with pay to attend these conferences and asked if the Board needed to change the requirements. OTHER BUSINESS Chairman Reed said that the seat held by Member Gledich was up for reappointment. Member Gledich confirmed a willingness to serve should the City Commission approve the reappointment. Chairman Reed also pointed out that Member Wilson's seat would expire on October 1, 1994 and instructed the Recording Secretary to post the Notices of election on August 30, 1994 and ending September 6, 1994. The ballot box would be made available at the reception desk in City Hall on September 14, 15, and 16, 1994 and the ballots are to be counted at the meeting in September. CONFERENCES - Mr. Christiansen announced (1) that the FPPTA conference, September %rr 4 Police Officers/Firefighters Retirement Trust Fund Board Meeting August 23, 1994 19 -20, 1994 in Palm Beach Gardens at the PGA resort; and (2) that the State of Florida's Division of Retirement Annual Conference, October 11 -12, 1994 at the Radison Hotel in Orlando. BILLS AUTHORIZED FOR PAYMENT Chairman Reed said the Board had received a letter from the City Manager informing the Board of its responsibility to pay the fiduciary insurance. Attorney Christiansen said that Actuary Garrett would be checking into the matter for the General Employees' Board and will do the same for the Police /Fire Board. The Waiver of Recourse must be paid by the City ($125) and Mr. Christiansen will write the City requesting reimbursement for the Board. Member Gledich, seconded by Member Williams, moved to purchase, after findings of Actuary Garrett that the figure is correct, within Funds the defense cost within policy. Motion carried 5 -0. EXPENDITURES Chairman Reed requested approval of the Board to send the expenditures from May 18 - August 23, 1994 to Key Trust for payment. Member Williams, seconded by Member Wilson, moved to la the ex. enditures from Ma 18 to Au' ust 23 1994 as , resented. Motion carried 5 -0. Chairman Reed announced the next meeting on September 28, 1994 of the Joint Pension Boards **ow at 1:00 a.m. and the Police /Fire Board would meet one hour after adjournment of the Joint Board. ADJOURNMENT The meeting adjourned at 2:45 p.m. Respectfully submitted, J ie Lewis, C erk /Stenographer lialr 5