HomeMy WebLinkAbout05-08-1995 Minutes JOINT MEETING
l., GENERAL EMPLOYEES' /POLICE OFFICERS' /FIREFIGHTERS' PENSION BOARDS
Chairman Reed called the Police Officers /Firefighters' Pension Board to order at 11:05 a.m.
in the Commission Chamber Conference Room of City Hall, and a quorum was declared
present.
PRESENT: Chairman Reed, Members Gledich (arrived at 11:08 a.m.), Williams, and
Wilson. Also present were Actuary Garrett, Attorney Christiansen, Money
Managers Garcia and Robert, and Clerk/Stenographer Lewis.
ABSENT: Member Strosnider.
Acting Chairman Grafton called the General Employees' Pension Board back to order.
REPORTS
ATTORNEY
Attorney Christiansen said that he already had spoken with the General Employees' Board and
preferred to give his report during the 1:00 Police /Fire meeting.
Member Gledich arrived to the meeting at 11:08 a.m.
MONITOR
___ Monitor Garrett representing Foster & Foster, presented an analysis of the investment
performances of both of the Retirement Trust Funds for the period ending March 31, 1995. The
reports continue to show the entire history back to May 1, 1992, and it had not been relevant
to SunBank because they had only been managing for a quarter. The Monitors will be more
concerned with SunBank and their dollar - weighing (which shows how a fund grows, and
compares fund to fund while time - weighing compares more manager to manager). The Monitor
would go forward with SunBank starting January 31, 1995, as SunBank did have 100% of the
assets on January 31.
PERFORMANCE REPORT - POLICE OFFICERS' /FIREFIGHTERS' FUND
Monitor Garrett reported that the rate of return for the quarter was 7.0 %. This rate of return
outperformed 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 6.7 %. This rate of return ranked in the 9th percentile of the Cadence
Universe of investment managers.
The equity portion of the Fund underperformed the S &P 500 over the latest quarter (9.0% vs.
9.8 %). However, this performance ranked in the 26th percentile of the Cadence Universe of
investment managers. (Fixed income, the Police /Fire Plan lagged 5.5 % to 4.6% over the
quarter as it caught a majority of the up spike.)
PERFORMANCE REPORT - GENERAL EMPLOYEES' FUND
Now Monitor Garrett reported that the rate of return for the quarter was 6.7 %. This rate of return
The Joint Meeting of the City of Ocoee General Employees' and
Police Officers' /Firefighters' Retirement Trust Boards
May 8, 1995
matched 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 also
registered a return of 6.7 %. This rate of return was ranked in the 13th percentile of the
Cadence Universe of investment managers.
The equity portion of the fund outperformed the S &P 500 over the latest quarter (11.1% vs.
9.8 %) and ranked in the 3rd percentile of the Cadence Universe.
The Investment Council (ICC) had turned in a really good performance for the quarters ending
September 30, 1994 and December 31, 1994, and had three winning quarters in a row but
because of SunBank the Plans were riding a lot smoother.
Actuary Garrett gave details of a letter that had been sent to each Board Member regarding the
turnover at SunBank. Both plans had gone with SunBank because of their long term track
record. Mr. Garrett said that SunBank had done an excellent job, and that all of their funds
were very happy with them. While the people SunBank had lost were key he believed there was
enough depth remaining to SunBank for there to be no reason to worry.
The first report showed that the allocation of the Police and Fire were over allocated, just over
%or the 40% mark. This was probably due to the differences when SunBank had been selling the
equity pieces. Mr. Garrett explained that when SunBank sells the equity pieces at the market
value, the Monitor does this on a cost value basis, when they sell it and buy back into the fund,
they're swapping that market value for cost value. It was hard to allocate perfectly. With
SunBank the Plans were going to have about 2% cash fully allocated to the equities, and takes
a little bit of time to even out. Mr. Garrett said he believed that the Boards were going to be
happy with the allocations. SunBank did a good job minimizing on a cash flow. There were
pieces of cash inside of the co- mingled funds available as trades were taking place inside those
co- mingled funds. SunBank did an outstanding job of monitoring so the Plans were never
having to sell their funds in order to pay a check, and were never holding on to too much cash
either. The Money Managers would keep close to the numbers as directed by the Board.
Attorney Christiansen asked if this was going to correct itself, and Actuary Garrett responded
that it would. Money Manager Robert said they were able to move the asset allocation around
on the semi - monthly valuations, and believed that they would be back in line on the 15th.
Actuary Garrett said that just enough inflow on funding side would probably fix that, buying
more bonds, instead of stocks, from here on out.
The General Board had discussed in their earlier meeting about requesting SunBank to change
the asset allocations of the fund. Actuary Garrett said that the Police and Fire Board might
like to discuss those changes as well. Chairman Reed said he believed that they had changed
those a couple of years before, and Actuary Garrett said that they were changed from 30%.
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The Joint Meeting of the City of Ocoee General Employees' and
,` Police Officers' /Firefighters' Retirement Trust Boards
May 8, 1995
The Police and Fire Board had let it slip to 50% in the ordinance, but their guidelines limited
the manager. The Board must decide but had the range to go to 50% without changing the
ordinance. Mr. Garrett pointed out the importance of getting the Money Manager's input as
they were the professionals.
MONEY MANAGER
Money Manager Robert introduced Ms. Garcia, and said that the Board had already gone
through the numbers. He reviewed what SunBank had done for the quarter, and said he felt
that the management changes would cause very little impact on the Funds.
Money Manager Robert said that SunBank had a very good quarter, and pointed out that the
market return for this quarter ranked in the top 15 percentile. That had been difficult to beat,
particularly since there had been a little overflow of individual stocks in the portfolio, and had
been hesitant to sell a lot of stocks into this latest two month period of the market rally. He said
they planned to do that over the next month or two as they begin to see the pace of the market
coming down. There were still approximately 10% in individual securities. The objective was
to be completely in the funds, and have no individual securities in the portfolio.
Mr. Robert said he believed it was important to use a blended return between the value and
growth style. The Boards had talked about growth in the beginning of the meeting and it was
the Money Managers' opinion that they continue to use both funds to diversify the fund's
holdings, and to continue utilizing both styles, so as to not miss out on the fluctuations when one
style does bad.
Money Manager Robert said that it was nice to see a 5% quarter in bonds. The interest rates
had stabilized during the time period, the economy had slowed down dramatically, and the
Managers expected that to continue to moderate itself. On the flip side, there had been a very
low inflation, and a combination of the two sets them up to have a very good year compared to
1994, '93, or '92, where there had been sub -par years relative to historical performance in the
financial markets overall. The smaller stocks lagged and fortunately SunBank was predominately
into large company stocks. Those were the areas that had done well this first quarter.
Mr. Robert said that, on the fixed income side, it was their philosophy that they were going to
be a little bit more conservative. For the most part, they had underperformed the index. They
were emphasizing the multi - national companies that typically have more exposure to foreign
markets, that also have had significant revenues coming in from outside the United States. Even
as the domestic economy slows down, there were still very good revenue streams coming from
outside the States. Owning international stocks multi - national companies gave them broad
exposure to the overseas markets without a tremendous amount of risks. The weak dollar was
a real concern and Mr. Robert said that the Federal Reserve was tempted to raise interest rates
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The Joint Meeting of the City of Ocoee General Employees' and
Nor. _ Police Officers' /Firefighters' Retirement Trust Boards
May 8, 1995
once more to defend the dollar.
Mr. Robert anticipated 12 to 20% in stocks would be reasonable for the year, and that would
put the Fund more along the lines of historical norms. Ten percent to 12% were around the
historical norms for stocks, and Mr. Robert said he believed that they were close to 8% for
bonds already in the first four and a half months of the year so they were getting much better
actuarial assumptions on times of return. He said that they were going to be a little bit more
cautious on the stock markets since they had had such a good run. It gave them a great
opportunity to shift those assets out of equities back into fixed income, and may be a safe haven
during the soft period in the market. Mr. Robert said in looking back, the Money Managers
were going to see that the first quarter of 1995 is the first time that they have had a 10%
quarter, as that had been the biggest move in the market since the first quarter of 1991. Mr.
Robert's goal was to liquidate the individual stocks within a reasonable time period.
CHANGES AT SUNBANK
Mr. Robert explained the changes that had occurred within SunBank, and said that while the
people that had left were important to the firm, SunBank had done a great job in replacing those
people. A lot of talent and depth remained within the organization. He said the firm had the
full support of their Atlanta parent company and they had benefited from that support.
Chairman Reed expressed concern about the newspaper accounts as far as the number of clients
that might have left SunBank, and Mr. Robert said that the loss had been less than 10 %.
Many SunBank clients had been in to visit with them but, knowing their processing, had
continued to be very loyal. They had been successful in maintaining a large portion of those
assets and they were continually adding staff in that area so they did not become over burdened
with that particular discipline.
ASSET ALLOCATIONS
Chairman Reed asked if, in their opinion, the monetary standard would be changed from the
U.S. dollar in the International Market, going to a yen or marc. Mr. Robert said that they
would be closely watching the trade talks between the U.S. and the Japanese, but he assumed
that since almost everything has been tied to the dollar for a long, long time it would continue
so. However, if there were a decision to be made, it would not be made for a while and that
would give us some time to make some assumption decisions.
Manager Robert asked if the Boards would like to discuss asset allocations, and Chairman
Grafton asked that the discussion wait until the other Board members could be present.
Mr. Robert distributed an Asset Allocation Chart by Iffson and Associates, long term market
researchers, for the Board's review, and spoke briefly on the topic. He said he would go into
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The Joint Meeting of the City of Ocoee General Employees' and
Police Officers' /Firefighters' Retirement Trust Boards
May 8, 1995
more details at a later date with the individual Boards. He then distributed a chart and spoke
about risks over different periods of time. A Risk Reward Chart was something that could be
addressed which would probably be beneficial over any given long time period.
Actuary Garrett said that Attorney Christiansen had pointed out that that might be good to talk
about in the valuation. He was sure that Actuary Foster had gone over it as part of the assets
smoothing.
In response to Chairman Grafton, Actuary Garrett said that it would not be necessary for the
Board to approve another change in the methodology. The valuation had already been approved
and he thought the Plan was set for the '94 valuation.
APPEARANCE OF STATEMENTS
Ms. Garcia said that the Board would notice a different look in statements as SunBank had gone
to a new Trust Accounting System. A letter and tracking chart of the new statements, along
with instructions on how to read them, will be sent to the Members.
Chairman Reed asked about SunBank's billing process, and Ms. Garcia said she believed that
when the account came in, that they were asked to send the Board a copy of the billing but to
charge the account. Also, Ms. Garcia said that other payments such as attorneys, actuaries,
etc., must be approved before being paid. Attorney Christiansen said that it was in the
contract that SunBank is automatic withdrawal in arrears.
Chairman Reed called a recess at 12:00 p.m. until 1:00 p.m. for the Police
Officers' /Firefighters' Pension Board.
RECESS (Police Officers' /Firefighters' Pension Board) 12:00 - 1:00 p.m.
ADJOURNMENT FOR THE GENERAL EMPLOYEES' PENSION BOARD
Chairman Grafton adjourned the General Employees' Pension Board at 12:00 p.m.
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THE CITY OF OCOEE POLICE OFFICERS' /FIREFIGHTERS'
RETIREMENT TRUST FUND (PENSION BOARD MEETING) - May 8, 1995
Chairman Reed reconvened the Police Officers' /Firefighters' Pension Board at 1:00 p.m. and
declared a quorum.
PRESENT: Chairman Reed, Members Gledich, Wilson, and Williams. Also present were
Actuary Garrett, Attorney Christiansen, and Clerk/Stenographer Lewis.
ABSENT: Member Strosnider.
CHAIRMAN REED AMENDED THE AGENDA AND MOVED THE ATTORNEY'S REPORT TO ITEM V.
APPROVAL OF MINUTES
Attorney Christiansen asked for a change on page 1, Reports, first paragraph, to be corrected
to Attorney Christiansen, instead of Attorney Dehner. Member Gledich, seconded by
Member Williams, moved to approve the minutes, as corrected, of the Police
Officers /Firefi • hters' Retirement Trust Fund of Februa 13 1995. Motion carried 4 -0.
QUESTIONS /COMMENTS FROM AUDIENCE
Billy Walker introduced his wife, Mrs. Walker, and said that he had been with this City, off
and on, for about 25 years. He gave a brief history of his tenure as a Certified Police Officer.
Due to a break in service with the City, records did not reflect the first five (5) years, from
1968 to 1972. Mr. Walker said that he would like to retire and asked whether he could retain
those five (5) years.
Discussion ensued regarding what type of records would be necessary to verify employment
longevity. Attorney Christiansen said that there was no pension plan at that point, and for
confirmation on whether that previous period of employment would count he would have to talk
with Trish Schuemaker in Tallahassee.
Attorney Christiansen said that they were going to look at the Pension Plan and apply what is
in the Plan. Mr. Walker explained that he did not know about the three month window (early
retirement window), had seen no memo or paper work on it.
Attorney Christiansen said that Mr. Walker needed to work on trying to get confirmation on
the period of time he had worked; and Mr. Christiansen would reconfirm that there are no
problems with the language in the plan in giving Mr. Walker credit for a previous period of
employment during a time when there was no pension plan. Attorney Christiansen said that
Actuary Garrett and he would work on that, and if that was the case, then the question would
be "Should he get credit for the early retirement window ?" One of the legal requirements was
that everyone who qualifies gets information about it and has the opportunity to take advantage
of it. Mr. Walker said that he did not know about it. Chairman Reed said that the reason Mr.
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Police Officers' /Firefighters' Retirement Trust Fund
May 8, 1995
Walker did not know was because the City had used his "recent" hire date.
Discussion ensued regarding the age under the early retirement window. Attorney Christiansen
said that an eligible employee was one who was at least 46 years of age and who has or will
have at least 23 years of credited service on or before September 30, 1994. If an employee had
that before September 30, 1994, the employee could get their accrued benefit but not less than
62.5 % of their average final compensation.
Actuary Garrett said there would be a cost to the City to go back and credit this the correct
way.
Attorney Christiansen said that Mr. Walker was going to confirm the time and get whatever
records he could to establish that he, in fact, had worked for the City during that time as a
Certified Police Officer, and they (Actuary and Attorney) would go back and confirm the
information with regard to giving him the credited service. Member Gledich, seconded by
Member Wilson moved that the Actua do a benefit calculation for Mr. Walker• ivin. him
credit for the • revious s eriod of em to ment that he had with the Cit • assumin. that Mr.
Walker can establish that he was a Certified Police Officer during that period of time for the
Cit of Ocoee: assumin that the attorne can confirm with the State that the Board is s ermitted
to ' ive credited service for that • eriod of time: and that the calculation will be based u. on the
provisions of the early retirement window that was available in September, 1994. Motion
carried 4 -0. Mr. Walker requested a copy of the minutes.
REPORT FROM THE ATTORNEY WAS GIVEN AT THIS TIME DURING THE
MEETING.
ATTORNEY
Attorney Christiansen reported on the following:
CHAPTERS 175 AND 185
At the last meeting he had reported on the legislation pending redrafting of Chapters 175 and
185 in Tallahassee, that the Plan had a provision to change the investment criteria in Chapters
175 and 185 to make it more like the Florida Retirement System. None of that had happened.
Actuary Garrett said that there had been talk of changing the investment setup, and a committee
was going to review everyone's policy and strategy. Even if Plan had wanted 10% foreign
securities, it had to be approved by a committee at the State level for the Board to be able to do
that. Attorney Christiansen said that they will see what happens next year. The Board had
authorized them to be involved in the drafting procedure, but as they had not done any of that
there would be no billing statement.
PROPOSED ORDINANCE AMENDING ORDINANCE NO. 91 -09
Attorney Christiansen presented a proposed ordinance updating Ordinance 91 -09 amending the
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Police Officers' /Firefighters' Retirement Trust Fund
May 8, 1995
Sir
provisions to include current law and he advised that there was nothing in the proposed
ordinance that would increase the cost to the City. Chairman Reed pointed out that, as the
Summary Plan Description was revised November 21, 1994, that document would need to be
scheduled for review in 1996, as well as the Operating Rules and Procedures, which were
revised August, 1994.
Attorney Christiansen reviewed the recommended changes and said that the Board could vote
on the ordinance at the next meeting. He said that everything that was underlined in the
ordinance was new language, and anything marked through was the old language that would be
taken out. Discussion ensued of the following changes or amendments:
Amending the definitions of "accumulated contributions', "credited service", "Member" and
"salary" and adding the definitions "retiree" and "retirement "; amending Section 6, Benefit
amounts and eligibility, Subsection 2, normal retirement benefit; amending Section 7, Pre -
retirement death; amending Section 9, vesting; amending Section 10, optional forms of benefits;
amending Section 12, Claims procedures before the Board decision; amending Section 16,
Maximum pension; deleting Section 17, commencement of benefits; amending Section 18,
distributions of benefits; amending Section 20, repeal or termination of system.
OTHER BUSINESS
BILLS AUTHORIZED FOR PAYMENT
Nov Chairman Reed requested approval from the Board to present the bills to SunBank for payment.
Member Gledich seconded b Member Williams moved to . a outstandin . bills that have
been received to date. Motion carried 3 -0.
DISCUSSION IN BENEFIT IMPROVEMENTS TO PLAN
Chairman Reed said that the Board, in the past, had discussed adding benefit improvements to
the Plan. At that time the City had said that they may look at adding medical benefits to include
the pensioners. Attorney Christiansen said that it was up to the City to continue the retirees'
medical insurance as it was outside the pension plan. If the Board wanted to give the retirees
an extra $200 every month to help them pay for health insurance, that could be within the
pension plan.
Member Gledich asked what other young pension plans were doing, and Actuary Garrett said
that it was getting to be a standard thing for people to shoot for the 3% benefit rate before they
do anything else. If the Plan was going to do it with City money, that favored everyone across
the Board. Member Gledich said that the face of "our City" was going to change dramatically
over the next two to three years because of the onset of the new mall. There would be a
tremendous increase in the Police and Fire Departments. She could not imagine someone
leaving the City of Orlando, for an example, to come to the City, leaving behind their pensions.
They could not afford to do that. Member Gledich spoke about statistics and said that Ocoee
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Police Officers' /Firefighters' Retirement Trust Fund
May 8, 1995
will soon be the second largest City in Orange County. With that in mind, she asked the Board
to think about the people that they wanted working in the City of Ocoee, taking into
consideration those provisions the Board would want to be able to provide for the people who
are here now and the people that will be hired later. Member Gledich said that the Board could
discuss some possibilities at the August meeting.
Member Gledich, seconded by Member Williams, moved to direct Foster and Foster, Inc. to
do a benefit stud on increasin . benefit from 2.5% to 2.75 % '.100 a month sti send for the
August meeting. Motion carried 3 -0.
DISCUSSION ON CHANGING TIME OF MEETING
Member Gledich asked for a change in the meeting time for the Board, as it was very difficult
for her to leave the Joint Board meeting held earlier in the day and return in the afternoon for
the Police /Fire Board meeting. Chairman Reed said that he would check on whether the
General Employees' Board could change their meeting time. Discussion ensued on the best time
for everyone.
ELECTIONS FOR A FIREFIGHTER TO SERVE AS TRUSTEE
Chairman Reed said that the posting or advertising of an election to be held during September
must be discussed at the next meeting. Member Strosnider's term would be up on October 1.
Attorney Christiansen said that according to the Operating Rules and Procedures, nominations
Now
would be posted by the secretary on all City bulletin boards on the second Tuesday in
September, with the Election 7:00 a.m. to 4:00 p.m., but the date of the election could be
moved a little. Chairman Reed said that one member is elected from Police Dept. and one
elected from the Fire Dept. Attorney Christiansen said election of firefighter happens on odd
numbered years and police officer on even numbered years. Member Gledich said that this
Trustee should be from the Fire Department, and asked that the minutes reflect that the Board
will be seeking nominations in August for an interested pension person to serve as Trustee.
MISCELLANEOUS
Chairman Reed presented the following information:
1) Details of a memorandum of April 4, 1995 from the Division of Retirement regarding
receipt of the premium tax money during the first distribution on or before June 1, 1995.
2) Letter from Foster 4/5/95 regarding personnel changes in SunBank Management.
3) Correction from Foster and Foster, Inc. regarding blank lines in the Annual Report. The
Police /Fire Fund had to switch @ $6,000 to the General Employees' Fund. (Actuary
Garrett said that the error had been corrected which had to take place in the assets as the
contributions had been put in the wrong place).
4) A Ranking of Client Performance for the Fiscal Year ending September 30, 1994 dated
March 29, 1995 from Foster and Foster, Inc. (Ranking 22nd out of 44 agencies under
ICC, September 30, 1994).
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Police Officers' /Firefighters' Retirement Trust Fund
May 8, 1995
ADJOURNMENT
Member Gledich, seconded b Member Williams, moved to adjourn the meeting at 3:00 . .m.
Motion carried 3 -0.
Respectfully submitted,
Judie Lewis, Clerk/Stenographer
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