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HomeMy WebLinkAbout06-18-1999 Minutes THE CITY OF OCOEE POLICE OFFICERS' /FIREFIGHTERS' RETIREMENT BOARD MEETING - June 18, 1999 Chairman REED called the meeting of the City of Ocoee Police Officers'/Firefighters' Retirement Trust Fund to order at 1:12 p.m. in the Commission Chambers Conference Room of City Hall. The roll was called and a quorum declared present. PRESENT: Chairman Reed, Members Gledich and Williams. Also present were Attorney Christiansen, Money Manager Senderowitz, and Sue Mela for Recording Secretary Lewis. ABSENT: Members Strosnider and Wilson (excused), and Actuary Foster. APPROVAL OF MINUTES Member REED presented the Police Officers'/Firefighters' Retirement Trust Fund Minutes of February 18, 1999 for acceptance and approval. Money Manager SENDEROWITZ stated for the record that there should be corrections to page 3 which should read "Mr. DONLAN also stated..." rather than "Mr. NASH..." Also, he said that "Acting Performance Monitor DONLAN presented an analysis..." rather than "Acting Performance Monitor NASH..." Member GLEDICH, seconded by Member WILLIAMS, moved to approve the Minutes of the February 18, 1999 Police Officers'/Firefighters Retirement Trust Fund meetings as corrected. kirol Motion carried 3 -0. QUESTIONS /COMMENTS FROM AUDIENCE Lt. FRANK CARLSSON of the Fire Department addressed the Board about whether or not they had ever done a survey on a "20 and Out" Program. The State and several of the local departments had gone with the program. Other Firefighters had expressed support on such a plan and were interested in seeing what it would cost the Plan. Discussion also ensued about implementation of the DROP Plan. Attorney CHRISTIANSEN said that he did not believe that they would go to a 3% or 4% multiplier as it would be a major additional cost (to the Plan). Lt. CARLSSON announced that Orlando had a 20 & Out (Program) and if a Firefighter/Police Officer stayed an extra five (5) years, the employee would get 4% for every year one stayed past twenty, and the possibility at 25 years and making 80 %. Discussion ensued. A study by the Actuary would be necessary. Attorney CHRISTIANSEN suggested that they study for 25 (years) and out, 20 and out with no age limit. Member GLEDICH said that the City must be competitive in order to keep good people from leaving for other agencies that might have better benefits. She would like to see a study and a comparison chart of varying Central Florida Fire agencies such as Orlando, Winter Park, Maitland, Orange, etc. Chairman REED will contact the Division of Retirement to request a booklet on the Statistics on Retirement Plans in the State. Member GLEDICH, seconded by Member WILLIAMS, moved that the Plan do a study to check 25 and out, 20 and out with no age limit. Motion carried 3 -0. Police Officers' /Firefighters' Retirement Trust Fund June 18, 1999 Discussion ensued about up- coming conferences or schools. Chairman REED said that Members would be provided with a copy of the incoming conference material. OTHER BUSINESS AUTHORIZE/RATIFY PAYMENT OF BILLS A summary of payment vouchers had been distributed during the meeting. Discussion ensued about Members WILLIAMS' attendance and charges for a conference. Chairman REED asked for ratification of payment, and requested approval of the Board the bills that had been presented to present to SunTrust for payment. Member GLEDICH, seconded by Member WILLIAMS, moved to authorize and ratify payment of the bills. Motion carried 3 -0. DISABILITY/ELIGIBILITY /LENGTH OF SERVICE (When does 10 years stop for removal from the Insurance Roll.) Chairman REED explained that Police Officers and Firefighters often came to him about short term disability and sick leave. The City carries short term disability on Police Officers and Firefighters with less than 10 years of service. Providing an example, Mr. REED said that if an employee goes out at 10 years and one (1) month, and has a stroke, it would not be a permanent disability. The employee did not have short term disability unless he applied for permanent k POI disability through the Pension Board. Attorney CHRISTIANSEN also explained that the employee must have a statement from the doctor saying that the employee was not going to recover to the point where he could be a Firefighter or Police Officer again. If the employee could not get a statement than they did not qualify for the disability. This was related to off the job injury (up to 10 years of service). The Plan covers only for permanent disability. An employee must show that they were not likely to again perform the duties of a Police Officer or Firefighter, and only became effective for not inline of duty disabilities after having 10 years of service. Before that there was no disability benefit from the Pension Plan for not in the line disabilities. In line of duty disability is a day one coverage. If an employee fell through the roof on the second day on the job as a Firefighter, and could not do his job as a firefighter anymore, he would qualify (and it's current) for a disability benefit. This was not Workers Comp which was a separate program as well. Due to the exclusion in the Pension Plan for injuries that occur while working for someone else other than the City, not even in -line, a Firefighter or Police Officer working for someone else (Sears, etc.) and became disabled was not covered by this Pension Plan. Mr. CHRISTIANSEN said what they were referring to an insurance policy that the City has that is short term coverage. He said that the question was that it may cover a Police Officer or Firefighters in the first 10 years but then it stopped. Short term coverage normally covers you if you're unable to work for a year but would likely return to the job afterwards. The short term coverage should probably continue 2 Police Officers' /Firefighters' Retirement Trust Fund June 18, 1999 to apply after the 10 years because an employee still had to show that they were permanently disabled in order to get something from the Pension Plan. In response to Member GLEDICH, Chairman REED said that General Employees continue to have short term coverage after 10 years but not the Police Officers or Firefighters. Several General employees had moved into the Police/Fire Plan, and Debbie Bertling of Human Resources had wanted to know when their 10 years stopped; when they began employment with the City or when they started with the Fire Department. They had been covered as General Employees but if they left the General Plan for the Fire Department then they must reach 10 years from the day they came to the Fire Department before they came off the rolls. It was not 10 years from date of hire. Mr. REED said that he had relayed the response from Attorney Christiansen to Ms. Bertling. Member GLEDICH said that she did not understand why Police Officers and Firefighters were different then General Employees when it came to the benefit of an employee for the City of Ocoee. It was like comparing an orange to an apple, and not an apple and an apple. In response to Chairman REED's inquiry about the Board's request for a letter clarifying short term coverage from the Board Attorney to the City Manager, Attorney CHRISTIANSEN said that the City had received their answer. DISCUSSION RE: RECORDING SECRETARIAL SERVICES Chairmen REED reported that Pat Cornell had initially accepted work as the recording secretary. She had since declined the position. Judie Lewis will continue transcribing minutes, preparing agendas, meeting packets, and various secretarial tasks for the Board in her personal time, and Sue Mela will sit in at the meetings. As a City Manager's secretary, it was important that the position of recording secretary to the Board did not interfere with the operation of the City Manager's office. With the difficulty the Board has had in finding a recording secretary, Judie and Sue, with Chief Strosnider's approval, had compromised in coverage for the Board meetings. Ms. Mela will be compensated by Ms. Lewis for this coverage. DISCUSSION RE: ELECTION Election for the Firefighter seat, currently held by Mike Reed, was scheduled for September. Chairman REED submitted a letter dated May 22, 1999 which stated that he would not be submitting his name for re- election to the Board of Trustee. Also, that he would not accept any nomination for the seat. Discussion ensued about the seats currently held by Members Strosnider and Williams. The election will be held on September 21, 22, and 23, 1999. A special meeting to certify the election and to swear in new members was scheduled for Friday, September 24, 1999, 1:00 p.m. During this meeting, the Board would address the following: 3 Police Officers' /Firefighters' Retirement Trust Fund * June 18, 1999 1. Count the Ballots 2. Certify the Election 3. Select the Fifth Trustee 4. Elect Officers Also, the new Board must schedule a special meeting to select the 5"' member to the Board. Member WILLIAMS announced that he would be willing to serve, if appointed by the City Commission, for another two years. DISCUSSION RE: TRUSTEE CERTIFICATION Chairman REED explained that the FPPTA now had an Educational Incentive Program to certify Board Members in Pension Trusteeship by accrediting hours at schools (not conferences) held each Spring and Fall. The FPPTA had looked to the University of Texas for giving education credit (CEU) in maintaining certification over an annual basis. Rather than having someone who has no idea about what is going on a Board, this would give more validity to a person's membership. This would provide accountability. Certification cost is $500 per person. Certification requires the attendance to at least two schools and Board Members must attend one school a year to maintain certification. In response to Member WILLIAMS, Chairman REED said that the program would credit a member if he had attended six (6) schools since 1993. There would be three different levels of certification: 1) Beginner, 2) Intermediate, and 3) Advanced. Many may be grand- fathered in to the program. Member WILLIAMS said that he believed people on the Board should have the opportunity to attend these schools. The Board would pay for the enticement in getting members certified. CONSIDERATION /SELECTION OF PERFORMANCE MONITOR INVESTMENT MONITORING SERVICES - Joe Vagdahn at 1:30 p.m. MR. VADGAHN failed to appear before the Board. Due to a Police/Fire emergency on June 18, the Board had failed to have a quorum at its meeting to hear prospective Performance Monitors. However, Members Gledich and Williams had heard presentations by ATD & Associates, and Merrill Lynch when the General Employee Board had heard and video taped presentations by Morgan Stanley Dean Wittier, and also, ATD & Associates. Since that meeting, Chairman REED had viewed the tapes. Member GLEDICH, seconded by Member WILLIAMS, moved to select Merrill Lynch as the Performance Monitor to the Police Oficers'/Firefighters' Pension Trust Board. Motion carried 3 -0. Attorney CHRISTIANSEN said that Merrill Lynch had quoted $9,500 to the General Employees. On a chance that the Board might select Merrill Lynch, Mr. CHRISTIANSEN had contacted them to see whether or not they would accept a deal for both Boards. They had agreed on $8,700 if Nib" 4 Police Officers' /Firefighters' Retirement Trust Fund June 18,1999 both Boards that met on the same day. A contract with Merrill Lynch was presented to members for their review. Three (3) copies of the contract were to be signed by the Chairman and Secretary of the Board. Member WILLIAMS, seconded by Member GLEDICH, moved to approve the Performance Monitor contract with Merrill Lynch. Motion carried 3 -0. REPORTS ACTUARY The Actuary was not present for the meeting. MONEY MANAGER Money Manager SENDEROWITZ provided the Board with an analysis for the period ending in May, 1999. He explained what had happened during the first quarter of the year. Larger cap growth stocks had been the only thing that had performed well. The growth fund had been up about 5 1/2 percent for that quarter. The value side had been down a little over 1 1 /2 percent. The Bonds had been pretty much flat, having lost a little bit of ground. They were starting to see kind of a spreading out of the market near the end of the quarter. The top growth stocks had actually started falling back in performance. Value stocks had been doing well for a while, and has really rebounded to a point where now the value fund was up more counter year to date than the growth side which was catching up on a year over year basis. They really wanted a balance between the 14k '" two. At some point it would turn around. There was no reason for the switch to value and they had been able to keep the balance and ride along with it. They were happy to see that the fiscal year to date was up 15 Y2 percent. Limited cap fund was up over 39 1/2 percent fiscal year to date. Mr. SENDEROWITZ reported that he had done in error the September 1 report which had carried an extra quarter. It had been up 52 percent. It had kind of skewed a little bit around August 31S as the market had dropped. They were catching it at the very worst point and still had over a 50 percent gain in a nine (9) month period (Limited Cap Fund). In response to Chairman REED, Attorney CHRISTIANSEN said that the policy (to include investing in foreign fund) had not yet been signed. Foreign was in the Ordinance. He said that Merrial Lynch might suggest re -doing the Investment Policy in their format anyway. Te Fund was well ahead of their acturial assumptions for the year, and Mr. SENDEROWITZ said June was continuing to be a pretty good month for them. They were happy with that. The next fiscal fourth quarter should be o.k. There may be some rockiness in the next fiscal fourth quarter of 1999. Maintaining the investment policy was really the way to go. Mr. SENDEROWITZ said that the Fund might want to consider delaying for another quarter Nitow- 5 Police Officers' /Firefighters' Retirement Trust Fund err. June 18, 1999 the decision to go International. It was a decision for the Board. He said that they were pleased with the report. Bonds continue to be negative through June. Any time interest rates rose there would be a weak performance on the Bond side of the Portfolio. It would stabilize more so as they eek out some positive performance by the end of the calendar or fiscal year (1 - 2 percent on the Bond side of the portfolio). The Fund would be pretty good if they do that by end of this year. The Stocks had really helped out this time. PERFORMANCE MONITOR The Actuary was not present for the meeting. ATTORNEY COMMENTS Attorney CHRISTIANSEN reported that: 1. The Board had approved Summary Plan Description (SPD) last time. He directed the Board to distribute the SPD and the Selected Provisions of Operating Rules and Procedures of the Board As Pertaining to Members of the Plan to each member of the Plan. 2. The Board had been instructed to send Y2K letters to everyone who works (Actuary, Money Manager, CPA doing audit, SunTrust) for the Board. Mr. CHRISTIANSEN said that it was important to determine whether their systems were going to cause us problems. It was obvious that the bank was the most important thing as we did not want our account to drop off the table come year 2000. It was important from the fiduciary standpoint. In response to Mr. CHRISTIANSEN, Chairman Reed said he had met with Chief Strosnider who would report back to the Board. 3. Legislation regarding Chapter 175 and 185 had been signed by Governor Bush on March 12. This new Legislation was designed to set minimum floors for all Police/Fire plans in the State of Florida, and it required each Plan to meet those minimums in order to continue to qualify for State monies. The Legislation had been thoroughly reviewed to determine any cost impact to the Plan. • Disability provisions currently off -set the Workers Compensation. i.e.; If an employee getting Workers Comp and also a disability benefit resulted in a combination that exceeds the 100% of their salary, than the Plan must reduce the pension benefit down so it doesn't exceed 100 %. It wasn't in Chapters 175 and 185. Under the old law it was allowed but under the new law, Chapters 175 -185, it was the minimum benefit, and it does not have an off -set. Having an off -set meant that you have something left other than what's in the Chapter, that must now be pulled out. The reason that it did not have a cost r.. 6 Police Officers' /Firefighters' Retirement Trust Fund thre June 18, 1999 was that it did not have a funding cost. In other words, the City's contribution level was not going to go up automatically by taking that out. The reason for that was when the Actuary did the actuarial evaluation he kind of assumed there was going to be an offset so when there was no off -set it wasnot any kind of gain. Obviously that was good for the Plan but it was not figured into the calculation of the amount of funding every year. There were some exclusions in our Plan that we had in which meant if someone was disabled as a reult of getting hurt off the job, that was o.k. However, there was one with a pre- existing condition, meaning that if a Firefighter or Police Officer had a previous condition that he had when he came to work and it became progressively worse, he became disabled as a result of that then he could not get a disability for that. That was not in and must come out of the Chapter. By the same token, Attorney CHRISTIANSEN said that we have an exclusion for intentional acts for gross negligence acts like a Police Officer shoots himself in the foot intentionally, and as a result cannot do his job anymore. We have an exclusion that says he cannot get a disability pension again. It was not in the Chapter. It means that we must take these things out even though they had been legal under the prior law before this Legislation had passed but we were allowed to change by local law the provisions of the Chapter. We can no longer do that. Again, those two exclusions when Actuary Foster does the Actuarial calculation he does not assume that any exclusions are going to apply. He just assumes that we are going to have one (1) to two (2) disabilities per year, and the exclusions didn't come into play when he was doing his actuarial evaluations so by taking them out there will be no impact on the Plan. A 10 year certain life benefit comes with a disability now. It is paid for your life. If you do before you have 10 years worth of payments your beneficiary gets the remainder of the 10 years, than his spouse. That was the only option that one could under disability in our Plan, and that was in the Chapter before. Now, optional forms of benefits must be offered the employee. If someone goes out on disability they should be able to select a benefit whereby just like normal retirement, actuarially equal but a benefit that would provide for your life and to your spouse for his or her life. Again at no cost impact to the Plan. That was in the Chapter now and was something that the Board must put in or take out of the Plan. Attorney CHRISTIANSEN said that there were some "not at a cost" list of things that they must accomplish. He had gone through each of the benefit levels for the Plan. We make changes regarding the early retirement. There was an actuarial reduction for early retirement which meant that if you retire at normal retirement, there was a reduction factor for each year that you go out prior to normal retirement. For an actuarial reduction the yearly reduction was probably 6 to 7% per year. Chapter 175 - 185 states 7 Police Officers' /Firefighters' Retirement Trust Fund June 18, 1999 that the maximum reduction can be 3% per year. That change must be made "at a cost" to the Plan. (i.e., The actuarial reduction and having a normal retirement with an actuarial reduction is a "no cost" item because it is equal to the benefit that you would get at normal retirement. However, if you go out three (3) years early instead of a 7% reduction there is only a 3 %, that means there is a cost to the Plan. It is a subsidized benefit so there is a fairly small cost. In order to make the Legislation a little more palatable to the League of Cities and the Cities themselves, they have provided that they are going to take the State money that they get and use last year's State money amount as the base year (the '97 amount received in '98), and take the difference between 1997 and 1998 amounts, and earmark that amount to improve any minimum that you don't meet. An example is if we have an additional $10,000 over what we had last year and that $10,000 will pay for the cost of increasing our early retirement or lowering our reduction to 3 %, we have to take that, apply it, and improve that benefit. If that $10,000 isn't enough, say it takes $20,000 to do that, that money gets set aside for funding purposes, and it is not figured into the yearly calculation done by Actuary Foster. It will be only as if we received $150,000 from the State and another $10,000 is set aside. We must do the same analysis next year. (i.e., we get $170,000 next year so we have an extra $20,000 this year. We add it tkiire to the $10,000 that we had set aside from the year before, if that buys our minimum than we move it up to the minimum. The laws say the Plan does not have to change anything but the law says that the City does not have to fund it until that additional State money becomes available. We take care of it if we have enough money this year to fix that 3 %. The next analysis is that they have now made clear is the language that was in the Chapter about the use of the State money and the fact that the State money has to be used to provide extra benefits for Police Officers/Firefighters. Although it had never said it, Attorney CHRISTIANSEN reported that they had always interpreted that to mean extra benefits as compared to the General employees of the City. The Board now must take a look at it. What the Actuaries were to do and where the State had approved in this concern was to take the contribution level that the City was making to the General Employees' Plan, compare that to what they were making to the Police officers/Firefighters, if the amounts were about the same, that means that the State money was being used to provide something more for the Police Officers/Firefighters because the City was funding both Plans essentially. On the other hand, if they are putting 10% into the General Employees Plan and they are putting 7% in the Police Officers/Firefighters Plan, obviously what is happening is that a portion of that State money is being used to provide that difference in the 3% and they are not using the State money appropriately. 8 Police Officers' /Firefighters' Retirement Trust Fund June 18, 1999 This was the third analysis against the Legislation. Again, if those numbers were not correct the City does not need to immediately fund the Plan up to that level. It goes back to "as State money becomes available," and to the extent that we have a gap between the City putting in for General Employees that they were not putting in for Police Officers/Firefighters. State money difference (difference from last year) is set aside for the minimum benefit analysis. That is not used to fund the Plan currently. It doesn't mean by setting it aside that we have gotten any additional benefits but the City is not getting the benefit of that money to fund the Plan currently. This will drive up the cost because they are no longer getting State money in the calculation of the City's required amount. This will drive up their costs as a percentage of payroll and will eventually drive the Police/Fire Plan up where it will be equal to the General. That money set aside obviously is intended to be used to provide additional benefits. The City does not theoretically have to do that but there is no reason not to do it. Attorney CHRISTIANSEN recommended that the Board: 1) do an Ordinance to meet the non -cost items which must be accomplished by the end of this year; and 2) direct the Actuary to advise the Board of our State money amount (in July) difference from last year and whether it is enough to fund that 3% reduction, if so then that will also be placed in the Ordinance; present it to the City with instruction that the proposed Ordinance was being done in order to comply with Legislation. Member *ormir seconded by Member WILLIAMS, moved to ask the Board Attorney to draft the Ordinance, with changes per legislation of Chapters 175 and 185 at no cost to the Fund, and the 3% early retirement reduction if the additional State money will pay for it; and to authorize Foster and Foster, Inc. to report on whether or not the Plan had met the requirement. Motion carried 3 -0. Chairman REED announced that he had received information about a Government Rules Workshop from the Division of Retirement. Attorney CHRISTIANSEN said that the workshop had been held for the Division to gather input on the Rules. The Division of Retirement is the body that oversees the endorsement of Chapter 175 and 185. They have rule making authority and they can develop rules to carry out the intent of the Legislation. They were trying to strengthen their stand of the Rules in Court. There were trying to clarify things that needed better interpretation. It will be easier to defend them if in fact they have had hearings and provided people with an opportunity to be heard on the rules (which have not been drafted) or the proposed rules. There will be more hearings in July or August. In other discussion, Chairman REED inquired about the Ordinance regarding the DROP Plan which had been approved three (3) meetings ago. Member WILLIAMS, seconded by Member GLEDICH, moved that they Deferred Option Plan Ordinance be presented to the City Commisson. Motion carried 3 -0. Attorney CHRISTIANSEN reported that the %N. 9 Police Officers' /Firefighters' Retirement Trust Fund June 18, 1999 proposed Ordinance had been sent to the City, and said that the Actuary would be sending a letter stating that there would be no cost associated with the adoption of the DROP. SET NEXT AGENDA Chairman REED announced the next meeting scheduled for Wednesday, August 11, 1999, at 1:00 p.m. ADJOURNMENT Member WILLIAMS, seconded by Member GLEDICH, moved to adjourn the meeting at 2:52 p.m.. Motion carried 3 -0. Respectfully submitted, ! J -Lewis, Recor. mg Secretary a: \MSWord\PF061899 -m \jl 10