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HomeMy WebLinkAbout05-04-2011 Minutes Minutes of the Regular Meeting of the CITY OF OCOEE GENERAL EMPLOYEES' RETIREMENT TRUST FUND BOARD OF TRUSTEES (GERB) Held on May 4, 2011 At 150 N. Lakeshore Drive Ocoee, FL 34761 CALL TO ORDER — Chairman Wagner Chairman Russ Wagner called the meeting to order at 10:08 a.m. in the Commission Chambers at City Hall. Roll Call Chairman Wagner called the roll and a quorum was declared present. Present were Chairman Russ Wagner, Trustees David Wheeler, Wendy West and Pat Gleason. Absent /excused was Trustee Jean Grafton. Also present were Mr. Tim Nash of Bogdahn Consulting, LLC, Human Resources Director Gene Williford, Debbie Bertling, Human Resources Analyst, and GERB Recording Secretary Stella McLeod. Approval of Minutes (Prior to the approval of the minutes, at the board's request, Trustee Wheeler gave a summary of his trip to New York with FPPTA.) The chairman directed the board's attention to the minutes for the January 26, 2011 meeting (Exhibit #1). A motion having been made by Trustee Wheeler and seconded by Trustee West to approve the minutes, and that motion having been carried unanimously, the board RESOLVED to accept the minutes as presented. General Employees Retirement Board May 4, 2011 Page 2 of 9 OLD BUSINESS Pension Technician Position Chairman Wagner told the board about the new pension technician. Her office will be right across from the entrance to the finance office. Trustee West asked about what she would be paid. The chairman answered that for a 22 -hour week, the technician will be paid $25,000 annually. She will be an employee of the finance office technically, but she will take direction from the board chairman and will also be trained by Debbie Bertling (HR). The office and computer have been set up, the chairman said. Trustee Gleason asked how employees would know about the new pension technician. Chairman Wagner replied that nothing about the technician has been sent out yet so that she can get her `feet wet' first. The chairman concluded that the employees will be notified that the technician is on board, but she will need the support of all of the City departments until she becomes accustomed to performing the necessary duties. Service Eligibility Determination Chairman Wagner reported that following discussion regarding this previously - tabled matter with City Manager Frank and the commissioner involved, it has been concluded that one cannot combine prior general City service with commission service. The actuary and attorney advised that they did not believe this could/should be done based upon the City's pension ordinance; therefore, it is clear that one cannot combine contributory service with non - contributory service. The commissioner can receive, however, credit for his previous City service if he should work for the City as a general employee following the expiration of his term as a commissioner. He would then receive a separate pension as a general employee if he added regular employee service to equal a total of five years. He could also begin to take his City Commission pension once he exits his elected post. Attorney Dehner further explained that the provision in the ordinance was amended in order to bring in employees who had been in a different City pension plan a few years back. The attorney concluded that for members who terminated employment with the City prior to October, 1991, and who become employed by the City on or after October, 1991, they will be given pension credit for all of their eligible service to the City. Further discussion ensued. The chairman said that to do it any other way would require a change to the ordinance which is unlikely since it would be almost impossible to determine the actuarial impact to the pension fund. General Employees Retirement Board May 4, 2011 Page 3 of 9 Chairman Wagner asked if the board needs to make a determination. Attorney Dehner said that a request was made; hence, a motion needs to be made. Chairman Wagner solicited the board for a motion. A motion having been made by Trustee Wheeler and seconded by Chairman Wagner based upon the advice of the attorney and the actuary concerning a request to combine general employee service with commissioner service for the purposes of the pension, the board unanimously RESOLVED to deny the request. NEW BUSINESS Investment Consultant Report — Mr. Tim Nash of Bogdahn Consulting, LLC Mr. Nash said that the plan had a very strong performance for last quarter. The plan is well above its actuarial assumptions so far. Most of the money managers are fairly bullish on the market. There's been almost 100% increase in the market since the big drop. Despite this, there is still a 14% increase needed to get to a pre -2008 market. Money managers say that for calendar 2011 they still expect double digit returns from the Standard & Poor (S &P) year -to -date. So far the S &P is at 7.9 percent and the Dow is at 10 %. Fiscal year to date, the fund is over 11%. Page 3 of the investment report, shows stocks (domestic, international) broad market indices with money managers out performing in every category. International benchmark was up 3.4% for the quarter. The S &P was up almost 6 %. Bonds did well. For large or midcap stocks, value did better than growth. For small cap stocks growth did better due to small cap technology stocks doing very well during the quarter. Page 5 shows the performance of the different sectors in the Russell 1000 index (red & pink lines). Energy companies were up 16.8% for the quarter and up over 40% for the year. Basic materials and industrial materials continued to rise. Page 8 shows the countries in the MSCI EAFA index. Returns are printed off to the right of the page. Japan's market was one of the only negatives due to the earthquake. General Employees Retirement Board May 4, 2011 Page 4 of 9 On page 9 on the bond side, hedging by the bond manager is managing intermediate, high - quality bond portfolio. The portfolio beat the benchmark. Junk bonds are approaching all -time highs, but how long this will continue is questionable (junk bonds are not in the City's portfolio). The City's portfolio is on page 11. Total market value of the fund at the end of December was a little over $20,000,000. At the end of the second fiscal quarter, it was $21,1 84,315. The City is in line with its investment policy statement targets. Page 14 shows cash flows. At far right, the income line added to the capital appreciation equals $2,112,000 which is the dollar gain for the quarter; and divide by what we started with gives the total rate of return. The City's plan is up 11.03% (see page 15). Benchmarks for the quarter are up 9.7 %. City has had almost 1.5% extra over the last 6 months which reflects very strong gains. Chairman Wagner asked if we determined what the ranking across `all public funds' referred to. Mr. Nash said that the ranking compares the City's plan to public plans across the US, not just Florida. On page 16 are the international and fixed income portfolios. He made comments about the progress of the plan with respect to these portfolios. Bonds beat the benchmark for the quarter. But it isn't believed that this level of bonds is sustainable. The Fed will start raising rates within the next six to 12 months putting downward pressure on the bonds. How to hedge against this? Add commercial real estate to the portfolios. Mr. Nash recommended adding real estate to the portfolio. Target within the policy is 40% in bonds. Real estate is not in the portfolio and is a different category from bonds. Bogdahn is recommending to its clients that they add 10% in real estate to the portfolio. Doing this would not require a change to the City's investment policy. He went over the report he prepared about real estate options. Mr. Nash is recommending that the City purchase real estate such as office /commercial property. All of the real estate money managers that they have vetted are used in police and fire plans all over the country. Mr. Nash went on to explain the remainder of the report. Chairman Wagner asked if the City's police and fire pension had real estate. Mr. Nash replied that the matter is on the agenda to discuss at today's police / fire pension meeting. Mr. Nash added that the real estate funds have minimums. The City would propose acquiring 10% of the fund in real estate, according to Mr. Nash. July 1 would be the date that the City could get into the funds. Cornerstone, ING, and American Realty are the real estate managers that Bogdahn is looking at closely. General Employees Retirement Board May 4, 2011 Page 5 of 9 After further discussion, a motion having been made by Trustee West, and seconded by Trustee Gleason, to invest in American Realty advisor based upon document review and contract negotiation investing up to 10% of the City's total fund, and the motion having carried unanimously, the board RESOLVED to invest in American Realty. Bogdahn Service Fee Increase Request The chairman called the board's attention to the request by Bogdahn to increase their service fee. Fees are normally guaranteed for three years. This would guarantee the fee for another three year period. Chairman Wagner asked if all clients are being asked for this increase or if it's only for those clients whose fees are up for renewal. Mr. Nash replied it was for those clients whose fees were up for renewal. Chairman Wagner said that he has been most pleased with the performance of the consultant. The chairman did ask for an executive summary at the beginning of each printed report. Mr. Nash said that he would do that. The chairman also noted that he never received information on Chemtura which he had previously requested. He asked that the consultant be more diligent about such things in the future. Trustee Wheeler asked if he was asking their other clients for a 15.8% increase. Mr. Nash said that the City's fee increase was actually on the lower end. Trustee Gleason asked how many money managers the consultant has. Mr. Nash said there are roughly 130 different management firms that they work with. He went on to explain how the firm goes about acquiring money managers. The chairman solicited the board for a motion. The motion having been made by Trustee West, and seconded by Trustee Gleason to approve the all- inclusive fee increase from $19,000 to $22,000 guaranteed beginning July 1, 2011 based upon contract negotiation, and the motion having carried unanimously, the board RESOLVED to approve the Bogdahn consultant' s request for a fee increase. Beneficiary /Joint Annuitant Discussion The chairman brought the board's attention to the matter of beneficiaries versus joint annuitants, after reminding the board that certain questions should lead board trustees to send employees to seek personal advisors to advise them on what choices to make. Attorney Dehner gave the board information about the two. A joint annuitant is only involved if someone chooses the joint General Employees Retirement Board May 4, 2011 Page 6 of 9 survivor benefit. A beneficiary is anyone who is designated to receive the pension benefit. A beneficiary can be changed at any time. After benefits are being received, certain requirements must be met before a change can be made. They are listed in the plan document. The chairman said that he understood that the actual monthly payment is based upon the actual age of the joint annuitant. The beneficiary, he continued, receives what the benefit is worth at the time he /she receives it. OTHER BUSINESS Payment of Invoices Ratification Chairman Wagner directed the board's attention to the invoices needing board ratification (exhibit #2). The chairman said that there were several invoices added to the list included in the board's agenda packets that are included in a handout. With respect to Trustee Wheeler's hotel bill, the trustee said that the check issued to him will be ratified when he opens his next credit card statement. Because Trustee Wheeler's assertion of the tax exempt status for the trustee's hotel bill has yet to be determined by the hotel, the board will accept the tax exempt assertion. Once the status is confirmed one way or the other, the paid invoice will be ready for ratification. Trustee Wheeler told the board if it becomes necessary, he will pay the remaining cost that might be due depending on the hotel's decision. A motion having been made by Trustee West, seconded by Trustee Gleason, to ratify the paid invoices, and that motion having passed unanimously, the board RESOLVED to ratify the payment of the invoices presented on the handout. Quarterly Activity Report Review Chairman Wagner directed the board's attention to the activity report for their information (exhibit #3). The chairman remarked on the fact that a variety of requests from plan members are being made including DROP, regular retirements, refunds, etc. There were no comments, and no further action was needed from the board regarding this report. General Employees Retirement Board May 4, 2011 Page 7 of 9 Retiree Payment List Review Chairman Wagner directed the board's attention to the activity report for their information which shows monthly payments that are made to retirees. The list is in compliance with the recommendation of the board's auditors. There were no comments, and no further action was required by the board. Florida Public Pension Trustees Association (FPPTA) Conference The conference will be held June 26th — 29th in Orlando. Chairman Wagner will be obtaining his certification at this conference. He asked if anyone else was interested in going to the conference. The chairman discussed the conference with HR Director Williford and offered him the opportunity to attend in accordance with the City's travel payment policy. Trustee Gleason said that she would like to attend also. Trustee West said that she would let the chairman know for sure later whether or not she will be attending. Further discussion ensued regarding credits needed to maintain certification. ATTORNEY'S COMMENTS Sunshine Law — Administrative Guidelines Chairman Wagner asked Attorney Dehner to speak to the board about the Sunshine Law. Attorney Dehner left a pamphlet about the Sunshine Law with the chairman who will pass on copies to the other trustees. The chairman was particularly concerned about routine paperwork that might require the attention of another board member so that the needs of a retiree /plan member could be met. The attorney said that the standard is that two or more trustees cannot discuss or take action on a matter that would reasonably or foreseeably come before the board for action without proper notice. He said no discussion should be held with a third party that could be a conduit of a trustee. Chairman Wagner was told that administrative action should come to the board before action is taken. Attorney Dehner said an application is a matter that one person (trustee) should work on because it could be necessary for the application to come before the board. Attorney Dehner noted the three requirements for public notice: a meeting that has been noticed, reasonable access to the facility where the meeting will be held, and minutes must be taken. Further General Employees Retirement Board May 4, 2011 Page 8 of 9 discussion ensued. Attorney Dehner invited the board to call him if there are any specific questions on the matter. State Legislature Update Attorney Dehner reported that Senate Bill 1128 passed the senate two days ago and was on the floor. There's been an amendment striking the entire bill as it had been filed previously. It has been passed to the house. The attorney had no additional information. The part that would affect the City is the proposed limitation on the compensation for benefits calculation to base pay plus 300 overtime hours. The attorney was doubtful that the bill would pass with anything that would affect the City. Further discussion ensued. Chairman Wagner asked about the proposal that local governments had to set up defined contribution pension plans. The attorney confirmed that this proposed provision has been stricken from the bill. Federal Legislation Helps II legislation has seen no action at this time. COMMENTS FROM TRUSTEES / CITY LIAISON The chairman and HR director went over possible changes to the personnel rules and regulations to clarify some of the rights for retirees. The proposed changes would be for clarification only and would not deviate from the provisions within the City's pension ordinance. HR Director Williford said that he has a completed draft. He thanked the board for their support. AGENDA FOR NEXT MEETING Pension Technician — will be on board Routine agenda reports COMMENTS FROM PUBLIC — None. ADJOURNMENT Attorney Dehner reminded trustees to get their form 1's mailed in. General Employees Retirement Board May 4,2011 Page 9 of 9 Respectfully submitted by: • • . • ved y: Stella McLeod, Municipal Rec. Coordinator / J �'' GERB Recording Clerk Russell B. Wagner, GERB Chairman