HomeMy WebLinkAbout11-02-2011 MinutesMinutes of the Regular Meeting of the
CITY OF OCOEE GENERAL EMPLOYEES' RETIREMENT TRUST FUND
BOARD OF TRUSTEES (GERB)
Held on November 2, 2011
At 150 N. Lakeshore Drive
Ocoee, FL 34761
CALL TO ORDER — Chairman Wainer
Chairman Russ Wagner called the meeting to order at 10:01 a.m. in the Commission Chambers
at City Hall.
Roll Call
Chairman Wagner called the roll and the recording clerk declared that a quorum was present.
Present were Chairman Russ Wagner, Trustees Jean Grafton, David Wheeler, and Wendy West
with Trustee Pat Gleason arriving shortly after the meeting started.
Also present were GERB Attorney Lee Dehner, Mr. Tim Nash of Bogdahn Consulting, LLC,
Mr. Richard Cristini and Ms. Jeanine Bittinger, the board's auditors, Human Resources Director
Gene Williford, Pension Technician Junelli Maher and GERB Recording Clerk Stella McLeod
who declared that a quorum was present.
Approval of Minutes
Chairman Wagner directed the board's attention to the minutes for the August 3, 2011 meeting
(Exhibit #1).
Compliments were conveyed to Pension Technician Maher for her work on the agenda packets.
A motion having been made by Trustee Wheeler and seconded by Trustee Grafton, and that
motion having carried unanimously, the board
RESOLVED to approve the August 2011 minutes.
Chairman Wagner asked the Board Auditor Richard Cristini about documentation, specifically,
if it was alright that certain references which appear in the minutes do not appear on the board's
website. Mr. Cristini answered that it did not matter to the auditors; they are more concerned
about when there is a reference to an attachment within the board's minutes. If the minutes
contain referenced items that are not included with the minutes, those minutes would be deemed
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November 2, 2011
Page 2 of 11
incomplete, and the auditors will bring the matter to the board. Further discussion ensued. Mr.
Cristini concluded that, just like in contract law, in order for a reader to fully understand the
minutes, he or she needs to have the benefit of reviewing the attachments.
NEW BUSINESS
Annual Audit Report
Mr. Cristini gave the highlights of the report for the fiscal year ending September 30, 2010
(Exhibit #2).
Page 1 contains the independent auditor's report which verifies that in all material respects, all of
the assets, liabilities, revenues and expenses were fairly stated.
Page 2 contains the statement that the Governmental Accounting Standards Board (GASB)
requires that all such reports contain a management discussion and analysis (MD&A). The State
of Florida, however, does not require it. The MD&A is simply a rehash of the information
contained in the financial statements of the audit report. Not having the MD&A saves the board
the time and money it would take to prepare it. The MD&A does not affect the auditors'
opinion; it is an optional component.
Page 3 contains the statement of planning and assets. The cash is the holding dollars in the
accounts as of the end of September. Receivables were about the same as the previous year.
Mr. Cristini explained that transactions have to be reported as of the `trade day' rather than the
`settlement date' which can be several days after a transaction has been made.
Mr. Cristini brought up a matter to the board. He said that last year the custodian (Fifth Third
Bank) did a good job of organizing the investments by natural type or category. The transactions
were organized as well. This year it was decided to mix them all up. So the auditor had to go
through and carefully pull out each type of security, bond, etc., to come up with the inventory to
match to the total inventory stated as of September 301h. The auditors' suggestion is that the
custodian return to organizing the reports as was done previously in order to save the board the
money that will be paid to the auditors for having to take the extra time to prepare the report.
Total assets at the end of the year amounted to $18,700,000. The majority of the payables were
for the money managers. Net assets held in trust went from $15,000,000 to $18,645,000 which is
a heads up to the reader that the fund had a good year.
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November 2, 2011
Page 3 of 11
Page 4 shows that the employer's contribution increased which is in accordance with actuary's
advice. Employee contributions are about the same. Appreciation of investment went from
$400,000 to $1,450,000. Interest was up a bit and dividends down a little. Investment expenses
were down a little. Administrative expenses were also down as of the reporting period.
Expenses were less than 1 % of net assets which is the rule of thumb for pension funds. Mr.
Cristini said for investment expenses the board is at .54%, and .2 for administrative expenses.
He added that this is a good report.
Page 5 and onward basically gives boiler plate such as plan description. On page 6 and 11 there
is a reference to disability benefits which will be removed since the fund has no such component.
This will not affect numbers.
The board's accounting policy did not change during the reporting period. There were actuarial
cost changes which were approved by the board as noted on page 10. Under previous accounting
standards the fund was considered a component of the City's comprehensive annual financial
report (CAFR). Under the new rules, the fund is a stand-alone entity.
Mr. Cristini continued reviewing the report. Page 19 shows the cost and fair value of invested
assets. This data is pulled from the custodial report. The custodian is the legal title holder to
these investments. Page 20 shows a schedule which lists the realized appreciation (sold some
securities and had a gain or loss) and unrealized appreciation of securities (increase in value of
the security's market value over the cost of the securities held by the end of the reporting period).
Again, the information shows that the fund had a good year and was position positively.
Page 21 gives a summary of the plan's investments. Each expenditure is documented with an
invoice and is in the plan's file. The auditors discovered that there was a small difference in
market value in securities between the City's numbers and the auditors' calculations. It turned
out to be a journal entry mistake. The City was using the number from the actuarial valuation
provided by the actuary. This is not the same as the fair market value used by the auditors. Now
that the City is aware of it, they have said that they will take care of it.
There were no plan amendments for the period.
Page 24 shows designations (set asides with dollars earmarked for an individual for a specific
purpose) for DROP. There is a total of $192,000 which is earmarked to specific individuals.
Mr. Cristini closed the report after saying that the report was excellent; the board has addressed
the administrative issues as previously discussed.
Chairman Wagner thanked Mr. Cristini. He verified with Mr. Cristini that the board has
resolved the administrative issues. Mr. Cristini responded affirmatively. The chairman said
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November 2, 2011
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that the board does have much better business records. He asked if any of the board members
have any questions.
Trustee Grafton asked if the plan's tax exemption status was demonstrated in the report. Mr.
Cristini answered that he thought the board used the City's tax exemption status. Trustee
Grafton said that the board has its own which Pension Tech. Maher verified.
Chairman Wagner thanked Mr. Cristini again for the report. Mr. Cristini added that the board
will have to put the unfunded actuarial liability on the City's financial statement as part of new
rules of the GASB. This will be difficult to explain to the public. Chairman Wagner said that
the board will certainly seek the assistance of the plan's actuary.
Investment Consultant Report — Mr. Tim Nash of Bogdahn Consulting, LLC
Mr. Nash reported that the last quarter of the reporting period basically collapsed. There was a
lot of uncertainty in the market, he said, and the markets hate uncertainty. Mr. Nash reported
that the markets dropped almost 300 points yesterday.
He said that if the current volatility continues, they will have few to no tools to predict what the
market will do. Using a graph (page 11) from his report (Exhibit #3) of the market's activity
over the 64 days of the past quarter, he stated that the volatility illustrated by the graph is the
same kind of volatility seen during the last quarter of 2008. Mr. Nash continued by saying that
even with today's conditions, the world is in a much better position today than it was in 2008.
Savings rate has grown from almost 0 to 6%.
Chairman Wagner asked Mr. Nash to talk about: 1) why the money managers did not reach the
benchmark(s) and 2) what the board can anticipate happening when Congress ends up doing
nothing about the budget.
Mr. Nash told the board what he is hearing. One of the big issues out there for business is
continued regulation. It is perceived that this is a non -business friendly environment. Another
`wild card' for business is the certainty about healthcare and regulation, and until these matters
are settled, business is refraining from doing acquisitions or hiring. Mr. Nash made mention of
the Dodd Frank law. Mr. Jamie Diamond, CEO of JP Morgan Chase, has bought several
different banks. He has said based upon the regulations that have been put forward, I don't see
how my bank can make any money. Banks will be prohibited from trading the assets of their
reserve accounts, nor will they be able to enact interchange fees on debit cards. Mr. Nash said
that there will be a presidential election soon which another `wild card' for business. Chairman
Wagner said that all of the other things pale in comparison to the fact that our country cannot
pass a budget. He asked if there's going to see another dramatic drop, and is there anything the
board can do to protect the fund. Mr. Nash said market timing will be key, but no one has the
General Employees Retirement Board
November 2, 2011
Page 5 of 11
tools to evaluate this kind of risk. One would have to know somehow when to take the money
out and when to put it back in. Mr. Nash said the big picture answer is that the plan has
diversification as well as several different investment strategies.
Page 3 of the report shows what the benchmarks did. They protected the plan well. The EAFA
was down 19%. Mr. Nash added that despite the nation's recent downgrade, the US is still one
of the securest investments. The Russell 2000 was down 22%; emerging markets were down
22.5%. There was not anywhere in equities where one could be `safe'.
Page 5 of the report shows the rate of return for each sector. Financials were the worst
performing. Rockwood's bright spot was healthcare. Healthcare was negative for the quarter but
positive for the year.
On page 9, treasury bonds for the quarter were up 6.5%. It is better to own high quality
corporate bonds over the longer term for now.
Plan went from $18,000,000 to $21,000,000. It then dropped by 2 percentage points to
$19,000,000. As of October 1" the plan went back up to $20 million.
On page 17, the plan was down more than the index which was not the desired result.
The median public plans were down and the board's plan was right around the median. The
combination of Rockwood and ICC together (which was thought that the two managers would
balance each other) were down for the year. The plan is not in the top tier now.
Mr. Nash said that when there's an 8% assumption and we don't meet it, we ask are we doing
something wrong. He said that he believes that the board is doing the proper things.
Chairman Wagner said that it makes it difficult when you have to explain this to a commission
or city manager.
Mr. Nash added that everyone is in the same boat across the nation. He referred the board to
page 19 of the report to see the plan's historical data. Most of the plans his firm handles are
fallen by around 11 %. Ocoee's plan has dropped by 6%.
Chairman Wagner solicited questions from the board. When there were none, the chairman
thanked Mr. Nash for his report.
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November 2, 2011
Page 6 of 11
Discussion — Ordinance Amendments — State Statute / 5 Year Vesting
(Trustee West leaves the meeting — 11: 22 a.m. )
Chairman Wagner introduced this topic. He said that changes need to be made to the pension
ordinance due to changes in the state statute. There have been meetings with the City including
the Finance Department and HR. Direction as to how to proceed was obtained by the board's
legal counsel, Board Attorney Lee Dehner. An employee gets credit for personal time up to
Julyl, 2011. Pension Tech. Maher got the report which shows what each employee has in their
bank. It is now documented in the pension plan's records. The question is which salary to use in
the calculation. Does one use the present salary or the future salary? Board Attorney Dehner
said that it is up to the City to decide that. The salary that they make at the time that they retire
will be used. If you have more hours in your bank when you retire, you get the amount you had
in your bank as of July I". If you have less time in you bank you get the lesser time.
Chairman Wagner asked if there is a way that the board can update the ordinance so that it
follows the state statute and then leave it to the operating rules?
Board Attorney Dehner answered `yes'. It will be drafted in a way that the minimum
necessary is placed in the ordinance which in this case is referring to period of credited service
prior to July 1" in terms of lump sums and the periods after that and then the procedures can be
outside of the ordinance. He said that what the chairman has described is what most cities are
doing. It is better for the employees and easier administratively. He said to Trustee Grafton that
one can use those hours that were accumulated before the effective date, but they can be restored
using the accumulations after the effective date and then bring it back up to the maximum that it
was on the effective date.
Trustee Grafton asked if that meant that one has that time in one's bank but it is not used for
vacation. Further discussion ensued.
Trustee Grafton restated that you are using those days on the books at today's rate but if you
get a raise you can replace those hours at the new rate. Chairman Wagner said `right'. He
continued that they are trying to ensure that the employee doesn't lose anything but it means that
employees will have to watch where they are at when they retire. It eliminates a huge burden on
the City to have to keep track of those hours.
The chairman asked if the attorney had any boilerplate language to add to the ordinance.
Because circumstances vary, language has to be developed for a plan's specific conditions. Once
the board has the language, this will require that the actuary produce an impact statement.
Chairman Wagner asked if the board will have the language by the next meeting. Attorney
Dehner said he should have the language by then. The attorney added that because the change
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November 2, 2011
Page 7 of 11
became effective as of July 1 st, any retirements after that should be handled according to the
policy that the chairman just described.
The maximum overtime hours also need to be reflected. It will need to be noted whether it is
fiscal year or calendar year. There will need to be some sort of tickler in the payroll system of
when one hits the 300 hour threshold. Attorney Dehner said that he will draft the language and
have it ready by the next meeting.
Chairman Wagner asked about the other provisions that affect reporting for the fund. Will that
need to be identified in the ordinance as well, he asked? Board Attorney Dehner said `no'.
Further discussion ensued between the HR director, the chairman and the board attorney.
Chairman Wagner brought up the 5-year vesting. He said that he believes that all employees
should be vested for 5 years in the program. The chairman suggested that the language be
changed to reflect that in order to be eligible for retirement one must be vested with at least 5
years in order to receive pension benefits. Board Attorney Dehner said the board would r1mlly
be amending the retirement age to 60 with a minimum of five years vested. Further discussion
ensued. Trustee Grafton asked what current employees would be affected. Further discussion
ensued. HR Director Gene Williford said he would research and bring that information back to
the board. A motion having been made by Trustee Wheeler, seconded by Trustee Gleason, that
to be eligible to receive retirement benefits, the employee must be at least 60 years old and be
vested in the plan for a minimum of five (5) years, and that motion having passed unanimously,
the board
RESOLVED amend the retirement eligibility to age 60 with a minimum of 5 years vested.
Board Attorney Dehner said that he will incorporate the language into the ordinance that they
had discussed earlier.
Chairman Wagner brought up changing the DROP to being a standard percentage rather than a
variable one. He said it appeared to be an extreme administrative burden rather than using the
fixed rate. Trustee Wheeler reminded the board that at the last meeting Ms. Bertling (of HR)
had said no one had ever asked that the variable rate be used. A motion having been made by
Trustee Wheeler, seconded by Trustee West to remove the provision that allows the variable
rate to be used in calculating DROP, and that motion having passed unanimously, the board
RESOLVED to amend the ordinance to remove the provision to calculate DROP based on the
variable rate.
The chairman asked that the attorney forward the changes to him and then he will forward them
to the rest of the board.
General Employees Retirement Board
November 2, 2011
Page 8of11
Discussion — Agreement with American Realty Advisor
Chairman Wagner reminded the board that it was determined at a previous meeting that the
board would add real estate to the portfolio. The chairman is concerned that an agreement has
not been signed after four or five months. He feels that consultants should have been on top of
this. Nobody is telling the board what needs to be done. Chairman Wagner said that he does
not feel as though the matter has been managed properly.
Mr. Nash offered to explain what the normal flow would have been. Typically his firm contacts
the real estate fund and asks them to forward the agreement to the board's attorney. The forms
were forwarded to the board's attorney and were reviewed by him.
Mr. Nash continued his remarks about the real estate fund process. He described what was
needed from the board for the forms to be complete. He said that the fund has to call its client in
order for things to move ahead once the forms are signed. Mr. Nash offered to take the forms
today, overnight them to the real estate fund, and then wait for the fund to request payment.
Set Board Meetings
The board agreed on the following meetings for 2012.
February 1, 2012
May 2, 2012
August 1, 2012
November 7, 2012
Trustee Grafton asked if these dates worked around the FPPTA meeting dates. The chairman
responded affirmatively. A motion having been made by Trustee Grafton, seconded by Trustee
Wheeler, to accept the proposed meeting dates as the official board meeting dates for 2012, and
that motion having passed unanimously, the board
RESOLVED to accept the proposed meeting dates as the official meeting dates for 2012.
General Employees Retirement Board
November 2, 2011
Page 9 of 11
OTHER BUSINESS
Payment of Invoices Ratification
Chairman Wagner reviewed with the board payment of invoices (Exhibit #4). Trustee
Grafton asked if there were any invoices in the packet that were not listed. Pension Tech.
Maher replied that the Foster & Foster invoice came in after the report was compiled. A motion
having been made by Trustee Grafton, seconded by Trustee Wheeler, to ratify the invoices
presented and that motion having carried unanimously, the board
RESOLVED to ratify the payment of the invoices presented in the handout.
Quarterly Activity Report Review / Adjustments Activity Report (Pension Board Member
Records)
The board reviewed the activity report prepared by Pension Tech. Maher. After asking the,board
members if there were any questions, and the board posing no questions, the chairman solicited
the board for a motion concerning the invoices. A motion having been made by Trustee Grafton,
seconded by Trustee Wheeler, to ratify the activity report presented, and that motion having
carried unanimously, the board
RESOLVED to ratify the activity report.
Trustee Wheeler asked why they needed to approve the report when it is already being enacted.
The chairman replied that it is necessary to comply with the auditors' rules. Trustee Wheeler
made a recommendation that there be a consent agenda added to the agenda to take care of all
items requiring an administrative okay in compliance with auditors' requirements.
Pension Tech. Maher is going through the records and finding that some of the calculations are
incorrect. She explained how the errors were discovered. The chairman declared that the
payments have not been paid yet. Further discussion ensued. Chairman Wagner solicited a
motion to pay the people listed. A motion was made by Trustee Wheeler, seconded by Trustee
Grafton to make payment to those contained who were not fully paid, and that motion having
passed unanimously, the board
RESOLVED to make payment to the people on the Adjustment Activity Report.
Trustee Wheeler asked what would be done if someone on the list asks for interest. The
attorney replied that there is no such provision in the pension rules.
General Employees Retirement Board
November 2, 2011
Page 10 of 11
Retiree Payment List Review
The board acknowledged their review of the Fifth Third Bank RPS Report (Pension Board
Bank Records).
Florida Public Pension Trustees Association (FPPTA)
The next conference is February 5 — 9, 2012. The chairman asked that the schedule be added to
the packet for the next meeting. He told the board members that Pension Tech. Maher needs to
know a month in advance if a board trustee is going to attend the conference. The next class will
be in Jacksonville, Florida. Chairman Wagner, Trustee Grafton, and Trustee Wheeler plan to
attend. Trustee Gleason just received her FPPTA certification. The board congratulated her.
The entire board is now certified. Further discussion ensued.
ATTORNEY'S COMMENTS
Chairmann Wagner said that he received the revised Summary Plan Description from the
attorney's office. Board Attorney Lee Dehner advised that the board hold on to the description
given that additional changes will be made to the document. The chairman said that he will put
the item back on the agenda for the next meeting.
Board Attorney Lee Dehner said that the legislative session will start in January 2012. House
Bill 365 will be discussed. He will have more legislation to discuss at the board's next meeting.
COMMENTS FROM TRUSTEES / CITY LIAISON
None.
AGENDA FOR NEXT MEETING
Summary Plan
Actuarial Report
General Employees Retirement Board
November 2, 2011
Page 11 of 11
COMMENTS FROM PUBLIC.— None.
ADJOURNMENT
There being no other business, the meeting was adjourned at 12:27 p.m.
App ed by'
Russell B. Wagner, bERB Chairman
uh" Kecoramg t-,iem
Minutes of the Regular Meeting of the
CITY OF OCOEE GENERAL EMPLOYEES' RETIREMENT TRUST FUND
BOARD OF TRUSTEES (GERB)
Held on August 3, 2011
At 150 N. Lakeshore Drive
Ocoee, FL 34761
CALL TO ORDER — Chairman Wagner
Chairman Russ Wagner called the meeting to order at 10:03 a.m. in the Commission Chambers
at City Hall.
Roll Call
Chairman Wagner called the roll and the recording clerk declared that a quorum was present.
Present were Chairman Russ Wagner, Trustees Jean Grafton, David Wheeler, Wendy West and
Pat Gleason.
Also present were GERB Attorney Lee Dehner, Mr. Tim Nash of Bogdahn Consulting, LLC,
Human Resources Director Gene Williford, HR Specialist Debbie Bertling, and GERB
Recording Clerk Stella McLeod.
Approval of Minutes
Chairman Wagner directed the board's attention to the minutes for the May 4, 2011 meeting
(Exhibit 41).
Trustee Jean Grafton cautioned the recording clerk to be careful not to use `the City' when
referring to the pension board. A motion having been made by Trustee West and seconded by
Trustee Gleason, and that motion having carried unanimously, the board
RESOLVED to approve the May 2011 minutes.
Chairman Wagner introduced Pension Technician Junelli Maher to the board. Board members
welcomed Ms. Maher and commended her on the improvements that they have seen since she
came aboard.
General Employees Retirement Board
August 3, 2011
Page 2 of 7
NEW BUSINESS
Investment Consultant Report — Mr. Tim Nash of Bogdahn Consulting, LLC
Mr. Nash reported that the past quarter was a good one for the pension fund (Exhibit #2). The
June quarter (page 3) international stocks up 1.8%. The S & P 500 was barely positive. The
bond market was up over 2.3% over the quarter. The last few days of June were positive.
Page 4 of the report shows the large mid and small value stocks were negative for the quarter.
Mr. Nash noted that the ICC multicap fund (which looks at large mid and small cap stocks) is
opportunistic and goes where it needs to go. It was negative for the quarter.
On page 8 of the report the different countries of the EAFA Index are listed. The Japanese stock
market was up about 20 basis points. Other countries were up over 30%. Barings International
stock has about a 15% allocation to Japan which affected Baring's overall performance.
Cashflows are on page 16. Mr. Nash reported that there was $2.1 million gained for the fund
which translates to a 11.61 % rate of return.
Chairman Wagner asked if the percentage increase is simply the earnings income. Is the City's
contribution calculated in that increase? Mr. Nash replied `no'. The calculation is the ending
balance minus the beginning balance. Contributions or withdrawals are not included the
calculation. Any income is factored in.
Pages 16 and 17 list the quarterly returns which show the fund up 30 data points. Indices were
up 1.01 %. The median manager was up 1.07%. Why was the fund behind for the quarter, Mr.
Nash asked? The domestic equities pulled the fund back.
The chairman remarked at how Rockwood and ICC have switched positions in terms of their
performance. At one point in the past, Rockwood was the problem performer. The board and
Mr. Nash began a discussion regarding measures taken by the consultant to monitor ICC's
performance.
On the bond side, Mr. Nash continued reporting, Agincourt continues to do a very nice job
being up 2.38% for the quarter, 1.73% for the fiscal year-to-date. There are no recommendations
for change; the portfolio is doing quite well. The fund is beating the index by almost 300 basis
points per year. The fund's ranking (among 447 public pension plans across the country) in the
fiscal year is the top 45t" percentile. In the three year term the fund is in the top 3rd percentile
and in the five-year the fund is in the 2nd percentile. Mr. Nash commended the board for the
fine performance of the fund.
General Employees Retirement Board
August 3, 2011
Page 3 of 7
Chairman Wagner asked where the fund stood with contracts with real estate companies
(adding real estate to the portfolio had been previously approved by the board). Board Attorney
Lee Dehner said that an agreement will be signed as part of the necessary documents.
Chairman Wagner said that he had just recently received contracts in the mail, but was not
quite sure what to do with them. Mr. Nash said that once the board selects the real estate
manager, the manager contacts the board's attorney. Then the board will be contacted if all is
well.
(HR Director Williford and HR Specialist Debbie Bertling enter the meeting 10: 31 a.m. )
Pension Technician Report — Junelli Maher
Chairman Wagner announced that in the future, the pension technician will be giving a
quarterly report. He updated the board regarding the set-up of the technician's office and her
office hours (8:00 a.m. to 2:00 p.m., Monday through Thursday). Trustee Grafton
congratulated Pension Technician Maher. In addition to further discussion, the chairman
reported that 100% of verification letters had been returned to the pension office [the letters
verify that the pensioner is not deceased].
Discussion - Ordinance Amendments
Discussion began about the need for amendments to the pension ordinance. The board attorney
concurred that amendments will need to be made. Attorney Dehner noted that numerous
proposals have been made to the Senate Bill 1128 in the legislature. The bill has been
significantly watered down. The most significant amendment with impact to the City is the
compensation definition for benefit calculation purposes. Further discussion ensued.
With respect to the computation, the statute says that it is a fixed computation that allows up to
300 hours of overtime for service rendered after July 1, 2011. This change will need to be
reflected in the pension ordinance according to the board attorney. Chairman Wagner said the
question that the board has had is if the hours are based on a monetary amount or is if it is based
on the number of hours at the time that they retire. Attorney Dehner said it is based on hours,
and the City can determine whether or not it is going to use average compensation in effect as of
June 30th or average compensation at time of termination from employment. This will be up to
the City to determine. The board may make a recommendation to the commission. Attorney
Dehner added that there can be no lump sum payments of unused sick or vacation pay included
for retirement calculations for periods of service after July I".
The attorney continued that there is now a requirement as a disclosure item that the actuary, with
each valuation, calculate the cost of benefits in the plan utilizing a 73/4 % investment return
assumption. This is the Florida Retirement System rate so that the state can compare apples to
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August 3, 2011
Page 4 of 7
apples. Foster & Foster has sent a letter to the City requesting a corresponding change in their
contract with the City in order to meet this requirement.
Chairman Wagner asked if this is a fairly simple plan. Attorney Dehner said it will differ
from plan to plan. Ultimately, it must comply with the requirements of the statute. The board
will discuss and develop an amendment and make recommendations to the City commission.
The attorney confirmed for the chairman that as long as the board is working on compliance, and
not doing anything in conflict with the statute, it should stand the board in good stead.
Chairman Wagner asked if the current rule is fair (under current pension rules, if a sixty -year
old joins the pension plan, he/she is automatically vested). Attorney Dehner answered that
there is a distinction between the years required to vest and the retirement age. Further
discussion ensued. Chairman Wagner said that the actuary should weigh in on the matter.
Regarding the DROP program, one of two selections could be made: 1) the set interest rate of
6.5% per quarter, or 2) value of investments made. Chairman Wagner said that it is a lot
cheaper for the board to have a set interest rate. Having two choices is very cumbersome to
administer. When Trustee Wheeler asked how many have taken the variable rate versus the
fixed rate, HR Specialist Debbie Bertling answered `none'. Trustee Wheeler concluded that
the board should remove the variable rate as an option. Further discussion ensued.
HR Director Williford asked if the attorney saw anything wrong with the language of the City's
personnel Rules and Regulations. The attorney responded that as long as the changes comply
with the statute, HR should be in a good position. Further discussion ensued.
(11: 29 - Trustee West exits to the foyer)
The board discussed the purchase of service time. Air time requires employee to be vested
before purchase of additional service time can be made. After discussion with the board attorney
and HR staff, it was concluded that the board probably does not want to make changes.
Chairman Wagner said that he will chat with the actuary and the city manager to discuss items
that might need to be placed in the pension ordinance.
(11: 34 — Trustee West returns)
The board discussed the actuary's request for an increase in fees. A motion having been made by
Trustee Wheeler, seconded by Trustee Grafton, to approve the increase to the fees as requested
by actuary Foster & Foster, and that motion having carried unanimously, the board
RESOLVED to increase the fees as requested by the actuary Foster & Foster.
General Employees Retirement Board
August 3, 2011
Page 5 of 7
OTHER BUSINESS
Payment of Invoices Ratification
Chairman Wagner reviewed with the board the auditor's reporting requirements as it relates to
the board's payment of invoices (Exhibit #3). Trustee Grafton asked about the Florida Public
Retirees Organization (FPRO). Discussion ensued. Chairman Wagner stated that the board is
paying for the board members to become members. Trustee Gleason said that she had already
paid for her own. Trustee Grafton said that the FPRO will refund the money if the board pays
for its members. A motion having been made by Trustee Grafton, seconded by Trustee Gleason,
to ratify the invoices presented and that motion having carried unanimously, the board
RESOLVED to ratify the payment of the invoices presented in the handout.
Quarterly Activity Report Review
The board reviewed the activity report prepared by HR Specialist Bertling (Exhibit #4). Trustee
Grafton commended Ms. Bertling for her work regarding the activity report. After asking the
board members if there were any questions, and the board posing no questions, the chairman
solicited the board for a motion concerning the invoices. A motion having been made by Trustee
Wheeler, seconded by Trustee Grafton, to ratify the activity report presented, and that motion
having carried unanimously, the board
RESOLVED to ratify the activity report.
Trustee Grafton said that the folks on the activity report should be given an opportunity to join
the FPRO.
Florida Public Pension Trustees Association (FPPTA)
Chairman Wagner pondered the idea of commission members attending the FPPTA which
could be conflict of interest.
Trustee Grafton suggested that the pension technician attend an FPPTA conference. She said
that the commissioner (who approached a trustee about attending the conference) said that he
believed that attending the conference would help him be a better commissioner.
General Employees Retirement Board
August 3, 2011
Page 6 of 7
Trustee Gleason said that while it would be nice for commissioners to attend, she does not think
that it is necessary. Additional discussion ensued during which Chairman Wagner mentioned
that at any point the board could be asked to report to the commission about the board's handling
of the fund, but he is confident that the board can show that it has been prudent in the handling of
the pension funds.
Chairman Wagner was selected by the FPPTA to go to The Wall Street Program in March of
2012.
ATTORNEY'S COMMENTS
Helps 2 legislation — not expected to come back to the floor this session.
Attorney Dehner reminded board members that financial disclosure filings were due 7/1/2011;
the penalty date is September 1, 2011. He advised that board members could check the
supervisor of election's website to verify their forms have been received.
COMMENTS FROM TRUSTEES / CITY LIAISON
Trustee Gleason said that she was very impressed with Pension Tech Junelli Maher and thanked
her for her work.
HR Director Williford commended Ms. Maher as well; he also thanked the board for allowing
him to attend the FPPTA training.
AGENDA FOR NEXT MEETING
Ordinance changes; possibly bring in the actuary
The auditor may have a report
COMMENTS FROM PUBLIC.— None.
General Employees Retirement Board
August 3, 2011
Page 7 of 7
ADJOURNMENT
There being no other business, the meeting was adjourned at 12:06 p.m.
��sPectfully submi d by:
41-1
Stella McLeod, Municipal RIZ7WQrdipator
GERB Recording Clerk
App ued by:
Russell B. Wagner, 5FRB Chairman
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CITY OF OCOEE MUNICIPAL GENERAL
EMPLOYEES' RETIREMENT TRUST FUND)
FINANCIAL STATEMENTS
September 30, 2010
DAVIDSON, JAMIESON & CRISTINI, P.L.
Certified Public Accountants
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
September 30, 2010 and 2009
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITOR'S REPORT ....................................... I
FINANCIAL STATEMENTS
STATEMENTS OF PLAN NET ASSETS ................................ 3
STATEMENTS OF CHANGES IN PLAN NET ASSETS ................... 4
NOTES TO FINANCIAL STATEMENTS ............................... 5
REQUIRED SUPPLEMENTAL INFORMATION
SCHEDULES OF FUNDING PROGRESS ............................... 25
SCHEDULES OF CONTRIBUTIONS FROM THE CITY ................... 26
NOTES TO THE ADDITIONAL SCHEDULES ........................... 27
8
Davidson, Jamieson & Cristini, P.L.
Certified Public Accountants
1956 Bayshore Boulevard
Dunedin, Florida 34698-2503
(727)734-5437 or 736-0771
FAX (727) 733-3487
Members of the Firm
John N. Davidson, CPA, CVA
Harry B. Jamieson, CPA
Richard A. Cristini, CPA, CPPT, CGFM
The Board of Trustees
City of Ocoee Municipal General
Employees' Retirement Trust Fund
Ocoee, Florida
INDEPENDENT AUDITOR'S REPORT
Member
American Institute of
Certified Public Accountants
Florida Institute of
Certified Public Accountants
We have audited the accompanying statements of plan net assets of the City of Ocoee Municipal General
Employees' Retirement Trust Fund (Plan) as of September 30, 2010 and 2009, and the related statements
of changes in plan net assets for the years then ended. These financial statements are the responsibility
of the Board of Trustees. Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States
of America. Those standards require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audits provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the plan
net assets of the City of Ocoee Municipal General Employees' Retirement Trust Fund as of September
30, 2010 and 2009 and the changes in plan net assets for the years then ended in conformity with
accounting principles generally accepted in the United States of America.
The Board of Trustees
City of Ocoee Municipal General Employees'
Retirement Trust Fund
Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a
whole. The accompanying required supplementary information on pages 25 through 27 of the City of
Ocoee Municipal General Employees' Retirement Trust Fund is required by the Govermnental
Accounting Standards Board Statement No. 25 and is not a required part of the basic financial statements.
Such information has been subj ected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
The City of Ocoee Municipal General Employees' Retirement Trust Fund has not presented the
Management's Discussion and Analysis that the Governmental Accounting Standards Board under its
Statement No. 34 has determined is necessary to supplement, although not required to be a part of the
basic financial statements.
August 31, 2011
2
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
STATEMENTS OF PLAN NET ASSETS
September 30, 2010 and 2009
Cash
Receivables:
Employer
Participants
Interest
Dividends
Broker -dealer
Total receivables
Prepaid insurance
Investments at fair value:
U.S. Government obligations
U.S. Government agency obligations
Domestic corporate bonds
International corporate bonds
Domestic stocks
International stock
International equity mutual fund
Temporary investment fund
Total investments
Total assets
Assets
Liabilities
2010
$ 146,375 $ 1,465
55,958
41,792
20,583
24,606
71,199
64,392
8,391
5,552
37,655
-
193,786 136,342
1,566 1,903
790,766
271,855
2,641,711
2,743,849
3,316,882
3,171,659
619,316
-
7,779,453
6,700,990
595,252
-
1,977,663
1,804,119
647,491
931,982
18,368,534 15,624,45
18,710,261 15,764,164
Accounts payable 22,877 24,971
Accounts payable, broker -dealer 41,870 -
Total liabilities 64,747 24,971
Plan net assets held in trust for Pension benefits $ 18.645.514 $ 15.739,193
See Notes to Financial Statements.
3
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
STATEMENTS OF CHANGES IN PLAN NET ASSETS
Years ended September 30, 2010 and 2009
2010 2009
Additions
Contributions:
Employer $ 1,324,799 $ 1,088,192
Employee 631,376 619,761
Total contributions
1,956,175
1,707,953
Investment income (Loss):
Net appreciation (depreciation) in fair value of
investments
1,458,548
416,881
Interest
403,320
367,652
Dividends
132,573
178,568
Litigation records
4,721
-
Total investment income
1,999,162
963,101
Less investment expenses
101,495
104,644
Net investment income
1,897,667
858,457
Total additions
3,853,842
2,566,410
Deductions
Benefits:
Age and service
769,774
751,512
PLOP
2,191
38,131
Refund of contributions
138,898
146,808
Administrative expenses
36,658
51,473
Total deductions
947,521
987,924
Net increase
2,906,321
1,578,486
Plan net assets held in trust for pension benefits:
Beginning of year
15,739,193
14,160,707
End of year $ 18,645,514 $ 15,739,193
See Notes to Financial Statements.
4
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2010 and 2009
1. Description of Plan
The following brief description of the City of Ocoee Municipal General Employees'
Retirement Trust Fund (Plan) is provided for general information purposes only. For more
complete information participants should refer to the Plan Ordinance which was adopted pursuant
to the provisions of Ordinance No. 2009-020 of the City of Ocoee, Florida.
The plan is a defined benefit pension plan covering all full-time general employees' of the City
of Ocoee.
At September 30, 2010, the Plan's membership consisted of:
Retirees and beneficiaries:
Currently receiving benefits 61
Drop participants 3
Terminated employees entitled to benefits but
not yet receiving them 37
Total 101
Current employees:
Vested 87
Nonvested 96
183
At September 30, 2009, the date of the most recent actuarial valuation, there were 56 retirees
and beneficiaries receiving benefits.
General - The Plan is a defined benefit pension plan covering all full-time employees (except
for public safety employees) of the City of Ocoee, Florida. Participation in the Plan is required as
a condition of employment except that the City Manager, Assistant City Manager and directors may
elect not to be participants in the Plan. Effective October 1, 2006 current and future mayors and
commissioners may elect to enter the Plan as non-contributory participants and receive credited
service determined as if they had been
5
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2010 and 2009
1. Description of Plan (Continued)
participants in the Plan on the date they took office subject to completing nine years of credited
service. Originally effective on October 1, 1991 and substantially amended in 1999, 2005, 2006,
2007 and 2008 the Plan provides for pension, death and disability benefits. The Plan is subject to
provisions of Chapter 112 of the State of Florida Statutes and the oversight of the Florida Division
of Retirement.
The Plan, in accordance with the above statute, is governed by a five member pension board,
two of whom are legal residents of the City who are appointed by the City Commission, two of
whom are vested participants of the Plan who are elected by a majority vote of the full-time general
employees who are participants in the Plan and a fifth Trustee who is chosen by a majority of the
first four Trustees. The City of Ocoee is obligated to fund all Plan costs based upon actuarial
valuations. The City of Ocoee is authorized to establish benefit levels and the Plan's Board of
Trustees approves the actuarial assumptions used in the determination of contribution levels.
Pension Benefits - Under the Plan, participants are entitled to annual pension benefits upon the
attainment of age 60. A mayor or commissioner participant's normal retirement date on the
attainment of age 60 and the completion of nine years of credited service regardless of years of
credited service. Benefits are equal to 3.00 percent of the participant's average final compensation
times the number of years of service provided however, in no event shall the monthly benefit exceed
81 % of average final compensation. A participant's monthly retirement benefit ceases upon the later
of death or one hundred twenty months from the date of commencement.
The average final compensation for purposes of calculating benefits is 1/12 of the participant's
average salary during the highest five years of the last ten years of credited service prior to
termination.
A participant is eligible for early retirement upon the attainment of age 50 and the completion
of five years of credited service. A mayor or commissioner participant is eligible for early
retirement upon the attainment of age 50 and the completion of nine years of credited service.
Refund of Contribution- If a participant has less than five years of credited service upon
termination of employment with the City, the participant shall be entitled to a refund of his or her
accumulated contributions.
0
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2010 and 2009
1. Description of Plan (Continued)
Partial Lump -Sum Option (PLOP) - A participant may elect to receive a retirement income and
a percentage of a benefit in a lump sum as follows:
(1) Five (5) percent lump sum benefit with ninety-five (95) percent paid under the normal
form.
(2) Ten (10) percent lump sum benefit with ninety (90) percent paid under the normal form.
(3) Fifteen (15) percent lump sum benefit with eighty-five (85) percent paid under the normal
form.
(4) Twenty (20) percent lump sum benefit with eighty (80) percent paid under the normal
form.
Deferred Retirement Option Plan (DROP) - Any Plan participant who is eligible to receive a
normal retirement pension may elect to participate in a deferred retirement option plan (DROP)
while continuing his or her active employment. Upon participation in the DROP, the participant
becomes a retiree for all Plan purposes so that he or she ceases to accrue any further benefits under
the pension plan. Normal retirement payments that would have been payable to the participants as
a result of retirement are accumulated and invested in the DROP to be distributed to the participant
upon his or her termination of employment. Participation in the DROP ceases for a Plan participant
after 84 months from their normal retirement date.
Death Benefits - For any deceased participant who had been an actively employed participant
eligible for early or normal retirement, the manner of benefit payable shall be at least equal to the
annuity of ten years calculated as of the date of death.
The benefit shall be calculated as for normal retirement based on the participant's credited
service and average final compensation as of the date of death and reduced as for early retirement,
if applicable.
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2010 and 2009
I. Description of Plan (Continued)
Buy -Back Additional Years of Credited Service - In additionto credited service actually earned
in the employment of the City, the Plan provides that a participant may also buy-back credited
service under the following alternatives:
A. Buy-back for prior government service.
B. Buy-back for military service prior to employment.
C. Buy-back for air time.
2. Summary of Significant Accounting Policies
Basis of Accountins7 - Basis of accounting is the method by which revenues and expenses are
recognized in the accounts and are reported in the financial statements. The accrual basis of
accounting is used by the Plan. Under the accrual basis of accounting, revenues are recognized
when they are earned and collection is reasonably assured, and expenses are recognized when the
liability is incurred. Participants' contributions are recognized in the period in which the
contributions are due. The City of Ocoee contributions to the plan, as calculated by the Plan's
actuary, are recognized as revenue when due and the City has made a formal commitment to provide
the contributions. Benefits are recognized when due and payable in accordance with the terms of
the plan.
Basis of Presentation - The accompanying financial statements are presented in accordance
with Governmental Accounting Standards Board (GASB) Statement 25, Financial Reporting for
Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans and the
Codification of Governmental Accounting and Financial Reporting Standards which covers the
reporting requirements for defined benefit pensions established by a governmental employer. The
accompanying financial statements include solely the accounts of the Plan which include all
programs, activities and functions relating to the accumulation and investment of the assets and
related income necessary to provide the service and death benefits required under the terms of the
Plan as amended.
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2010 and 2009
2. Summary of Significant Accounting Policies (Continued)
Valuation of Investments - Investments in common stock and bonds traded on a national
securities exchange are valued at the last reported sales price on the last business day of the fiscal
year; securities traded in the over-the-counter market and listed securities for which no sale was
reported on that date are valued at the mean between the last reported bid and asked prices;
investments in securities not having an established market value are valued at fair value as
determined by the Board of Trustees. The fair value of an investment is the amount that the Plan
could reasonably expect to receive for it in a current sale between a willing buyer and a willing
seller, other than in a forced or liquidation sale. Purchases and sales of investments are recorded on
a trade date basis.
Investment income is recognized on the accrual basis as earned. Unrealized appreciation in
fair value of investments includes the difference between cost and fair value of investments held.
The net realized and unrealized investment appreciation or depreciation for the year is reflected in
the Statement of Changes in Plan Net Assets. The Plan has no undue investment concentrations.
Custody of Assets - Custodial and certain investment services are provided to the Plan under
contracts with a custodian having trust powers in the State of Florida. The PlaWs investment policies
are governed by investment objectives governed by the Florida State Statutes and ordinances of the
City of Ocoee, Florida.
Authorized Plan Investments - The Board recognizes that the obligations of the Plan are long-
term and that its investment policy should be made with a view toward performance and return over
a number of years. The general investment objective is to obtain a reasonable total rate of return
defined as interest and dividend income plus realized and unrealized capital gains or losses
commensurate with the prudent investor rule and Chapter 112 of the Florida Statutes.
Permissible investments include obligations of the U.S. Treasury and U.S. agencies, high
capitalization common or preferred stocks, pooled equity fiends, high quality bonds or notes and
fixed income funds. In addition, the Board requires that Plan assets be invested with no more than
70 percent in stocks and convertible securities measured at cost.
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2010 and 2009
2. Summary of Significant Accounting Policies (Continued)
In addition, the Plan limits investment in common stock (equity investments) as follows:
a. No more than 5 percent at cost of an investment manager's portfolio may be
invested in the common or capital stock of any single corporation.
b. The Plan's investment in the common stock of any single foreign corporation shall
not exceed 25 percent of the Plan's total value.
The Plan has no instrument that, in whole or in part, is accounted for as a derivative
instrument under GASB statement No. 53, Accounting and Financial Reportingfor
Derivative Instruments during the current Plan year.
Actuarial Cost Method - The Plan uses the entry age normal cost method. This method involves
the systematic funding of the normal cost (current year's cost for benefits to be funded) and the
unfunded actuarial accrued liability.
In accordance with a new actuarial standard of practice the actuarial value of the Plan's assets
as of October 1, 2008 included a one time increase of $221,425. This one-time increase is intended
to ensure the removal of any differences between actuarial and market value given the hypothetical
future investment returns of 8%.
At the request of the Florida Division of Retirement the City of Ocoee is now required to fund
the Plan based on an actuarially calculated percentage of payroll. This change is designed to avoid
actuarial shortfalls associated with increasing liabilities.
For the purpose of compliance with legislative intent and to maximize the likelihood of state
acceptance, additions to the unfunded actuarial accrued liability will be amortized as follows:
Existing Based on and
Bases after 10/l/08
(Years) (Years)
Gains and losses 20 10
Methods/assumptions No change 20
Amendments No change 30
10
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2010 and 2009
Summary of Significant Accounting Policies (Continued)
The actuarially calculated contribution for the fiscal year ended September 30, 2010 is shown
as follows:
Annual payroll
$ 8,102,359
Actuarial percentage of payroll
24.1%
Total required contribution
1,956,175
Less participant contributions
631,376
Total employer contribution
$ 1,324,799
ReportingEntity_ - The financial statements presented are only for the Plan and are not intended
to present the basic financial statements of the City of Ocoee, Florida.
The Plan is included in the City's Comprehensive Annual Financial Report (CAFR) for the
years ended September 30, 2010 and 2009, which are separately issued documents. Anyone wishing
further information about the City is referred to the City's CAFR.
The Plan is a pension trust fiend (fiduciary find type) of the City which accounts for the single
employer defined benefit pension plan for all frill -time general employees. The provisions of the
Plan provide for retirement, disability, and survivor benefits.
Administrative Costs - All administrative costs of the Plan are financed through investment
earnings.
Cash - The Plan considers money market fiends held by custodians as cash. Temporary
investments shown on the balance sheet are composed of investments in short-term custodial
proprietary money market funds.
Federal Income Taxes - The Plan has not applied for a favorable determination letter from the
Internal Revenue Service indicating that the Plan is qualified and exempt from Federal income taxes.
The Board believes that the Plan is designed and continued to operate in compliance with the
applicable requirements of the Internal Revenue Code.
11
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2010 and 2009
2. Summary of Significant Accounting Policies (Continued)
Use of Estimates - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Risk and Uncertainties - The Plan invests in a variety of investment funds. Investments in
general are exposed to various risks, such as interest rate, credit, and overall volatility risk. Due to
the level of risk associated with certain investments, it is reasonably possible that changes in the
values of investments will occur in the near term and that such changes could materially affect the
amounts reported in the statements of net assets available for benefits.
Subsequent Events - Management has adopted the provisions set forth in GASB statement No.
56 and FASB ASU No. 2010-09. Subsequent Events, and considered subsequent events through the
date of the audit report which is the date that the financial statements were available to be issued.
Reclassification - Certain figures for the fiscal year ended September 30, 2009 were
reclassified to conform to the presentation used in the financial statements for the fiscal year ended
September 30, 2010.
3. Funding; Policy
Each participant of the Plan, except Mayors and Commissioners shall be required to make
regular contributions to the Plan in the amount of seven and four -tenths (7.4%) of his or her salary.
Participant contributions withheld by the City on behalf of the participant shall be deposited with
the Board at least monthly. The contributions made by each participant to the Plan shall be
designated as employer contributions pursuant to §414(h) of the Code. Such designation is
contingent upon the contributions being excluded from the participant's gross income for federal
income tax purposes. For all other purposes of the Plan such contributions shall be considered to
be Member contributions. Notwithstanding the preceding, when the participant's accrued benefit
is equal to 81% of average final compensation, the participant may make a one time irrevocable
election at anytime after the 81 % limit is met to discontinue making participant contributions to the
Plan and have his or her benefit calculated and frozen at the time of election. If no such election is
made, participant contributions to the Plan shall continue.
The City of Ocoee's funding policy is to make fixed, actuarially computed annual contributions
to the Plan in amounts such that all employees' benefits will be fully provided for by the time they
retire. The City's actuarially calculated contribution rate for the year ended September 30, 2010 and
2009 was 16.35% and 13.4%, respectively.
12
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2010 and 2009
3. Funding Policy (Continued)
This rate consists of 11.38% of member salaries to pay normal costs plus 4.97% to amortize
the unfunded actuarially accrued liability pursuant to the September 30, 2008 actuarial valuation as
amended.
The Plan also provides for the purchase of credited service for prior govermnental and military
service or air time through payroll deductions (6 months or less) or paying for it at one time (lump
sum payment).
4. Plan Funded Status
The Plan's funded status as of October 1, 2009 actuarial valuation is presented below:
Actuarial
Value of
Actuarial Unfunded
Assets as a Ratio of the
Valuation Actuarial Actuarial Actuarial
Percentage of the Annual Unfunded Actuarial
Date Value of Accrued Accrued
Actuarial Accrued Covered Liability to Covered
September 30, Assets Liability Liability
Liability Payroll Payroll
2009 $ 17,570,369 $ 24,514,314 $ 6,943,945 71.67% $ 8,506,240 81.63%
The required schedule of funding progress immediately following the notes to the financial
statements presents multiyear trend information about whether the actuarial value of plan assets
is increasing or decreasing over time relative to the actuarial accrued liability for benefits.
The actuarial methods and significant assumptions used are summarized as follows:
(a) Actuarial cost method - Entry Age Normal
(b) Asset valuation method - Four years smoothed market
(c) Actuarial assumptions:
Investment rate of return - 8.00%
Post retirement benefit increases - None
Projected salary increases - 6.00%
Inflation rate - 3.00%
(d) Amortization method - Level percent of payroll - closed
(e) Remaining amortization period - 29 years
13
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2010 and 2009
5. Plan Termination
Although it has not expressed an intention to do so, the City of Ocoee may terminate the Plan
at any time by a written resolution of the Authority's Board of Directors, duly certified by an
official of the Authority. In the event that the Plan is terminated or contributions to the Plan are
permanently discontinued, the benefits of each employee in the Plan at such termination date
would be non-forfietable.
6. Deposits and Investments
Deposits
Fifth -Third Bank periodically hold uninvested cash in its respective capacity as custodian
of the Plan. These funds exist temporarily as cash in the process of collection from the sale of
securities.
Investments
Investments that are not evidenced by securities that exist in physical or book -entry form
include investments in open-ended mutual or pooled investment funds.
The Plan's investments are segregated into four separate accounts and managed under
separate investment agreements with Fifth -Third Bank, Rockwood Capital Advisors, L.L.C., ICC
Capital Management, Inc., and Agincourt Capital Management, L.L.C. These accounts give Fifth -
Third Bank the custodianship but give Rockwood Capital Advisors, L.L.C., ICC Capital
Management, Inc. And Agincourt Capital Management, L.L.C. the authority to manage the
investments. These assets are invested in accordance with the specific investment guidelines as
set forth in the Plan's Investment Policy. Investment management and custodial fees are
calculated quarterly as a percentage of the fair market value of the Plan's assets managed.
Further, the Plan's investments included an alternative investment and a mutual fund. The
alternative investment fund invests primarily in foreign securities and funds. The investments in
the underlying funds are generally valued at fair value as determined by the management of the
fund by reference to the value of the underlying securities and fund's assets, if available, or by the
valuation of a fund's underlying assets as provided by the general partner or investment manager,
if the assets are not publicly traded. The funds may also hold certain investments which may be
valued by a single market marker. While the fund managers use their best judgment in estimating
the fair values of underlying fiends, there are inherent limitations in any estimation technique.
14
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2010 and 2009
6. Deposits and Investments (Continued)
Investments (Continued)
Accordingly, the fair values of alternative investment funds have been estimated by the Plan's
management in the absence of readily ascertainable market values. Therefore, the values of such
funds are not necessarily indicative of the amount that could be realized in a current transaction.
The fair values may differ significantly from the values that would have been used had a ready
market for the underlying funds existed, and the differences could be material. Future confirming
events will also affect the estimates of fair value, and the effect of such events on the estimates
of fair value could be material.
The alternative investment find exposes the Plan to certain risks, including liquidity risks,
counterparty risks, foreign political, economic, and governmental risks, and market risk. In
addition, these investments may have initial lock -up periods, as well as restrictions for liquidating
positions in these funds, that make the investment non -current and non -marketable.
The Plan's investments are uninsured and unregistered and are held in a custodial account
in the Plan's name.
15
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2010 and 2009
6. Deposits and Investments (Continued
Investments (Continued)
The Plan held no investments that individually represent 5% or more of the Plan's net assets
available for benefits during the years ended September 30, 2010.
The Plan held the following fixed investments as of September 30, 2010:
Overall
Credit Rating
Average
%
(Standards &
Effective
of
Fair Value
Poor's and
Duration
Investment Type
Fund
9/30/10
Moody's)
(Years)
U.S. Government obligations
4.2%
$ 790,766
A -AA
8.3
U.S. Government agency obligations
14.2
2,641,711
A -AA
5.9
Domestic corporate bonds
17.8
3,316,882
A -AA
3.4
International corporate bonds
3.5
619,316
A -AA
2.8
Temporary Investment Fund
8.5
647,491
AAA
N/A
Total
44.0%
$ 8.016.166
Credit Risk - Credit risk is the risk that a debt issuer will not fulfill its obligations.
Consistent with state law the Plan's investment guidelines limit its fixed income investments to
a quality rating of `A' or equivalent as rated by one or more recognized bond rating service at the
time of purchase. Fixed income investments which are downgraded to `BAA' or equivalent must
be liquidated within a reasonable period of time not to exceed twelve months. Fixed income
investments which are downgraded below `BAA' shall be liquidated immediately.
16
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2010 and 2009
6. Deposits and Investments (Continued)
Investments (Continued)
The Plan's investment policy which conforms to the Florida Statutes was adopted and
contains the following sections:
I. Scope
2. Investment objectives
3. Performance measurement
4. Investment and fiduciary standards
5. Authorized investments
6. Maturity and liquidity requirements
7. Portfolio composition
8. Risk and diversification
9. Expected annual rate of return
10. Third -party custodial agreements
11. Master repurchase agreement
12. Bid requirement
13. Internal controls
14. Continuing education
15. Reporting
16. Filing of investment policy
17. Valuation of illiquid investments
Interest Rate Risk - Interest rate risk is the risk that changes in interest rates will adversely
affect the fair value of an investment in debt securities. Generally, the longer the time to maturity,
the greater the exposure to interest rate risk. Through its investment policies the Plan manages
its exposure to fair value losses arising from increasing interest rates. In this regard the Plan
adopted the Merrill Lynch Government Corporate Bond Index (MLGC) bench mark. The Plan
further limited the effective duration of its fixed investment portfolio to between 50% and 150%
of the duration of the MLGC duration.
17
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2010 and 2009
6. Deposits and Investments (Continued)
Investments (Continued)
Custodial Credit Risk - Custodial credit risk is defined as the risk that the Plan may not
recover cash and investments held by another party in the event of a financial failure. The Plan
requires all securities to be held by a third party custodian in the name of the Plan. Securities
transactions between a broker -dealer and the custodian involving the purchase or sale of
securities must be made on a "delivery vs. payment" basis to ensure that the custodian will have
the security or money, as appropriate, in hand at the conclusion of the transaction. The
investments in mutual funds are considered unclassified pursuant to the custodial credit risk
categories of GASB Statement No. 3, because they are not evidenced by securities that exist
in physical or book entry form.
Investment in Foreign Markets - Investing in foreign markets may involve special risks and
considerations not typically associated with investing in companies in the United States of
America. These risks include revaluation of currencies, high rates of inflation, repatriation
restrictions on income and capital, and future adverse political, social, and economic
developments. Moreover, securities of foreign governments may be less liquid, subject to
delayed settlements, taxation on realized or unrealized gains, and their prices are more volatile
than those of comparable securities in U.S. companies.
Foreign Tax Withholdings and Reclaims - Withholding taxes on dividends from foreign
securities are provided for based on rates established via treaty between the United States of
America and the applicable foreign jurisdiction, or where no treaty exists at the prevailing rate
established by the foreign country. Foreign tax withholdings are reflected as a reduction of
dividend income in the statement of operations. Where treaties allow for a reclaim of taxes,
the Fund will make a formal application for refund. Such reclaims are included as an addition
to dividend income.
18
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2010 and 2009
6. Deposits and Investments (Continued)
Investments (Continued)
The Plan's investments at both fair value and cost or adjusted cost as of September 30,
2010 and 2009 are summarized as follows:
2010
2009
Investments
Cost
Fair Value
Cost
Fair Value
U.S. Government obligations
$ 718,113 $
790,766 $
261,005 $
271,855
U.S. Government agency obligations
2,532,884
2,641,711
2,660,170
2,743,849
Domestic corporate bonds
3,059,396
3,316,882
3,038,611
3,171,659
International corporate bonds
561,703
619,316
-
-
Domestic stock
6,961,138
7,779,453
6,489,581
6,700,990
International stock
433,502
595,252
-
-
International equity mutual fund
1,266,785
1,977,663
1,266,785
1,804,119
Temporary investment funds
647,491
647,491
931,982
931,982
Total
$ 16,181,012 $
18,368,534 $
14,648,134 $
15,624,454
19
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2010 and 2009
7. Net Increase (Decrease) in Realized
and Unrealized Appreciation of Investments
The Plan's investments appreciated (depreciated) in value during the years ended September
30, 2010 and 2009 as follows:
2010
2009
Realized
Unrealized
Realized
Unrealized
Appreciation
Appreciation
Appreciation
Appreciation
(Depreciation)
(Depreciation)
Total
(Depreciation)
(Depreciation)
Total
Investments at fair value as
determined by quoted market price:
U.S. Government obligations
$ 9,944
61,803
71,747
$ (3,338)
$ 16,226 $
12,888
U.S. Government agency
19,344
25,148
44,492
21,297
114,565
135,862
Domestic corporate bonds
37,622
154,220
191,842
(81,738)
359,955
278,217
International corporate bonds
9,055
27,831
36,886
-
-
-
Equity mutual fund
-
-
-
(1,027,645)
-
(1,027,645)
Domestic stock
230,196
539,980
770,176
(560,023)
1,040,248
480,225
International stock
8,111
161,750
169,861
-
-
-
International equity mutual fund
-
173,544
173,544
-
537,334
537,334
Net increase (decrease) in realized and
unrealized appreciation of investments
$ 314,272
$ 1,144,276 $
1,458,548
$ (1,651,447)
$ 2,069,328 $
416,891
The calculation of realized gains and losses is independent of the calculation of net
appreciation (depreciation) in the fair value of plan investments.
Unrealized gains and losses on investments sold in 2010 that had been held for more than one
year were included in net appreciation (depreciation) reported in the prior year.
FA
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2010 and 2009
S. Investment and Administrative Expenses
Investment and administrative expenses for the years ended September 30, 2010 and
2009 are slunmarized as follows:
2010
2009
Investment
Administrative
Investment
Administrative
Expenses
Expenses
Expenses
Expenses
Actuary
$ -
$ 12,366 $
-
$ 18,532
Audit
-
-
-
-
Dues and subscriptions
-
650
-
600
Fiduciary insurance
-
4,636
-
2,248
Custodial fees
5,734
-
6,401
-
Investment management fees:
Rockwood Capita Advisor
23,559
-
25,001
-
ICC Capital Management, Inc.
22,671
-
20,115
-
Baring Asset Management, Inc.
12,587
-
7,263
-
Agingcourt Capital
Management, L.L.C.
17,944
-
22,114
-
Legal
-
6,743
-
11,912
Office expense
-
-
-
1,523
Performance monitor
19,000
-
23,750
-
Seminars and travel
-
11,769
-
16,013
Secretarial
-
494
-
645
Total
$ 101,495
$ 36,658 $
104,644
$ 51,473
Percent of net assets
0.54%
0.20%
0.66%
0.32%
21
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2010 and 2009
9. Plan Amendments
There were no Plan amendments during the fiscal year ended September 30, 2010.
The Plan was amended during the fiscal year ended September 30, 2009 as follows:
A. Members with at least 25 years of credited service who elect to retire on or before
September 1, 2009 will receive an immediate unreduced retirement benefit.
B. Members who terminate employment with the City of Ocoee prior to October 1, 1991
and became or will become reemployed on or after October 1, 1991 shall be grated
credited service for the total number of years and fractional parts of years of service as
a General Employee with the City of Ocoee prior to October 1, 1991.
C. The Mayor and City Commissioners shall have a Plan entry date equal to the date of
election to office. The current ordinance provides a Plan entry date which is the later
of election to office and October 1, 1997.
Current Adjusted
Participant
Plan Entry
Plan Entry
Anderson, Scott
10/01/1997
11/27/1995
Hood, Gary
10/19/2005
10/19/2005
Johnson, Jr., Leon
10/01/1997
3/16/1988���
Keller, Joel
03/21/2006
03/21/2006
Vandergrift, Scott
10/01/1997
11/04/1988(2)
Mr. Johnson's current term in office began March 16, 1999. The adjusted Plan entry
date shown above accounts for 11 years of credited service from 1986 though 1997.
(2) Mr. Vandergrift's current term in office began November 4, 1992. The adjusted Plan
entry date shown above accounts for 4 years of credited service from 1967 - 1969 and
1973 - 1975.
The actuarial impact statement provided that the above changes increased the City's contribution
rate from 15.30% to 15.37% of annual payroll.
22
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2010 and 2009
10. Actuarial Assumption Changes
In conjunction with the Plan's actuarial valuation dated October 1, 2009, the Plan's mortality
assumption was changed from the 1983 Group Annuity Mortality Table to the RP2000 (combined
health) table. This change did not increase the City's contribution rate.
11. Mortgage -Backed Securities
The Plan invests in mortgage -backed securities representing interest in pools of mortgage loans as
part of its interest rate risk management strategy. The mortgage -backed securities are not used to
leverage investments in fixed income portfolios. The mortgage -backed securities held by the Plan were
guaranteed by federally sponsored agencies such as: Government National Mortgage Association,
Federal National Mortgage Association and Federal Home Loan Mortgage Corporation.
All of the Plan's financial investments are carried at fair value on the Statement of Plan Net Assets
included in investments. The gain or loss on financial instruments is recognized and recorded on the
Statement of Changes in Plan Net Assets as part of investment income.
12. Commitments
As described in Note 1, certain members of the Plan are entitled to refunds of their accumulated
contributions, without interest, upon termination of employment with the City prior to being eligible for
pension benefits. At September 30, 2010, aggregate contributions from active members ofthe Plan were
approximately $3,900,000. The portion of these contributions which are refundable to participants who
may terminate with less than five years of service has not been determined.
23
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2010 and 2009
13. Designation
A portion of the plan's net assets are designated for benefits that accrue in relation to the DROP
accounts as further described in Note 1. Allocation to DROP plan accounts for the year ended
September 30, 2010 are presented below as determined in the most recent actuarial information
available:
Designated for DROP accounts (fully funded) $ 192,347
Total designated plan net assts 192,347
Undesignated plan net assets 18,453,167
Total plan net assets $ 18,645,514
24
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
SCHEDULE OF FUNDING PROGRESS
September 30, 2003 through September 30, 2009
Actuarial
Accrued
UAAL as
Actuarial
Actuarial
Liability
Unfunded
Percentage
Valuation
Value
(AAL)
AAL
Funded
Covered
of Covered
Date
of Assets
Entry Age
(UAAL)
Ratio
Payroll
Payroll
September 30
(a)
(b)
(b-a)
a/b
(c)
(b-a)/c)
2009
$ 17,570,369
$ 24,514,314
$ 6,943,945
71.67%
$ 8,506,240
81.63 %
2008
16,439,261
21,522,873
5,083,612
76.38
7,904,794
64.31
2007
15,159,555
19,313,744
4,154,189
78.58
7,347,632
56.54
2006
13,421,299
16,368,182
2,946,883
82.00
6,685,539
44.08
2005
11,741,104
15,493,289
3,752,185
75.78
5,885,653
63.74
2004
10,604,164
12,214,901
11,610,737
86.81
5,835,922
27.60
2003
9,609,758
11,270,865
1,661,107
85.26
5,802,144
28.63
25
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
SCHEDULE OF CONTRIBUTIONS FROM THE CITY
September 30, 2003 through September 30, 2010
Year
Annual
Actual
Ended
Required
Percentage
September 30
Contribution
Contributed
2010
$ 1,324,799
100.0%
2009
108,192
100.0
2008
901,342
100.0
2007
627,790
100.0
2006
708,823
100.0
2005
673,190
100.0
2004
695,565
100.0
2003
617,788
100.0
26
CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES'
RETIREMENT TRUST FUND
NOTES TO THE ADDITIONAL SCHEDULES
September 30, 2003 through September 30, 2010
The information presented in the required supplementary schedules on pages 22 and 23 was determined as
part of the actuarial valuations at the dates indicated. Additional information as of the latest actuarial
valuation follows:
Valuation date
Actuarial cost method
Amortization method
Remaining amortization period
Asset valuation method
Actuarial assumptions:
September 30, 2009
Entry Age Normal
Level percentage of payroll, closed
29 years
Four year smoothed market
Investment rate of return
8.0%
Post retirement benefit increases
0.0
Projected salary increases
6.0
Inflation rate
3.0
27
CITY OF OCOEE MUNICIPAL GENERAL
EMPLOYEES' RETIREMENT TRUST FUND
MEMORANDUM ON REVIEW OF
INTERNAL CONTROL STRUCTURE
September 30, 2010
DAVIDSON, JAMIESON & CRISTINI, P.L.
Certified Public Accountants
Davidson, Jamieson & Cristini, P.L.
Certified Public Accountants
1956 Bayshore Boulevard
Dunedin, Florida 34698-2503
(727)734-5437 or 736-0771
FAX (727) 733-3487
Members of the Firm
John N. Davidson, CPA, CVA
Harry B. Jamieson, CPA
Richard A. Cristini, CPA, CPPT, CGFM
August 31, 2011
Board of Trustees
City of Ocoee Municipal General Employees'
Retirement Trust Fund
Ocoee, Florida
Member
American Institute of
Certified Public Accountants
Florida Institute of
Certified Public Accountants
In planning and performing our audit ofthe financial statements of City of Ocoee Municipal General
Employees' Retirement Trust Fund (Plan) for the year ended September 30, 2010, we considered the
Plan's internal control structure to determine our auditing procedures for the purpose of expressing
an opinion on the financial statements and not to provide assurance on the internal control structure.
However, during our audit, we observed certain matters that are opportunities for strengthening
internal controls and operating efficiency.
We present our observations and recommendations under the following captions for your
consideration:
CURRENT YEAR
Board Minutes
Travel and Training Authorization Letters
Paid Invoices
Control Structure
CURRENT YEAR
Board Minutes
During the course of our audit procedures of the Plan's financial statements for the fiscal year
ended September 30, 2009 we reviewed the Board's minutes for completeness and disclosure
issues. Our findings are presented below:
A. The approved minutes did not clearly disclose and identify by the payee and
amount approved payments for refunds, partial lump sum payments (to
include the percentage elected) and age and service retiree benefits.
B. The minutes failed to disclose the Board's approval of the sale of the
Voyageur investment, the purchase of the Baring Focused Investment or the
sale of the Vanguard investment.
C. Although the Board's minutes documented the Board's approval for payment
of the Plan's operating invoices a detail schedule of the payees and the
amount approved was not attached to or listed in the minutes. We were
therefore unable to trace any paid invoice to the Board's minutes.
During our audit procedures for the fiscal year ended September 30, 2010 and subsequently
we observed that the above findings were being addressed through the preparation and
approval of the Plan's invoice report and activity report.
The primary way that the Board documents its due process procedures to meet its fiduciary
responsibility is through the proper preparation of the minutes of the Board's meetings.
We also reminded the Board that it can request and receive a certificate of sales tax
exemption from the state which can be provided to hotels and other vendors. The plan is a
legally constituted entity that is a political subdivision of the United States government
which according to the IRS and the State of Florida is exempt from Florida sales tax.
2
Travel and Training Authorization Letters
In order to improve the Board's control and the audit trail over travel and training letters of
authorization we recommend that these letters reflect not only the individuals' traveling and
the amounts of the respective checks to be drawn but should disclose the overall total for the
expenditure. The custodian frequently records the total of the amount requested without
listing individual checks issued. (See attached documents.)
This matter has been addressed by the board.
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Paid Invoices
Our audit of the fiscal year ended September 30, 2009 included an examination of the Plan's
paid invoices.
The Plan's paid bills for all years and periods were filed together in a single file pocket
folder. The Plan's paid bills must be segregated and filed by year. To avoid or at least
reduce the possibility of misfiling invoices we recommended that an alpha pocket file be set
up for each year's paid bills. We also noted that the current paid bill file contained other
documents like the summary listing of investments held by the Plan. We recommended that
the paid bill file be maintained separately from other Plan correspondence and documents.
Finally, we recommended that each invoice be marked with the date approved for payment
by the Board.
This matter has been addressed by the Board.
Control Structure
It appears that the Plan does not currently have an administrator who is assigned all of the
duties of an administrator. One of those duties is to review the monthly pension check
register as well as the monthly 5/3 custodial statements and the Plan's monthly reports of its
alternative investment.
During the 2009 year an unidentified expenditure for $1,511.40 was charged to the Plan's
receipts and disbursement (R&D) custodial report. There was also a charge for an overnight
posting for $15.00 which was charged with no explanation in the Plan's file. Upon further
investigation the custodian admitted that a Plan travel and training invoice had been charged
to another customer's account. The $15.00 charge covered an overnight delivery charge of
a check for an FPPTA registration to the St. Augustine School.
Control Structure (Continued)
We also noted that the central plan files are maintained by different employees yet no one
keeps a copy of the monthly 5/3 custodial investment reports. The HR department keeps
copies of the paid bills, monthly pension check records and the travel, training and dues
invoices. On further examination we learned that the only copy of the custodian's monthly
statements received are sent to the City's finance department for its use. No copies are
maintained under the control of the Plan for the Board's review.
A control deficiency occurs when the design or operation of a control does not allow
management or staff during the performance of their normally assigned duties to prevent or
detect a financial statement misstatement. While the items described above did not result in
a financial loss to the Plan, we recommended that the Board revisit and restructure its
controls in each of these systems. We further recommended that absent an administrator,
that a Board member review each monthly custodial statement and further the Board should
approve these statements and order them held for audit.
This matter has been addressed by the Board.
7
We will review the status of these comments during our next audit engagement. We have already
discussed many of these comments and suggestions with Plan personnel, and we will be pleased to
discuss them in further detail at your convenience, to perform any additional study of these matters,
or to assist you in implementing the recommendations.
DAVIDSON, JAMIESON & CRISTINI, P.L.
Ocoee General Employees'
Pension Plan
Investment Performance Review
September 30, 2011
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TIIE
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Law Offices
Christiansen & Dehne r, P.A.
63 Sarasota Center Blvd. Suite 107 Sarasota, Florida 34240 • 941-377.2200 9 Fax 941-377.4848
MEMORANDUM
TO: PENSION BOARD CLIENTS
FROM: CHRISTIANSEN & DEHNER, P.A.
RE: SENATE BILL l 128: BENEFIT CALCULATION ISSUES
DATE: AUGUST 22, 2011
Recently adopted Senate Bill 1128 amends Chapters 112, 175 and 185, Florida Statutes.
Section 112.66(l 1), which is applicable to general employee, police and fire plans, now provides as
follows:
"For non -collectively bargained service earned on or after July 1,
2011, or for service earned under collective bargaining agreements
entered into on or after July 1, 2011, when calculating retirement
benefits, a defined benefits system or plan sponsored by a local
government may include up to 300 hours per year of overtime
compensation as specified in the plan or collective bargaining
agreement, but may not include any accrued unused sick leave or
annual leave. For those members whose terms and conditions of
employment are collectively bargained, this Section is effective for
the first agreement entered into on or after July 1, 2011 ..."
Chapter 175, covering firefighters, has been amended to revise Section 175.032(3) to amend
the definition of "salary" or "compensation" to read:
"Compensation" or "salary" means, for noncollectively bargained
service earned before July 1, 2011, or for service earned under
collective bargaining agreements in place before July 1, 2011, the
fixed monthly remuneration paid a firefighter. If remuneration is
based on actual services rendered, as in the case of a volunteer
firefighter, the term means the total cash remuneration received yearly
for such services, prorated on a monthly basis. For noncollectively
bargained service earned on or after July 1, 2011, or for service
earned under collective bargaining agreements entered into on or after
July 1, 2011, the term has the same meaning except that when
calculating retirement benefits, up to 300 hours per year in overtime
compensation may be included as specified in the plan or collective
bargaining agreement, but payments for accrued unused sick or
annual leave may not be included.
MEMORANDUM
Page 2
August 22, 2011
Chapter 185, covering police officers, has been amended to revise Section 185.02(4) to
amend the definition of "salary" or "compensation" to read:
"Compensation" or "salary" means, for noncollectively bargained
service earned before July 1, 2011, or for service earned under
collective bargaining agreements in place before July 1, 2011, the
total cash remuneration including "overtime" paid by the primary
employer to a police officer for services rendered, but not including
any payments for extra duty or special detail work performed on
behalf of a second party employer. A local law plan may limit the
amount of overtime payments which can be used for retirement
benefit calculation purposes; however, such overtime limit may not
be less than 300 hours per officer per calendar year. For
noncollectively bargained service earned on or after July 1, 2011, or
for service earned under collective bargaining agreements entered into
on or after July 1, 2011, the term has the same meaning except that
when calculating retirement benefits, up to 300 hours per year in
overtime compensation may be included as specified in the plan or
collective bargaining agreement, but payments for accrued unused
sick or annual leave may not be included.
Pursuant to its terms, Section 112.66(11) becomes effective on July 1, 2011 for those plans
which do not have a collective bargaining agreement and on the effective date that a new bargaining
agreement is entered into (when all parties sign) on or after July 1, 2011 for those that have a
collective bargaining agreement. ("Effective Date") Plans that do not currently include lump sum
payments of sick and vacation time or overtime in the definition of "compensation" or "salary" are
not affected by these changes.
While this change is effective on the applicable effective date even if the plan has not been
amended, changes will have to be made to all affected police officer, firefighter and general
employee pension plans in order to comply with the restrictions set forth in the above section.
Additional issues arise with respect to the application of the rules regarding the calculation of lump
sum payments of sick and vacation time in order to comply with the new restrictions. In order to
deal with these issues, it will be necessary for the Board, the union (if applicable), and the City to
agree on the means by which the above restrictions will be applied. We would recommend that the
pension plan be amended to incorporate the procedures which have been agreed upon in order to
comply with the new restrictions. We recommend that the following be considered:
MEMORANDUM
Page 3
August 22, 2011
First, we recommend that the Board ask the City to run a calculation of all sick and
vacation time that each member of the pension plan has accrued as of the applicable
effective date. Anyone who retires on or after the effective date and who receives
lump sum payments of sick and vacation time which would otherwise be included
for pension purposes as "salary" under the current definition, may receive pension
credit for such sums, subject to the following considerations.
2. Example 1. An individual who has 200 hours of accrued vacation time (or sick time)
as of the effective date and retires one month after the effective date after having
accrued an additional five hours of vacation time and who has not used any
additional vacation time during this subsequent month would be permitted to receive
credit for the 200 hours of vacation time accrued as of the effective date, but would
not be permitted to receive pension credit for the 5 hours accrued after the effective
date.
Example 2. if an individual had 200 hours of vacation time as of the effective date
and accrues another 80 hours of vacation time during the next year and then retires,
he would again be permitted to receive pension credit for the 200 hours of vacation
time accrued as of the effective date, but not for any additional accruals after that
date.
4. Example 3. Assume the same as Example 2., above, but after having accrued the
additional 80 hours, the member takes 40 hours of vacation during the subsequent
year leaving him with 240 hours of accrued vacation time. In this example, the
Board would have to consider whether the 40 hours which is actually used would
deplete the accruals prior to the effective date, or deplete the accruals after the
effective date. In other words, First -In First -Out (FIFO) or Last -In First -Out (LIFO).
Either option is legally acceptable. Interpreting this provision in the most
advantageous way for plan members would dictate using the LIFO method, which
means that the 40 hours of vacation time used would be deducted from accruals after
the effective date, and therefore, would not reduce the 200 hours of vacation accrued
as of the effective date. This methodology must be determined by the
Board/City/Union.
Exam Ip e 4. Assume the same as Example 3., above, but instead of using 40 hours
of vacation time, the member uses 100 hours of vacation time, so that his accrued
vacation time is reduced to 180 hours. In this instance, if he retired at this point, the
City would pay him for 180 hours of accrued vacation time and he would receive
pension credit for only 180 hours.
MEMORANDUM
Page 4
August 22, 2011
6. Example S. Assume the same as Example 4., above, but after he took the 100 hours
of vacation to reduce his accrued time to 180 hours, he continued to work and earned
another 40 hours of vacation time, thereby restoring his lump sum accrued vacation
time to 220 hours. If he retired at this point, he still would only be able to receive
pension credit for 180 hours of lump sum vacation time because the restoration of the
accrued vacation time from its low of 180 hours is attributable to accruals after the
effective date and therefore, cannot be counted for pension purposes.
An additional decision needs to be made concerning the value of the lump sum sick
and vacation time to be included for pension purposes at the time of retirement. Will
the accumulated lump sum sick or vacation hours be valued at the hourly rate earned
at the time of retirement, or at the hourly rate in effect on the effective date? Either
option is legally acceptable. The position which would be most advantageous to the
individual members would be to calculate the sick and vacation time based upon his
rate of pay at the date of retirement, particularly since this is the actual amount which
is received by the individual for the unused sick and vacation time. This issue must
also be determined by the Board of Trustees, the City and any union, so that we
can establish a consistent basis for calculating retirement benefits.
8. There may be other acceptable methods for handling these issues, such as freezing
all or part of the accumulated sick/vacation time as of the effective date and not
allowing this time to be used by the member until it is paid out in a lump sum at
retirement, at which time pension credit will be given.
9. With regard to the limitation on overtime,we need to determine whether we will
apply the 300 hour annual limitation on a fiscal or calendar year basis. Either
option is legally acceptable. Also, we would recommend not including any hours
treated as overtime pursuant to the Fair Labor Standards Act (FLSA) when
calculating the 300 hours of includible overtime.
Once agreement is reached on the three benefit calculation issues above, we can prepare an
ordinance to amend the plan to incorporate the new legislation and the three benefit calculation
issues.
Law Offices
Christiansen & Dehner, I.A.
63 Sarasota Center Blvd. Suite 107 Sarasota, Florida 34240 • 941-377-2200 • Fax 941.377.4848
MEMORANDUM
TO: PENSION BOARD CLIENTS
FROM: CHRISTIANSEN & DEHNER, P.A.
RE: SENATE BILL 1128: BENEFIT CALCULATION ISSUES - SUPPLEMENT
DATE: OCTOBER 12, 2011
Based on further guidance received from the State the following information is provided to
supplement our August 22, 2011 memorandum.
Paragraph 6 of our August 22, 2011 memorandum provided:
6. Example 5. Assume the same as Example 4., above, but after he took the 100 hours
ofvacation to reduce his accrued time to 180 hours, he continued to work and earned
another 40 hours of vacation time, thereby restoring his lump sum accrued vacation
time to 220 hours. If he retired at this point, he still would only be able to receive
pension credit for 180 hours of lump sum vacation time because the restoration of the
accrued vacation time from its low of 180 hours is attributable to accruals after the
effective date and therefore, cannot be counted for pension purposes.
The State has now indicated that it is permissible, but not mandatory, to set the amount
of sick or annual leave accrued on the effective date as the maximum amount that can be used
for pension purposes. Accordingly, the pension calculation can include the lesser of the
amount of sick or annual leave time accrued on the effective date or the actual amount of sick
or annual leave time for which the retiree receives payment at the time of retirement,
regardless of whether the amount of sick or annual leave was at some time prior to retirement,
reduced below the amount on the effective date.
CORPORATE HEADQUARTERS
801 North Brand Boulevard
Suite 800
Glendale, CA 91203
818.545.1152
Fax: 818.545.8460
A M E R I CA N www.americanreal.com
REALTY ADVISORS.
Institutional Real Estate Investment Management
May 5, 2011
Via Electronic Mail
Lee Dehner, Esq.
Christiansen & Dehner, P.A.
63 Sarasota Center Boulevard, Suite 107
Sarasota, FL 34240
Re: City of Ocoee Municipal General Employees' Retirement Trust Fund
American Core Realty Fund, LLC — Documents
Dear Lee:
American Realty Advisors is pleased to welcome the City of Ocoee Municipal General
Employees' Retirement Trust Fund to the American Core Realty Fund, LLC and
appreciates the Trust Fund's confidence in American demonstrated by its commitment to
the Core Fund.
In regard to the Trust Fund's commitment to the Core Fund, we enclose the following
documents, for your review:
❖ The Core Fund's Offering Memorandum No. 520, revised March 21, 2011;
❖ The Core Fund's Fourth Amended and Restated Operating Agreement, dated
March 12, 2008;
❖ A copy of the Amended and Restated Investment Management Agreement
between American and the Core Fund, dated March 12, 2008;
❖ The Core Fund's Adoption Agreement;
❖ The Core Fund's Service Provider Disclosure Statement;
❖ American Realty Advisors' current Form ADV Part 2;
A form of Consent and Authorization for Electronic Delivery; and
An Investor Questionnaire.
Please have the Trust Fund execute two original copies of the Core Fund Adoption
Agreement and return them to me. After execution by American, one original copy of
this document will be returned to the Trust Fund for its records.
The Consent and Authorization for Electronic Delivery would allow American to deliver
certain information that is required to be sent to clients, such as the quarterly reports, by
Los Angeles a Atlanta o Chicago a San Francisco
Lee Dehner, Esq.
May 5, 2011
Page 2
AMERICAN
REALTY ADVISORS:.
electronic means, increasing the efficiency of distribution. To authorize this option, please
have the Trust Fund review and execute the attached form and return it to my attention.
Of course, should the Trust Fund require a hard copy of any such material, we would be
happy to provide it promptly upon request.
In addition, please have the Trust Fund complete the attached Investor Questionnaire
which assists us in gathering important information related to the Trust Fund.
If you have any questions or would like additional information, please contact me.
Best regards,
AMERICAN REALTY ADVISORS, a California corporation
Mki
Jay Butterfield, CFA
Principal/Managing Director
Direct Dial: (818) 409-3243
E-Mail: butterfield(@americanreal.com
JB: mo
Enclosures
cc: Ms. Kristin Adrian
Mr. Scott Darling
Ms. Richelle Hayes
Mr. Kirk Helgeson
Mr. Stanley Iezman
Mr. Tim Nash
F:\F\W\ASVF_Client\Clients\Prospects\City of Ocoee Municipal General Emplo),ees' Retirement Trust Fund\Cover Letter
05.05.11.doc
Law Offices
Christiansen ,& Dehnelr9 P.A.
63 Sarasota: treater Blvd. Suiie 107 Sarasota, Florida 34240 • 941.377.2200 • Fax 941-377-4848
MEMORANDUM
TO: City of Ocoee Municipal General Employees' Retirement Trust Fund
FROM: Kristin Hill
RE: Proposed 2012 Meeting Dates
Listed below are the proposed 2012 meeting dates based on the previous year's schedules.
Should they meet with the Board's approval, please let us know and we will put them on our
calendar. Should there be any discrepancies with any of the dates and/or times, please do not hesitate
o contact Kristin at the office, via phone at 941-377-2200 or E-Mail at kristin@edpension.com, and
we will do the best we can to comply with your requests.
ALL MEET ,,,cis VVILL BE HELD AT 10:00AM:
February 1, 2012
May 2, 2012
August 1, 2012
November 7, 2012
Thank you.
City of Ocoee Municipal General Employees' Retirement Trust Fund
Activity from August 3rd 2011 through November 1 st 2011
DROP Participants- None for this period
Retirees - 1
William T. Brown - Terminated his employment on 08/02/11 -
Started Retirement Benefits 09/01/2011
Discontinued Retiree's Benefit
Kendall D Fisher - Retired 10/01/2008
Refunded Contributions- 3 (Not vested)
Joel W. Yoder
(Not vested - employed from 9/30/2008 to 9/2/2011)
Brett E. Butler
(Not vested - employed from 8/28/2006 to 1/31/2011)
Miguel A. Lugo
(Not vested - employed from 10/18/2010 to 10/11/2011)
Rollover Contributions- 1 (vested)
Brian M. Pauline
(Vested - employed froml0/10/1994 to 07/19/2011)
Purchase of Service Credit - None this period
Monthly Benefit
Monthly Benefit
$ 1,289.79 (Early Retirement Lifetime Only)
(Plus 20 % PLOP Option in the amount of $42,331.43)
$ 91.76 (Social Security to Age 63)
(Discontinued benefit as of 9/1/11, reached age 63 08/10111)
Refund Amount
$ 5,461.63
$ 8,736.58
$ 2,234.14
Refund Amount
$ 46,825.58 (Rollover to an IRA)
City of Ocoee Municipal General Employees' Retirement Trust Fund
Adjustments Report
Activity from August 3rd 2011 through November 1st 2011
Amount Owed
Adjustment for Retirees' Benefits - 2 to 11/30/2011 Calculation
Judie Lewis - Terminated her employment 05/03/2002- Started
retirement benefits on 06/01/2002 in the amount of $488.75.
Benefits were calculated, and started, using estimates only.
Final calculations after termination of employment were not
issued. Monthly benefit should have been $513.28, difference of
$24.53 per month. Correct monthly benefits should start on
December 1st 2011. $
Martin Velie - Terminated his employment 8/12/2002. Started
retirement benefits on 09/01/2002 in the amount of $285.29.
Benefits were calculated, and started, using estimates only.
Final calculations after termination of employment were not
issued. Monthly benefit should have been $288.82, difference of
$3.53 per month. Correct monthly benefits should start on
December 1st 2011. $
Adjustment for Refunded Contributions- 1
Johnny Calvert- First hired on 06/22/1990 with first date of
termination 08/18/1993. Returned to work 10/06/1993 and left
on 05/31/1994. Refunded contributions were only for last period
in the amount of $521.12. First period of employment, with
contributions in the amount of $1,545.83 were not refunded to
employee. Information confirmed with SunTrust, Bank
Custodian at the time.
Dennis R. Foltz- Hired on 03/19/2001. Refunded contributions
were in the amount of $5,968.52 as per report received from
Finance on 08/23/2002. Actual date of termination is
09/03/2002. Total amount of contributions refunded should have
been $6,350.40. Amount confirmed with Finance and SunTrust
confirmed no other checks issued for him.
2,796.42 $24.53 * 114 months
391.83 $3.53 * 111 months
Amount Owed
1,545.83
381.88
SUMMARY OF INVOICES
August 3rd 2011-November 1st 2011
REQUESTED FOR PERIOD
PAYMENT
DATE
08/04/11 08/01/2011 - 08/01/2011
08/09/11 04/30/2010 - 06/30/2010
08/10/11 04/01/2011 - 06/30/2011
08/11/11 07/14/2011 - 07/14/2011
08/22/11 03/28/2012 - 03/31/2012
09/01/11 04/01/2011 - 06/30/2011
09/13/11 08/01/2011 - 08/31/2011
09/23/11 07/01/2011 - 09/30/2011
09/28/11 10/02/2011 - 10/05/2011
09/28/11 10/02/2011 - 10/05/2011
10/12/11 10/02/2011 - 10/05/2011
10/12/11 07/01/2011 - 09/30/2011
10/12/11 09/01/2011 - 09/30/2011
10/13/11 08/03/2011 - 08/03/2011
10/25/11 07/01/2011 - 09/30/2011
COMPANY
TOTAL
AMOUNT
Davidson, Jamieson & Cristini- Progress Bill
$
4,000.00
Barings Asset Management, Inv# 4968- 2nd Qtr
$
3,990.77
Agincourt Capital Management 2nd Qtr
$
5,079.91
Christiansen & Dehner Inv 19948
$
102.34
FPPTA- Wall Street Program- Registration Fee Reimbursement for Russell Wagner
$800.00
Barings Asset management, Inv# 10361- 2nd Qtr
$
5,007.99
Christiansen & Dehner, PA- Inv 20115
$
1,347.00
The Bogdahn Group- Inv# 6791
$
5,500.00
FPPTA- Trustees' School in Tampa- Registration for Pat Gleason
$
450.00
FPPTA- Trustees' School in Tampa- Expenses Reimbursement (Hotel, Travel, Food)
$
897.22
FPPTA- Trustees' School in Tampa- Expenses Reimbursement Adjustment (Hotel)
$
48.04
ICC Capital - Inv 57531589
$
6,041.79
Christiansen & Dehner, P.A.- Inv# 20277
$
239.85
Stella W. McLeod- Inv# 113
$
100.00
Fifth Third Bank- Inv# 3458226
$
1,695.21