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HomeMy WebLinkAbout10-29-2014 Minutes CITY OF OCOEE MUNICIPAL GENERAL EMPLOYEES' RETIREMENT TRUST FUND BOARD OF TRUSTEES QUARTERLY MEETING MINUTES City Hall, Commission Chambers Wednesday, October 29, 2014 at 10:OOAM TRUSTEES PRESENT: Jean Grafton Russ Wagner David Wheeler Patricia Gleason Robert Godek TRUSTEES ABSENT: None OTHERS PRESENT: H. Lee Dehner, Board Attorney Ferrell Jenne, Plan Administrator Gene Williford, City Liaison Doug Lozen, Board Actuary Jeanine Bittinger, Board Auditor Tim Nash, Performance Evaluator 1. CaII to Order Russ Wagner called the meeting to order at 10:00AM. 2. Roll Call As reflected above. 3. No Public Comments 4. Approval of Minutes The minutes from the July 30, 2014 quarterly meeting and August 19, 2014 special meeting were approved upon motion by Jean Grafton and second by David Wheeler, motion carried 5-0. 5. Consent Agenda The consent agenda items were approved upon motion by David Wheeler and second by Jean Grafton, motion carried 5 -0. 6. New Business a. Proposed 2015 meeting dates from Lee Dehner's office. i. Board discusses a possible conflict with the 02/04/2015 meeting date due to FPPTA conference. Board decides that the Trustees will be attending alternative FPPTA conferences so there will not be a conflict. The 2015 proposed meeting dates were approved upon motion by Robert Godek and second by David Wheeler, motion carried 5 -0. b. 2013 Comparative Analysis Schedules i. Board discusses the 2013 comparative analysis schedules. c. Update on proposed Ordinance providing for a change in the interest rate assumption utilized for the definition of Actuarial Equivalence. i. Russ Wagner updates the Board that Ordinance 2014 -017 passed second reading and instructs Ferrell Jenne to send the Ordinance to the State. ii. Doug Lozen states that this change has no impact on the Plan and has to do with how optional forms of benefits are calculated. 1 d. Establishment of Chairman, Vice - Chairman, and Secretary Offices. i. Ferrell Jenne informs the Board that this is to be done every 2 years according to the Operating Rules & Procedures; this was last done on 11/17/2012. Russ Wagner is nominated as Chairman by David Wheeler and second by Jean Grafton, motion carried 5 -0. David Wheeler is nominated as Vice - Chairman by Jean Grafton and second by Robert Godek. motion carried 5 -0. Jean Grafton is nominated as Secretary by Robert Godek and second by David Wheeler, motion carried 5 - 0. e. Quarterly retiree activity report. i. Russ Wagner reviews the report with the Board, no questions from the Trustees. 7. Old Business- None. 8. Reports (Attorney /Consultants) a. Davidson, Jamieson, & Cristini, P.L., Board Auditor, Jeanine Bittinger i. Presentation of the September 30, 2013 audit report. 1. Jeanine states that overall, the Plan experienced good gains from the year before with assets increasing from approximately 22.7M (2012) to approximately 27M (2013) and the net position increasing from approximately 3.47M (2012) to 4.25M (2013). She also informs the Board that there are many changes from last year's report due to the changes in auditing standards and GASB. 2. Jeanine informs the Board that there was a large increase in buybacks from 2012 to 2013 ($10,560 vs. $65,594). 3. Jeanine clarifies that the DROP balances shown reflects when money leaves the Fund (upon DROP exit). 4. Jeanine directs the Board to page #15 of the report, section "Plan Funded Status," and explains that using the prior year's actuarial valuation report was allowed under prior GASB rules, but this is no longer allowed under the new GASB guidelines. 5. Jeanine reviews the investment and administrative expenses for the year and states that the goal for percentage of net assets is to be 1 %; both investment and administrative expenses are below this goal. 6. Russ Wagner asks about the assumption changes that were made in conjunction with the 2013 actuarial valuation report and Jeanine states that those will be incorporated in next year's audit report. 7. Jeanine asks the Board for permission to reach out to Fifth Third regarding some reports that she needs split out; Tim Nash from The Bogdahn Group states that the reports are static but he can reach out to the individual money managers and get the information that Jeanine is asking for. 8. Trustees have no questions for Jeanine. ii. Discussion of GASB 67 Letter 1. Jeanine spoke briefly about the new GASB 67 requirement and informed the Board that there will be one time not -to- exceed fee of $2,500. 2. David Wheeler requests that a memo be sent out outlining this fee increase. 2 The not -to- exceed one time auditor fee increase of $2,500 in coniunction with the new GASB 67 requirements was approved upon motion by David Wheeler and second by Jean Grafton. motion carried 5 -0. b. Foster & Foster, Board Actuary, Doug Lozen i. Discussion of new GASB Rules and SB 534 1. Doug Lozen reviews the letter dated 09/04/2014 outlining the new GASB rules and SB 534. a. Doug explains that Foster & Foster has hired a new team of consultants to produce the new GASB statements and SB 534 reports. As a result, there will be additional fees for the GASB 67/68 and SB 534 reports. The not -to- exceed fee for GASB 67 will be $1,250, the not -to- exceed fee for GASB 67 will be $2,000, and the not -to- exceed fee for SB 534 will be $3,000 or $3,500 depending on if the Board wants numbers at 2% greater than assumed rate which warrants an additional $500 fee. b. David Wheeler asks about GASB 68 being paid by the City instead of the Board and Doug states that the City reimburses the Plan for all expenses, but the Plan has the option to request that Foster & Foster bills the City directly for this report. c. Lee Dehner comments that SB 534 must be posted on the City's website so to present a more balanced picture he recommends to show the additional 2% calculation. Board approves Foster & Foster's preparation of SB 534 including the additional 2% calculation upon motion by David Wheeler and second by Robert Godek, motion carried 5- 0. The Board approved the 09/04/2014 fee addendum presented by Foster & Foster upon motion by David Wheeler and second by Jean Grafton, motion carried 5 -0. 2. Presentation of GASB 67 report. a. Doug explains to the Board that GASB 67 is plan accounting that the City needs to include in their 2014 CAFR. b. Doug points out new terms and pages found in the report i. "Fiduciary net position" is the market value of assets. ii. "Statement of changes in fiduciary net position" shows the in /outs of the Fund. iii. "Notes to the financial statements" summarizes the Plan make -up. iv. "Total pension liability" is the funded ratio of the Plan. v. "Schedule of contributions" is similar to GASB 27. c. Doug informs the Board that under the new GASB rules, the Plan's funded ratio will be in the mid 90's which is well above the 80% threshold. d. Doug states that the long term assumption is 5.9 %, plus inflation and is not tied to the funding assumption. Doug also explains that the long term assumption is calculated by taking the long term expected % and multiply it by asset class %. GASB requires a range to be shown; -1 % and +1 %, shown under "sponsor's net pension liability." e. Board has no questions for Mr. Lozen. 3 c. The Bogdahn Group, Performance Evaluator, Tim Nash i. Presentation of September 30, 2014 Quarterly Report. 1. Board immediately expresses concern with Brown Advisory. Tim states that he has confidence in Brown Advisory and explains that the when the company buys stocks, they take the approach that they are buying the company and not just the stock. Tim also informs the Board that this company has been around for 15 years and typically outperforms in the 3 -5 year range. Tim recommends that the Fund stays invested with Brown Advisory. Russ Wagner asks Tim to bring suggestions for replacements to the next meeting so the Board has the opportunity to see what else is out there. 2. Tim reviews the 09/30/2014 quarterly report with the Board. a. Tim states that overall, the Plan has exceeded its assumed rate of return with the FYTD total fund (net) return to be 8.79 %. b. Net earnings for the quarter were - 1.42 %, underperforming the policy benchmark of - 0.57 %. c. Since inception, the Fund is at 6.39 %, underperforming the policy benchmark of 6.74 %. d. The Plan's gross performance of -1.33% for the quarter ranked in the 69 percentile of the public fund sample. e. Board discusses American Realty and the quarterly asset checks that are currently being deposited. Tim Nash suggests that the asset checks be turned off and reinvested in the Fund. The Board approved to turn off the quarterly asset checks and have them reinvested in the American Realty Fund upon motion by David Wheeler and second by Patricia Gleason, motion carried 5 -0. f. Tim reviews the compliance checklist and has no recommendations for any changes at this time. g. Tim reviews the breakdown of the fee schedules for all managers and states that it is on the lower end of fees. ii. Discussion of Fifth Third Rebalancing Letter 1. Tim explains that the custodian typically takes on the responsibility of rebalancing the portfolio under guidance from The Bogdahn Group. However, Fifth Third will no longer accept a standing rebalancing letter based on %'s, only a dollar amount. This means that someone will need to take on the responsibility and give Fifth Third direction. Tim states that his Firms will take on this role on a monthly basis and recommends the Board to sign the letter allowing them to do so. 2. Board briefly discusses changing custodians and Tim comments that Fifth Third's fees are the lowest he has seen, as most custodians are in the 5 basis points range. 3. Tim states that The Bogdahn Group will not charge any additional fees for now, but will come back if the workload becomes burdensome. 4. Board agrees with Tim's recommendation and will sign the authorization letter. 4 d. Christiansen & Dehner, Board Attorney, Lee Dehner i. Discussion of American Core Realty letter regarding a change in partnership. 1. Lee states that he reviewed the documents and has no problem with the firm changing from a LLC to LP. 2. Tim Nash states one of the main reasons for the change is that American Realty wants to be able to add foreign investors and allow them to buy the fund like the Plan does. 3. Tim also informs the Board that there will be no changes to investment objectives or the way the fund is run. The Board approved the American Core Realty change in partnership upon motion by Jean Grafton and second by Robert Godek, motion carried 4 -1 with David Wheeler opposed. ii. Discussion of legislative /legal updates. 1. Lee states that there are no new updates at this time. 9. Staff Reports, Discussion, and Action a. Fifth Third, Authorized Signor Form i. Russ Wagner states that there is a Board policy that two (2) Trustees sign anything that financially affects the Fund. These signatures must both be a Trustee signature. ii. Ferrell Jenne as plan administrator can sign and handle general inquiries such as changes in addresses, withholding, etc. without Trustee involvement. iii. Board agrees to add Ferrell Jenne as an authorized signor with Fifth Third. b. FPPTA Conference Dates 1. Ferrell Jenne reviews the upcoming conference dates with the Board and the Board agrees to renew their 2015 FPPTA membership fee. 10. Adjournment The meeting adjourned at 12:35PM. 11. Next Meeting February 4, 2015 at 10:OOAM. -spectful y bmitted by: Appr v d by: ) .1_. i a e: errell Jenne Name: Russ Wagner Title: Plan Administrator Title: Chairman Date Approved By the Pension Board: EA, (- .rut ' ' Li f -015 5