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HomeMy WebLinkAbout08-09-2006 Minutes Minutes of the Regular Meeting of the CITY OF OCOEE GENERAL EMPLOYEES’ PENSION BOARD Held on August 9, 2006 At 150 N. Lakeshore Drive Ocoee, FL 34761 AGENDA ITEM I. CALL TO ORDER – Vice Chairman Wagner A.Vice Chairman Russ Wagner called the meeting to order at 10:17 a.m. in the Commission Chambers in City Hall. He called on Secretary Jean Graftonto call the roll. Present were Trustees Russ Wagner, Terry Reed and Jean Grafton and it was declared that a quorum was present. Absent were Trustees Tom Hendrix and Mary Anne Swickerath. Also present were H. Lee Dehner, Attorney; Jim Carnicella, Human Resources Director/Plan Administrator; Brad Heinrichs, Consulting Actuary, Foster & Foster; Mike Sebesta, Money Manager, Trusco Capital Management; Larry Cole, Monitor, Merrill Lynch; and Dianne Garcia, Relationship Manager, SunTrust. B.Approval of Minutes from Regular Session dated May 10, 2006. Chairman Wagner called for review of the Minutes as stated. There being no additions or on motion made by Trustee Grafton, seconded by Trustee Reed, corrections, it was, unanimously RESOLVED that the Minutes of the Regular Session of the Board of Trustees of the General Employees’ Pension Board of May 10, 2006, be and are hereby approved. AGENDA ITEM II. NEW BUSINESS A.Money Manager’s Report – Michael Sebesta, Managing Director, Trusco Capital Mr. Sebesta handed out a copy of the investment review for the quarter (Trusco blue book) along with a one-page cash flow report. He reported that the retirement Small Cap Group left and a letter went out to consultants. He said that it has been a good performing fund and that they will pick up and will move forward and continue to monitor it. Mr. Sebesta reported that the fund has seen a little of the assets go away but not a big change. He also reported that during this quarter they made changes to the portfolio by increasing the allocations to International as the 30-day waiting period was over. Mr. Sebesta stated that the past quarter was a difficult one and that there were three major factors – higher interest rates, oil and the slowing housing market. He also stated that some other areas were down (Mid Cap & Small Cap), which was a reversal of trends from the previous quarter. Mr. Sebesta reported that Fixed Income was flat to slightly down and that the Federal Reserve met yesterday and decided not to raise the interest rates. He reported that stocks and bonds were lower as well. Mr. Sebesta stated that overall asset allocations had not changed and the strategy was consistent and that even though the quarter was down it was still up over the nine-month period. He reported that they no longer have Large Cap General Employees Pension Board Quarterly Meeting, August 9, 2006 Page 2 of 5 in the portfolio, that the total portfolio was down and not much was going on with bonds. He stated that things have bounced back so far and should finish the last quarter better and that we will also be dropping off a bad year. Mr. Sebesta asked if there were any questions from the Board. Trustee Wagner asked if there were any historical trends of the stock market and if there is something they should do. Mr. Sebesta explained that they are making some changes to help in that respect. B.Investment Consultant Report – Larry Cole, Merrill Lynch Mr. Cole went over the investment consultant reports (green book) that were handed out to the Board and advised that it wasn’t a pretty quarter. Mr. Cole referred to Trustee Wagner’s question and said it was a slow down, not a recession. Mr. Cole stated that the Feds should be lowering the rates within the next six months and that even though the quarter was down it was still up for the fiscal year. Larry Cole reported that the asset allocation has 68% in stocks and that the fund was down 1.4% for the quarter, which put us just below the average pension board. Mr. Cole stated that there were six or seven weeks left until the end of the year and he would like to get it to the 8% level. He stated that he would be keeping an eye on Trusco due to the concerns in reference to the Small Cap Group leaving and the new ones in place. Concerning the fiduciary aspect, Attorney Dehner suggested the Board follow the consultant’s advice, as they are the professionals in regards to the suggestions made. Trustee Wagner asked for more specifics from Mr. Cole regarding what was going on with Trusco and asked if they could have something in writing. Mr. Cole stated that the Large Cap didn’t perform well for anyone and referred to the Small Cap Group leaving and that the new ones were just not seasoned in this. Mr. Cole advised that he thinks there are better alternative out there. Mr. Cole said the Board would also need to look for another custodian, rather than SunTrust. Trustee Wagner asked Mr. Cole for an outline of what would happen if we left Trusco. Larry Cole said he could put it in writing. Trustee Wagner asked Mr. Cole if the Board could have it in the next couple weeks or within 30 days. Attorney Dehner suggested that the Board may want to have a special meeting so the Board could discuss it further. Mr. Cole said he would get that information to Mr. Carnicella. Mr. Cole continued to go over the handouts. Mr. Cole went over Mid Cap and stated that the returns over the last two years were good but longer term was no so good. Mr. Cole reported that Small Cap did not have a good quarter but over long term it had very good returns. He referred to International Fund and said it was consistent and the good new is that the allocations were up and that should help with the long term. Mr. Cole said that as far as the Fixed Income returns are concerned there was a new team managing the money and that there were a lot of changes so the returns were not good over the last couple of years. Mr. Cole said he added the Morning Star sheet to the report and that it will be in the report every quarter as it has a lot of information on it. Mr. Cole brought up Trusco’s track record over the last few years and said the Florida Fund Ranking showed them at 6%, which is below average for the year. Mr. Cole said it is up a little but still not where they want it to be. Mr. Cole asked the Board if there were any questions to which there were none. C.Actuary Report – Brad Heinrichs, Foster & Foster Brad Heinrichs referred to the Experience Study put together in May 2006 and said that the key objective was to develop costs that are stable and predictable, which they have. Mr. Heinrichs stated that he was asked to look at the assumptions, which are outlined in the letter. Mr. Heinrichs stated that the assumptions were pretty strong but that there is one that he recommends General Employees Pension Board Quarterly Meeting, August 9, 2006 Page 3 of 5 be tweaked. He reported that meeting the 8% assumption hasn’t been a bad one and that it is close to what we are doing. Mr. Heinrichs reported that salary increases were also part of the assumption and were at 6.9%, which they assumed 6% so that was pretty good or dead on and stated that he was not recommending changing this assumption. He reported that turnover, workers leaving before retirement age, was also part of the assumption, which they predicted 165 but there were 163 so that assumption was pretty good and doesn’t recommend changing this one either. Mr. Heinrichs also reported that the assumption for retirement assumes that 2% will leave prior to early retirement and that people are working past normal retirement age, which is good for the fund. He stated that there were about 25 retirees in the plan and that he doesn’t recommend changing this one either. Mr. Heinrichs reported that payroll growth is also used in the assumption and is different from salary increases as it covers the entire payroll such as bringing on new employees. Mr. Heinrichs also stated that payroll growth matters when they are looking at fund liability. Brad Heinrichs reported that they are using 3% payroll growth but that ours was going up to 8.1% so he recommended this be increased from 3% to 5%. Plan Administrator Jim Carnicella said he doesn’t see it changing much from the 8.1% so he is in agreement with what Mr. Heinrichs has suggested. Mr. Carnicella said that the City is growing and Trustee Wagner agreed. Trustee Wagner asked about increasing the 5% to 6% or 7%. Mr. Heinrichs stated that actuarial costs endure average over 15 years and another cost method will take it up to 30 years. He stated that by making this method change, actually both changes, it could save the City about $60,000 or 1% of payroll. Mr. Carnicella referred to the balance from the City on the report, which was stated at 10.9%, and asked if they could report back to the City Manager that the responsibility for the City would be 9.9% instead of the 10.9% for the new fiscal year. Brad Heinrichs recommended reworking the reports on changing the multiplier if the On motion made by Board makes the recommended changes in the assumptions he suggested. Trustee Grafton, seconded by Trustee Reed, it was unanimously RESOLVED that the Board change the payroll growth assumption to 5% as recommended by Brad Heinrichs be and are hereby approved. Brad Heinrichs asked the Board what increase in the multiplier he should figure would take up the savings, like changing the multiplier from 2.5% to 2.6%. Trustee Wagner stated he would On a rather leave it up to the City Manager to decide if the City could fund the 3% multiplier. motion made by Trustee Grafton, seconded by Trustee Reed, it was unanimously RESOLVED to make the changes to the cost assumptions as recommended by Brad H be and are hereby approved. AGENDA ITEM III. OLD BUSINESS A.Discussion regarding Daniel Dingman – Jim Carnicella, Human Resources Director Mr. Carnicella deferred to Attorney Dehner regarding this matter to which Mr. Dehner stated that he has not reviewed all the documents that Mr. Carnicella sent him as it hadn’t come across his desk but that he would check on this and let Mr. Carnicella know. Therefore, this issue would have to be tabled for next meeting. General Employees Pension Board Quarterly Meeting, August 9, 2006 Page 4 of 5 AGENDA ITEM IV. OTHER BUSINESS A. Payment of Invoices Mr. Carnicella spoke briefly about the transition between him and Trustee/Secretary Grafton concerning this and that there was a list of invoices in the packet and recommended the Board On motion made by Trustee Grafton, approve them and deferred this to Trustee Grafton. seconded by Trustee Reed, unanimously RESOLVED that the bills and other charges and fees be and are hereby approved as presented for payment. B. Reports and Correspondence – Jean Grafton, Trustee/Secretary Trustee Grafton stated that she had tracked down some employees through the IRS and should be winding down on the ones we needed to get with. Trustee Grafton asked for guidance from Attorney Dehner regarding the ones that have over $1,.000 if they should be put in an IRA. Trustee Grafton also asked Attorney Dehner about the 10 or so that still have not been heard from and if they need to turn the money over to the state. Attorney Dehner recommends that the fund hold on to it for now. C. Discussion regarding International Foundation – Jim Carnicella, Human Resources Director Mr. Carnicella explained that the International Foundation Group was similar to the FPPTA and wanted to share this information with the Board to see if they would like to join and that the cost for membership was $600 a year. Mr. Carnicella stated that they have a certification program and suggested the Board go through this as he saw it as a benefit to the Board on how to govern pension plans in addition to FPPTA. Mr. Carnicella stated that it was about $1,000 for the training course and had heard great things about them. Mr. Carnicella said that he believed the $600 covered up to 4 people from an organization. Trustee Wagner said that he would like Mr. Carnicella to try it out for a year first and report back the Board to see if others should attend. On a motionmade by Trustee Grafton, seconded by Trustee Reed, unanimously RESOLVED to authorize Mr. Carnicella to join the International Foundation and that the Board would pay for membership as well as the certification program for him to attend. D. Pensionable Wages – Jim Carnicella, Human Resources Director Mr. Carnicella stated that he had already talked to Attorney Dehner regarding this issue and wanted to let the Board know that he believes some of the amounts being used don’t meet the criteria and should not be considered as pensionable wages, such as take home vehicle use for tax purposes. Attorney Dehner stated that it should not be considered compensation for services rendered. General Employees Pension Board Quarterly Meeting, August 9, 2006 Page 5 of 5 AGENDA ITEM V. ATTORNEY COMMENTS – H. Lee Dehner, Esq. st Attorney Dehner said he doesn’t have anything except to remind the Board of the September 1 deadline to file the Financial Disclosure. Attorney Dehner stated the next meeting was set for November 8, 2006 and also set dates for future meetings for 2007, (10:00 a.m. on February 7, May 9, August 8 and November 7). AGENDA ITEM VI. PLAN ADMNISTRATOR COMMENTS – Jim Carnicella Jim Carnicella spoke about announcing Mary Anne Swickerath’s Board seat (term expires 9/30/06) at the next Commission Meeting after Trustee Wagner’s inquiry regarding what would be the best way to get this out to the Community. Mr. Carnicella suggested this be advertised in different publications and Trustee Wagner suggested the utility bills. Trustee Wagner suggested to list the types of duties required of this board seat and asked if the Board could receive the applications in order to review them before the November meeting. Mr. Carnicella stated he would draft up the advertisement and get it to the Board and suggested the Board could call a special meeting instead of waiting until November. Trustee Wagner suggested that the Board present something like a plaque to Mary Anne Swickerath in appreciation for her services to the Board. AGENDA ITEM VII. COMMENTS FROM TRUSTEES Trustee Grafton stated that there were a couple of things that needed signatures before the Board leaves. AGENDA ITEM VIII. SET AGENDA FOR NEXT MEETING Trustee Grafton said appointment of the new board member needed to be placed on the next agenda unless there was going to be a special session to take care of it. Trustee Wagner asked if the Board needed to elect a Chairman to which Mr. Carnicella stated yes and that it could be done at the next meeting. Trustee Grafton stated that Trustee Reed’s seat on the Board expires September 30, 2006 and asked Trustee Reed if he was going to sign up for another term and advised him to go to the City Clerk’s office to sign up. AGENDA ITEM IX. ADJOURN There being no other business, the meeting was adjourned at 12:25 p.m. Respectfully submitted by Approved by: Debbie Bertling ______________________________ HR Analyst Russell Wagner, Vice Chairman