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HomeMy WebLinkAbout11-08-2006 Minutes Minutes of the Regular Meeting of the CITY OF OCOEE GENERAL EMPLOYEES’ PENSION BOARD Held on November 8, 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 10:11 a.m. in the Commission Chambers in City Hall. He called on Secretary Jean Graftonto call the roll. Present were Trustees Russ Wagner, Wendy West, Terry Reed, Tom Hendrix and Jean Grafton and it was declared that a quorum was present. Also present were H. Lee Dehner, Attorney; Jim Carnicella, Human Resources Director/Plan Administrator; Mike Sebesta, Money Manager, Trusco Capital Management; Alan Kirchner (in place of Larry Cole), Monitor, Merrill Lynch; and Dianne Garcia, Relationship Manager, SunTrust. B.Introduce new Board Member, Wendy West Vice Chairman Wagner introduced newly appointed Member, Wendy West, to the Board and the Board Members welcomed her. C.Reorganization of the Board Plan Administrator Jim Carnicella stated that the Board may need to elect officers, if it was the appropriate time to do so, and deferred to Attorney Dehner. Attorney Dehner explained that the reorganization of the Board is done every two years in November and if an office in the interim is vacated an appointment will be made to fill the remainder of that vacated term. Trustee Grafton explained that it was the Chairman, Mary Anne Swickerath, who chose to not be reappointed so the Board would need to elect a new Chairman. There were further discussions by the Board concerning the Chair and Vice Chair appointments, as well as the Secretary position currently held by Trustee Grafton. Trustee Wagner asked if the Board could elect officers at this meeting to which Attorney Dehner stated yes. And so on a motion made by Trustee Hendrix nominating Russ Wagner as Chair, seconded by Trustee Reed the Board unanimously appointed Trustee Wagner as Chair. Trustee Grafton nominated Terry Reed as Vice Chair, seconded by Trustee Hendrix the Board unanimously appointed Trustee Reed as Vice Chair. Plan Administrator Carnicella said it was probably not necessary at this meeting to reappoint Trustee Grafton as Secretary since the term was not up until next year and Attorney Dehner said that it could be done at this meeting but made contingent upon her term ending. The Board agreed to address the appointment for Secretary when Trustee Grafton’s term was up. Trustee Grafton mentioned that the Pension Board letterhead would need to be changed to reflect the reorganization of the Board and she would take care of doing that. General Employees Pension Board Quarterly Meeting, November 8, 2006 Page 2 of 6 D.Approval of Minutes from Regular Session dated August 9, 2006, Approval of Minutes from Joint Workshop Session dated October 4, 2006, and Approval of Minutes from Special Session dated October 27, 2006 Chairman Wagnercalled for review of the Minutes as stated. There being only one correction to the Minutes of the August 9, 2006 Regular Session as stated by Trustee Grafton (the correction to the minutes being Brad Heinrichs name was not spelled out on page 3), and no changes to the Minutes of the Joint Workshop dated October 4, 2006 or the Minutes of the Special Session on motion made by Trustee Grafton, seconded by Trustee dated October 27, 2006, it was, Hendrix, unanimously RESOLVED that the Minutes of the Regular Session of the Board of Trustees of the General Employees’ Pension Board of August 9, 2006, the Minutes of the Joint Workshop of the Board of Trustees of the General Employees’ Pension Board and of the Board of Trustees of the Police Officers’/Firefighters’ Pension Board of October 4, 2006, and the Minutes of the Special Session of the Board of Trustees of the General Employees’ Pension Board of October 27, 2006, be and they are hereby approved with one correction to the August 9, 2006 Minutes as stated. 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. He reported that the review of the performance for the fiscal year ending September 30,2006 from an actuarial standpoint has turned a corner as the Plan had four good years of positive performance. He also reported that Large Cap stocks are beginning to out perform Small and Mid-Cap stocks and Value type style outperforming Growth style. Mr. Sebesta stated that International was a very good place allocation wise and that stocks and bonds did well this quarter. Mr. Sebesta reported the total portfolio earnings of over 300,000, making the quarter just slightly over 10 million, which did not include the Large Cap piece, and the last fiscal year growth added 886,000, making the total portfolio around 12 million including the Large Cap. Mr. Sebesta said that it was pretty much in line with targets and explained further. Jim Carnicella asked Mr. Sebesta to explain what he meant by the percentages between Equity and Income and asked if this would take a Board action to make a change. Mr. Sebesta explained that he gets direction from the Board and the Consultant and it would take a change in the Investment Policy. Trustee Wagner asked if it appeared that the overall funds they manage are close to target or were we still lagging behind others in the State. Mr. Sebesta said it is consistent with others in the State but said that they had under performed in the past compared to other managers as they tend to possibly be too conservative for a lot of people but performance does well when the markets are difficult. Trustee Wagner asked if what was hurting us primarily was the Small Cap. Mr. Sebesta said that was correct. He stated there were two senior equity managers in the firm handling it and unfortunately they took over when there was sort of a deflection point with the Small Cap in the market. Jim Carnicella asked about Trusco’s investment strategy and if it was the same for all in Florida. Mr. Sebesta stated yes, that was correct, as long as municipal guidelines and policies are the same the returns should be consistent and that historically that wasn’t the case. He stated that General Employees Pension Board Quarterly Meeting, November 8, 2006 Page 3 of 6 he feels good about how all these accounts are being managed but we need to make sure everyone is in line with the overall investment strategy. Mr. Sebesta said the maximum 20% International is higher than others and that the international has done well but may not be the case forever. Trustee Grafton stated that she was the senior member of the board and wanted to say what a wonderful job he and Dianne have done for her and the plan in the past. Trustee Hendrix said that the Board appreciates Trustee Grafton for the job she has done. B.Investment Consultant Report – Alan Kirchner, Merrill Lynch Alan Kirchner stated he is involved with Larry Cole with many clients in the State of Florida and has gone over our details and told the Board not to hesitate to ask him anything. Mr. Kirchner then went over the investment consultant reports that were handed out to the Board. He stated that the ongoing underperformance of our fund compared to others is primarily tied to the Equity Portfolio but the Fixed Income performance was good as it was a really touch place to make money. Mr. Kirchner believed over the long haul that International was a good place to be. He continued to go over the report. Trustee Wagner asked if there were any questions of Alan Kirchner. Mr. Carnicella said that while Mike Sebesta was there the Board should have a discussion about the money manager and would like Mike Sebesta to explain why a majority of our trades go through the Merrill Lynch Company, Citation. Mr. Sebesta stated that the Board had provided TruscoCapital with a letter of direction, which says based on the best execution basis they can do trades through Merrill Lynch Citation if there is no impact difference to the fund. Mr. Carnicella asked him to explain who recommended to the Board to go in that direction and asked if other Boards do it different or if there is an advantage or benefit in doing this. Attorney Dehner explained that Trusco’s contract is required to execute trades on the best execution basis if best execution is obtained through Citation or if it is through another broker they would be required to do that. Mr. Sebesta stated that best execution is not necessarily best price and explained this further. Mr. Carnicella asked who would advise the Board if it wasn’t done on best execution basis. Attorney Dehner explained that it is the responsibility of the manager to demonstrate best execution to the Board. After further discussions, Trustee Wagner said he believes the Board is more concerned about funds losing money than management fees and asked where the Board wanted to go from here. Alan Kirchner asked if Trustee Wagner wanted him to touch on these issues now. Trustee Wagner then asked about the actuary, Foster & Foster, and Jim Carnicella explained that they were unable to complete the annual report and suggested they come to the next meeting with the annual report if it was completed by then. After some discussion, Mr. Carnicella recommended the Boards have a joint special meeting if the Boards wanted to make any changes in the Investment Plan or Ordinance. Mr. Carnicella said the Boards should take a look at these issues, for example the Ordinance says no real estate but the Board may want to change this. Trustee Grafton said she thought the Board was prevented from investing in real estate by state law. Attorney Dehner explained they are not prevented from investing by state law and that it can be done if the Ordinance permits it. Attorney Dehner said he believes what Mr. Carnicella was suggesting is to ask for recommendations from our Consultant on proposed amendments to the Ordinance provisions to allow a broader variety of asset classes. After further discussion, Mr. Carnicella recommended they set up a separate special session meeting with both Boards. Trustee Grafton asked if what they need to do is schedule a meeting to reorganize the investment policy, the investment people and everything they are doing. Jim Carnicella said yes that would be his recommendation and if Mike Sebesta is doing the best he can with the direction he was given then the Board may not want to change the Money Manager. Mr. Carnicella suggested that he go back to Larry Cole for General Employees Pension Board Quarterly Meeting, November 8, 2006 Page 4 of 6 clear recommendations. After further discussion regarding what direction the Board might want to take, Alan Kirchner asked Mr. Carnicella if the Board wants to have more discussion with Larry Cole as to what they want to accomplish. Trustee Wagner asked if the Board was satisfied with making 8% or do they want to do something different because the Board would need to know that before knowing what they want to do with the Money Manager. Trustee Wagner said the Board needs to decide what the best strategy is. Mr. Kirchner stated that it is not difficult as advisors to suggest that certainly a portion of the underperformance is directly related to their lack of performance and agreed that needs to be clearly addressed. Trustee Wagner asked Mr. st Carnicella to set a date sometime after January 1. Attorney Dehner asked Mr. Carnicella if he would coordinate the schedule with both Boards and Mr. Carnicella agreed to do so. Attorney Dehner said he suggests that Larry Cole review the Ordinance provisions and recommend changes to the Ordinance so the Board can go from there. Trustee Wagner asked if there were any other comments. Attorney Dehner said in connection with the recommendation that Larry Cole made to utilize the Growth Fund of America he had asked Larry to provide the Board with a letter accepting fiduciary responsibility for that recommendation, which to date has not been provided, and asked Alan Kirchner to check on it and get the letter to the Board with a copy to him. C.Actuary Report – Brad Heinrichs, Foster & Foster None. AGENDA ITEM III. OLD BUSINESS A.Discussion regarding Daniel Dingman – Jim Carnicella, HR/Risk Management Director Mr. Carnicella deferred to Attorney Dehner regarding Daniel Dingman to which Mr. Dehner stated that Jim Carnicella provided information to him to review in order to make an opinion on the matter. Attorney Dehner stated that in the information provided to him it said Daniel Dingman went full-time on October 1, 2002 and was a member in the General Employees’ Pension Plan. On February 27, 2006 he started contributing to the Police Officers’/Firefighters’ Pension Plan. Attorney Dehner said that Mr. Dingman should be in the General Employees’ Pension Plan as it was not a requirement under the job description and therefore legally not eligible to be in the Police & Fire Pension and went in to some detail. After further discussion between Mr. Carnicella and Attorney Dehner it was decided that Mr. Carnicella and Attorney Dehner would need to discuss this issue further and possibly provided other documents. Trustee Wagner asked if it would need to come back to the Board. Attorney Dehner stated it should come back to the Board and suggested it be put on the next agenda. B.Discussion regarding Money Managers Search – Larry Cole, Merrill Lynch Item was moved to the special joint meeting being scheduled for January 2007. AGENDA ITEM IV. OTHER BUSINESS A. Payment of Invoices – Jim Carnicella, HR/Risk Management Director General Employees Pension Board Quarterly Meeting, November 8, 2006 Page 5 of 6 Mr. Carnicella spoke briefly about the transition between him and Trustee/Secretary Grafton, that there was a list of invoices in the packet for the Board to approve, and deferred to Trustee Grafton. Trustee Grafton reported that along with the invoice for the Attorney there was an On motion additional $100 invoice (total 1,708.50) and a book for Mr. Carnicella for $95.00. made by Trustee Grafton, seconded by Trustee Hendrix, unanimously RESOLVED to approve 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 advised that she was not finished with the report regarding who has left employment with the City and how much of their contributions have been returned or rolled over but would have it for the next meeting. AGENDA ITEM V. ATTORNEY COMMENTS – H. Lee Dehner, Esq. Attorney Dehner advised the new Board Member, Wendy West, she would need to file a full disclosure of finances within 30 days. Attorney Dehner advised the Board that the special provisions in the Pension Protection Act of 2006 amended for Police & Fire did not apply to the General Employees and said he wanted to mention it so there was no confusion. Attorney Dehner also stated that on the issue with a couple of provisions in the documents if after he & Mr. Carnicella go over them he is satisfied with the background of the situation they may be able to take care of it without going back to the Board but he would notify Trustee Grafton. AGENDA ITEM VI. PLAN ADMNISTRATOR COMMENTS – Jim Carnicella Jim Carnicella spoke about the increase in the multiplier going to the City Commission last night st for 1 reading and said they had a long discussion about the cost. Mr. Carnicella reported that he hoped he had convinced the Commission to pass it at the next meeting and if it did pass it would go into effect December 1, 2006. Trustee Wagner suggested the Board show up at the nd Commission Meeting for the 2 reading and encouraged the Board Members to go. AGENDA ITEM VII. COMMENTS FROM TRUSTEES Trustee Hendrix again welcomed Wendy West to the Board. Trustee Wagner spoke about the training session coming up the end of January and advised Trustee West that she must attend one training session a year. AGENDA ITEM VIII. SET AGENDA FOR NEXT MEETING Not Addressed. General Employees Pension Board Quarterly Meeting, November 8, 2006 Page 6 of 6 AGENDA ITEM IX. ADJOURN There being no other business, the meeting was adjourned at 12:24 p.m. Respectfully submitted by Approved by: Debbie Bertling ______________________________ HR Analyst Russell Wagner, Chairman