01-17-1994 Minutes GENERAL EMPLOYEES' RETIREMENT TRUST FUND
(PENSION MEETING)
January 17, 1994
The meeting was called to order at 10:05 a.m. in the Community Center by Chairman Lewis.
PRESENT: Chairman Lewis, Members Grafton, and Waldrop. Also present were Attorney
Lee Dehner, Actuary Ward Foster and Scott Haynsworth, M.A.S. of Foster and
Foster Actuarial Consulting, Terry McDougal and Reese Lospinoso of The
Investment Counsel Company, Clerk/Stenographer Lewis, and employees Ellen
King and Janet Resnik.
ABSENT: Members Miller and Oliver.
APPROVAL OF MINUTES
Member Waldrop, seconded by Secretary Grafton, moved to approve the minutes of
November 12, 1993 meeting as presented. Motion carried 3-0.
QUESTIONS AND COMMENTS FROM THE AUDIENCE
There were no questions or comments from the audience at this time.
Ly Consideration/Adoption Of Amendments To OPERATING RULES AND PROCEDURES
And Selected Provisions
•
Attorney Delmer distributed copies of proposed amendments to the Operation Rules and
Procedures for Board study, pointing out that one of the primary changes in the document relates
to election procedures. He also pointed out the following changes:
1) Rule 2 par. 2.2: A new legend is now required on the agenda in addition to the
notice, "Any person who desires to appeal any decision made at the meeting will need
a record of the proceedings and for this purpose, may need to ensure that a verbatim
record of the proceedings is made which includes testimony and evidence upon which the
appeal is based." The new ADA legend is "Persons with disabilities needing assistance
to participate in any of these proceedings should contact the (contact name's office) 24
hours in advance of the meeting.";
2) Rule 6 par. 6.1: re: Fiduciary Insurance, add "..., but the fund shall not pay to
waive recourse against Trustees. ...";
3) Rule 10 par. 10.8: This paragraph was expanded to include more specific details
to cover solicitations from consultants.
When the final draft is presented and adopted then the off-print of the selected provisions will
be authorized. In order to complete the adoption of the amendments in a timely manner there
was consensus to schedule a meeting for early February. Later in the day, during the
Fire/Police Pension Board Meeting, the time was set for 9:00 a.m. on Wednesday, February 9,
1994.
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General Employees' Retirement Trust Fund (Pension Meeting)
January 17, 1994
Proposed Revision To PERMIT EMPLOYEE TRANSFERRING TO FIRE/POLICE FUND
FROM GENERAL FUND TO RETAIN VESTING CREDITS EARNED IN GENERAL
FUND
Attorney Delmer reported that he had discussed several issues with City Manager Shapiro and
Personnel Director Psaledakis regarding possible ordinance amendments to the policy which the
Board may wish to consider recommending to Commission:
1. Should a provision be incorporated which provides that an employee's credit of time
toward vesting for retirement count from the time of employment with the City rather
than from the time of transfer from the General Fund Plan to the Fire/Police Plan? The
present policy provides that an employee who transfers from the General Fund to the
Fire/Police Fund must start all over earning vesting credits toward retirement, and lose
those credits toward vesting that had been earned in the General Fund.
During discussion Board determined that, if this is done, language should be clear whether or
not this time so credited is to be counted toward actual retirement date. Language should also
be clear on the accrual rate calculation to be used on the General Fund contribution if the
employee so transferred opts to leave his contribution in the General Fund Plan, becomes fully
vested in the Fire/Police Plan, and then retires.
2. Should employees who have used time under the Family Medical Leave Act have the
option to buy that time as credited service time in the plan? The current ordinance does
not cover this area. Mr. Dehner said that Mr. Shapiro and Ms. Psaledakis have no
objection to including this in the plan should the Board desire to incorporate this policy,
and he had included it in the draft for Board consideration.
Actuary Foster responded to the November 12, 1993 Board questions as presented in the
minutes. He explained the current plans provide for full vesting after five years of service yet
he had seen many situations where a member might start out as a General Employee and, after
working four years, become a Police Officer/Fire Fighter, accrue benefits in that plan four
years, terminate employment and never get benefits from either plan other than a refund of
contributions. Actuary Foster said that some plans define service for vesting purposes as
"service with the City in any capacity for entitlement to vesting." When this is done the
employee gets two checks, one from each plan, computed based upon the average monthly
earnings in effect at the time of retirement and the benefit provisions in effect in each plan at
the time of retirement. In this way a transferred employee would share in any benefit
improvements that the plan they transferred from had developed. A terminated employee would
not get the benefits of increased plan provisions. Mr. Foster said that the financial impact on
either plan would be minimal. In response to Chairman Lewis's questions as to why we are
just now addressing this and what other cities are doing, Mr. Foster said that other cities are
beginning to use this method and it was not incorporated into their plans until the issue came up
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General Employees' Retirement Trust Fund (Pension Meeting)
January 17, 1994
as employees transferred.
Mr. Foster's recommendation was as follows:
1. Use the average of the best five years of all service to apply to the formula benefit from
each plan as opposed to the best average they had as a general employee.
2. Apply the accrual rates in effect in each plan on the date of retirement as opposed to the
full rate in effect at the time of the transfer.
Attorney Dehner agreed with Mr. Foster's comments on the distinction to be made between the
terminated vested employee receiving the benefit of any improvements in the General Plan the
employee left when terminated from City service versus continuing to work for the City, and
said that he would have a legal problem with applying benefit improvements to a terminated
vested employee with respect to under compensation, which is a Statutory Prohibition.
Secretary Grafton asked if a provision should be included for those employees who have
already transferred to the Fire/Police Plan who have withdrawn their money from the General
Fund to buy back in for vesting purposes. She said it might create a financial hardship for some
employees but the option could be made available to them. Attorney Dehner said there was no
legal requirement to do so, but the Board could provide an opportunity for this to be done.
Actuary Foster pointed out employees could be given a one year buy back period then close the
window on the opportunity. Chairman Lewis directed, on the Board's behalf, that Attorney
Dehner prepare a workable DRAFT of the Ordinance and asked Mr. Foster to prepare a cost
estimate presentation for the next scheduled meeting. Mr. Lewis suggested a delay in making
a decision based on the outcome of the estimate and to table it for the next meeting.
REPORTS
ATTORNEY
Attorney Dehner explained the Family Medical Leave portion of the draft was for discussion
purposes only, and that the minimum federal standards do not require that this provision be
made available to the employee. He suggested, if Board elects to provide this option, a buy-
back date for an employee who had taken leave during the past fiscal year to occur annually
between March 1 - April 30, and for the employee to provide a check for costs of Mr. Foster's
calculation for employee buy back amount. Mr. Dehner pointed out the importance of tracking
personnel records and possibly placing a cap on the total amount that can be purchased. Another
issue of concern was whether the amount of time should count for vesting purposes and if the
employee should be given 12, 24 months, or an open ended time to buy back. Mr. Dehner also
pointed out that the language required for the Internal Revenue Service before the end of this
calendar year is included in the plan on direct trustee to trustee transfer for roll over
distributions.
ACTUARY
Actuary Foster said a new program had been created to produce the member certificates and
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General Employees' Retirement Trust Fund (Pension Meeting)
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the new format offered a more detailed formulation. He said that the new system will enable
them to produce the certificates in November this year as the City is very good about providing
employee data in a timely manner. Scott Haynsworth explained each aspect of the Actuarial
Valuation Report, noting that there was a change in the methodology used in this year's
valuation of the Plan which assumes that those active members who are eligible to retire on the
valuation date retire one year following the valuation date instead. This change was required
by the Department of Management Services, formerly the Department of Administration.
Chairman Lewis asked when this fund would be fully funded to cover 100% of the accrued
benefits to date and whether the City's contribution would decrease at that time or the fund
would continue to build to an over-funded status. Mr. Haynsworth said it would probably be
fully funded next year and typically at that time it would be appropriate for the Board to
consider increasing employee benefits. Member Waldrop asked if the City could move the
multiplier up and Attorney Dehner said that to change a benefit the Board would have to
request a study and then make a recommendation to the City for a benefit change which occurs
only through amending an Ordinance to amend the Plan. Mr. Dehner also recommended
discussion with membership to determine where they would like to see the improvements made
in 1.) increasing monthly retirement benefit which can be done by increasing the accrual rate
and/or decreasing the number of years that is provided for the average final compensation, and
2.) retirement age. The Board should then request that Actuary Foster do a cost estimate on
those improvements, then review the results to determine a recommendation on how it will be
funded. Mr. Foster said that he can provide some information regarding medical benefit
supplements and post retirement medical benefit premiums Board could consider to help the
retirees. This will be considered at the next meeting.
Actuary Foster gave his quarterly report on the analysis of the investment performance of the
Trust Fund for the period ending September 1993. The report showed poor performance for the
quarter. Mr. Foster pointed out, however, that the yearly average was acceptable and The
Investment Counsel Company had a good track record for a number of years or they would not
have been considered by this Board in the beginning.
MONEY MANAGER
Terry McDougal, of The Investment Counsel Company, introduced Reese Lospinoso to the
Board and then presented the Investment Review for the period ending December 31, 1993. She
reminded the Board that they are a value manager as opposed to a growth manager and
explained their strategy. She then distributed "The Investment Counsel Company - Description
of Fixed-Income Strategy" report describing different investment strategies. Attorney Denner
asked Ms. McDougal about the transaction rate and said he does not understand why Investment
Counsel does not go through a broker that will give the Board 6 to 10 cents a share to
accomplish the "best execution" required by the Board as opposed to the approximately 30 cents
being charged now. Ms. McDougal said that she was sure they were doing their very best to
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General Employees' Retirement Trust Fund (Pension Meeting)
January 17, 1994
do best execution now and she described the method used. Mr. Definer asked Actuary Foster
to provide a list of rebate brokers he would recommend to the Board to contact for written
materials.
OTHER BUSINESS
GENERAL EMPLOYEES' RETIREMENT TRUST FUND SIGNATURE CHANGES
Secretary Grafton submitted for Board consideration a Resolution providing a new list of
authorized signatures to the custodians, removing Judy Henry's name and adding new member
Ricky Waldrop. After pointing out that this was a legally noticed meeting at which a quorum
was present, Secretary Grafton, seconded by Member Waldrop. moved to adopt the Resolution
resolving that any two _(2) of the following named trustees' signatures may authorize
disbursement from the account maintained by Key Trust Company of Florida, as custodian, for
the City of Ocoee Municipal General Employees' Retirement Trust Fund: Paul Lewis,
Chairman; Jean Grafton. Secretary; Tanya Miller: Joyce Oliver: and Ricky Waldrop. Motion
carried 3-0.
BILLS AUTHORIZED FOR PAYMENT
Secretary Grafton requested approval of the Board to present to Key Trust for payment the
following bills:
1. Christiansen and Denner $ 1,118.35
2. Investment Counsel Company $ 964.23
3. Foster & Foster, Inc. $ 4,085.00
Secretary Grafton, seconded by Member Waldrop moved to pay the bills as presented. Motion
carried 3-0.
Attorney Definer advised the Board that his service fees would increase from $150 to $180 an
hour, effective February 1, 1994.
RECESS 12:15 - To Reconvene in Joint Pension Board Meeting at 3:30 P.M.
3:30 p.m.
JOINT BOARD/GENERAL EMPLOYEES PENSION BOARD
In the absence of Chairman Lewis, Secretary Grafton opened the meeting at 3:30 p.m., and
introduced Actuary Foster. Mr. Foster then explained the new format for the employee
certificates while they were being distributed to those employees present. There followed a
general session of questions from the employees which Mr. Foster and Attorney Denner
answered.
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General Employees' Retirement Trust Fund (Pension Meeting)
January 17, 1994
ADJOURNMENT
The meeting adjourned at 4:05 p.m.
Respectfully submitted,
Judie F. Lewis
Clerk/Stenographer
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