08-02-2023 MinutesCITY OF OCOEE
MUNICIPAL GENERAL EMPLOYEES' RETIREMENT TRUST FUND
BOARD OF TRUSTEES QUARTERLY MEETING MINUTES
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ON
Wednesday, August 2, 2023 — 10: OOAM
TRUSTEES PRESENT: Gequita Cowan, Chair
Robert Briggs, Vice Chair
Gary Gleason
TRUSTEES ABSENT: Patricia Gleason, Secretary
OTHERS PRESENT: Pedro Herrera, Sugarman & Susskind (via Zoom)
Doug Lozen, Foster & Foster
Chrissy Stoker, Foster & Foster
Brad Hess, AndCo Consulting
William Duncan, Plan Retiree
Paul Duncan, Member of the Public
Call to Order — Gequita "Gee" Cowan called the meeting to order at 10: 11 AM and a
quorum was determined.
2. Roll Call — As reflected above.
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4. New Business
a. Discussion of overpayment to retiree
i. Chrissy Stoker commented the pension plan included an optional form of
benefit that provided for a percentage of a retiree's monthly benefit to continue
to a survivor upon the death of either the retiree or the designated survivor.
Chrissy commented her fiduciary duty was to ensure benefits were paid
correctly, and as a solution to tracking the survivors listed by retirees who
elected this form of benefit with continuing percentages of less than 100%, she
worked with Salem Trust to add survivor information into their system so the
survivors would be included in monthly death audit reports. Chrissy
commented Salem Trust contacted her in June to notify her that a survivor
appeared on a recent death audit with a date of death of October 5, 2016,
Chrissy stated effective November 1, 2016, the monthly benefit due to the
retiree of the deceased survivor should have decreased by approximately $560
per month. The result was an overpayment of approximately $42,000.
ii. Gee Cowan commented the Board needed to address the overpayment in the
same manner they would address an underpayment and consider all
information and proceed with a plan to rectify the situation.
iii. Pedro Herrera noted the actuary was present to discuss possible repayment
options.
iv. Paul Duncan addressed the Board on behalf of William Duncan, commenting
he was not aware of the benefit option his father chose when he retired. Paul
further commented if the options had been explained to him, his father would
not have chosen the 66-2/3% option. Paul referred to the final benefit
calculation- dated June 19, 2008, noting the amounts of the 100% option and
the 66-2/3% option were not much different. Paul commented his dad signed
the election form but was unaware of the implications of his choice. Paul
commented his mom passed very quickly so he did not have time to discuss
everything with her.
v. William Duncan stated a City employee assisted him with his benefit election
and he took her advice when she recommended this option.
vi. Doug Lozen commented if the Board decided to recover the overpaid funds,
he could spread the overpayment amount over the future lifetime of the retiree
using the life expectancy tables the Ordinance had in place at the time of Mr.
Duncan's retirement. Doug commented based on his age, the mortality tables
stated there were 8-9 years of future lifetime. Doug commented the Police &
Fire plan had a similar situation about a year ago and the pension board agreed
to recoup the funds in this manner with no interest charged. Doug reviewed the
estimated monthly benefit amount if the Board decided to move forward with
collecting the overpaid funds in this manner.
vii, Doug Lozen stated the Board could also recover the overpayment over a
longer period, such as 15 years, or the Board could ask for a lump sum. Doug
added the Board's decision would determine how he calculated the numbers.
viii. Robert Briggs noted the repayment over Mr. Duncan's expected lifetime was
consistent with other actuarial approaches they took.
ix. Gary Gleason stated this would be a drastic life change for Mr. Duncan so they
should consider spreading the repayment out over a longer period of time.
x. Gee Cowan commented this was a difficult spot to be in as they were not
without compassion, but they had a responsibility to the Fund. Gee commented
there may not have been proper education given about the benefit options
when Mr. Duncan retired which is why she worked so hard to educate the
membership. Gee commented ultimately the Board needed to do what was in
the best interest of the pension fund.
A Doug Lozen commented he would also be comfortable using the latest
mortality table which was a longer spread, and that was what was done for the
Police & Fire retiree he mentioned. Doug commented using the updated
mortality table would add approximately 1.5 years to the expected lifetime.
xii. Chrissy Stoker stated for the record the Board needed three (3) affirmative
votes to take any action today.
xiii. Robert Briggs commented they should wait until the full Board was present to
make any decision.
xiv. Pedro Herrera commented another option was when Mr. Duncan passed
away, if there was any remaining balance due to the Fund, the Fund could file
a claim against Mr. Duncan's estate, or they could make an agreement while
he was alive that he would repay the Fund from his estate if the repayment was
not completed prior to his death.
xv. William Duncan commented the City was at fault and they should repay the
Fund as they did not advise him properly on his choice. William commented
when his wife passed away no one told him his pension would be affected, and
he had no idea it should have been adjusted. William commented his wife's
death should not have impacted his pension.
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b. Proposed 2024 meeting dates
i. Gee Cowan noted the proposed dates did not conflict with any FPPTA events
and the Commission Chambers were already reserved for them to meet.
ii. By consensus, the Board approved the meeting dates as presented with the
caveat that they should consider what the Police & Fire Board approved.
5. Approval of Minutes
a. May 3, 2023, quarterly meeting
Robert Brigg and second • Ga[y Gleason; motion carried 3-0.
6. Reports (Attorney/Consultants)
a. AndCo Consulting, Brad Hess, Investment Consultant
i. Quarterly Report as of June 30, 2023
1. Brad Hess gave an overview of the market environment over the
quarter ended June 30, 2023.
Z Brad Hess reviewed the asset allocation compliance relative to the
investment policy statement targets, noting they were inside the target
ranges for all asset classes. Brad had no recommendations to
rebalance the portfolio.
3. Brad Hess reminded the Board they turned off the dividend
reinvestment program for their real estate investment and the income
generated would be wired into the R&D account quarterly.
4. The market value of assets as of June 30, 2023, was $45,857,856. Brad
Hess noted the value of the Fund as of today was approximately $46.3
million, which did not account for any cash flows.
5. Brad Hess reviewed the financial reconciliation of the Fund over the
quarter and discussed the cash flows.
6. Total fund gross returns for the quarter were 2.51 %, underperforming
the benchmark of 3.59%. Trailing returns for the FYTD, 1, 3, 5, and 10-
year periods were 11.66%, 7.24%, 6.30%, 5.85%, and 7.33%,
respectively, compared to the respective benchmarks of 14.66%,
8.99%, 7.08%, 7.05%, and 7.87%. Since inception (04/01/2004), total
fund gross returns were 6.73%, compared to the policy benchmark of
6.94%.
7. Brad Hess reviewed the performance of each manager and stated he
had no concerns.
ii. Asset allocation study
1. Brad Hess commented at the last meeting they discussed strategic
asset allocations and took money out of small/mid cap index funds and
put it into an S&P 500 index fund. Brad commented he recommended
they keep everything status quo, but he still wanted to present some
asset allocation mixes for the Board's consideration.
2. Brad Hess briefly reviewed some asset mixes based on JPMorgan's
capital market assumptions. Brad commented their current asset mix
was expected to return 7.36% over the long term with a standard
deviation (risk) of 10.83%. Brad noted increasing their allocation to
fixed income would reduce their long-term horizon return estimate.
3. Brad Hess recommended they did not make any structural changes at
this time.
iii. Revised Investment Policy Statement (IPS)
1. Pedro Herrera stated House Bill 3 (HB3) took effect July 1, 2023, and
prohibited public pension funds from entering into any investments
based on environmental, social or governance ("ESG") factors. Pedro
commented it was still unclear how the law would be administered, but
he would keep the Board informed as additional information was
released from the State.
2. Pedro Herrera commented H133 was geared toward legislative intent
and was not meant to remove investment options. Pedro commented
they could still invest in an ESG fund but their reason(s) for choosing
that fund must be based solely on pecuniary factors.
3. Pedro Herrera commented the IPS was updated with language
confirming how they had always operated, which was making
investment decisions based on recommendations from the investment
consultant. Brad Hess confirmed AndCo only made recommendations
based on risk/return factors and never ESG reasons.
4. Brad Hess briefly reviewed the differences between the role of the
investment consultant and the role of investment managers. Brad
reviewed the new language in the IPS that was directly from the statute.
Based on the recommendation of the investment • the Board voted to approv
second by Gary Gleason; motion carried 3-0.
The Board took a recess at 11:33AK
Gequita Cowan► called the meeting back to order at 11:37AM.
b. Sugarman & Susskind, Pedro Herrera, Board Attorney
i. House Bill 3 Memo
1. Pedro Herrera commented he would work with the administrator and
the investment consultant to ensure they complied with the new law,
and updating the IPS was a good start. Pedro confirmed he would
keep the Board posted of any new information from the State.
ii. Pedro Herrera reminded the trustees of the Form 1 filing requirement.
iii. Summary Plan Description
1. By consensus the Board authorized Pedro Herrera to update the
Summary Plan Description. Pedro commented he would bring the
updated document to the next meeting for the Board's consideration.
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second by Gary Gleason, motion carried 3-0.
9. Staff Reports, Discussion, and Action
a. Foster & Foster, Chrissy Stoker, Plan Administrator
i. Educational opportunity
1. Chrissy Stoker stated for the record Gee Cowan, Robert Briggs, and
Patricia Gleason were registered to attend the FPPTA Fall Trustee
School. Gary Gleason stated he also planned to attend and would
take the Advanced courses to complete his CPPT certification.
ii. Update on agenda packets
1. Chrissy Stoker commented Foster & Foster was going paperless and
she would discontinue paper agenda packets in the near future.
Chrissy stated she would still distribute meeting materials seven days
in advance for the trustees to review.
iii, Chrissy Stoker announced her colleague Nancy Rivera had been assigned
the Assistant Plan Administrator and her primary role was to assist members.
Chrissy commented Nancy would be an additional set of eyes for the Plan.
Chrissy commented Stef Bravo would still handle trustee travel and
reimbursements, portal access, and refunds.
iv. Chrissy Stoker commented she would be hosting an educational session at
9:OOAM before the November meeting.
11. Chairperson's Report
a. Gee Cowan commented she had been meeting with members to educate them on
the pension plan, and the sessions had gone very well.
b. Gee Cowan commented she had been reviewing vendor contracts, and when Lee
Dehner passed away in 2019 his contract was passed on to Pedro Herrera. Gee
requested Pedro to prepare a legal services agreement for the Board's
consideration at the next meeting.
c. Gee Cowan thanked Doug Lozen for attending.
d. Gee Cowan announced Tammy Brown's resignation from the pension board.
e. Gee Cowan stated she would distribute a flier to the membership to announce the
education session taking place next quarter.
12. Adiournment — The meeting adjourned at 11:51AM.
13. Next Meeting — Wednesday, November 1, 2023, at 10: OOAM, Quarterly Meeting
Respectfully submitted by: Approved by:
Chrissy Stoker Ian Administrator Ge ui Cowan( Chair
Date Approved by the Pension Board: November 1, 2023