11-21-1994 Minutes v.„ POLICE OFFICERS' /FIREFIGHTERS' RETIREMENT TRUST FUND
(PENSION MEETING)
November 21, 1994
The Police Officers' /Firefighters' Pension Board meeting was called to order by Chairman
Reed at 1:10 p.m. in the training room of the Community Center, and a quorum was declared
present.
PRESENT: Chairman Reed, Members Strosnider and Wilson. Also present were Actuary
Foster, Attorney Dehner, and Clerk /Stenographer Lewis.
ABSENT: Members Gledich and Williams.
APPROVAL OF MINUTES
Member Strosnider, seconded by Member Wilson, moved to approve the minutes of
September 28, 1994 as presented. Motion carried 3 -0.
QUESTIONS /COMMENTS FROM AUDIENCE
None
ADOPTION OF CHANGE IN OPERATING RULES & PROCEDURES (Confirmation of
Receipt of Retirement Benefits).
Attorney Dehner explained the provision will be added to the excerpt provision given to
members once the Board had approved the Operating Rules and Procedures. He then
recommended changing Rule 18 -18.1 "require any service retiree" to "any persons receiving
benefits under the system." Member Strosnider, seconded by Member Wilson, moved to
a . . rove the revised O . eratin . Rules & Procedures which su . ersede the • rior Rules in its
entirety. Motion carried 3 -0. Attorney Dehner will reprint the last page of the Operating Rules
and Procedures to include the October 1 date.
Discussion ensued on the time limit of sending the eligibility reporting form to retirees and
Attorney Dehner recommended sending them annually (on a given date) to service and
disability retirees. Chairman Reed said that all the benefits are calculated after September 30,
ending the City's fiscal year. Member Wilson, seconded by Member Strosnider, moved to
a • trove the re a ortin . re I uirement for each • erson receivin . benefits of an kind from the Cit
of Ocoee Munici. al Police Officers ' /Firefi ! hters' Pension Fund shall be October 1 of each ear.
Motion carried 3 -0. (The eligibility reports must be returned to the Board Secretary within 30
days.)
Chairman Reed inquired as to members signing the new form which did not have the Selected
Provisions and Operating Rules & Procedures. Also, the Summary Plan Description (SPD) did
not include the Selected Provision. Attorney Dehner said that what is listed in the Rules is
what should go to each employee and Mr. Reed asked about the acceptance and terms of the
+�,,, condition of the Retirement System. Members must sign a form acknowledging receipt of the
Police Officers' /Firefighters' Retirement Trust Fund
% November 21, 1994
following: the acknowledgment form that they understand the terms and conditions of the Plan,
that they have been furnished with an SPD, a beneficiary designation, and the Selected
Provisions. Member Strosnider, seconded by Member Wilson, moved to a I I rove the Selected
Provisions of the O , eratin ' Rules & Procedures with a s .roved chan . es recei et form . Motion
carried 3 -0. Attorney Dehner will make and send the change to Chairman Reed.
REPORTS
ATTORNEY
Attorney Dehner announced the following:
1) DIVORCE PROCEEDINGS - Members getting a divorce should notify one of the
Trustees of the Board of their attorney's name, address and phone number. The Trustee
would pass that information along to the Fund's attorney and a package of information
would be mailed informing the attorney of the differences between a public and private
plan. Discussion ensued on the differences of the two plans.
2) STATE ACCEPTANCE ON VALUATION REPORTS - Legislative change now
makes State acceptance of valuation reports on a current basis. In order to get the
Fund's State monies it is particularly important that reports reach the actuary early so
they will have time to correspond with Charles Sloven, should it be necessary. Actuary
Foster had requested all available information in advance and unless the auditors held
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the report it could meet the deadline of March 15.
Chairman Reed asked how the collective bargaining of the Police Department affected
the Pension Board's agreement. Attorney Dehner said that it did not affect the Plan
unless 1) the bargaining unit addresses a Pension issue (floor amount of City funding),
and 2) when improved benefits or subsequent changes are made in the Plan the Board
would need a sign off from the Bargaining Unit on those changes. Constitution in
Florida on Pension is subject to collective bargaining so that when the Fund does propose
a substantial change /reduction by the City, the Board will also get a sign off before it
passes on secondary.
Chairman Reed asked Attorney Dehner when the transfer of funds would take place from The
Investment Counsel (ICC) to SunBank. Attorney Dehner said that SunBank had the contracts
and had not returned the signed copy to him. He would check about the transaction.
ACTUARY
Actuary Foster reported on the experience study in the Actuarial Valuation Report as of
October 1, 1994. The contribution amount developed in this valuation is applicable to the City's
fiscal year ending in September 30, 1995, as follows:
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Police Officers' /Firefighters' Retirement Trust Fund
November 21, 1994
10/1/94 10/1/93
Total Required Contribution $ 495,999 $ 421,834
% of Total Annual Payroll 24.8 % 24.7 %
Member Contributions (Est.) 100,124 85,312
State Contribution (Est.) 46,172 35,984
Balance From City 349,703 300,538
% of Total Annual Payroll 17.5% 17.6%
As could be seen, the Total Required Contribution had increased in dollar amount but had
remained stable when expressed as a percentage of Total Annual Payroll.
The dollar increase was attributable to the 17.4% increase in the Total Annual Payroll
($2,02,476 this year compared with $1,706,230 in the actuarial impact statement dated
March 18, 1994). The stability of the percentage was an indication that the actuarial
experience during the past 12 months was consistent with expectations. The principal
component of favorable experience was the addition of 11 new entrants at comparatively
younger ages. The effects of these gains were offset by losses resulting from a -0.4%
investment return (Actuarial Asset basis) which was significantly less than the 8.0%
assumption.
In connection with the year's valuation of the Plan, one methodology change was made. The
use of market value in determining valuation assets had been changed to a method which is
based upon a four (4) year moving weighted average of the ratio of market value to cost
value. This technique had the effect of smoothing short term market fluctuations. The
effects of the change was set forth in the Comparative Summary.
The balance of the Report presented additional details of the actuarial valuation and the
general operation of the Fund.
Actuary Foster said that the methodology change must be approved by the Board. Member
Strosnider, seconded b Member Wilson moved to a. .rove the change in the methodolog
of develo I ing assets and to accept the report as • resented. Motion carried 3 -0.
An analysis of the investment performance of the Fund for the period from May 1, 1992
through September 30, 1994, had been completed and Actuary Foster presented the analysis
to the Board.
The average annual rate of return for the Fund during this period was 4.6%. This rate of
return failed to outperform the composite index of market indicators (40% S &P 500
Composite Stock Index, 55 % Lehman Brothers Government /Corporate Bond Index, and 5%
U.S. Treasury Bills) which registered a return of 6.7%
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Police Officers' /Firefighters' Retirement Trust Fund
%N. November 21, 1994
During the one year period ending September 30, 1994, the Fund registered a -0.3 % rate of
return (compared with -0.7% for the composite index) and ranked in the 43rd percentile in the
Cadence Universe of investment managers. The equity portion of the Fund outperformed the
S &P 500 (7.0% vs 4.9%) and ranked in the 19th percentile for the one year period.
Actuary Foster said the report in March will have a full quarter with SunBank and he would
keep the Board posted through the transition. He would also like to see SunBank at the
February meeting to update the investment policy guidelines, and will send the guidelines that
are currently in effect. Member Wilson, seconded by Member Strosnider, moved to accept
the performance report as presented. Motion carried 3 -0.
OTHER BUSINESS
Chairman Reed reported the following:
1) Encouraged members to attend the FPPTA Conference in February and reminded them
that they must use their own vacation time.
2) Expressed thanks to Actuaries Foster and Garrett in the Board's receiving a good rate on
the Fiduciary Insurance policy which had been locked in for the next three years. The
waiver recourse is provided by Cincinnati (1M dollars with a $2500 deductible).
Attorney Dehner said another client had used Cincinnati with this particular policy and
Noe the defense costs were paid out of the limit of liability, not in addition to the limit.
EXPENDITURES
Chairman Reed requested approval of the Board for expenditures sent to Key Trust for
payment. Member Wilson, seconded by Member Strosnider, moved to approve the payment
of expenditures as presented. Motion carried 3 -0.
ADJOURNMENT
Chairman Reed announced the next meeting was scheduled for 1:00 p.m., Monday,
February 13, 1995. Also, the General Employees' Pension Board had scheduled a mini -
conference for trustees and interested employees at 6:00 - 10:00 p.m., Wednesday, February 1,
1995 in the training room of the Police Department.
The meeting was adjourned at 1:58 p.m.
Respectfully submitted,
J / ie Lewis, erk /Stenographer
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