HomeMy WebLinkAboutMinutes Police Pension 042408City of Palm Beach Gardens Police Officers'
Pension Fund
Minutes of the Meeting Held
April 24th. 2008
The regular meeting of the Board of Trustees of the City of Palm Beach Gardens
Police Officers' Pension Fund was called to order at 10:02 AM by Jay Spencer in the
Council Chambers at the Palm Beach Gardens City Hall at 10500 North Military Trail,
Palm Beach Gardens, Florida.
TRUSTEES PRESENT OTHERS PRESENT
Jay Spencer John McCann (Thistle Asset Consulting) (11:40)
Brad Seidensticker(departed 11:45AM) Steve Stack (ICC Capital Management)
David Pierson Denise D'Entremont (RhumbLine)
Wayne Sidey Steve Palmquist (Gabriel, Roeder, Smith)
Bonni Jensen (Hanson, Perry, & Jensen, P.A.)
Donna Cannon (Palm Beach Gardens Clerk's Office)
Scott Baur (The Pension Resource Center, LLC)
Audrey Ross (The Pension Resource Center, LLC)
MINUTES
MOTION: Mr. Seidensticker made a motion to approve the minutes from
the January 31, 2008 meeting.
SECOND: Mr. Pierson seconded the motion.
CARRIED: The motion carried unanimously 4 -0.
INVESTMENT MANAGER REPORT
RumbLine — Presented by Denise D'Entremont
Ms. D'Entremont stated that the first quarter was very lousy. April did rebound back
pretty quickly, but not enough to bounce back the negative first quarter.
For the quarter ending March 31, 2008 the large cap core slightly beat the S &P 500
index at -9.40% versus - 9.44 %. Mr. D'Entremont reviewed the returns from the
fiscal year to date to current. As of April the fund is currently at 4.43 %. She also
reviewed the top 10 holdings as well as top and bottom 5 performers for the quarter
ending March 31, 2008.
Ms. D'Entremont reviewed the mid cap core fund and stated that there was more
volatile in this fund. For the quarter ending March 31, 2008 the fund was at -8.83%
versus the S &P 400 index at - 8.85 %. She commented that this fund took a big hit
towards the end of 2007 and in the beginning of 2008. In April this fund is up
6.01 %, and since inception of November 2002 the fund is at 12.86% versus 12.88 %.
There are 22 investors in the mid cap fund.
The small cap core fund did a little better in the quarter ending March 31, 2008 at
-7.20% versus the S &P 600 at - 7.46 %. Ms. D'Entremont commented that this fund
did very well last year but has pulled back for the first quarter in 2008. Since
inception of this fund on October 14, 2003 it has done very well at 9.46% versus
9.29 %.
Lastly, Ms. D'Entremont commented that there have been no new changes within the
company since she was last hear in August 2007.
INVESTMENT MANAGER REPORT
ICC Capital — Presented by Steve Stack
Mr. Stack stated that for the quarter ending March 31, 2008 they started with
$11.5M in their portfolio and now they are at $11.9M. Currently they hold 91% in
fixed income and 9% in cash. The total fund was behind the index for the quarter at
1.83% versus 2.53 %, and bonds were also behind at 1.97% versus 2.53 %.
He commented that they did add Globel Enterprise into the portfolio, and that the
large cap growth is up 9% within the last 3 weeks. Mr. Stack explained the strategy
that his company uses to pull through a bad market. He commented that right now
it seems to be a traders market.
Mr. Stack gave a brief background of the market and stated that financials are the
worst sector in the market even though they are the biggest. Mr. Stack can not sell
anymore in treasuries as he is already in the 5% holding. He stated that there has
been under performance on the growth side, but he thinks that they are in a very
good position going forward. Technology seems to be leading the market out of
recession as the other stocks follow.
Mr. Pierson asked Mr. Stack about trading in XLF's. Mr. Stack commented that he is
a little hesitant on trading in XLF as he would have to find the right time and also
make sure that there are no restrictions to do so. Mr. Seidensticker asked about
when a stock gets pooled how fast they pay it down. Mr. Stack replied that they
have a lot less time to pay it down, as it shortens the duration of the portfolio.
INVESTMENT CONSULTANT REPORT
Thistle Asset Consultant — Presented by John McCann
Mr. McCann stated that the fixed income was the place to be for the last year and
also for the current quarter. Mr. McCann reviewed the compliance questions and
stated that the fund is on target. He then reviewed the asset allocation of the
portfolio and stated that there is 40% in fixed income, 57% in equities and 3% in
cash.
For the quarter ending March 31, 2008 the total fund was negative but did out beat
the index at -4.94% versus - 5.06 %. The total equities were behind at -9.54%
versus -9.05% and the total fixed income was also slightly behind at 2.00% versus
2.17 %. Mr. McCann commented that hopefully they got the negative quarters out
of the way.
Mr. McCann reviewed each performer. He stated that RumbLine did well and they
had nice asset class and great diversification in their portfolio. The large cap growth
was the best performing asset class in 2007, but the worst in the first quarter of
2008. Mr. McCann commented that he would not recommend any changes at this
time.
Mr. McCann recommended using an active manager for the S %P 500 because the
market is so volatile. They could split the S &P 500 50/50 between an active
manager and their current index manager. Mr. Pierson made some comments about
the risk that they are taking when having an active manager. Ms. D'Entremont
stated that it is very hard for an active manager to stay consistent and outperform
on an ongoing basis. Also she commented that the fees are a lot higher as well. The
board had a lengthy discussion on whether or not they wanted to go with an active
manager or not. Mr. McCann stated that he will do an active manager search for the
large cap core manager to fund 50 %, and he will bring it back to the board at the
next meeting. Mr. McCann wanted the board to know that there are other options
out there as well.
Ms. Jensen commented that there was 44% in the fixed income portfolio and
recommended reallocation of the portfolio. Mr. Spencer stated that we should add
2% more into the international fund as 10% is the maximum. The board discussed
on where they would take the 2% from to fund the international fund. They agreed
that they would take the 2% from the ICC Capital fixed income portfolio to fund the
three international managers.
MOTION: Mr. Pierson made a motion to move 2% from the ICC Capital
fixed income portfolio to be split up between the three current
international accounts.
SECOND: Mr. Seidensticker seconded the motion.
CARRIED: The motion carried unanimously 4 -0.
Mr. McCann stated that he will send an email to Mr. Baur with the dollar amount to
be transferred from ICC Capital to the international accounts.
Mr. McCann reviewed the international funds for the quarter ending March 31, 2008.
The total fund for the quarter was down -8.98% versus - 8.82 %. He commented that
this will be the last time that we will see Mainstays on the report as they were closed
out.
Lastly, Mr. McCann commented that he will change the Investment Policy Guidelines
again to reflect the new allocations since they are moving money from ICC Capital to
the international funds. He will bring them back at the next meeting. Mr. McCann
would like the Trustees to approve the Investment Policy Guidelines subject to the
one change.
MOTION: Mr. Seidensticker made a motion to approve the Investment
Policy Guidelines subject to the one change.
SECOND: Mr. Pierson seconded the motion.
CARRIED: The motion carried unanimously 4 -0.
2007 ACTUARIAL VALUATION REPORT
Gabriel, Roeder, Smith & Company - Presented by Steve Palmquist
Mr. Palmquist started his report out by commenting that he lowered the assumed
rate of return by 7 %. He reported that there was a gain of $251,668 in the fiscal
year ending September 30, 2007. This gain decreased the employer contributions
by .23% of covered payroll. Half of the gain came from the investment returns and
the other half came from the assumption that fewer people are retiring the expected.
Mr. Palmquist stated that $3.7M has to be paid into the fund by September 30, 2008.
Mr. Palmquist stated that the reasons the city's dollar amount went up was because
payroll has gone up as well. The employer contribution rate has slightly decreased
this year from 35.98% in 2006 to 35.78% in 2007. He then reported that state
revenue reserve fund has just under $400,000 in it that could be used for more
benefits for police officers. Mr. Spencer asked if the $400,000 was enough to
increase the supplemental benefit of $12.50 per year. Mr. Palmquist replied that it
will not be enough to cover that kind of increase. He recommend to the board to let
the reserve money sit until it increases some more.
Mr. Palmquist reported that the average active employee's payroll is $83,323. There
are currently 15 people retired and 4 in the DROP which would pay out an annual
benefit of $561,620. Also there are 12 disability retirees who are also getting a
combined annual benefit in the amount of $335,641, but this is the fourth year in a
row with no new disability.
Mr. Palmquist stated that the fund did not meet the requirements this year to pay
out a 13th check. He did commented though that if they fund has 10 more years of
experience gains then they will be 100% funded.
Mr. Palmquist reviewed the actual decrements compared to the expected among the
active employees. There were 3 new members who retired or entered the DROP in
2007 when 6 were expected. Mr. Palmquist assumed 1 new disability and there were
0. The overall cost revenue and expense of the fund in 2006 was at $1.4M and has
increased to 2.9M in 2007. Also the disbursements increased $796,293 in 2006 to
$845,925 in 2007, which was lower then expected.
Lastly, Mr. Palmquist stated that there are 107 active members with 4 people in the
DROP. He commented that one eligibility for members to retire is at the age of 20
and out, so he expects that 14 members could leave in 2008. Mr. Palmquist is quite
pleased on how things have worked out in 2007 and hopes the same in 2008.
MOTION: Mr. Pierson made a motion to approve the 2007 Actuarial
Valuation Report that was presented by Steve Palmquist.
SECOND: Mr. Sidey seconded the motion.
CARRIED: The motion carried unanimously 3 -0.
ATTORNEY REPORT
Hanson, Perry & Jensen, P.A. — Presented by Bonni Jensen
Ms. Jensen stated that the proposed ordinance did not make it on the agenda to be
approved. Ms. Jensen recommend to the board to have the DROP eligibility
removed. Mr. Spencer stated that he would like to proceed with the other 3
amendment changes with exclusion of the DROP eligibility.
MOTION: Mr. Sidey made a motion to allow Bonni Jensen to propose the
3 amendment changes.
SECOND: Mr. Pierson seconded the motion.
CARRIED: The motion carried unanimously 3 -0.
Ms. Jensen reported that the municipality was looking into adopting an invest free
from Iran and Sudan policy, but it has not been passed yet. She will update the
board when an outcome is reached.
Ms. Jensen reminded the board that the form 1 disclosures are due July 1, 2008.
Ms. Jensen proposed her fee increase to the board. She stated that January 2004
was the last time that she had increased her fees. Mr. Spencer commented that he
was surprised that Ms. Jensen has not come before the board sooner.
MOTION: Mr. Sidey made a motion to approve Bonni Jensen's fee
increase that was presented.
SECOND: Mr. Pierson seconded the motion.
CARRIED: The motion carried unanimously 3 -0.
ADMINISTRATOR REPORT
The Pension Resource Center, LLC — Presented by Scott Baur and Audrey
Ross
Mr. Baur stated that he has received the fifth incorrect data from the City, so now he
has to go back and redo calculations for the recent retires. He expressed his
frustration in trying to calculate benefits when he keeps receiving incorrect data. At
this time Mr. Baur thinks he has good data now, so hopefully going forward all
benefits that he calculates should be correct. Mr. Baur explained that when he goes
back to recalculate the most recent retires benefits that it may have an effect on the
Actuarial Valuation Report.
Mr. Baur commented that the audit was going through its internal controls and that
we should be receiving a draft copy soon.
BENEFIT APPROVALS
MOTION: Mr. Sidey made a motion to approve the benefit approvals.
SECOND: Mr. Pierson seconded the motion.
CARRIED: The motion carried unanimously 3 -0
DISBURSEMENTS APPROVALS
MOTION: Mr. Sidey made a motion to approve the disbursements.
SECOND: Mr. Pierson seconded the motion.
CARRIED: The motion carried unanimously 3 -0
Mr. Baur notified the board that he will be requesting the option factors from Gabriel,
Roeder, Smith & Company. The estimated cost is going to be between $1,000 and
$1,200.
i�
The board reviewed and discussed the financial statements that were provided
through March 31, 2008.
The board received and filed the financial statements through March 31,
2008.
AJOURN
There being no further business, and the future meetings are scheduled for the last
Thursday of the first month of the quarter. The next meeting is scheduled for
Thursday July 24, 2008 at LOAM; the Trustees officially adjourned the meeting at
12:33PM (note- Mr. Pierson will not be present at the July 24, 2008 meeting)
Respectfully submitted,
DAVID PIERSON, Secretary