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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