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Minutes 8-2-13.doc
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City of Palm Beach Gardens Police Officers’
Pension Fund
Minutes of the Meeting Held
August 2, 2013
The regular meeting of the Board of Trustees of the City of Palm Beach Gardens
Police Officers’ Pension Fund was called to order at 9:01 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, Chairman Audrey Ross (Resource Centers)
David Pierson, Secretary Bonni Jensen (Law Offices of Perry & Jensen)
Brad Seidensticker, Trustee Donna Kramer (PBG Clerk’s Office)
Greg Mull, Trustee Bart McMurry (ICC Capital)
Marc Glass, Trustee Steve Stack (ICC Capital)
John McCann (Thistle Asset Consulting)
INVESTMENT MANAGER REPORT
ICC Capital – Presented by Steve Stack & Bart McMurry
Mr. Stack introduced Mr. McMurry to the board and stated that he is the bond
portfolio manager that manages this funds portfolio. Mr. McMurry is here from
California and would an opportunity to speak to the board regarding the current bond
environment and the plans portfolio as well.
Mr. McMurry welcomed himself and explained that they did not have a good quarter
on the fixed income side. For the quarter ending June 30, 2013 the portfolio was
negative and behind the index at -2.85% versus -2.33%, and for the fiscal year to
date they are in the same position at -2.98% versus -2.24%. Mr. McMurry discussed
all the different bond benchmarks and how many different types there are. He also
reviewed the breakdown of all the bonds held in the portfolio and noted that most of
their underperformance was due to the lack of corporate holdings in the portfolio.
The bond market is very volatile right now, but during the quarter corporates did
better than treasuries and their portfolio was not adjusted for that. Mr. McMurry
stated that they have since repositioned the portfolio and that he feels comfortable
with where they are at now and going forward.
Mr. McMurry briefly reviewed the equity side of the portfolio and commented that it
is in a much better position then the bond side. For the quarter ending June 30,
2013 they are behind the index at 1.36% versus 2.03%, but for the fiscal year to
date they are ahead at 16.53% versus the index at 10.33%. Mr. McMurry reviewed
the top 10 holdings in the portfolio and also the current asset allocation. He noted
that a lot of investors are moving back into stocks at this time because bond rates
are so low.
INVESTMENT CONSULTANT REPORT
Thistle Asset Consulting – Presented by John McCann
Mr. McCann noted that there are no scrutinized companies in the portfolio and that
the plan is in compliance. He explained that ICC Capital recently lost about 20% of
their assets because two of their main clients left when one of the ICC managers
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retired earlier this year. Mr. McCann expressed that these events do not have any
impact on this portfolio.
As of June 30, 2013 the plan had almost $60M in assets, but the total fund net of
fees was behind the index at -0.41% versus 0.62%. For the fiscal year to date they
are positive but still behind the index at 7.86% versus 8.29%. Mr. McCann reviewed
each managers performance for the quarter and commented that all the managers
outperformed with the exception of both of the ICC accounts; equity and fixed
income. He reported on the plans asset allocation and stated that they are currently
underweighted to their target allocation in international equities, but he noted that
he would like to leave it that way until the end of the fiscal year. This is the same
situation for the bond exposure as well. In the meantime Mr. McCann commented
that they have 5 different managers with 8 different asset classes, which is great
diversification. He noted that the board did previously approved to amend their
investment policy guidelines to increase the real estate asset allocation to 5%, but
American Realty has not taken all of their money yet (they have only called for
$115K as of yet). The next American Realty capital call will be in 6 months. By
increasing the real estate asset allocation to 5%, it reduces the ICC fixed income
exposure to 25%. Lastly Mr. McCann explained that the American Realty
performance numbers outlined in todays report are estimates only because they do
no have the property appraisals completed yet. Mr. Jensen asked Mr. McCann to
footnote somewhere that the American Realty numbers are preliminary at this point.
In the meantime Mr. McCann stated that the portfolio is doing very well and that
they are taking more risk, but also getting more return as well.
ATTORNEY REPORT
Law Offices of Perry & Jensen - Presented by Bonni Jensen
Ms. Jensen reviewed her memo regarding the important pension disclosure
amendments to Chapter 112 (SB 534). This bill will increase the reporting
requirements for the next fiscal year. She stated that the board will be receiving
something directly from their Actuary outlining the changes and the new fees that
will be incurred due to the additional reporting. Ms. Jensen briefly reviewed and
discussed some of the additional reports that will be required. She also commented
that there is another legislative session that will take place before this bill is
effective, so there is still time for this bill to be revised or taken off the table
completely.
Ms. Jensen noted that the 2012 annual report was approved and that the plan should
be receiving the 2012 Chapter 185 money soon.
Ms. Jensen stated that GRS submitted the response to the Division of Retirement in
regards to the “Naples Letter” that the plan received. The plan received
correspondence back and ultimately it will not change the amount of money that is in
the reserve account, which can only be used for future benefit enhancements.
Ms. Jensen notified the board that the Ethics of Commissions waived the fine for
Wayne Sidey after her office submitted an order explaining why Mr. Sidey did not file
his Form 1 Disclosure on time when he exited the board.
Ms. Jensen stated that she tried to send a letter to the son of Charles Sharon after
the last meeting explaining the boards outcome on his father’s pension, but the
materials where sent back because of the wrong address. Mr. Mull stated that Mr.
Sharon’s son works as a police officers for Palm Beach Gardens so he can obtain his
information.
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Ms. Jensen explained the IRS’s new interpretation regarding the DROP accounts and
the variable rate of return. She stated that the IRS is now classifying all DROP
accounts that are invested in the plans rate of return to be considered a defined
contribution account and not a defined benefit account. Ms. Jensen reviewed the
background of this situation and noted that the IRS has not actually passed this rule
yet, but if and when they do then all the members that are in the variable rate of
return would need to abide by the defined contribution rules (which mean members
can only contribute $50K to their accounts per year, as well as other regulations).
Ms. Ross commented that currently all the active DROP members have their
accounts invested in the fixed rate of return and not the variable rate of return. Ms.
Jensen stated that since the police are in current negotiations with the City then she
would recommend adding a “collar” around the variable rate option, or to simply
allow the pension plan to amend the ordinance and plan to get rid of the variable
rate of return option all together. Mr. Mull and Mr. Glass stated that they will bring
this item up to the Union and the City at negotiations.
ADMINISTRATOR REPORT
Resource Centers – Presented by Audrey Ross
Ms. Ross stated that she received an email from the underwriter for the plan’s crime
insurance stated that they are changing carries from Ullico to Seneca. Ms. Jensen
commented that she had no objection to this change as all coverage remains the
same.
MOTION: Mr. Glass made a motion to approve the revised contract with
Seneca for the Plan’s Crime Insurance coverage.
SECOND: Mr. Pierson seconded the motion.
CARRIED: The motion carried unanimously 5-0.
MINUTES
MOTION: Mr. Glass made a motion to approve the minutes from the April
23, 2013 regular meeting.
SECOND: Mr. Pierson seconded the motion.
CARRIED: The motion carried unanimously 5-0.
DISBURSEMENTS APPROVALS
MOTION: Mr. Mull made a motion to approve the disbursements.
SECOND: Mr. Glass seconded the motion.
CARRIED: The motion carried unanimously 5-0.
BENEFIT APPROVALS
MOTION: Mr. Seidensticker made a motion to approve the application for
distribution from DROP account for Wayne Sidey, and the
application for a refund of contributions for Laure Van Deusen.
SECOND: Mr. Pierson seconded the motion.
CARRIED: The motion carried unanimously 5-0.
The application for a refund of contributions for Christopher Sands was tabled until
the next meeting. Since Mr. Sands is a vested member asking to cash out his
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benefit, the board would like him to attend the next meeting so that they can explain
to him what he is forfeiting and to also sign a legal release waiver. Ms. Ross noted
that she will invite Mr. Sand’s to the next meeting.
FINANCIAL STATEMENTS
The board reviewed and discussed the financial statements that were provided
through May 2013.
The board received and filed the financial statements through May 2013.
OTHER BUSINESS
Ms. Ross presented the board with the supplemental actuarial valuation report that
GRS prepared in regards to changing benefits. This report was requested by the
board a couple of months ago.
PUBLIC COMMENTS
N/A
AJOURN
There being no further business, the Trustees officially adjourned the meeting at
11:02 AM. The next meeting is to be scheduled.
Respectfully submitted,
_____________________________
DAVID PIERSON, Secretary