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HomeMy WebLinkAboutMinutes Fire Pension 031014PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND MINUTES OF MEETING HELD MARCH 10, 2014 A meeting of the Board of Trustees was called to order at 9:03AM at Council Chambers, Palm Beach Gardens, Florida. Those persons present were: TRUSTEES OTHERS Rick Rhodes, Chairman Audrey Ross, Administrator Tom Murphy, Secretary Pedro Herrera, Attorney Ed Morejon Dan Johnson, Investment Consultant Martin Cohen Mike Barry, Class Action Attorney Allan Owens, Finance Director PUBLIC COMMENTS N/A MINUTES The Board tabled the minutes of the regular meeting held on January 10, 2013 until the next meeting so that Mr. Cohen had more time to review them. GRANT & EISNEHOFER PRESENTATION – MIKE BARRY Mr. Barry introduced himself to the board and explained why he was here today and what services his firm provides for this board. His firm represents share holders in litigation and today he has a derivative case to bring forth to the board. A motion was made by Ed Morejon to hold an executive closed door session (beginning at 9:11AM). The motion was seconded by Tom Murphy and carried 4-0. A motion was made by Tom Murphy to conclude the executive closed session (closing at 9:42AM) and to reopen the regular meeting. The motion was seconded by Marty Cohen and carried 4-0. The Trustees had a lengthy discussion on the derivative case that was brought forth to them today. The case is related to AmTrust, which is held by Dana Advisors. A motion was made by Ed Morejon to retain Grant & Eisenhofer and to authorize them to file the section 220 document/records request against AmTrust on behalf of the Plan. The motion was seconded by Tom Murphy and carried 4-0. Mr. Barry stated that he will bring back the findings of the 220 document to the board and then they will go from there in regards to moving ahead with the case or not. In the meantime the manager, Dana Advisors will need to hold onto at least 100 share in AmTrust during this process. Mr. Herrera noted that holding onto 1 share is legal, but not recommended. A motion was made by Ed Morejon to authorize the Plan’s investment consultant to send a letter to Dana explaining that they need to hold onto at least 100 shares in AmTrust due to possible litigation. The motion was seconded by Tom Murphy and carried 4-0. 2 INVESTMENT MONITOR REPORT: THE BOGDAHN GROUP (DAN JOHNSON) Mr. Johnson reviewed the December 31, 2013 quarterly report. He briefly reviewed the market environment during the quarter and noted that all the indices where up with the exception of bonds. At the end of the quarter the fund had $63M in assets, which was up $4M since the end of the last quarter. The total return net of fees for the quarter was 6.72% versus the index at 6.27%, and for the one year to date they are also ahead of the index net of fees at 20.70% versus 20.68%. Mr. Johnson reviewed all the managers’ performance during the quarter and noted that all the managers outperformed their index’s except for Fiduciary Management and American Realty. Fiduciary Management is currently holding onto a lot of cash and Mr. Johnson stated that they will keep an eye on that. Mr. Johnson reviewed the February 28, 2014 market update. For the quarter the fund is up 1.1%, but for the fiscal year to date they are already up 8.1%. Mr. Johnson stated that there are no recommendations at this time regarding any of the managers, but he did note that the plan is holding a lot of cash at $850K. Therefore Mr. Johnson would recommend moving a total of $525K out of cash and into the Templeton and Vanguard accounts. A motion was made by Ed Morejon to authorize the transfer of $525K from the plans cash account to be distributed to Templeton ($225K) and Vanguard ($300K). The motion was seconded by Tom Murphy and carried 5-4. Mr. Johnson updated the board on ICMA and where they stand with the contract. Mr. Herrera stated that he has reviewed the ICMA contract and made some minor revisions to it and then sent it back to ICMA to review and sign off on. He explained that the original contract had an 8-10 year lock up so Mr. Herrera removed that language. He commented that he will keep the board posted when he receives more information. The Trustees also tabled the revised IPG until the ICMA contract is signed. ATTORNEY REPORT: SUGERMAN & SUSSKIND (PEDRO HERRERA) Mr. Herrera explained that recently a new law passed that now states that same sex marriages are now granted in regards to benefits such as pensions and insurances. No action is needed at this time (information purposes only) Mr. Herrera stated the SB 246 & HB 509 is still pending up in the Legislative Session and that he will update the board as more information becomes available. Lastly Mr. Herrera noted that the Division of Retirement is holding a school from May 12-14, 2014. ADMINISTRATIVE REPORT: RESOURCE CENTERS (AUDREY ROSS) DISBURSEMENTS The Board reviewed the disbursements presented for approval by the Administrator. A motion was made by Tom Murphy to approve the disbursements as presented by the Administrator. The motion was seconded by Marty Cohen and carried 4-0. 3 BENEFIT APPROVALS The Board reviewed the application to enter the DROP for Richard Holder. A motion was made by Tom Murphy to approve the application to enter the DROP for Richard Holder. The motion was seconded by Ed Morejon and carried 4-0. The Board reviewed the 2014 COLA increases for the active DROP members that were prepared by the actuary. A motion was made by Tom Murphy to approve the 2014 COLA increases for the active DROP members as presented. The motion was seconded by Marty Cohen and carried 3-0. (Mr. Morejon abstained from the vote since he was one of the members on the COLA list). Ms. Ross presented the board with the 2014/2015 fiduciary insurance renewal. Ms. Ross stated that the fee for this year is $25.83 lower that last year. The Trustees’ had a brief discussion on the type and amount of coverage and asked Ms. Ross to get quotes for higher coverage next year ($2M & $5M). Ms. Ross notified the board that she did get in hold of Mr. Zace regarding a refund of his contributions, but she has not heard anything else since. PRESENTATION OF THE 9/30/2013 AUDITED FINANIAL STATEMENTS: CHERY, BEKAERT (JIM BURDICK) Mr. Burdick welcomed himself back and reviewed the required communications letter. He noted that all together an unmodified opinion was issued, which is the highest level that can be issued. There were no deficiencies or material weaknesses found while performing the audit as well. Mr. Burdick discussed the DROP liability and how it is being accounted for in this report. Currently the DROP assets are considered a liability to the plan and then when the member exits the DROP and takes their money out, then that distribution is deducted from the plan’s DROP liabilities. Mr. Burdick explained that this board had the same conversation last year regarding the DROP assets and ultimately decided to continue to do it the same way. Also the Division of Retirement will accept the report either way, so it is more of a housekeeping thing. Lastly Mr. Martin asked if the audit should have a footnote reflected somewhere indicating that the board reduced their assumed rate of return, although it was after September 30, 2013. Mr. Burdick stated that the change will not have any impact on the numbers or the financials, but he could add in the footnote if the board wished for. Mr. Burdick noted that this is only a draft copy of the September 30, 2013 financial statements that are being presented today and that the board will need to meet again within a week or two to finalize them. NEW BUSINESS The Trustees reviewed the updated service provider contract list and the Sugarman & Susskind contract. Mr. Rhodes noted that the Sugarman & Susskind contact was signed in 2008 and the fee was guaranteed through December 31, 2010, and the fee has still remained the same till this day. The Trustees concurred that they were pleased with their legal services and do not want to make any changes at this time. 4 Mr. Morejon reviewed the 415 IRS rule and the timing of implementing the self-directed DROP accounts. He explained that currently the plan has an IRS determination letter which is good through 2016, and then they will re-file for another letter. Mr. Morejon wants to know what would happen to the self directed accounts if the IRS was to implement the 415 IRS rule in between the filings. Mr. Herrera explained that there are ways to get around the 415 IRS rule, but in the meantime nothing has been approved yet. Mr. Johnson presented the board with the Bogdahn fee proposal for monitoring the self- directed DROP accounts. After review with his firm Mr. Johnson thinks the best way to approach this is by increasing the annual rate altogether to $30K (from $22,500) and they would guarantee this fee for the next 3 years. This new fee would include all the DROP accounting and monitoring as well as all the other work they do for the board. Mr. Johnson explained the Bogdahn Group is a hard dollar fee and by increasing the hard dollar option, it actually decreased the fee as a percentage of assets. The Trustees discussed the fee increase and noted that they are happy with the services. A motion was made by Tom Murphy to approve and accept the Bogdahn fee increase to $30K per year effective July 1, 2014. The motion was seconded by Marty Cohen and carried 4-0. Lastly Ms. Ross stated that for the reminder of 2014 we will move the quarterly meeting dates (May, August & November 2013) back from 9AM to 1PM. OLD BUSINESS Mr. Morejon asked if the Actuarial Valuation report and the share account statements are available yet. Ms. Ross stated that as of yesterday neither documents where available yet. Mr. Murphy stated that 2 members received incorrect benefit statements. Ms. Ross stated that she will check with the Actuary and get them revised. Lastly Mr. Morejon wanted confirmation that members are not allowed to withdrawal or have access to their share or DROP accounts prior to them separating service. Mr. Herrera confirmed that was correct. Members must be collecting a pension check in order to have access to their DROP or share accounts. OTHER BUSINESS Mr. Rhodes acknowledged that the Division of Retirement has accepted and approved all of the plans Actuarial Valuation Reports through September 30, 2011. There being no further business, the meeting adjourned at 12:40PM. Respectfully submitted, Tom Murphy, Secretary