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HomeMy WebLinkAboutMinutes Fire Pension 081808PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND MINUTES OF MEETING HELD August 18, 2008 A meeting of the Board of Trustees was called to order at 10:00 A.M. at Council Chambers, Palm Beach Gardens, Florida. Those persons present were: TRUSTEES OTHERS Ed Morejon Margie Adcock and Scott Baur (11:30 A.M), Administrator Tom Murphy Bob Sugarman, Attorney Richard Hitchins (10:55 A.M.) Mike Welker, Investment Monitor Steve Rogers Rick Rhodes MINUTES The Board reviewed the minutes of the meeting held June 16, 2008. A motion was made, seconded and carried 4 -0 to accept the minutes of the meeting held June 16, 2008. ATTORNEY REPORT Mr. Sugarman noted that there was an issue raised about individuals hired at the same time but having different Share Account balances. Mr. Armstrong has indicated that the difference goes back to 2004. Mr. Armstrong needs copies of the prior State Annual Reports in order to figure out the discrepancy. A motion was made, seconded and carried 4 -0 to authorize the Actuary to review the discrepancy in Share Account balances and pinpoint the error with a cost not to exceed $3,000. Mr. Sugarman stated that he was contacted by one of the securities attorneys asking the Board to seek lead plaintiff status. He stated that the Board should decide if they wanted to approve seeking lead plaintiff status and how to do so in between meetings. He stated that it could be approved subject to ratification by the Board at a following meeting or the Board could have a special meeting. A motion was made, seconded and carried 4 -0 to delegate the Chairman the authority to approve lead plaintiff in a class action or derivative action between meetings with approval by the Board at the following meeting. It was noted that there was a balance in the Share Account for Shawn Thurman. It was confirmed that there was no distribution made during the fiscal year October 1, 2006 to September 30, 2007. Mr. Armstrong wanted to confirm that his decision to credit net investment earnings was consistent with the Ordinance and the Board's intent. Mr. Sugarman stated that the issue is not really answered in the Ordinance. The issue is whether the Share Account value includes accrued earnings. There was a lengthy discussion. The Board determined that the Share Account balance should include earnings. A motion was made, seconded and carried 4 -0 that when a death benefit is paid, all accrued earnings should be paid even if it requires a subsequent and separate 2 payment. The Board directed the Administrator to pay the balance in the Share Account for Shawn Thurman. Mr. Sugarman reported that the contract with Agincourt was completed. Mr. Sugarman stated that he had worked with the Chairman on a letter to the City Council on the possibility of going to FRS. A letter was received back from the City that there were just informal discussions and that the City would advise the Board if there were serious discussions. Mr. Morejon reported that he has heard nothing further with respect to this. Mr. Sugarman discussed filing for an IRS Determination Letter. He stated that he attended a roundtable discussion by the IRS. He stated that the IRS has an interest in public pension plans and concerns of underfunding and DROP plans costing tax dollars. He stated that the IRS would be sending out a questionnaire to all of the public pension plans. If a plan requests a Determination Letter, they might not receive the questionnaire. He stated that they are working on the IRS Determination Letter that the Board approved at a prior meeting. Mr. Sugarman discussed the proposed changes to the State Administrative Rules pertaining to funding and disclosure. He discussed the workshop the Department of Management Services held to discuss the proposed changes to Section 60T of the Florida Administrative Code. He noted that another workshop is scheduled for September 10 after the Division of Retirement Conference. Mr. Sugarman encouraged Trustees to attend and speak at the workshop. He stated that the Actuary prepared a memorandum dated July 17, 2008 on their comments to the proposed changes. Mr. Sugarman reviewed some of the proposed changes to the Rules. He stated that these proposed changes will make the Board's job harder and will be more cost for the City with no greater benefits. He suggested that someone present this to the City and have them speak up as well as this has a bigger financial impact on the City than the Board. It was noted that Voyageur was seeking the Board's consent to using the Fund as a client name. The Board stated that they had no objection in providing consent to using their client name. ADMINISTRATIVE REPORT It was noted that American Realty Advisors provided a consent and authorization to deliver certain documents to the Fund electronically. Mr. Sugarman stated that this would be fine as long as the Administrator has the ability to locate and retrieve that information. It was determined that the Board should make a blanket approval for such requests. A motion was made, seconded and carried 4 -0 to authorize electronic delivery by any of the investment mangers who want to, contingent upon the Administrator being able to store and back up the information. 3 Ms. Adcock presented the list of disbursements to be made. A motion was made, seconded and carried 4 -0 to approve the disbursements listed . Ms. Adcock provided the Board with a copy of the Resolution on Social Security Numbers and the contracts with Davis Hamilton Jackson & Company and Agincourt for their Trustee Handbooks. Ms. Adcock stated that the online benefit calculator was working. INVESTMENT MONITOR REPORT Mike Welker appeared before the Board. He discussed the market environment and asset class performance. He stated that all asset classes were negative except for the mid cap. He noted that growth did better than value. He stated that energy, materials and industrials drove the quarter. Mr. Welker stated that he had prepared a letter for the Board to sign for the Custodian to open separate accounts for all of the managers. This will enable each account to be invoices separate and tack the cash flow. Richard Hitchins entered the meeting. Mr. Welker reviewed the investment performance for the quarter ending June 30, 2008. The total market value of the Fund as of June 30, 2008 was $22,775,912. The Fund was down 1.35% net of fees for the quarter while the benchmark was down 1.27 %. The equity portfolio managed by Dana was up .37% for the quarter while the benchmark was down 1.69 %. The portfolio managed by Galliard was down .76% for the quarter while the benchmark was down 1.02 %. Mr. Welker stated that because of the commingled issues, they would be moving the money out of Galliard and to Agincourt. He noted that Agincourt has better returns than Galliard. The international portfolio managed by Voyageur was down 10.94% for the quarter while the benchmark was down 1.93 %. Mr. Welker noted that up until this quarter, their numbers were good. Voyageur is a deep value manager. A couple of companies, like British Home Builders, did poorly. Additionally, their sock selection within materials did poorly. There has been no change in their process and the company is strong. He stated that the Fund is large enough now that it makes sense to fund an international growth manager to complement Voyageur and balance the volatility. They still like Voyageur and for the long term they look very strong. There was discussion on the actuarial assumption rate of 8.25 %. Mr. Welker stated that long term they still feel confident because of the way the portfolio is diversified. However, for the short term it will be tough to get 8.25 %. They are exploring additional asset classes to try to get the return to meet the 8.25% assumption in the short term. Scott Baur entered the meeting. 4 DISABILITY HEARING — TOBY BIVINS Mr. Sugarman provided an introduction. He noted that there are five questions the Board has to answer in the affirmative in order to grant a disability to Toby Bivins. Mr. Sugarman reviewed the five questions. He noted that this was an injury claim and not an illness claim. He reviewed the Disability Book his office prepared, the Code, Application, job description, personnel and risk management records, medical records and the IME of Dr. Sherman. Mr. Sugarman recommended that the Board permit Mr. Bivins or his attorney Richard Sicking or both to present their case and answer questions. He stated that at the end the Board could make a motion to grant, deny or table because more information or time is needed. Mr. Sicking provided an introduction. He stated that Mr. Bivins received a letter from the Chief dated March 27, 2008 recommending termination on April 4, 2008 due to the disability provision in Article 23 of the collective bargaining agreement, which gives one year to return to full duty. Mr. Sicking stated that on March 27, 2007 Mr. Bivins was unloading a truck and a tool weighing about 70 pounds feel on him and injured his back. He had a herniated disc and had surgery. He had an injury in 2003 where he injured his back in a brush fire in Colorado and had surgery and retuned to duty. In 2005, he injured his back puling hose. The workers' compensation carrier denied the claim due to a pre- existing condition. It was noted that on February 27, 2007 Mr. Bivins went to the ER and there were two different histories as to why he was there. Dr. McFarland stated that he was there because he had back pain on and off. The handwritten description on the notes from that ER visit state that Mr. Bivins fell from an 8 -foot ladder the day before. Mr. Bivins provided the time records from February 27 to March 27, 2007. He opined that Mr. Bivins could not have worked all of those shifts between that period with a herniated disc. Mr. Sicking stated that he has asked Dr. McFarland for an addendum to clarify the notes of the visit to the ER on March 27th. The Board had numerous questions for Mr. Sicking and Mr. Bivins. Mr. Sicking noted that aggravation of a pre- existing injury does not prevent a disability pension. Mr. Sugarman agreed. The Board has to take them as they are if they came back to work. Mr. Sugarman noted that the Board needs to determine if the injury was from the fall off the ladder which aw off duty or from the tool that fell on him which was on duty. Mr. Bivins stated that he did not fall off an 8 -foot ladder or into a fence. He went to the ER on February 27, 2007 because his back hurt. The Board stated that there appeared to be a number of inconsistencies. The Board thought seeing the call loads and talking to Mr. Bivins' partners from February 27 to March 27, 2007 might be helpful. There was discussion on providing misleading statements under Chapter 440 and how that could be a crime. Mr. Sugarman stated that Chapter 175 has an identical law. Mr. Sugarman stated that at the moment that is just an acquisition and a crime would need determined by a criminal court before the forfeiture requirements under Chapter 175 would come into play. Mr. Sugarman noted that the City has taken an interest in this case. He stated that right now there is no criminal finding in this case. He stated that the Board could wait on a ruling until that is resolved. Mr. Sicking stated that once 120 days have gone by the only way they can contest it is by a claim of fraud, which can be done either in a criminal case or a workers' compensation judge could find fraud. Mr. Sugarman stated that the workers' compensation 9 determination is not binding on the Board like a criminal court conviction, although it could be persuasive and certainly is admissible. Mr. Sugarman stated that if the Board wanted to wait to see what happens with the workers' compensation case that is certainly reasonable. Mr. Sicking stated that there was a hearing on the motion in October. Mr. Sugarman stated that the City is asking the workers' compensation judge whether the March injury was the cause of the disability for which workers' compensation benefits were made or were they due to an injury that occurred earlier in February. This is exactly the same question that the Board has. If the workers' compensation judge grants the motion, there will be a hearing with sworn testimony on this issue. Mr. Sicking stated that he was not aware of any criminal proceedings. There was a lengthy discussion. Mr. Sugarman asked the Board if they wanted to wait for the fraud allegation to play out to which the Board responded in the affirmative. Mr. Sugarman stated that he would advise Mr. Sicking and the City Attorney to notify the Board of the October hearing. The Board determined that they needed to get any information available to help the Board made a decision. Mr. Sugarman stated that the workers' compensation hearing is in progress and he will ask to be kept updated; he would correspond with Dr. Sherman for a more definitive idea of whether Mr. Bivins is completely and totally permanently disabled, if appropriate, he would correspond with Dr. McFarland to have him clarify his notes and the nurses notes from the ER visit on February 27, 2007, and suggested that the Board obtain the call log reports and talk to Mr. Bivins' co- workers for the time period of February 27 to March 27, 2007. Steve Rogers departed the meeting. The Board directed Tom Murphy to obtain the call logs and set up in any way he deems possible and appropriate meetings with the co- workers. A motion was made, seconded and carried 4 -0 to table the disability hearing of Toby Bivins pending response from Dr. Sherman and Dr. Gomez on clarification of information; interviews with co- workers; information from Mr. Sicking on the workers' compensation hearing in October and whether Mr. Bivins has reached MMI; and clarification of the notes of Dr. McFarland and the nurses notes. Richard Sicking and Toby Bivins departed the meeting. INVESTMENT MONITOR REPORT CONTINUED Mr. Welker provided a revised draft Investment Policy Statement. He stated that it coordinates with the current Ordinance. It also includes addendums for Dana Growth, Dana Value and Voyageur. Mr. Sugarman stated that he would take one more look at the IPS to make sure there are no other issues. A motion was made, seconded and carried 4- 0 to accept the revised Investment Policy Statement subject to the Attorney's review and corrections. Mr. Welker presented the letters to terminate Galliard and instruct the Custodian to add manager accounts for signature. A motion was made, seconded and carried 4 -0 to 6 execute the letters to terminate Galliard and instruct the Custodian to add manager accounts. Mr. Welker provided information on alternative investments. He stated that he liked infrastructure but cannot do it right now based on the Ordinance. He stated that they really need to get in front of the Council to discuss with them the way to help the Fund get better returns in this rough market. Mr. Welker discussed TIPS (Treasury Inflation Protected Securities) and CIPS (Corporate Inflation Protected Securities). He stated that CIPS is a wonderful way to hedge against equity market volatility. He recommended a search for a complement manager who can do both TIPS and CIPS. He stated that 5% in this portfolio makes sense. When markets rally, this asset class does not do well, but is up in environments when domestic and international stocks are down. It is good for diversification. Mr. Welker discussed real estate. He stated that he wants the Fund to be able to invest in all different areas. It is a great opportunity but not allowed in the current Ordinance because of quality and the 10% limitation. Mr. Welker stated that they would talk to Allan Owens. A motion was made, seconded and carried 4 -0 to authorize the Investment Monitor to bring in some managers for TIPS /CIPS and international growth and to set up something with the City. ADMINISTRATIVE REPORT CONTINUED Mr. Baur appeared before the Board. He provided a summary of the Plan provisions. He stated that they are also the Administrator for the Police Pension Plan and had a long process of getting information from the City and historical data. He stated that he feels relatively comfortable that the information they are now receiving for this Plan is clean. He discussed the online calculator. Mr. Baur addressed communication issues and provided updates on his firm and what they are doing. It was suggested that perhaps a survey could be drafted to be sent out to the Participants in order to get more feedback. OTHER BUSINESS There being no further business, the meeting adjourned. Respectfully submitted, Tom Murphy, Secretary