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HomeMy WebLinkAboutMinutes Police Pension 072408City of Palm Beach Gardens Police Officers' Pension Fund Minutes of the Meeting Held July 24h,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) Brad Seidensticker(departed 11:45AM) Steve Stack (ICC Capital Management) Wayne Sidey Howard Rew (Cherry, Bekaert & Holland) Rowana Flitan (Cherry, Bekaert & Holland) Bonni Jensen (Hanson, Perry, & Jensen, P.A.) Donna Cannon (Palm Beach Gardens Clerk's Office) Scott Baur (The Pension Resource Center) Audrey Ross (The Pension Resource Center) Dixie Martinez (The Pension Resource Center) MINUTES MOTION: Mr. Sidey made a motion to approve the minutes as amended from the April 24th, 2008 meeting. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 3 -0. 2008 AUDITED FINANCIAL STATEMENT REPORT Cherry, Bekaert & Holland — Presented by Howard Rew & Rowana Flitan Mr. Rew explained the Report of Independent Auditors to the Trustees. The report explains the process they went through when auditing the plan and their findings. Mr. Rew also discussed the Management's Discussion and Analysis Report. This report reflects the items that appear in the financial statements. Mr. Rew reviewed the net assets of the plan for the fiscal year ending September 30, 2007. They have increased by $6,130,731 during 2007, primarily due to employer and employee contributions. He commented that the net assets for the 3 year period and the net investment income have been improving tremendously. Mr. Rew commented that over the last 3 years there has been a significant improvement in Administration expenses, which has also helped the fund. He also reviewed the breakdown of the employer and employee contributions for the year ending September 30, 2007. Mr. Rew reviewed the deposit table which showed all the investments for the year. Ms. Jensen asked what the difference between the Money Market funds and the International funds were for purposes of the table. Mr. Rew commented that he would like to differ that question to the Investment Manager. Mr. Stack explained that they Money Market fund was more like a bank account that earns interest. The International fund holds Vangaurd and all the other International funds. Mr. Seidensticker commented that he was very concerned about how low the funded ratio of the plan was. Mr. Spencer stated that about a year ago when they made some assumption changes to the plan that it lowered their funded ratio. Mr. Spencer also explained that they have reached a plateau mark in their benefits, so now the future goal is to be 100% funded in the next 10 -15 years. Mr. Rew stated that the pension plan is only 16 years old and they have accomplished a lot within that time as a new plan. Ms. Flitan explained that she wants to stat the audit process a lot earlier for this year. She would like to have it completed by December, and she commented that she will start planning the process next week. MOTION: Mr. Seidensticker made a motion to approve the Audited Financial Statements for the year ending September 30, 2007. SECOND: Mr. Sidey seconded the motion. CARRIED: The motion carried unanimously 3 -0. INVESTMENT MANAGER REPORT ICC Capital — Presented by Steve Stack Mr. Stack commented that it has been a challenging market and that it was going to continue. He stated that you would have thought that the fixed income side would have been positive, but not for this quarter. For the quarter ending June 30, 2008 the fixed income fund was ahead of the index at -0.46% versus - 1.02 %, with bonds also ahead at -0.56% versus - 1.02 %. He stated that the growth fund did better at 4.08% versus the index at 1.25 %, and the equities also outperformed at 3.50% versus 1.25 %. Mr. Stack stated that his company is currently writing a letter about their thoughts regarding Fannie May and Freddie Mac and he will forward it over to the board once it is complete. Mr. Seidensticker commented that he just went in and bought into both because they were trading so low. Mr. Stack reviewed the asset allocation of each fund for the quarter. The fixed income fund was at 8.5% in cash and 91.5% in fixed income. For the growth fund there was 18.1% in cash and 81.9% in equities. Lastly, Mr. Stack reported that the funds large cap growth manager had resigned. Mr. McCann commented that he will monitor the fund and if there are any issues then he will suggest to the board to look for another manager. INVESTMENT CONSULTANT REPORT Thistle Asset Consultant — Presented by John McCann Mr. McCann stated that he has made all the necessary changes to the Investment Policy Guidelines relating to the fixed income fund. He commented that over the next 2 months he wants to get all the allocations in order. He wants to take money from the fixed income and put it into the S &P 500. Mr. Stack commented that he would like to be able to invest in BBB because they are still investment grade, but are lower then quality. He stated that he currently does not hold any BBB though. Mr. McCann replied that he would like to keep the Investment Policy Guidelines how they are now and they might consider going into BBB in the future. Mr. McCann reviewed the return of the fund for the quarter ending June 30, 3008. The total fund was negative but ahead of the benchmark at -0.01% versus -0.42% and the total equities were also ahead at 0.37% versus - 0.27 %. The total fixed income was ahead of the benchmark at -0.50% versus -1.02% and the international was ahead at -1.32% versus - 1.93 %. Mr. McCann reviewed the break down by manager and stated that the dollar figures are behind the allocations. The asset allocations of the portfolio for the quarter were at; 6% cash, 55% in equities and 39% in fixed income. Mr. McCann explained the MainStays situation. The account was closed out at the end of the quarter. Mr. McCann commented that this portfolio is well diversified but he would like to bring some real estate into the fund. He would split the S &P500 and put some into real estate. The board would have to amend the Ordinance to allow the fund to invest in real estate. Ms. Jensen commented that some funds remove all investment restrictions from the Ordinance and abide by the Investment Policy Guidelines. MOTION: Mr. Seidensticker made a motion to direct Bonni Jensen to draft an amendment to the Ordinance to remove all investment restrictions. SECOND: Mr. Sidey seconded the motion. CARRIED: The motion carried unanimously 3 -0. Lastly, Mr. McCann commented that he has the Investment Policy Guidelines that need to be approved. Mr. Spencer stated that he thinks the price to earnings ratio needs to be looked at a little closer. MOTION: Mr. Seidensticker made a motion to approve the Investment Policy Guidelines. SECOND: Mr. Sidey seconded the motion. CARRIED: The motion carried unanimously 3 -0. BOARD DISCUSSION Mr. Spencer explained that he just returned from the FPPTA conference; his third year in a row. The main theme of the conference was how plans need to take a shift on how they are investing. He stated that this plan really needs to think about investing in alternatives; considering real estate and hedge funds. Mr. Spencer commented that interest rates are at their lowest now and as they drop the bonds will go up. Again, Mr. McCann stated that they would need to amend the Ordinance to reflect investing in real estate or hedge funds. Mr. McCann will bring in a real estate search and other information regarding alternatives to the next meeting. DISBURSEMENTS APPROVALS MOTION: Mr. Seidensticker made a motion to approve the disbursements. SECOND: Mr. Sidey seconded the motion. CARRIED: The motion carried unanimously 3 -0 BENEFIT APPROVALS MOTION: Mr. Sidey made a motion to approve the benefit approvals. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 3 -0 ATTORNEY REPORT Hanson, Perry & Jensen, P.A. — Presented by Bonni Jensen Ms. Jensen reviewed her fee increase proposal with the board. MOTION: Mr. Sidey made a motion to execute Bonni Jensen's fee increase agreement. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 3 -0. Ms. Jensen reviewed the workers compensation rules and regulations as they are now. She stated that when members take time off they do not get credit for time of service, so therefore members should not be making contributions into the pension plan. Ms. Jensen explained that she can amend the rules to allow members to continue making pension contributions when they are out on workers compensation. This rule can also retro back to the members that are now affected by this situation. MOTION: Mr. Sidey made a motion to amend the workers compensation rules and regulations. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 3 -0 Ms. Jensen commented that the Ordinance amendments have not been approved by the council. Ms. Jensen reviewed the Federal and State memo. She explained that it is now a mandatory provisions that when a member leaves employment to go serve our Country and then dies, that the surviving spouse must collect a benefit. The question that still remains is if you will treat the death as a duty or non duty. Ms. Jensen reviewed the changes that were discussed at the workshop in Tallahassee that she attended regarding Actuarial changes to pension plans. She believes that the rules that were proposed will exceed authority. The state will hold another workshop in September to discuss the situation further. Ms. Jensen reported that the IRS is encouraging all public pension plans to file for an IRS determination letter, which will state that the plan is qualified. She explained that the IRS feels that they have underserved the public pension plans for quite sometime and now they want to help. If they board would like to file for this letter it has to be done by January 31, 2009. She commented that there will be an additional cost to the plan to file for the letter. The board agreed that they will wait until the next meeting before making a decision. Lastly, Ms, Jensen stated that she will bring back the revised Summary Plan Description to be approved at the next meeting. ADMINISTRATOR REPORT The Pension Resource Center, LLC — Presented by Audrey Ross & Dixie Martinez Ms. Ross stated that the Annual Report has been sent to the state and we have not heard anything back yet. We will keep the board updated on the process. 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 October 30, 2008 at 9AM; the Trustees officially adjourned the meeting at 12:18PM. Respectfully submitted, DAVID PIERSON, Secretary