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