Loading...
HomeMy WebLinkAboutMinutes Police Pension 060116 Minutes 6-1-16.doc Page 1 of 4 City of Palm Beach Gardens Police Officers’ Pension Fund Minutes of the Meeting Held June 1, 2016 The regular meeting of the Board of Trustees of the City of Palm Beach Gardens Police Officers’ Pension Fund was called to order at 9:08 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) Marc Glass, Trustee Bonni Jensen (KKJ&L) Brad Seidensticker, Trustee John McCann (The Bogdahn Group – Greg Mull, Trustee via teleconference) John Manuel, Trustee Steve Stack (Highland Capital) Alisa Train (Cherry Bekaert) Pete Strong (GRS) Richelle Hayes (American Realty) Randy Buntin (PBG Police Officer/ Union Rep) INVESTMENT CONSULTANT REPORT The Bogdahn Group – Presented by John McCann (via teleconference) Mr. McCann briefly reviewed the market environment during the quarter ending March 31, 2016 as well as the Plan’s compliance checklist. The total fund net of fees underperformed the index at 1.89% versus 2.03% and for fiscal year to date they are up 5.38% versus the index at 5.64%. He reviewed the Plan’s asset allocation and noted that the transfer from Vanguard to Rhumbline has not been completed yet, but is in the process. Also Mr. McCann recommended increasing their real estate target to 10% as that is the max that is allowed under the State guidelines, and real estate is doing very well too. The Trustees discussed and noted that they did not want to move ahead with that at this moment and will discuss it again at the next meeting. Mr. McCann reviewed each manager’s performance during the quarter and noted that overall the fund is doing very well despite the market place. Lastly he presented the Board with an updated flash performance report as of May 27, 2016. Mr. Spencer thanked Mr. McCann for providing this additional report and confirmed with the other Trustees that this report contains the information they wanted. Ms. Jensen noted that she has the Thistle Asset/Bogdahn Group addendum as well as the Assignment and Assumption ready for the Board to execute today noting the merge between the two companies as well as the reduced fee agreement. Mr. McCann confirmed he will be reducing the Plan’s fee by $1,800 per year since we will no longer have the Vanguard accounts to track, for a revised total yearly fee of $12K effective April 1, 2016. MOTION: Mr. Seidensticker made a motion to approve the addendum #2 to the investment monitoring services agreement between the Plan and Thistle Asset Consulting as presented, as well as the Assignment and Assumption of Thistle Agreement to Bogdahn Consulting, LLC as presented. Minutes 6-1-16.doc Page 2 of 4 SECOND: Mr. Glass seconded the motion. CARRIED: The motion carried unanimously 5-0. PRESENTATION OF THE SEPTEMBER 30, 2015 AUDITED FINANCIAL STATEMENTS Cherry Bekaert – Presented by Alisa Train Ms. Train introduced herself and stated that she was here to present the September 30, 2015 audited financial statements and Mr. Burdick returned from Cherry Bekaert a couple of weeks ago. She reviewed the required communication letters in regards to the audit and noted that there were no findings while performing the audit, no material weaknesses, or reportable compliance issues. A modified opinion was issued for this audit, which is the highest level that can be achieved. Ms. Train noted that there were no changes this year in regards to accounting, planning, or timing of the audit. There were no incorrect adjustments made this year, or no issues with management while performing the audit. Ms. Train explained that she will need the Board to sign an audit representation letter today so that the final copy of the audit can be issued and filed. Lastly she briefly commented on the Plan’s assets from 2014 to 2015 and noted that they increased from $72.6M last year to $74M, but mostly everything else remained the same. MOTION: Mr. Glass made a motion to approve the September 30, 2015 Audited Financial Statements as presented. SECOND: Mr. Manuel seconded the motion. CARRIED: The motion carried unanimously 5-0. PRESENATION OF THE SEPTEMBER 30, 2015 ACTUARIAL VALUATION REPORT GRS – Presented by Pete Strong Mr. Strong noted that he revised the October 1, 2014 Valuation Report due to a small correction and that has already been submitted and approved by the Division of Retirement, as well as all other necessary parties. He noted that the revised report changed the total contribution requirement by $6K, which the City is aware of and will need to pay. Mr. Strong presented the Board with the October 1, 2015 Valuation and noted that the City is making their annual required contribution amount in one lump sum payment to the Plan at the beginning of the fiscal year as it saved the City money in interest. For the fiscal year ending September 30, 2017 the total required contributions are 61.11% ($3.2M) of payroll versus 68% ($3.3M) of payroll this past year. Mr. Strong reviewed the breakdown of how the additional City contribution of $601,407 was applied to the Plan’s unfunded liability this year. Also he noted that the Plan’s funded ratio as of September 30, 2015 is slightly increased to 71.78% from 70.8% last year. Mr. Strong reviewed the changes in this year’s report which include the FRS mortality table change, the decrease in the Plan’s assumed rate of return from 7.1% to 6.9% as their goal is 6.5%, and all the assumption changes that were previously approved by the Board; salary increase rates, retirement rates, separation/withdrawal rates, and disability rates. Mr. Strong reported that this year the Plan had a net actuarial loss of $893,801 which was mainly due to more retirements than expected, higher salary increases than expected, and the recognized investment return was below the assumed rate of return. He reviewed the breakdown of benefit payments and assets and noted that it does not include the DROP member’s assets which are around $6M. The Plan’s total unfunded liability Minutes 6-1-16.doc Page 3 of 4 balance is $23.6M. The Trustees had a lengthy discussion on how to pay down the Plan’s unfunded liability quicker and Mr. Strong stated that they can change the amortization period from 21 years to 15 years to pay off the balance 6 years earlier, but that would cost the City approximately an additional $300K each year for 15 years or until the unfunded liability balance is paid off. The Trustees tabled that discussion until the next meeting when they have time to reach out to the City to get their thoughts, as the City is hoping to make another additional contribution to the Plan again this year. Mr. Strong presented the Board with the GASB No. 67 report for the fiscal year ending September 30, 2015. He reminded the Board that no action was needed on their behalf as this report will be filed with the Division of Retirement and is for informational purposes only. MOTION: Mr. Mull made a motion to approve the September 30, 2015 Actuarial Valuation Report as presented. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 5-0. MOTION: Mr. Glass made a motion to set the assumed rate of return at 6.9% for this year, next year, and the long term thereafter. SECOND: Mr. Manuel seconded the motion. CARRIED: The motion carried unanimously 5-0. Lastly Mr. Strong discussed the use of the State money. He commented that the current base amount is $412,644 and the amount received this year was $524,479. Ms. Jensen explained the new State Statute and explained that the agreement between the City and the Union (or the State’s default method) on the use of the excess State money needs to be written into the CBA. Mr. Glass stated that the CBA is supposed to be ratified tomorrow and this issue is not addressed in it. The Board called in Mr. Randy Buntin (Union rep) to the meeting. Ms. Jensen explained to Mr. Buntin and the Board that if no mutual agreement between the City and the Union about the use of the excess State money is written into this CBA then the default 50/50 split from the Division of Retirement will fall into place. The Trustees and the members want the use of the excess State money to remain status quo and for that to happen it still needs to be written into the CBA. Ms. Jensen stated that this agreement can also be done through a memo of understanding. Mr. Buntin stated that he will get with the other Union members right away to discuss getting a memo of understanding regarding this as there is no way they can have this written into the CBA by tomorrow. The Board also directed Ms. Jensen to contact the City, Union and Police Chief to get the State money language added into the CBA or a memo of understanding as soon as possible. Both parties will report back to the Board. INVESTMENT MANAGER REPORT American Realty Advisors – Presented by Richelle Hayes Ms. Hayes welcomed herself back and gave a brief update on the firm. Their total firm assets are up to $7.3B and they have 10 offices nationwide. They own 154 properties with 399 investors and as of date they have not had any litigation or conflicts of interest reported. American Realty does not hold any debt on their balance sheets and their leverage can go up to about 35-40%, but they always stay around 20%. Ms. Hayes noted that the portfolio does not have an outgoing queue, but they still do have an incoming queue which is about 2-3 quarters long. She Minutes 6-1-16.doc Page 4 of 4 reviewed the Plan’s performance as of March 31, 2016 and noted that the total assets are up to $5.1M with a one year return of 12.09% versus 13.12%. On April 1, 2016 they made another capital call and a portion of this Plans assets were called, although there is still another $325K to be invested. During the quarter they sold 2 properties which leaves 8 remaining in this portfolio which an average occupancy rate of 92%. Lastly she reviewed a couple of the properties held in the portfolio and noted that they are only real estate managers and do not invest in any other sectors. INVESTMENT MANAGER REPORT Highland Capital Management – Presented by Steve Stack Mr. Stack gave a brief update on the market environment during the quarter and noted that they will keep trading government issued bonds as the rates don’t really affect them either way because they are staying market and duration neutral. Growth is the most challenging market to be in right now as they are trying to keep up. For the quarter ending March 31, 2016 on the value side they are down -1.66% versus the index at 0.74% and for the fiscal year to date they are also trailing the index at 2.77% versus 8.11%. Fixed income held up the quarter at 3.36% versus the index at 3.03% and for the fiscal year to date they are up 3.41% versus 2.45%. ATTORNEY REPORT KKJ&L - Presented by Bonni Jensen Ms. Jensen presented the Board with the proposed Ordinance regarding the required IRS changes due to the IRS determination letter. This proposed ordinance also includes the rehire after retirement language and how they are going to deal with it. Any retiree except for disability retirees can be reemployed by the City in any other position but a police officer and can still collect their pension. If the member is reemployed as a police officer then their pension will stop and they will not collect again until they are no longer working for the City. Also the member does not get any makeup pension payments for the time they were rehired by the City, unless they were rehired as a reserve officer. The Trustees discussed what was considered “rehired” and Ms. Jensen commented that a member cannot willing know that they will be rehired when they retired. The Trustees also discussed the new normal retirement age that was recently put into place by the Division of Retirement; the 20 years of service and out no matter the age. Ms. Jensen stated that this proposed ordinance includes that revised language as well. This ordinance will be presented to City Council. MOTION: Mr. Glass made a motion to authorize and approve legal counsel to forward the proposed ordinance to the City for approval as presented. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 5-0. ADMINISTRATOR REPORT Resource Centers – Presented by Audrey Ross Ms. Ross reminded the Trustees that their annual Form 1 Disclosure forms are due July 1, 2016. They need to be filed with the Supervisor of Elections in the County that the Trustee resides in. Ms. Ross confirmed that the next meeting date is scheduled for Thursday September 22, 2016 at 9AM and she will also have the proposed 2017 meeting dates then as well. Minutes 6-1-16.doc Page 5 of 4 MINUTES MOTION: Mr. Manuel made a motion to approve the minutes from the March 10, 2016 regular meeting. SECOND: Mr. Glass seconded the motion. CARRIED: The motion carried unanimously 5-0. DISBURSEMENTS APPROVALS MOTION: Mr. Glass made a motion to approve the disbursements. SECOND: Mr. Manual seconded the motion. CARRIED: The motion carried unanimously 5-0. BENEFIT APPROVALS MOTION: Mr. Manual made a motion to approve the applications to exit the DROP for Glenn Wright & George Clay, the application for distribution from DROP account due to retirement for George Clay, the applications for distributions from DROP accounts due to MRD for Ernest Carr & Jules Barone, the application for distribution from DROP account (1/15/2016) for Wayne Sidey, the applications for distributions from DROP accounts (5/15/2016) for Robert Wummer, Ronald Council & Sheree Brown, and the applications for distributions from DROP accounts (6/15/2016) for Jay Spencer & Todd Thomas. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 5-0. FINANCIAL STATEMENTS The board reviewed and discussed the financial statements that were provided through April 2016. The board received and filed the financial statements through April 2016. OTHER BUSINESS N/A PUBLIC COMMENTS N/A AJOURN There being no further business, the Trustees officially adjourned the meeting at 11:45M. The next meeting is scheduled for Thursday September 22, 2016 at 9AM. Respectfully submitted, _____________________________ Brad Seidensticker, Secretary