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MINUTES OF SPECIAL MEETING HELD
APRIL 12, 2016
A special meeting of the Board of Trustees was called to order at 1:03PM at Council
Chambers, Palm Beach Gardens, Florida. Those persons’ present were:
TRUSTEES OTHERS
Rick Rhodes, Chair Audrey Ross, Administrator
Martin Cohen, Vice Chair Doug Lozen, Actuary
Tom Murphy, Secretary Pedro Herrera, Attorney
Ed Morejon (departed 1:44PM)
Jon Currier
PUBLIC COMMENTS
N/A
PRESENTATION OF THE 9/30/2015 ACTUARIAL VALUATION REPORT:
FOSTER & FOSTER (DOUG LOZEN)
Mr. Lozen stated that he is here today to present the September 30, 2015 Actuarial
Valuation Report which sets forth the funding requirements for the fiscal year beginning
October 1, 2016. He noted that the total contributions for the next fiscal year slightly
decreased to 53.11% with the City required to contribute 40.31% of covered payroll after
taking into consideration the State money that the Plan receives. Mr. Lozen explained
that dollar wise the City’s contributions slightly decreased from about $3.7M this year to
$3M next year. He reviewed the favorable experiences that lead to lower contributions
and noted that the Plan’s investment rate of return exceeded the assumptions as well as
the payroll increases that were less than expected. During the fiscal year, the Plan made
some revisions such as reducing the payroll growth assumption for purposes of the
unfunded liability and reduced the investment rate of return from 7.85% to 7.65%. Mr.
Lozen noted that this report does reflect the City’s additional contribution during the
fiscal year ending September 30, 2015 of $791,354, which was applied to the Plan’s
unfunded liability balance. The Plan’s funded ratio this year increased to 84.6%
compared to 80.5% last year, even after the assumption changes that occurred this year.
He commented that if you remove the DROP and Share account balances from the Plan,
the funded ratio still remains above 80% at 82.6%. Mr. Lozen reviewed the Plan’s future
changes and noted that they still have two more reductions to go through until they meet
their target investment rate of return of 7.25%. In addition, the next Valuation will
include the required mortality table change to reflect the same mortality table as the FRS.
Mr. Lozen is estimating that this change in the mortality table could cost the Plan an
additional 1-7% of payroll, but they will not know the exact impact until next year’s
report is completed. The Board discussed the Plan’s unfunded liability breakdown and
Mr. Lozen noted that there is plenty of cash coming into the Plan to get the unfunded
liability payments to go down as scheduled. This year the Plan added $2M to the
unfunded liability balance, in which $791,354 of that came from the City as they made an
additional contribution to the Plan this year. As of September 30, 2015, the Plan’s total
unfunded liability balance was at $13.5M with scheduled annual payments of $1.5M.
The shortest unfunded liability payment is 8 years as the longest payment is 20 years out,
with a 4 year smoothing method applied. Mr. Lozen stated that overall this Plan is doing
very well, especially compared to their peers.
2
Mr. Lozen discussed the excess State money and how it will be distributed under the
new State Law that passed last year. The City and the Union need to come to a mutual
agreement on the use of the excess State money (this Plan is in compliance with the
Share account language as accounts have already been established). If there is not mutual
agreement made, then the Division of Retirement has issued a default plan where the
excess money will be split 50/50 between the City and the Share accounts. This decision
needs to be made in the next collective bargaining agreement (CBA). The Trustees noted
that the last CBA was just renegotiated effective October 1, 2015 and everything
regarding the State money and Share accounts remained status quo. Mr. Herrera stated
that by a copy of the CBA, it is sufficient to be in compliance with the new State law.
Lastly, Mr. Lozen stated that the GASB 67 & 68 reports have been completed and the
Senate Bill 534 report will be completed within 60 days of today. All of these reports are
for reporting purposes and do not affect the Plan’s assets or funding requirements.
Marty Cohen made a motion to approve the September 30, 2015 Actuarial
Valuation Report s as presented. The motion was seconded by Tom Murphy and it
carried 4-0.
OTHER BUSINESS
There being no further business, the meeting adjourned at 2:05PM.
Respectfully submitted,
Tom Murphy, Secretary