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Minutes 3-9-17.doc
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City of Palm Beach Gardens Police Officers’
Pension Fund
Minutes of the Meeting Held
March 9, 2017
The regular meeting of the Board of Trustees of the City of Palm Beach Gardens
Police Officers’ Pension Fund was called to order at 9:05 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)
Brad Seidensticker, Secretary Bonni Jensen (KKJ&L)
Marc Glass, Trustee John McCann (AndCo. Consulting)
Greg Mull, Trustee Steve Stack (Highland Capital)
TRUSTEE UPDATE
Ms. Ross briefly stated that the City is still working on appointing someone for the
open Trustee seat on the pension Board. The City is also asking for any
recommendations as well.
INVESTMENT MANAGER REPORT
Highland Capital Management – Presented by Steve Stack
Mr. Stack briefly updated the Board on his firm and stated that they recently added a
new employee who works in the financial and risk based sector. He reviewed the
market environment during the quarter ending December 31, 2016 and noted that
interest rates rose and bonds sold off and this Plan benefited from it. Mr. Stack
stated that portfolio wise they have shortened duration in anticipation on interest
rates rising so therefore 60% of their assets are in the 3-5 year range and they are
finding good yield there. They are also moving more into mortgage backed securities
because as rates rise less people will be refinancing their homes. As of March 7,
2017 the fixed income portfolio was up 1.28% so they are still keeping ahead. Lastly
Mr. Stack gave a brief update on the equities and noted that they continue to do well
and are up 12.91% for the quarter.
INVESTMENT CONSULTANT REPORT
AndCo. Consulting – Presented by John McCann
Mr. McCann explained this firm’s new name change to AndCo. Consulting that was
effective January 1, 2017. This name change does not have any effect on the
portfolio or personnel. Mr. McCann briefly reviewed the Plan’s September 30, 2016
aggregate chart that he does at the end of each year since he did not have time to
go over this at the last meeting.
Mr. McCann stated that the Plan now has 4 funds with Rhumbline as the
International equity portfolio was recently funded. As of December 31, 2016 the
total fund was up 2.43% versus the benchmark at 1.72% and the total assets are up
to $84.4M. Since the end of the quarter the fund has added another $2M. He
reviewed the asset allocation which is slightly out of balance on the fixed income side
due to the bonds rallying, but since the end of the quarter they are back in line with
the target allocation. Mr. McCann briefly reviewed each manager’s performance
during the quarter and commented that Oppenhiemer and Dreyfus will be moving
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over to Highland Capital. Also as of current this Plan is fully invested with American
Realty at 7.8% but can still go up to 10%. The Trustees had a lengthy discussion on
adding more to American Realty as real estate has been doing great. American
Realty currently has a 6 month entry queue but they can still put in the request now.
Mr. McCann stated that they will more than likely take from fixed income to fund real
estate, but he stated that he will confirm that once the call from American Realty is
actually made.
MOTION: Mr. Glass made a motion to increase the American Realty
holding to 10% by moving $2M from Highland Capital.
SECOND: Mr. Mull seconded the motion.
CARRIED: The motion carried unanimously 4-0.
Ms. Jensen commented that Thistle contract was assigned to the Bogdahn Group and
now they will need to assign it to AndCo. Consulting. Ms. Jensen recommends at this
point for the Board to sign a new contract with AndCo. Consulting to reflect the name
change, but everything else remains the same.
MOTION: Mr. Glass made a motion to allow the Chair to sign in between
meetings the updated Investment Consultant contract noting
the name change only.
SECOND: Mr. Mull seconded the motion.
CARRIED: The motion carried unanimously 4-0.
ATTORNEY REPORT
KKJ&L - Presented by Bonni Jensen
Ms. Jensen reviewed the new online State Annual Report requirement. This new
requirement requires that all State Annual Reports be filed online through the
Division of Retirement website. Therefore the signatures of the Chairman and
Secretary are no longer required.
Ms. Jensen stated that the FRS recently decreased their assumed rate of return from
7.8% to 7.6%, although their goal is 7.5%. This Plan was already proactive in
decreasing their assumed rate of return as they are at 6.8%. Also last year the FRS
changed their mortality table in which all DB Plans had to adopt as well, and this Plan
adopted that new table last year. Now this year the FRS has changed their mortality
table again, therefore this Plan has another 2 years to implement the new table into
the Plan once again.
Ms. Jensen noted that the IRS mileage rate decreased from 54 cents to 53.5 cents
effective January 1, 2017.
Ms. Jensen reviewed the Miami Beach fraud issue that recently occurred. She
explained what happened and commented that now would be a good time for this
Plan to double check their securities with their service providers and to also look into
cyber liability insurance coverage which can also protect the Plan against multiple
other uses. Ms. Ross will look into having someone attend a Board meeting to
discuss cyber liability coverage and to give some quotes.
The Board briefly discussed transitioning the DROP statements from GRS to PRC
since PRC processes the actual DROP distributions, the accounting would be easier
and cleaner. The Trustees tabled this discussion until the next meeting.
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The Trustees had a very lengthy discussion on the Share accounts and the excess
State money. Mr. Spencer explained that after the last meeting Ms. Jensen sent a
letter to the City regarding this outstanding issue and the City stated that the CBA is
closed and they are not reopening it at this time. Therefore at this point the default
plan is now in place regarding the Share accounts and splitting the excess State
money 50/50 between the Plan and the City. This default plan also affects the
retirees. On behalf of the retirees, Mr. Spencer stated that the default Plan will take
away benefits from retirees that they have earned and that is not legally allowed.
Therefore we need to keep in mind any legal ramifications that could occur when
dealing with this issue. There was a very lengthy discussion on the State money and
what benefits it has been used for and what benefits it will be used for going
forward. Ms. Jensen reminded the Trustees that under the default provision Share
accounts have to be established, but now the question is how those Share accounts
will be funded. Mr. Spencer shared some ideas he had the Actuary work out in
regards to splitting up the State money amongst the Share accounts for active and
retired members. Ms. Jensen stated that at this point to get a move on the issue,
the City will need to pass an Ordinance implementing Share accounts into the
pension plan and then they will work on funding them. After that the Board will need
to meet with the PBA to come up with the funding aspect.
Ms. Jensen stated that the summary plan description needs to be updated but at this
point she thinks the Board should wait until the Share account/state money issue is
resolved so that it can be added into this document as well.
Ms. Jensen presented the Board with her fee increase proposal. Her last fee increase
was back in March 2014 and therefore she is now asking to increase her hourly rate
to $265 (she noted that all her new clients pay $365 per hour). This new fee would
be effective April 1, 2017 and there is no lock in period. The Trustees discussed the
proposal and asked that a 3 year fee guarantee rate be added in. Ms. Jensen
concurred.
MOTION: Mr. Glass made a motion to approve Ms. Jensen’s fee increase
to $265 per hour effective April 1, 2017, with a 3 year fee
guarantee.
SECOND: Mr. Seidensticker seconded the motion.
CARRIED: The motion carried unanimously 4-0.
ADMINISTRATOR REPORT
Resource Centers – Presented by Audrey Ross
N/A
MINUTES
MOTION: Mr. Glass made a motion to approve the minutes from the
December 2, 2016 regular meeting.
SECOND: Mr. Mull seconded the motion.
CARRIED: The motion carried unanimously 4-0.
DISBURSEMENTS APPROVALS
MOTION: Mr. Glass made a motion to approve the disbursements.
SECOND: Mr. Mull seconded the motion.
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CARRIED: The motion carried unanimously 4-0.
BENEFIT APPROVALS
MOTION: Mr. Seidensticker made a motion to approve the applications to
exit the DROP for Jack Schnur, Ralph Kranchick, Chris Barca &
Tim Roman, the application for distribution from DROP account
(due to retirement 1/1/17) for Jack Schnur, the applications
for distributions from DROP account (due to retirement
3/1/17) for Chris Barca & Tim Roman, the applications for
distributions from DROP accounts (1/15/17) for William
Brandt, Robert O’Dell, Wayne Sidey & Todd Thomas, the
applications for distributions from DROP accounts (2/15/17)
for John Boyle, Sheree Brown, Gwen Fleming, Richard Geist,
Robert Odell, Jeff Main & Joseph Sheehan, and the application
for distribution of DROP account (3/15/17) for Gary Carmack.
SECOND: Mr. Glass seconded the motion.
CARRIED: The motion carried unanimously 4-0.
FINANCIAL STATEMENTS
The board reviewed and discussed the financial statements that were provided
through January 2017.
The board received and filed the financial statements through January 2017.
OTHER BUSINESS
Ms. Ross presented the Board with the Salem Trust letter that announced Mr.
Rinsem’s retirement that was effective December 31, 2016.
PUBLIC COMMENTS
N/A
AJOURN
There being no further business, the Trustees officially adjourned the meeting at
11:08PM. The next meeting is scheduled for Wednesday May 31, 2017 at 9AM.
Respectfully submitted,
_____________________________
Brad Seidensticker, Secretary