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HomeMy WebLinkAboutMinutes Police Pension 120607[ ___ _ City of Palm Beach Gardens Police Officers' Pension Fund Minutes of the Meeting Held December 6th, 2007 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: 15 AM by Chairman, Jay Spencer in the Council Chambers at the Palm Beach Gardens City Hall at 10500 North Military Trail, Palm Beach Gardens, Florida. TRUSTEES PRESENT Jay Spencer, Chairman David Pierson, Secretary Jules Barone Wayne Sldey MINUTES OTHERS PRESENT Brendon Vavrica (Thistle Asset Consulting) Steve Stack (ICC Capital Management) Bonni Jensen (Hanson, Perry, & Jensen, P.A.) Donna Cannon (Palm Beach Gardens Clerk's Office) Scott Baur (The Pension Resource Center, LLC) Audrey Ross (The Pension Resource Center, LLC) Steve Palmquist (Gabriel, Roeder & Smith) MOTION: Mr. Pierson made a motion to approve the minutes from August 30th 2007 as amended by Bonni Jensen. SECOND: Mr. Sidey seconded the motion. CARRIED: The motion carried unanimously 4-0. INVESTMENT MANAGER REPORT ICC Capital -Presented by Steve Stack Mr. Stack stated that the market has been a rollercoaster ride, but lately it has pulled back a little. He commented that the fixed income side has held up pretty well even though there has been a lot of volatility in the market. He reported that they were a little behind at the current quarter at 2.61 % versus the benchmark at 3.47% and for the year to date ending 9/30/07 they were ahead at 4.84% versus the target index at 3.47%. Mr. Stack reported that the fixed income side has been a little finicky lately, and that they just took over some more money in the growth area. Even though they have been adding to the portfolio they have also been trimming back a little. He stated that they are having difficulty finding a good value in the fixed income side. Mr. Stack commented that recently the cities and municipalities have been taking away money from the retirement systems, but it does not affect this fund because they have no floating rates, CDO's or subprimes. Mr. Spencer explained that at the last meeting Mr. Mccann asked Mr. Stack to rewrite the Investment Policy and wanted to know if it has been done yet. Mr. Stack stated that it has been revised but not signed due to some questions that Mr. Mccann had. Mr. Spencer commented that he will table this matter till the Investment Consultants Report at the next meeting. Mr. Spencer asked about the D I :I ! situation with CitiGroup and Mr. Stack replied that he thinks CitiGroup will get hit because they are selling subprime loans for 2/3 of the cost. He stated that It will not impact this fund at all because they do not have CitiGroup in their portfolio. Mr. Pierson recommended moving money from ICC Capital to their International Stocks because that is where he thinks the money will be in 5 years. He commented that the fund currently has 7. 7% investment in international and he thinks they should raise it to 10% since that is their limit. INVESTMENT CONSULTANT REPORT Thistle Asset Consultant -Presented by Brendon Vavrica Mr. Vavrica introduced himself to the board and stated that Mr. Mccann could not make it due to a personal issue. Mr. Vavrica stated that he has been with the company for about 6 months and gave a little on his background. Mr. Vavrica reported that their International Fund has been doing extremely well. He reviewed each International Fund and stated that the Vanguard Global Equity Fund for one year has done well at 27% versus 21.09% for the index with a fee of . 72 basis points and was rated with 5 stars. Mr. Vavrica had no recommendations to change anything in this fund. Vanguard International Growth also did well with a return of 28. 99% versus 24.87% for one year. Vanguard International Value Fund beat the index target as well at 26.36% versus 24.87% for one year, and lastly Mainstay ICAP International Fund for one year had a 25.56% return versus 24.87% which outperformed the index too. Mr. Vavrica reported that as of 9/30/07 the RlOOOG had a return of 4.21 % and the R2000 was the worst performing sector the last couple of quarters because they have been seeing a lot of rotation. Mr. Vavrica then reviewed all the compliance questions and explained the ones that were not in compliance with the policy. He reported that the total fund did not meet the policy for over a 3 year period . Ms. Jensen asked why the total fund did not beat the index . Mr. Vavrica replied that it was due to fees. Mr. Vavrica reviewed the total allocations and stated that 8% is in cash, 56% in equities, and 36% in fixed income. He also explained the breakdown of each individual manager and give the dollar amounts that each of them holds. The board asked that Thistle break up the cash and the fixed income next time. Mr. Spencer stated that he wants to add more money into the International Fund (about 2%), but wants to know where it should be taken from. Mr. Pierson stated that they should take the money from either the small cap side or the fixed income side. MOTION: Mr. Pierson made a motion to move money from the cash fixed income side to the International side to fund the full 10°10 in International Funds. Mr. Spencer will sign the documents after the meeting SECOND: Mr. Barone seconded the motion. CARRIED: The motion carried unanimously 4-0. u ( lf Mr. Vavrica continued to report that for the current quarter the total funds return is doing well at 2.13% versus 1.73% for the target index. For one year the return was 11.90% versus 12.97% which puts them slightly behind the index. The total equities for the current quarter are ahead at 1.82% versus 1.03% and for one year they just beat the index at 17.99% versus 17.05%. As for the total fixed income side, they are trailing a little behind at 2 .92% versus 3.01% for the current quarter and 4 .98% versus 5.10% for one year. Mr. Vavrica also reported that the S&P 500 is outperforming for the current quarter at 2.22% versus 2.03%, and for one year it also outperformed at 16.63% versus 16.44%. Lastly, the S&P 400 is trailing a little for the current quarter at -.81% versus -.87%. ACTUARY REPORT Gabriel, Roeder & Smith -Presented by Steve Palmquist Mr. Palmquist explained that he is reviewing the October 2006 Actuarial valuation report, but should be reviewing the October 2007 report. Mr. Palmquist stated that they are over and above the amount that needs to be contributed by the state and the employees. In 10/1/06 they required $3,556.548 and they received $412,644 In state contributions and $3,143,904 in employee contributions which put them over. Mr. Palmquist recommended to the board that they should lower their earning assumptions by 1 point. He commented that they had a net loss of $1,517,294 for the year and hopes that the 2007 report has a gain. Mr. Palmquist reviewed the contributions of employees and stated that in 2005 they were at 36.42% versus 35.98% for 2006, and then he reviewed the reasons for the differences between the two years. Ms. Jensen asked what rate they were making contributions at for the previous year, and Mr. Palmquist replied that it was between 24-25%. He also reported that from 2005 to 2006 the payroll went from $7,332,448 to $8,322,332 which was quite a difference. Mr. Spencer asked about the disability retirees and what the assumption was, and Mr. Palmquist stated that it was about .64% per year and over a three year period there were 2 disability retirees. Mr. Palmquist reviewed the gains and losses and stated that they have had several losses over the years and hopes to see more gains in the future. Salary increases are higher then they anticipated along with the more disabilities then they expected in the beginning years. Mr. Palmquist also explained the funds income and disbursements and reported that the investment earnings for 2007 are around $2 . 7M to $2.8M which has doubled from 2006. Mr. Spencer stated that he spoke to the City's Finance Director and now that the pension plan has plateaued, he wants the board to have a goal to lower the payroll assumption rate. Also he wants to make a goal that the plan will be 100% funded within 4-5 years. Mr. Palmquist replied that in order to do that, the plan would need to have more money funded by the city, but unless that happens he thinks that the plan will need to have the fund ratio go up a couple points each year which will take about 15 years to get it 100% funded. The positive side to that is that eventually it could help the City, the taxpayers, and everyone else that is involved. Mr. Spencer also stated that the City is trying to put a VEBA in affect so that when they do pass It, it will start with the 6%. Lastly, Mr. Palmquist reported on the active member's distributions. He explained that there are going to be a lot more benefit approvals to be paid out in the future, and that's exactly what they want to happen. Mr. Palmquist stated that if he gets all the information from the Administrators in a timely manner that he will present the October 2007 report at the February meeting . ",11 !: '. 6 n7 ··~ '' t,. r , ATTORNEY REPORT Hanson, Perry & Jensen, P.A. -Presented by Bonni Jensen Ms. Jensen reviewed the Ordinance rules that were changed in regards to the DROP. They changed the limits and provisions on the 185 money that are held in foreign securities. MOTION: Mr. Sidey made a motion to accept the changes and provisions in the Ordinance. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously4-0 Ms. Jensen reviewed the health insurance memo and stated that members can deduct the amount from their tax returns. She also explained the procedures for filing the 2007 tax returns along with the 1099R's. Ms. Jensen recommended that the pension fund should include instructions in the members January, February and March payroll to explain the process and to also include a sample 1099R. Mr. Spencer asked if the Pension Resource Center sends out an annual statement indicating what they have. Mr. Baur commented that they send out a 1099R which indicates everything that they will need. The Pension Resource Center also tries to give out instructions to the retirees before hand so they do not run into any problems. Ms. Jensen explained the second memo regarding social security numbers. She stated that legislation passed a new law that requires the monitoring of the usage of social security numbers. They have to specify in writing when and where social security numbers can be used. This policy must be turned in no later than January 31, 2008. Ms. Jensen has made a general policy that the board should abide by . MOTION: Mr. Sidey made a motion to adopt Ms. Jensen's policy as written to be incompliance. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 4-0 Mr. Vavrica stated that the Investment Policy guidelines are still pending, and he does not have the information with him today but will make sure John Mccann follows up with them after the meeting. The matter was tabled till next meeting . DISBURSEMENTS APPROVALS MOTION: Mr. Sidey made a motion to approve the Disbursements. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 4-0 FINANCIAL STATEMENTS Mr. Palmquist had a question about the number that we had recorded on the financial statements. He stated that we had a different figure amount then Thistles amount. Mr. Baur stated that he will discuss the situation after the meeting and will follow up with the board on the difference. The board received and filed the financial statements through September. BENEFIT APPROVALS Mr. Baur explained the process and why it took so long to get the calculations for the DROP members. He stated that he had some problems getting accurate payroll information from the city on multiple occasions. MOTION: Mr. Pierson made a motion to approve Benefit Approvals per Steve Palmquist's review. SECOND: Mr. Sidey seconded the motion. CARRIED: The motion carried unanimously 4-0 AJOURN There being no further business, and the next meeting date scheduled for January 31, 2008 at 9AM the Trustees officially adjourned the meeting at 11:08AM Respectfully submitted, DAVID PIERSON, Secretary ?'l' ,! ., ~: