HomeMy WebLinkAboutMinutes Fire Pension 110718CITY OF PALM BEACH GARDENS
FIREFIGHTERS' PENSION BOARD OF TRUSTEES
QUARTERLY MEETING MINUTES
City Hall, Council Chambers
10500 North Military Trail Palm Beach Gardens, FL 33410
Wednesday, November 7, 2018, at 1:OOPM
TRUSTEES PRESENT: Ed Morejon
Rick Rhodes
Jon Currier
Marty Cohen
Tom Murphy
TRUSTEES ABSENT: None
OTHERS PRESENT: Andrew Laflin, Clifton, Larsen, Allen, LLP
Eric Leventhal, KSDT
Liedhe Carpio, KSDT
Scott Anderson, Cherry Bekaert
Brian Liffick (via phone), Cherry Bekaert
Nick Stratis (via phone), Cherry Bekaert
Ronald Conrad (via phone), Cherry Bekaert
Richard Crawford (via phone), Cherry Bekaert
Alison Wester, Mauldin & Jenkins
Wade Sansbury, Mauldin & Jenkins
Pedro Herrera, Sugarman & Susskind
Scott Baur, Pension Resource Center
John Thinnes, AndCo
Ferrell Jenne, Foster & Foster
Michelle Rodriguez, Foster & Foster
Doug Lozen, Foster & Foster
1. Call to Order— Ed Morejon called the meeting to order at 1:01 pm
2. Rall Call — As reflected above
3. Public Comments — None
4. Approval of Minutes
a. Rick Rhodes suggested the following changes to the meeting minutes; attorney Bob
Sugarman was present representing Sugarman and Susskind, and not Pedro Herrera.
Rick commented that Sean O'Brien, Eric Leventhal & Liedhe Carpio were not present at
the meeting. Ed Morejon commented the date on page two should be changed to October
1, 2015.
The board voted to approve the September 27 2018 special meeting minutes with the
discussed revisions, upon motion by Tom Murphy and second by Jon Currier, motion
carried 5-0.
5. Reports
a. Auditor Presentations
i. Clifton Larsen Allen (CLA), Andrew Laflin, CPA
1. Andrew Laflin commented CLA was a very large public pension practice
familiar with ERISA, defined benefit plans, defined contribution plans and
employee benefits. Andrew commented the firm has over 5,000 people,
1,800 CPAs, and 700 principals in over 100 U -S. locations.
2. Marty Cohen asked if the firm provided audit services for any of their pension
administration clients. Andrew Laflin confirmed they did not.
3. Andrew Laflin commented the firm's audit technology software used data
analytics and that benefit payments were audited by utilizing the total
population.
4. Marty Cohen asked if the firm had any local consultants. Andrew Laflin
commented they did not. However, the firm had various offices in Florida,
including Orlando and Tampa, and they were available for on-site auditing.
5. Rick Rhodes asked about fee increases. Andrew Laflin commented the fees
would increase 1%-3% annually and that the fee increases mirror the
Consumer Price Index (CPI).
6. Ed Morejon asked how soon the firm could start the audit. Andrew Laflin
commented they could start as soon as the contract was signed.
Note: Andrew Laflin concluded the presentation and left.
ii. Kabat, Schertzer, De La Torre, Taraboulas (KSDT), Eric Leventhal, CPA
1. Eric Leventhal commented that his firm had a good working relationship with
twenty-five other police and fire pension plans in Florida and they share the
Hallandale Beach Police and Fire pension plan with Foster & Foster.
2. Eric Leventhal commented KSDT was the only local firm in the bidding
process and that helped them to keep costs low. Mr. Leventhal commented
his firm is aware of the tight audit schedule and would be able to immediately
start the audit.
Note: Pedro Herrera arrived at 1:35 pm
3. Eric Leventhal reviewed the history of the firm, detailing the merger with Steve
Gordon who had retired. Mr. Leventhal commented he had taken over Mr.
Gordon's clients and still speaks weekly with Mr. Gordon. Eric reviewed the
individual qualifications of the team that would be assigned to the plan.
4. Tom Murphy asked about the firm's proposed timeline for the audit process
and Mr. Leventhal commented they would adhere to the established timeline.
5. Eric Leventhal reviewed the fees. For the year ended September 30, 2018 the
audit fees would be $8,000. Eric reviewed the hourly rates for services which
are to be performed on an as needed basis, outside the scope of the audit.
Note: Eric Leventhal concluded the presentation and left.
5. Jon Currier asked if the auditor should have caught the payroll reporting error
that negatively impacted the 175 share plan money. Pedro Herrera
commented that the auditor would only be testing the plans assets and
transactions and that payroll information provided by the city would be outside
of their scope.
6. Rick Rhodes commented a trending analysis would have picked up unusual
payroll reporting activity, and it might be a good idea to have someone start
looking at payroll trends from year to year.
iii. Cherry Bekaert, Scott Anderson, Ron Conrad (via phone), Nick Stratis (via phone),
Richard Crawford (via phone) and Brian Liffick (via phone), CPA
1. Scott Anderson commented the firm was currently auditing the Palm Beach
Gardens Police pension plan. Scott commented the audit team was located in
the firm's Orlando office and included a dedicated government services group.
2. Scott Anderson reviewed the proposed engagement team and their audit
process. Scott reviewed the timeline of their audit process and commented
they could get started right away. Scott explained the firm uses smartsheet,
which is an interactive cloud -based portal to upload documents from clients.
Ed Morejon asked who would have access to the portal and Scott commented
only dedicated team members of the firm would have access.
3. Scott Anderson stated the firm's fees were competitive_ For the year ended
September 30, 2018 the audit fees would be $14,00.
4. Pedro Herrero asked about the firm's hourly rate. Scott Anderson commented
that in most cases, it was $100-$110.
5. The board discussed the auditor's ability to detect payroll reporting
discrepancies on the part of the City. It was generally agreed this would be a
service outside the scope of the contract and would need to be negotiated as
a separate deliverable.
Note: Scott Anderson concluded the presentation and left.
iv. Mauldin & Jenkins, Alison Wester, Wade Sansbury, CPA
1. Alison Wester commented she and Wade Sansbury had both been with the
firm for 20 years.
2. Alison Wester stated she would be the main point of contact and Wade
Sanshury oversees the Bradenton office.
3. Alison Wester ensured there was adequate staffing and resources. Alison
commented that Daniel Anderson would be the team leader but had another
engagement and could not make it to the presentation.
4. Wade Sansbury commented that Mauldin & Jenkins was a regional
southeastern firm that believed in a commitment to public plans. Wade
commented the firm has over 300 employees and currently provides audit
services to over 90 municipalities.
5. Alison Wester reviewed the firm's experience with client transitions. Alison
commented the firm takes a team approach, so someone is always available
to answer questions. Alison stated their firm also has very little turnover, which
ensures service continuity.
6. Ed Morejon asked if the firm could monitor the accuracy of the information in
the State Annual Report. Alison Wester commented their firm could analyze
this information.
7. Alison Wester reviewed the fees. For the year ended September 30, 2018 the
audit fees would be $9,500. Alison reviewed the hourly rates.
Note: Alison Wester and Wade Sansbury concluded the presentation and left.
8. The board discussed the presentations from each firm and their proposed
fees.
The board voted to not renew a contract with KSDT upon motion by Marty Cohen and a
second bV Tom Murphy, motion carried 5-0.
The board voted to hire Mauldin & Jenkins as the new pension board auditor in
con unction with the September 30 2018 audit upon motion by Rick Rhodes and second
by Tom M urphy, motion carried 5-0.
The board approved Pedro Herrera to prepare the engagement letter and for the Chairman
to execute the engagement letter upon Counsel's approval, upon motion by Rick Rhodes
and second bV Tom MurphV, motion carried 5-0.
b. AndCo Consulting, John Thinnes, Investment Consultant
i. Quarterly report as of September 30, 2018
1. John Thinnes reviewed October 31, 2018 flash report. John commented that
although the report included a loss of 4.2%, the market value of the fund was
$102,613,000 as of November 6, 2018.
2. John Thinnes reviewed the September 30, 2018 quarterly report. John
commented there were negative returns in fixed income while large tech
companies continued to drive market growth stocks. John commented that in
the next eighteen months, interest rates would more than likely continue to go
down affecting the treasury yield curve. Marty Cohen asked about the average
duration of the fund's fixed income assets. John commented that Templeton's
duration was very short, less than one year, Agincourt's average was five
years and Garcia Hamilton's averaged between Templeton and Agincourt.
3. John Thinnes reviewed the flattening of the Treasury Yield Curve.
4. John Thinnes reviewed the Chapter 175 Monies that were received.
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5. The market value of assets as of September 30, 2018 was $102,454,391. The
quarter -to -date total fund net performance was 3.57%, slightly
underperforming the benchmark of 3.90%. The fiscal -year-to-date total fund
net return was 8.99%, underperforming the benchmark of 9.65%. The total
fund trailing net returns for the 3 -year and 5 -year periods were 10.58% and
8.96% respectively. Since inception (511198), total fund net performance was
5.86%, slightly underperforming the benchmark of 6.17%.
6. Marty Cohen asked how their fees compared to other plans. John Thinnes
commented that .52% was in-line with industry standards. John reviewed the
comparative performance analysis of the fund managers. Ed Morejon asked
if Dana Investments still had the same protection strategy and if they were
still on the watch list from three years ago. John Thinnes commented Dana's
strategy remained the same and they were off the watch list.
7. John Thinnes reviewed the DROP account quarterly report ending September
30, 2018. John commented the Vantagepoint Core Bond and 500 Stock
Index funds may need to be evaluated differently since they were index
funds. Ed Morejon asked how long it had been since the board reviewed the
DROP portfolio lineup. John commented it had been a few years because he
did not like to make changes too often. John commented he would bring a list
of appropriate funds to the next meeting for the board to review.
c. Sugarman & Susskind, Pedro Herrera, Board Attorney
i. Discussion of Amendment 6
1. Pedro Herrera commented Amendment 6 had passed in the last election, and
this removed the deference that judges had previously given to administrative
boards while the court reviewed cases on appeal.
ii. The board agreed by consensus to table the Share Plan Policy until a later meeting.
iii. State Ethics Rules
1. Pedro Herrera reviewed the State ethics rules governing gifts accepted by
public officials. Pedro stated anything under $25 does not need to be
reported, gifts valued between $26-$100 need to be reported, and anything
over $100 should not be accepted.
2. Pedro commented that no matter the value, if a gift was given with the
intention of influencing the board's decision on any issue, the gift should not
be accepted.
iv. 175 Share Plan Funding
1. Pedro Herrera updated the board on the underfunding of member share plan
allocations. Pedro verified the City was looking into the matter_
2. Fd Morejon commented that the Finance Director indicated the City would file
the loss with their Error and Omission Insurance Policy. Ed stated he wanted to
assure the board that the City was taking the issue seriously.
3. Marty Cohen asked how much more the board would have received in 175
Monies if the calculation had been done correctly. Pedro commented that it was
approximately $350,000 based on the calculations done by Foster & Foster_
Marty asked if DROP money can be used to pay the pension liability. Pedro
commented that those monies could not be used because they were an
employee benefit.
4. Jon Currier asked if there was anything official that could be put out by the City
regarding the 175 State money issue. Pedro Herrera commented that it would
take some time, but the situation was moving in the right direction. The City was
working with the board by filing a claim with their insurance carrier.
v, Educational opportunities
1. Pedro Herrera reviewed upcoming educational opportunities.
2. Ed Morejon asked about the contracts for the custodian and the administrator.
Pedro Herrera commented he would prepare them for the Chairman's signature.
vi. Century bink securities litigation case.
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1. Pedro Herrera commented the firm had decided to wait to file while they gather
more information.
vii. Salem Trust fees
1. Ed Morejon asked for clarification of the fee agreement with Salem Trust to pay
benefits and invoices effective January 1, 2019. Pedro Herrera commented he
would follow up and finalize the contract.
viii. Bancorp case
1. Pedro Herrera reviewed the settlement in the Bancorp case. Ed Morejon asked
how much of their losses were recouped. Pedro commented the claim form
would not be finalized until the court approved it.
2. Pedro Herrera commented even though the Palm Beach Gardens Firefighter's
Pension was the lead plaintiff, all parties would receive the same amount.
Pedro verified the board's expenses were fully reimbursed.
d. Pension Resource Center, Scott Baur, Administrator
i. Administrator Transition
1. Scott Baur commented the transition of benefit payment processing was the
most important task and he would continue to coordinate with the new
custodian, Salem Trust. Ed Morejon commented there was one person
receiving a paper check and they needed to be contacted to set up his direct
deposit.
2. Ferrell Jenne commented Foster & Foster had not yet received any member or
plan information. Scott Baur commented the electronic and paper files should be
ready in the next few days. Ed Morejon asked if Foster & Foster could pick up
the files after today's meeting, as planned and discussed in prior transition
conference calls.
3. Ferrell Jenne asked Pedro Herrera if the 2019 board meeting dates had been
finalized. Ed Morejon commented the City wanted the audit done by March and
thought a special meeting was needed so the board could accept the audit
report. Pedro commented he needed to verify his availability and would get
back to the board.
4. Ferrell Jenne commented the actual expenses through September 30, 2018
needed to be reported to the City and State. Scott Baur commented the
numbers on the Income and Expense sheet could be used, but it had not been
through their internal review. Ferrell Jenne asked Scott Baur for a copy of last
year's budget. Scott commented that it was included in the last board meeting
packet.
5. Scott commented that the dropbox login information would be given to Foster &
Foster.
6. The board agreed to meet on April 3, 2019, to accept the audit and to keep the
May 1, 2019, meeting.
7. Ed Morejon asked Pedro Herrera if he added the updated COLA calculation
language in the Summary Plan Description. Pedro commented he would send
the final copy to Foster & Foster for review.
6. Plan Financials
a. Interim Financial Statement
i. Scott Baur commented the 175 monies were received in October and were not on
the interim financial statement which was through August 31, 2018.
b. Warrant Dated November 7, 2018
i. Rick Rhodes noted several duplicate invoices on the warrant dated November 7,
2018. Ed Morejon asked how the invoices were tallied and reported. Scott Baur
commented there was probably a duplicate page printed. Rick Rhodes commented
that the dates and invoice numbers were different. Ed Morejon requested a
comparison of the custodian's list of invoices paid to verify PRO's payment warrant.
Scott commented he would have to report back on the issue. Pedro Herrera
suggested the board authorizing payment contingent upon board trustee Marty
Cohen auditing and verifying the invoice payments as being valid.
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The board authorized payment of the warrant dated November 7 201$ contingent upon
trustee MartV Cohen's audit and verification upon motion by Tom Murphy and second b
Marty Cohen, motion carried 4-1 with Rick Rhodes opposing
7. _Benefit Approvals
a. Scott Baur commented there were no current benefit approvals for the board. However,
they were processing some at this time.
8. New Business
a. Collective Bargaining Benefit Cost Estimates
i. Ed Morejon received a letter from the Union requesting a cost analysis of increasing
the COLA from 1.5% to 3% to be used in the course of the collective bargaining
process. Ed commented that he reached out to the City Finance Manager to see if
they wanted something costed out as well.
ii. Marty Cohen commented that he believed the board should stay out of Union
matters. Marty commented the Union should bear the cost of any studies done. Ed
Morejon commented that he would rather Foster & Foster complete the analysis
since they were more familiar with the pension plan.
The board authorized Foster & Foster to work with the City and Union to do calculations
and studies for collective bargaining ur oses and the cost of any work to be paid by the
re uestor- upon motion by Rick Rhodes and second bV Marty Cohen motion carried 5-0.
9. Trustee Reports, Discussion, and Action
a. Pedro Herrera commented that the third quarter report from the portfolio monitoring firm
Saxena White was forwarded to the board as a courtesy. Rick Rhodes commented that the
Bancorp settlement was included in this report.
b. Ed Morejon requested Scott Baur to turn over all pension board documents to Foster &
Foster immediately.
10. Ad'ournment — The meeting adjourned at 4:18 pm
11. Next Meeting —February 6, 2019, at 1:00 pm
Respectfully submitted by:
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M chelle Rodriguez, Plan A�r
Approved y:
As:
Date Approved by the Pension Board:
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