HomeMy WebLinkAboutMinutes Fire Pension 050119CITY 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, May 01, 2019, at 1:00PM
TRUSTEES PRESENT: Ed Morejon
Rick Rhodes
Jon Currier
Marty Cohen
Tom Murphy
TRUSTEES ABSENT: None
OTHERS PRESENT: John Thinnes, AndCo
Ferrell Jenne, Foster & Foster
Michelle Rodriguez, Foster & Foster
Siera Feketa, Foster & Foster
Doug Lozen, Foster & Foster
Karen Russo, Salem Trust Company
Marcus Braswell, Sugarman and Susskind
1. Call to Order Ed Morejon called the meeting to order at 1:06pm.
2. Roll Call — As reflected above.
3. Public Comments
a. Marcus Braswell commented Bob Sugarman's wife passed away and requested a
moment of silence for the Sugarman family.
4. Approval of Minutes
The board approved the February 06 2019quarterly meeting minutes as presented, upon motion by
Tom MurphV and second by Rick Rhodes; motion carried 5�0.
The board approved the April 03, 2019, special meeting minutes as presented, upon motion by Tom
Murphy and second by Marty Cohen motion carried 5-0
5. Reports
a. AndCo Consulting, John Thinnes, Investment Consultant
i. Quarterly report as of March 31, 2019
1. John Thinnes briefly reviewed the preliminary performance and
allocation update through April 29, 2019. John commented the total
fund market value was just about $108 million, give or take around
3.5% for fiscal year-to-date.
2. John Thinnes reviewed the market environment for the quarter,
commenting markets rebounded significantly. John reviewed the
Federal Reserve and the potential decrease of rates. John
commented the trade and the Federal Reserve would be driving the
market moving forward.
3. John Thinnes commented there were no recommendations to
rebalance the allocations, since the Fund is on target with the policy
statement.
4. The market value of assets as of March 31, 2019, was
$106,506,050.
5. The total fund net returns for the quarter were 8.88%,
underperforming the benchmark of 9.29%. The total fund trailing net
returns for the 1, 3, 5 and 7 -year periods were 4.92%, 9.09%, 7.07%
and 8.73% respectively. Since inception (511198), total fund net
returns were 5.71%, slightly overperforming the benchmark of
6.04°/x.
6. Marty Cohen asked if real estate was free of retail. John Thinnes
commented of their managers; they were.
7. Ed Morejon asked if there were any compliance issues. John
Thinnes commented compliance issues were on page 51 of the
report. John Thinnes reviewed the compliance items, commenting
there were no concerning compliance issues.
8. Ed Morejon asked John Thinnes if there were any investments on
the watchlist. John Thinnes commented they were watching Dana
and keeping an eye on Fiduciary, but, overall, they had great
managers that were contributing to great success for the fund.
9. DROP quarterly report as of March 31, 2019
a. John Thinnes reviewed the investments for the DROP
accounts. John commented he felt they could eliminate
the Oppenheimer fund, but in general the fund lineup was
pretty strong.
b. John Thinnes gave an overview of the funds that could be
changed if the board was interested.
10. ICMA-RC monthly fund performance as of March 31, 2019
a. John Thinnes reviewed the ICMA-RC investment options
for those who were in the self-directed DROP account.
b. John Thinnes reviewed the different classes of funds.
John commented they could remove Oppenheimer and
add the T. Rowe Price for the U.S. Stock. John further
commented Dodge & Cox was not listed under the bonds
funds and if he needed to add one, he recommended the
Western Asset Core Plus Bond.
c. John Thinnes mentioned he could perform an analysis of
different funds if the members wanted to see more juice in
their self-directed options.
d. John Thinnes gave an overview of the different asset
classes and the changes that he would recommend for
each asset class. Ed Morejon commented no one had
asked for anything in particular, but he wanted to make
sure there was a review on funds because he felt it was
the board's responsibility.
e. John Thinnes commented he would research the Dodge &
Cox issue and would recommend some changes in the
portfolio to bring to the next meeting.
b. Salem Trust Company, Karen Russo, Plan Custodian
i. Change in firm ownership
1. Karen Russo introduced herself and gave a brief overview of her
background with Salem Trust.
2. Karen Russo gave an overview of the acquisition of Salem Trust with
TMI Trust Company (TMI). Karen commented TMI's expertise was
in the private corporate area.
3. Karen Russo commented at this point there would be no changes in
management or business operations, and both companies are client
focused and have similarities in core competencies.
4. Karen Russo reviewed the potential short-term and long-term
changes, such as new ACH authorization information to wire funds
to. Karen commented this information would be given well in
advance of the change.
5. Marty Cohen asked if the companies took on a lot of debt in the
acquisition process. Karen responded that she was unsure exactly
as to the amount of debt but knew a lot of capital was put up. Karen
commented that she could further research the question. Marty
commented he would like to know because it related to stability.
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6. Karen Russo gave an overview of the history of TMI.
7. Marcus Braswell asked if there would be an addendum to the
contract between Salem Trust and the board_ Karen Russo
commented from her understanding, they would not be changing the
contract because the relationship and the name would not be
changing. Marcus commented this was more of an asset acquisition.
Karen responded that from her understanding, their CEO would not
change. Karen commented TMI and Mark Rhine met with Pedro
Herrera to answer any questions he might have.
ii, Money Market Sweep
1. Karen Russo reviewed the concept of the money market sweep
vehicle and the three funds that the board could use as the money
sweep vehicle. Karen commented there was no action needed by
the board at this time, but rather she was just providing them
information.
2. Karen Russo commented with each fund the board uses the treasury
fund for each of their accounts.
3. Tom Murphy asked if this had been going on already. Karen Russo
responded this was how it had been done for this plan.
4. Ed Morejon asked John Thinnes' opinion. John commented to stay
where they were. In his other plans, he was recommending they
move to the Treasury. John commented his recommendation was to
take no action.
The board voted to accept the recommendation to take no action regarding the mone
_market sweep vehicle, upon motion by Ed Morejon and second by Tom Murphy: motion
carried 5-0.
iii. Service Summary Report
I. Karen Russo reviewed the Service Summary Report, explaining it
came out quarterly and was similar to a report card. Karen Russo
gave a brief overview on the purposes of the Service Summary
Report, commenting it allowed Salem Trust to stay in compliance
with their service pledge. Karen further commented if expectations
of Salem Trust were not met, the board could receive a discount for
the quarter.
2. Tom Murphy asked when they reset their goals. Karen Russo said
they were reevaluating them now.
3. Ed Morejon commented Karen Russo was very helpful during the
administrative transition and thanked her for that. Ed asked if Karen
had received everything necessary from Pension Resource Center
(PRC). Karen commented they did and they had also reviewed the
end dates that were provided by Foster & Foster to verify everything
was correct.
4. Marty Cohen asked how many clients Karen Russo had in this area.
Karen commented she serviced about 49 clients, each different in
size and complexity.
c. Foster & Foster, Doug Lozen, Plan Actuary
i. Share Plan reconciliation
1, Doug Lozen provided the Share Plan balances beginning in 2015.
2. Doug Lozen reviewed the history of who performed the Share Pian
calculations, commenting Foster & Foster did the calculation through
fiscal year 2014, then PRC took over, beginning with fiscal year
2015.
3. Doug Lozen commented in performing valuations, it was discovered
payroll was underreported. Doug reviewed the potential impact on
State monies and ultimately the impact on the Share Plan balances.
Doug commented the predicted loss of State monies was allocated
from plan assets to each eligible member's account.
4. Doug Lozen gave an overview of the items he was going to be
discussing and commented the board would need to approve or
make a decision on these items before the Share Plan Balances
could be approved.
a. Expenses were not deducted from balances for the years
PRC reconciled Share Balances (20152017).
i_ Doug Lozen reviewed how the expenses were
typically reconciled, commenting it was done
incorrectly by PRC.
H. Ed Morejon commented the 15/16/17 years were
reported and had gone out and asked Doug Lozen
if members would individually see their balances
from those years. Doug commented yes, but that
it was not a big concern.
b. Southard was 25.0% vested when he terminated in Fiscal
Year 2016, but this vesting percentage was not applied by
PRC upon the Share Plan Distribution in Fiscal Year 2017,
i.e. he received 100% of his Share Balance.
L Doug Lozen commented that Southard was
overpaid by about $4,000 or $5,000.
ii. Marty Cohen asked if this was annually or one-
time. Doug Lozen commented this was a one-
time payout.
iii. Ed Morejon asked Marcus Braswell if this could
lead to litigation. Marcus commented this could
lead to litigation, but at this point the board was
receiving information and it had not yet reached a
point of having a discussion in anticipation of
litigation.
iv. Jon Currier asked what happens in this situation;
Does the member repay the amount or did the
consultant who made the error repay it? Marcus
Braswell commented they could seek either route.
v. Tom Murphy commented when this happened in
the past, they gave the members the option to
repay the amount in a lump sum or installment
payments.
c. After termination of employment, should earnings be
applied to balances until distribution? This was done for at
least two members (Dunaway and Kreidler). Vested -
Terminated balances had historically also been credited
with earnings until the balance was eligible for distribution.
i. Doug Lozen commented in reviewing the
payments it appeared the payments had been
correct if it was determined that the members
should receive earnings until they received
distributions_
ii. Marty Cohen asked if this applied to losses. Doug
Lozen commented it applied to gains and losses.
Marty commented he thought the Share Plan
Balances should freeze from the time the member
was terminated. Ed Morejon commented his
understanding was the member was paying
expenses and gains and losses. Marty asked
when the earnings stop because there had to be a
cutoff point. Doug Lozen commented his
recommendation was to draw a line in the sand at
the quarterly mark.
iii. Rick Rhodes commented in respect to Dunaway
and Kreidler, they took their money, but they show
a negative balance on the most updated Share
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Plan Balances, Doug Lozen commented that was
a hypothetical discussion and if the board agreed
to earn interest through date of distribution, then
their balances would be zero and they would not
owe anything.
iv. Ferrell Jenne asked Doug Lozen to confirm that
Vested -Terminated members could not take their
175 Share Plan Funds until they were
commencing benefits. Doug confirmed this was
correct.
v. Ferrell Jenne commented it was good to hold back
a portion of the Share Plan Monies upon
distribution in case losses occur. The board
discussed that they hold back a portion already.
Doug Lozen commented the only item withheld
was 10% in taxes. Ferrell commented the
Statement of Policy Regarding Share Plan
Distributions states 10% should be withheld for
taxes, but it should reflect that 20% should be
withheld.
vi. Doug Lozen made a recommendation to tweak the
Statement of Policy Regarding Share Plan
Distributions under distribution methods to reflect
a 20% holdback to cover potential losses and
expenses, changing the withholdings for taxes
from 10% to 20%, and adding the word
"expenses" to what should be debited/credited to
the member's Share Plan Balance.
The board directed the attorney to add a 20% holdback increase the tax withholdings from
10% to 20% and add the word "expenses" to the otic u on motion bV Rick Rhodes and
second by Ed Morejon; motion carried 5-0.
vii. Tom Murphy asked if Dunaway and Kreidler were
good. Doug Lozen commented based on the
decision of the board their balance would be zero.
d. If a vested or partially vested member received a refund of
member contributions, should the Share Plan Balance also
be forfeited? See Beeler Fiscal Year 2017.
L Doug Lozen posed the question of a member
sacrificing their vesting status by taking a refund of
their contributions and, thus, sacrificing his Share
Plan Balance.
ii. Ed Morejon asked Doug Lozen to research what
had been done historically. Doug reviewed a
member in the past that was partially vested and
had taken a refund of their contributions and their
Share Plan Balance. The board discussed their
confidence in the fact that this was how the
monies had been paid previously.
The board directed the attorney and actuary to Look specifically into the issue of whether
vested terminated members who took a refund of their member contributions would receive
their 175 Share Plan monies in the Ordinance, The Share Plan Policy, and how it had been
done historically, upon motion by Ed Morejon and second by Tom Muri3hv: motion carried 5-
0.
iii. Doug Lozen commented based on the decision of
the board, the last item on his list of items to
discuss could be eliminated.
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iv. Ed Morejon commented he thought it was
important to understand how it had come to be
done historically before making a decision.
v. Doug Lozen commented he would have it
researched and would get back to the board.
vi. Marcus Braswell reviewed the forfeiture rule in the
Ordinance for non -vested members and reviewed
the provision that covered the vested portion of the
Share Plan balances.
vii. The board discussed if terminated members were
still receiving statements.
viii. Ferrell Jenne and the board reviewed how long
Vested -Terminated members could leave their
contributions in the fund before taking a refund of
contributions.
ix. The board, attorney, administrators, and actuary
reviewed the Share flan Policy and Share Plan
Distribution Rules under the Ordinance and
discussed the conflicting items. The board asked
Marcus Braswell to research whether Vested -
Terminated members had to wait until early or
normal retirement to collect their 175 Share Plan
Balance, and if it was based on the attainment of
eligibility or on the actual commencement of
benefits.
Quarterly Share Plan Statements
i. Doug Lozen asked the board if it was acceptable
to try to apply the expenses only once a year,
rather than quarterly. Doug commented the
expenses should not differ too much from year-to-
year and reviewed acceptable methods of
applying expenses. Doug commented for
members who leave in the middle of the year, they
could use the prior year's expenses.
ii. Doug Lozen proposed going forward that they
update the balances quarterly, the expenses
would be applied quarterly for distributions made
in the middle of the year, they would apply 1/ of
the expenses from the prior year's expenses.
The board approved updating the balances quarterly and applVing '/a of the expenses from
the prior ear's expenses to the members who receive a distribution in the middle of the
ear, upon motion by Tom MurljhV and second by Martv Cohen, motion carried 4-0 with Ed
Moreton opposing.
iii. Ed Morejon asked if this would cause members to
be underpaid or overpaid. Doug Lozen responded
no, because the board deemed it to be correct.
iv. The board discussed that even in case the
expenses increased, the increase was not going to
be very significant.
v. Doug Lozen commented the board could approve
the September 30, 2018, balances, except for
Southard and Beeler, so Foster & Foster could
calculate through March 31, 2019.
The board approved the September 30 2018 balances except for the balances for Beeler
and Southard upon motion bV Tom MurphV and second by Marty Cohen; motion carried 5-0.
vi, Rick Rhodes asked if the findings from Beeler and
Southard would increase the balances of the other
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members. Doug Lozen responded if anything it
would increase the balances next year.
vii. Doug Lozen commented the September 30, 2018,
balances would go on the portal. Doug further
commented they would update the balances
through March 31, 2019, and the administrators
should have them in about six weeks.
The board voted to accept the attorney's opinion regarding Beeler when given, only if it was
determined that the member was entitled to his Share Plan monies upon motion by Mart
Cohen and. second by Ed Morejon; motion carried 5-0.
f. Ed Morejon brought up the approved Collective Bargaining
Agreement (CBA). Doug Lozen commented the mutual
consent was that the City was now getting $750,000 and
anything over that was split between the City and the
Share Plan. Doug further commented less money was
going to the Share Plan because of the new CBA.
d. Sugarman & Susskind, Marcus Braswell, Board Attorney
i. Legislative Update
1. Marcus Braswell commented there were no bills that would appear to
be up for adoption that would impact the plan.
2. Ed Morejon asked about the cancer bill. Marcus Braswell
commented the actuary would speak to the physical impact to the
plan, but the impact would be small to none. Doug Lozen
commented in the short-term, they would issue a No Impact Letter,
but there would be a long-term impact.
3. Ed Morejon asked if the Ordinance would need to be updated to
reflect the presumptive disabilities. Marcus Braswell commented the
ordinance will need to be updated to reflect the presumptive
disabilities.
ii. Further discussion of proposed Ordinance
1. Marcus Braswell brought up mutual consent. Doug Lozen
commented a No Impact Letter would need to be done. Doug
reviewed the potential impacts on the plan and commented the City's
contribution would be going up.
2. Marcus Braswell commented no action should be taken by the board
at this time.
6. New Business
a. Kevin Mahady, Option Selection deadline
i. Siera Feketa reviewed the Option Selection Deadline Policy and stated Kevin
Mahady has requested an extension through April 30, 2033 to make his
option selection, as he was not going to be commencing his benefit until July
01, 2033.
The board approved Kevin Mahad 's request to extend his option selection deadline to April
30, 2033, upon motion by Tom Murphy and second by Rick Rhodes; motion carried 5-0.
b. Ed Morejon commented Sugarman & Susskind has been the board attorney for a
long time and requested the board approve sending flowers to the Sugarman's
family. The hoard discussed a donation to the suggested foundation would be
best.
The board approved a $100.00 donation to the foundation of the Sugarman's choice, upon
motion by Rick Rhodes and secondbVTom Murphy; motion carried 5-0.
7. Old Business
a. PRC November and December Invoices
i. Ferrell Jenne commented we did not receive the November invoice and it
was paid prior to Foster & Foster being the administrator.
ii. Ferrell Jenne commented the issue with the December invoice was the fee
for the retainer should be removed. The board agreed Ferrell was correct
and that it was consistent with the information they have received.
The board voted to pay the PRC December invoice less the $1,625.00 retainer and
accomany the PaVrnent with a letter that they were now paid in full and the reason as to
why they did not pay the $1,625.00 retainer, upon motion by Rick Rhodes and second b
Tom Murphy; motion carried 5-0.
b. Amended DROP Distribution Policy
The board voted to table the Amended DROP Distribution Policy until next meeting, upon
motion by Rick Rhodes and second by Tom Murphy, motion carried 5-0
Ed Morejon commented the DROP distribution policy would not take effect
until November because the members have not yet been notified.
B. Consent Aaenda
a, Payment ratification
i. Warrant #12, #13, and 414
b. Payment approval
i. Norse
c. Fund activity report for 01/31/2019 - 04/24/2019
The board voted to approve the consent agenda as presented, upon motion by Rick Rhodes and
second by Tom Murphy, motion carried 5-0.
9. Staff Reports, Discussion and Action
a. Foster & Foster, Ferrell Jenne, Michelle Rodriguez and Siera Feketa, Plan
Administrators
i. Fiduciary Liability renewal
1. Michelle Rodriguez commented the policy expired on March 10,
2019, and the new premium was $9,618, which was only $172
more than the previous year. Michelle stated per the insurance
company; the increase was due to the increase in assets.
ii. Portal settings for salary increases
1, Michelle Rodriguez reviewed the salary increase feature on the
portal and commented the max salary increase was 5.0% and
upon approval of the board, Foster & Foster could make it 7.0%
because the contract provides for a 7.0% increase.
2. The board discussed the portal being used for estimates only and
approved the direction to change the maximum salary increase to
7.0%.
iii. Upcoming educational opportunities
1. Michelle Rodriguez reviewed the upcoming FPPTA 351h Annual
Conference from June 3011 through July 3, 2019 in Orlando, FL.
2. Ed Morejon and Rick Rhodes commented they would both like to
attend.
iv. Financial Disclosure Forms
1. Michelle Rodriguez reviewed the Financial Disclosure Forms_
Ferrell Jenne reviewed the deadlines and potential fines if their
form was not filed by the deadline.
2. Marcus Braswell commented it was public record if it was not filed
as well.
10. Trustee Reports, Discussion, and Action — None.
11. Adjournment — The meeting adjourned at 3:29pm.
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12. Next Meetinq — August 07, 2019, at 1:00pm, quarterly meeting.
Respectfully submitted by: Appro ed by:
Michelle Rodriguez, Plari Admi tr r )rrCurrier, Chairman
Date Approved by the Pension Board: 7