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HomeMy WebLinkAboutMinutes Police Pension 043009City of Palm Beach Gardens Po /ice Officers' Pension Fund Minutes of the Meeting Held April 30, 2009 The regular meeting of the Board of Trustees of the City of Palm Beach Gardens Police Officers' Pension Fund was called to order at 9:00 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 Jay Spencer, Chairman David Pierson, Secretary Jules Barone, Trustee Brad Seidensticker, Trustee MINUTES OTHERS PRESENT Bonni Jensen (Law Offices of Perry & Jensen) Dixie Martinez (Resource Centers) Scott Baur (Resource Centers) Donna Cannon (Palm Beach Gardens Clerk's Office) Steve Stack (ICC Capital Management) Brendon Varvica (Thistle Asset Consulting) Jim Burdick (Cherry, Bekaert & Holland) Rowana Filtan (Cherry, Bekaert & Holland) MOTION: Mr. Pierson made a motion to approve the minutes from the January 29, 2009 regular meeting. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 4 -0. MOTION: Mr. Pierson made a motion to approve the minutes from the February 13, 2009 special meeting. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 4 -0. INVESTMENT MANAGER REPORT ICC Capital — Presented by Steve Stack Mr. Stack gave the board an update on the current marker environment. He explained that the rally that has occurred since mid March was led by financials and technology. Also with in the quarter the large cap growth was a good performer. Mr. Stack stated that the fund rebalanced their portfolio which benefited the equity side. Mr. Seidensticker had some questions in regards to the timing of the rebalancing. Mr. Varivca explained that the transfers were made on the 15th of each month and Rhumbline probably invested it by the end of the month. The board had a discussion on the timing of the transfers and investments. Mr. Stack reviewed some of the changes that have occurred in the portfolio within the quarter. On the equity side they now have larger exposures to technology and material stocks. Also, on the fixed income side they have started buying into larger Minutes 04 -30 -09 - Palm Beach Gardens Police.doc Page 1 of 6 treasuries. They bought some 30 year treasuries and they are looking into 10 year treasuries as well but their spread keeps going up and down. Mr. Stack explained that they have gone shorter on the corporate debt and longer on the treasuries. Mr. Stack reviewed and explained the difference between the funds average duration compared to the Barclays Capital Government Index and also against the Barclays Capital Aggregate Index. Assets backed securities are the portfolio's leading performer and that is due to the TALF program that the Government is offering. Mr. Stack commented that the funds duration is in line with the indexes. Mr. Stack commented to the board that the portfolio manager is looking into purchasing "Build America Bonds" which were part of the Stimulus Act in February 2009. He explained that these bonds are state and local issued tax exempt bonds. Mr. Stack stated that they have not purchased any of these bonds yet, but their firm is looking into it. These bonds are backed by the US Government and there is a lot more opportunity for more of a yield with these bonds. Mr. Seidensticker wanted to know about his firms' opinion in regards to inflation. Mr. Stack replied that he does not see any inflation in the near term but does in the long term. He explained that right now oil prices have dropped and commodity prices have come down. The board shared their opinions on inflation. Mr. Spencer commented that when the portfolio manager was here last meeting he stated that he is a little hesitant about US Treasury's and corporate bonds were doing better and he would like to stay on that same track. Mr. Baur and Mr. Varvica updated the board on the timing of the transfers. Mr. Baur explained that the board gave direction to make transfers on February 13, March 16 and April 15 which were done. Mr. Varvica explained Rhumbline's investment process once they receive the money. The money enters the commingled fund with Rhumbline on the first of the month and the money is invested right away. Mr. Varvica did not recommend making any changes to the dates as to when the money is transferred. INVESTMENT CONSULTANT REPORT Thistle Asset Consulting — Presented by Brendon Varvica Mr. Varvica reviewed the funds compliance check list. He reported on the areas that were trailing behind the index. The board had a discussion on the plans assumed rate of return, and Mr. Pierson commented that he would like to see that rate lowered to 6 %. Mr. Spencer commented that Mr. Palmquist did do a study reflecting this and did make a recommendation to eventually lower the assumption rate because it would help eliminate some of the funds debt. Although, by lowering the assumption rate it will make the City's contribution rate increase in the beginning but not in the long run. Mr. Spencer stated that this is something that should be looked at in the near future and should be in conjunction with the City. He gave an example of the VEBA fund the police department is trying to start. The VEBA's assumption rate would be 5 %, because they are being optimistic about the future. The board had a brief discussion on alternative investments and investment managers. Mr. Varvica returned back to his report and reviewed the funds asset allocation for the quarter ending March 31, 2009. He stated that there is 8% in cash, 42% in fixed income and 50% in equities, and also reviewed the allocation by manager. The total fund was negative but ahead of the benchmark for the quarter at -4.01% versus -7.00% and for the one year the fund is still negative at - 20.46% versus the target Minutes 04 -30 -09 - Palm Beach Gardens Police.doc Page 2of6 index at - 25.49 %. The total equities were in the same position at -9.08% versus the index at - 10.96 %, and the total fixed income performed better at 0.92% versus the index at 0.12 %. Mr. Varvica then reviewed each individual manager's performance for the quarter ending March 31, 2009. He commented that all the S &P accounts beat the index for the quarter with the S &P 400 at -8.58% versus - 8.66 %, the S &P 500 at - 10.92% versus - 11.01% and the S &P 600 at - 16.64% versus 16.84 %. Also, ICC had an exceptional quarter at 0.67% versus the index at - 4.12 %. Mr. Varvica stated that the fund is getting more of a return with less of a risk which is a positive. Mr. Varvica went back to the sector allocations and reported the current numbers after all the recent rebalancing. In equities there is $14.5M which is about 56% of the total funds portfolio. He commented that we are roughly 40% away from our target allocation of 60 %. Mr. Varvica stated that the fund will probably need to rebalance one more time to be in line with their target allocation. MOTION: Mr. Barone made a motion to continue the $300,000 allocation from the fixed income account to be equally distributed between the three S &P accounts for another 2 months or until the fund reaches their target allocation at 60 %. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 4 -0. Ms. Jensen asked Mr. Varvica if there is anything particular that they need to look at in regards to International. Mr. Varvica briefly reviewed the international funds and made no recommendations for changes at this time. Mr. Seidensticker asked Mr. Varvica to continue supplying the board with the detailed spreadsheet that Mr. McCann was working on. 2008 AUDITED FINANCIAL STATEMENT REPORT Cherry, Bekaert & Holland — Presented by Jim Burdick & Rowana Filtan Mr. Burdick introduced himself and Ms. Filtan to the board. He reviewed the cover letter with the board. He explained that this letter is required for communication of the audit under the GASB. Mr. Burdick explained that it is the Auditor's responsibility to express their opinion and they issued an unqualified opinion which is the highest level of assurance. Also, they did not identify any material weaknesses or significant difficulties in the internal controls while auditing the plan. Mr. Burdick reported that the plan adopted GASB 50 during the fiscal year and there were no significant audit findings. Mr. Burdick moved into the report and reviewed the Management Discussion and Analysis Letter. He commented that this is the summary of the activity that occurred during the year and also points out some of the financial highlights. He compared the plans net assets from 2007 to 2008 and stated that they have decreased $875,404 over the past year due mainly to investment losses. Mr. Burdick reviewed the employers' contributions from 2007 to 2008 and stated that they have increased $379,757. He pointed out that the benefit payments and the DROP withdrawals also increased throughout the year. Minutes 04 -30 -09 - Palm Beach Gardens Police.doc Page 3of6 Mr. Burdick reviewed the new disclosure that was required by GASB. The plans funded ratio has increased from last year to 53.2% and the unfunded liability has also increased to $24,431,125. Mr. Burdick gave his thoughts on increasing the assumed rate of return. He commented that if you do lower the rate it will have a significant impact on the plans unfunded liability which would then have a huge impact on the City's contributions. The board had another discussion on changing the assumed rate of return. Lastly, the board discussed the B3 obligation that is being held in their portfolio and Mr. Burdick commented that is due to their commitment to the Lehman bond. Also, the board noticed there was a huge increase in the Actuarial fees and Ms. Jensen reminded the board that Mr. Palmquist did several studies for the board throughout the fiscal year. MOTION: Mr. Pierson made a motion to approve the 2008 Audited Financial Statements that were prepared by Cherry, Bekaert & Holland. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 4 -0. ADMINISTRATOR REPORT Resource Centers — Presented by Scott Baur & Dixie Martinez Ms. Martinez notified the board that their crime insurance was up for renewal. It is a 3 year renewal and the rate has stayed the same. MOTION: Mr. Seidensticker made a motion to renew the crime insurance. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 4 -0. ATTORNEY REPORT Law Offices of Perry & Jensen - Presented by Bonni Jensen Ms. Jensen reviewed the new tax table that affects retirees. Ms. Martinez commented that this notice will be sent to all retirees and they can contact our office to obtain at W -4P form if they need to make any changes. Ms. Jensen described the Worker, Retiree & Employer recovery act of 2008. She reviewed some of the important changes that will impact the pension plan. First, the market rates of interest have been revised. This new law allows governmental plans to credit interest at a rate of interest set by the Federal, state or local law even if it exceeds the "market rate of interest ". This law has to do with this plans DROP accounts. Second, the $3,000 health insurance exclusion for Public Safety Officers now allows for self- funded health insurance programs to participant as long as the insurance premiums are deducted and paid by their pension plan. Lastly, the required minimum distribution age (70 1/2) law suspends required distributions from qualified retirement accounts for 2009. The new law also allows the beneficiaries not to received distributions in 2009. Ms. Jensen presented the board with the decreased IRS mileage rate for 2009. Minutes 04 -30 -09 - Palm Beach Gardens Police.doc Page 4of6 Ms. Jensen notified the board that her firm name has changed due to one of her partners retiring. The firm name has now changed to the Law Offices of Perry & Jensen, LLC and she had a new contract with her to be executed. MOTION: Mr. Seidensticker made a motion to execute the contract reflecting the name change to The Law Offices of Perry & Jensen, LLC. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 4 -0. Ms. Jensen gave the board an update on the House Bill 5 and stated that it looks like it may pass. This bill will increase foreign investment allocations to 25 %, but it still has a provision about investing in Iran and Sudan investments. The board had a discussion on the Sudan free investments and Mr. Stack commented that this is something they are watching and researching. Lastly, Ms. Jensen notified the board that there is piece of legislative out there that proposes increasing the FRS buyback rate from 2% to 3 %. In addition to that, this bill will also allow municipalities that merge pension plans to still receive their 185 money. Ms. Spencer updated the board that he heard "rumors" that they City was not moving forward in regards to looking into the FRS because of the cost. DISBURSEMENTS APPROVALS MOTION: Mr. Seidensticker made a motion to approve the disbursements. SECOND: Mr. Barone seconded the motion. CARRIED: The motion carried unanimously 4 -0 BENEFIT APPROVALS MOTION: Mr. Barone made a motion to approve the benefit approvals for Wayne Sidey. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 4 -0 FINANCIAL STATEMENTS The board reviewed and discussed the financial statements that were provided through March 31, 2009. Ms. Jensen had a question in regards to the Employers' contribution. She stated that there were no employer contributions since October and the City usually contributes on a quarterly basis. Ms. Martinez commented that she will look into this and get back to the board. The board received and filed the financial statements through March 31, 2009. Minutes 04 -30 -09 - Palm Beach Gardens Police.doc Page 5 of 6 OTHER BUSINESS Mr. Spencer reminded the board that he and Ms. Jensen are still in the process of reviewing with the City some Ordinance changes and he will keep the board updated as they make more progress. AJOURN There being no further business, and the future meetings are scheduled for the last Thursday of the first month of the quarter. The next regular meeting is scheduled for Thursday July 30, 2009 at 9AM; the Trustees officially adjourned the meeting at 10:54AM. Respectfully submitted, DAVID PIERSON, Secretary Minutes 04 -30 -09 - Palm Beach Gardens Police.doc Page 6of6