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HomeMy WebLinkAboutMinutes Police Pension 061319Minutes 06/13/2019 Page 1 City of Palm Beach Gardens Police Officers’ Pension Fund Minutes of the Meeting Held June 13, 2019 The regular meeting of the Board of Trustees of the City of Palm Beach Gardens Police Officers’ Pension Fund was called to order at 9:03 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 Denise McNeill (Resource Centers) Brad Seidensticker, Secretary A.C. Lovingood (Resource Centers) Marc Glass, Trustee Bonni Jensen (KKJ&L) Greg Mull, Trustee John McCann (AndCo Consulting) Allan Owens, Trustee Steve Stack (Highland Capital) INVESTMENT MANAGER REPORT – HIGHLAND CAPITAL Steve Stack presented the Investment manager Report for Highland Capital for the period ending March 31, 2019. Mr. Stack started his presentation by stating that the first quarter was the best quarter for the stock market since 2009, which was a complete turnaround from the fourth quarter of 2018. The S&P gain of 13.6% has recouped most of the market losses acquired in the last quarter . Growth has outdone value over the past ten years and the portfolio is in a defensive stance. 30 year bonds are up, not much change to this in the past six months. Mr. Stack noted that the Federal Reserve has paused rate hikes and does not expect any rates cuts unless inflation stays at 1.3%. There has been a spike in the cost of crude oil due to the recent attacks on oil tankers. Mr. Stack stated that he expects a pullback to eventually happen and noted that investible bonds are now BBB rating. Trustee Brad Seidensticker inquired about bond ratings. Mr. Stack stated that the BBB ratings are due to low rates, financial collapse, rating firms are quick to downgrade a company, and are slow to upgrade a company. The Bond Maturity Allocation and the Duration Allocation was reviewed and Mr. Stack noted that the average maturity is 14.19 years and the average duration is 5.13, which is mainly due to mortgage pools. Mr. Stack stated that if the Board wishes the Investment Policy can be changed to allow the investment into BBB rated bonds, however BBB bonds do carry a higher risk. A detailed conversation continued between the Board and Mr. Stack regarding bond ratings and mortgage refinancing, resulting in the Board deciding not to change the Investment Policy at this time. INVESTMENT CONSULTANT REPORT – RHUMBLINE Denise D’Entremont thanked the Board for inviting her to present the Investment Manager Report for Rhumbline for the period ending March 31, 2019. Ms. D’Entremont started off her presentation by informing the Board that the plan started with Rhumbline back in 2000 when the firm had $5 Billion in managed assets, and today the firm is at $57 Billion in managed assets. Minutes 06/13/2019 Page 2 Ms. D’Entremont informed the Board that the Total market Value of Rhumbline’s S&P 500 Pooled Index Fund as of May 31, 2019 is at $2.3794 Bill ion in investments and that the Plan’s Portfolio is up to $26.9 Million so far this month. The fund’s performance is slightly better than the benchmark since inception at 5.56%, compared to the benchmark of 5.48%. The composite returns were reviewed and Trustee Brad Seidensticker inquired if the Plan should move some money into the equal weighted S&P 500? Ms. D’Entremont explained the equal weight funds to the Board and stated that she thinks everything is okay where it is and does not want to change what is currently working. Chairman Jay Spencer asked if making a change would protect in a downturn, which Ms. D’Entremont said that it would. Ms. D’Entremont informed the Board that the Equal Weight funds do carry a lower benchmark. Ms. D’Entremont then reviewed the S&P 600 Pooled Index Fund performance and market value summary with the Board noting that the month to date market value is at $9.6M. The MSCI EAFE Pooled Index Fund performance and market value summary was then reviewed and Ms. D’Entremont noted that the month to date market value is at $9.3M. INVESTMENT CONSULTANT REPORT - ANDCO John McCann presented the Investment Consultant Report for AndCo for the period ending March 31, 2019, starting off with reviewing the Asset Allocation of the Plan. Mr. McCann noted that the S&P 500 Pooled Index Fund has the largest allocation amount. Mr. McCann stated that the past six months was a waste of time for investing as the gains that were earned offset the losses of the fourth quar ter in 2018. The total fund market value month to date was flat at $96M and the quarter performance was at 9.17%, compared to the benchmark of 9.53%. The Fiscal Year to Date performance is at -1.85% with a benchmark of -0.92%. Mr. McCann stated that the Plan is a bit aggressive for a concentration style fund and suggests that they leave fixed at 20% and move 10% into American Realty. He also suggested that the Plan diversify in the real estate market and hire a second fund manager. It was noted that JP Morgan is willing to void the minimum investment requirement for the Plan. JP Morgan has over 300 investments in its infrastructure fund and the investments are global. There was a lengthy discussion between the Board and Mr. McCann regarding investing in Infrastructure and Real Estate resulting in the request to invite a few managers in to present their products to the Board and answer questions. Mr. McCann stated that during the recession, the plan lost 14.5%, compared to other plans that lost 30%. Highland Capital and Rhumbline were the reasons why the Plan weathered the storm so well. Trustee Brad Seidensticker asked why the Board doesn’t stick with what they are already familiar with, such as treasuries’ since they have protections. Trustee Greg Mull questioned if they should wait with being on the high side of the market. Mr. Stack suggested a 1 -3 year fixed rate with a $4M investment.  Brad Seidensticker made a motion to move $5M from Rhumbline’s S&P 500 Index Fund into a new account with Highland Capital for 1 -3 Year Treasuries. The Motion received a second from Alan Owens and was approved by the Trustees 5-0. The Board thanked Mr. McCann for his due diligence and discussed the need to have a special meeting for the manage presentations. The Board decided to hold the meeting on August 23, 2019 at 9a.m. giving each manager 20 minutes to present and allocate 10 minutes to answer any questions. ATTORNEY REPORT Minutes 06/13/2019 Page 3 CHANGES IN TAX RULES FOR ALIMONY MEMO: Attorney Bonni Jensen presented a Memo to the Board regarding recent changes to how the Internal Revenue Service treats taxation of Alimony payments. Ms. Jensen stated that Alimony and separate maintenance payments are no longer deductible for any divorce or separation agreement executed after December 31, 2019, and modified after that date. In addition, divorce or separation agreements executed or modified after December 31, 2018 providing alimony will have different tax consequences. Ms. Jensen stated that the alimony payments will not be deductible for the spouse who makes the alimony payments and they will not be included in the income of the receiving spouse. Ms. Jensen reviewed her recommendation of verbiage to add to the Plan’s Summary Plan Description informing the members of this tax rule change to alimony payments and suggested that the Plan also place a copy on the Plan’s website for members to access. FORM 1 MEMO: Attorney Bonni Jensen presented a Memo to the Board informing them that they need to compete and submit their Statement of Financial Interest Form 1 documents by July 1, 2019. Ms. Jensen informed the Board that their CPA or personal attorney can complete the form on their behalf and remi nded everyone that if they are entitled to confidentiality in their address as provided by Florida Statute 119.071, they may request for the Commission on Ethics to maintain that confidentiality in writing. Ms. Jensen noted that, in the past, some trustees h ave used their work address or a post office box when completing the form. The form needs to be mailed or emailed to the Supervisor of Elections for the County in which they reside. Ms. Jensen reminded the Board that it is important that each and every Trustee file their Form 1 in a timely manner because the penalty for failure to file is $25.00 per day with a maximum of a $1,500.00. It is suggested that you file this form by certified mail, return receipt requested, and keep a photocopy of the form for your records. In the past, several Trustees have had to show proof of filing. STATUTORY DEATH BENEFITS AND EXPANDED PUBLIC RECORDS EXEMPTIONS MEMO: Attorney Bonni Jensen presented a Memo to the Board regarding two recent bills which were adopted by the Florida Legislature that relate to Public Safety Officers. Neither bill directly affects Police or Firefighter Pension Benefits; however both bills are relevant to Public Safety Officers and Plan Administrators. Ms. Jensen stated that SB 7098 expands the coverage of statutory death benefits to include members of the U.S. Armed Forces, paramedics, and EMTs. SB 7098 also increases the statutory death benefits that apply under three sets of circumstances: Accidental Death, Accidental Death during an Emergency, and Intentionally Killed as a result to an Unlawful and Intentional Act. Ms. Jensen stated that effective July 1, 2019, SB 7098 increases the statutory death benefits for Public Safety Officers as follows; Accidental Death Benefit of $75,000.00, Emergency Death Benefit of $150,000.00, and Intentional Act Death Benefit of $225,000.00. In addition to the statutory death benefits set forth, spouses and children are entitled to receive educational benefits which include the waiver of tuition and educational expenses while obtaining a career certificate, undergraduate education, or post graduate education at a state educational institution. The second bill that Ms. Jensen reviewed was SB248/Chapter 2019-12 (Public Records Bill). This bill amends Section 119.0701 to expand the exemption for home addresses under Florida’s Public Record Law. While the Florida Constitution provides for public access to inspect or copy government records, over the years the Legislature has adopted a growing list of exceptions. SB 248 expands the definition Minutes 06/13/2019 Page 4 of home address to include not just the commonly used street address, but also other identifying information that can be used to reveal a home address. The bill expands the definition of home address to include the physical address, mailing address, street address, parcel identification number, plot identification number, legal property description, neighborhood name and lot number, GPS coordinates, and any other descriptive property information that may reveal the home address. Ms. Jensen reminded the Board that under Section 119.0701, the following records of a Public Safety Officer are exempt from disclosure: Home Address, Telephone Number, Dates of Birth, Photographs, All of the above for spouses and children of current or retired Public Safety Officers, and finally the names and locations of schools and day care facilities attended by the children of current or retired public safety officers. DISABILITY TAX MEMO: Attorney Bonni Jensen presented a Memo to the Board regarding the tax treatment of their Duty-Related Disability/Service-Connected Disability Pension. Ms. Jensen informed the Board that the tax treatment of a Duty- Related Disability Pension is fact specific and depends on the express provisions of the particular plan. She went on to state that, as a general rule, Duty-Related Disability Pension benefits are ordinarily treated as exempt from federal income tax if the benefit is not determined by reference to an employee’s age or length of service. Ms. Jensen then went into detail on the various examples of what would be considered tax exempt and what would be taxable with regards to a member’s Disability Pension. Denise McNeill explained the standard action is to list a disability benefit as “taxable not determined” as each person’s taxable status may vary with the IRS. JENSEN 03-25-19 MEMO RE DIVISON’S ANNUAL REPORT: Attorney Bonni Jensen presented a Memo to the Board regarding the Division of Retirement’s Annual Report. Ms. Jensen reviewed the highlights of the Annual Report, noting that the most common investment assumption is currently 7.5% used by 92 plans along with the second most common investment assumption of 7.0%, which is used by 85 Plans. She then reviewed the assumption rates being used now as compared to 2011. JENSEN 02-19-19 MEMO IRS MILAGE RATE 2019: Attorney Bonni Jensen presented a Memo to the Board that the Internal Revenue Service released its updated Standard Mileage Rate for 2019. The new rate is $0.58 per mile for miles driven after January 1, 2019. Ms. Jensen noted that the rate went up 3.5 cents from the 2018 rates, that the mileage rate can fluctuate within the same year, and that her firm will monitor and convey any changes to the rate. ADMINISTRATOR REPORT ADMINISTRATOR AGREEMENT ADDENDUM: Denise McNeill presented the Board with the updated Administrative Services Agreement between the Palm Beach Gardens Police Officers’ Pension Fund and Resource Centers, LLC. to be signed as agreed upon and approved at the March 14, 2019 Board Meeting. CHERRY BEKAERT AUDIT ENGAGEMENT LETTER: Denise McNeill presented the Board with the Cherry Bekaert Audit Engagement Letter to the Board to be signed so that the auditor can start the audit process early as requested at the last Board Meeting. Minutes 06/13/2019 Page 5  Greg Mull made a motion to approve the Cherry Bekaert Audit Engagement Letter as presented. The Motion received a second from Marc Glass and was approved by the Trustees 5-0. MINUTES The March 14, 2019 minutes were presented in the Trustee packets for review.  Marc Glass made a motion to approve the March 14, 2019 Minutes as presented. The Motion received a second from Brad Seidensticker and was approved by the Trustees 5-0. DISBURSEMENTS The Disbursements through March 14, 2019 were presented in the Trustee packets for review.  Allan Owens made a motion to approve the Disbursements as presented. The Motion received a second from Brad Seidensticker and was approved by the Trustees 5-0. FINANCIAL STATEMENTS The interim financial statements through April were provided for informational purposes. BENEFIT APPROVALS The Benefit Approvals for March 14, 2019 were presented in the Trustee packets for review.  Marc Glass made a motion to approve the Benefit Approvals as presented for March 14, 2019. The Motion received a second from Brad Seidensticker and was approved by the Trustees 5-0. OTHER BUSINESS TMI-SALEM CLIENT LETTER: Denise McNeill informed the Board that Karen Russo with Salem Trust had a schedule conflict and was unable to attend the meeting today. Ms. Russo did state that she will be in attendance at the next Board Meeting to go over the merger and answer any questions or concerns that the Board may have. Ms. McNeill explained that she and Scott Baur of The Resource Centers had met with TMI and Salem Trust management regarding the merger and all is expected to go smoothly. There was a discussion regarding the issues that occurred when Salem Trust upgraded their platform a few years back and Trustee Brad Seidensticker requested that the Plan Administrator to keep a close eye on the merger. A frequently asked questions list from TMI was included in their packets regarding the acquisition of Salem Trust for the Board to review. TRUSTEE TRAVEL POLICY: Discussion followed regarding the Trustee Travel Policy due to the higher costs of attending conventions in major cities. Attorney Bonni Jensen clarified the policy and explained the $50 daily food allowance “per diem”. There was a detailed discussion on changing the daily food and what options exist when Trustees attend a convention in a higher cost cities. Ms. Jensen informed the Board that they could increase the food allowance to $60 a day if they wish, and if Minutes 06/13/2019 Page 6 needed, they could always set a temporary amount to cover conventions that are in higher cost where the cost to dine out is much higher than in most other locations. Ms. Jensen also informed the Board that they can make the change retroactive if they wish to do so.  Greg Mull made a motion to increase the daily food allowance per diem to $60 a day retroactive to March 1, 2019. The Motion received a second from Brad Seidensticker and was approved by the Trustees 5-0. DROP POLICY: Denise McNeill confirmed with the Board, the DROP Policy states that any distribution over $35K needs prior Board Approval before those funds can be distributed. BB&T 02-25-19 MERGER WITH SUNTRUST: Denise McNeill presented the Board with a letter informing clients that BB&T Bank and SunTrust Bank have agreed to merge together. The reason for informing the Board of this merger is due to the Pension Plan having a banking relationship with BB&T Bank. Trustee Greg Mull asked Ms. McNeill to verity that the online calculator is correct due to the recent bargaining agreement that the Police Officers’ Union and the City agreed upon. Trustee Marc Glass noted that at the Trustee Convention that he attended in New York City, that another actuary introduced an portal allowing Pension Members to have online access to their retirement information, such as DROP account balances. Ms. Jensen reminded the Board that their system is not in real time. Trustee Marc Glass stated that he would bring the information to the next Board Meeting. PUBLIC COMMENTS There were no public comments at this time. RHUMBLINE ANNUAL PROXY STATEMENTS RHUMBLINE FYE 2018 500 SP ANNUAL PROXY STATEMENT RHUMBLINE FYE 2018 L80A ANNUAL PROXY STATEMENT RHUMBLINE FYE 2018 MID CAP ANNUAL PROXY STATEMENT RHUMBLINE FYE 2018 SMALL CAP ANNUAL PROXY STATEMENT The Rhumbline FYE 2018 Annual Proxy Statements were presented to the Board for informational purposes. ADJOURN There being no further business, the Trustees officially adjourned the meeting at 12:27PM. The next meeting is scheduled for Thursday, September 12, 2019 at 9:00 AM. Respectfully submitted, _____________________________ Brad Seidensticker, Secretary