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HomeMy WebLinkAboutMinutes Fire Pension 072920CITY 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, July 29, 2020, at 1:OOPM TRUSTEES PRESENT: Ed Morejon Rick Rhodes Jon Currier Frank Spitalny Eric Bruns TRUSTEES ABSENT: None OTHERS PRESENT: Michelle Rodriguez, Foster & Foster (via phone) Siera Feketa, Foster & Foster Doug Lozen, Foster & Foster (via phone) John Thinnes, AndCo Consulting (via phone) Pedro Herrera, Sugarman and Susskind (via phone) Jerry Suiter, Member of the Plan Stephen Medford, Member of the Plan Members of the Public 1. Call to Order — Rick Rhodes called the meeting to order at 1:00 pm. 2. Roll Call — As reflected above. 3. Public Comments a. Jerry Suiter commented he was a firefighter that had been diagnosed with bladder cancer and reviewed documentation he had from his doctor stating he should no longer be a firefighter. Jerry gave a brief overview of the reasons for his doctor's recommendation for him to leave his employment as a firefighter. Jerry asked what the requirements were to be awarded a disability benefit and if his doctor's letter would be sufficient to meet the requirements. b. Pedro Herrera asked if the diagnosis was something the oncologist had said would get better. Jerry Suiter commented it was being treated right now and briefly reviewed the treatments he had received. Jerry provided further detail for his doctor's concerns with him remaining employed as a firefighter. Jerry confirmed he was not receiving the Worker's Compensation and was utilizing the firefighter cancer bill for his current benefits. c. Pedro Herrera reviewed the process to apply for a disability benefit. Pedro commented bladder cancer did fall under the presumptions and reviewed the eligibility requirements for the presumption to apply. Pedro commented the presumption allowed for bladder cancer, if the eligibility requirements were met, to be considered for an ILOD disability benefit, but it did not affect whether the member was disabled. Pedro commented the regular disability application procedures would still need to be followed. d. Jerry Suiter asked what the impact on his employment would be if he was denied a disability benefit. Pedro Herrera commented that was between the employer and member. Pedro reviewed the eligibility requirements for the member to apply for a disability benefit and commented he could not resign. Pedro commented he must apply while still an active employee or within 30 days of termination (if he was terminated for medical reasons) to be eligible to apply for a disability benefit. e. Jerry Suiter and Jon Currier briefly discussed how much longer the member would have to remain an active member of the plan before meeting early and normal retirement requirements. f. Ed Morejon briefly reviewed the language he read in the letter from Jerry Suiter's doctor. Pedro Herrera briefly reviewed the language and commented it would need to be more clearly defined. g. Stephen Medford commented he recently entered the deferred retirement option plan (DROP) and reviewed the unused sick and vacation leave used to calculate his average final compensation in comparison to his September 13, 2012 unused sick and vacation leave balance. Stephen reviewed his understanding that the September 13, 2012 balance would be used to calculate his average final compensation. h. Siera Feketa commented this was an agenda item under New Business. The Board voted to move the leave payouts and pension contributions discussion to be the next agenda item, upon motion by Eric Bruns and second by Jon Currier• motion carried 5 0 4. New Business a. Leave payouts and pension contributions i. Pedro Herrera briefly reviewed the research Michelle Rodriguez prepared for the discussion. ii. Siera Feketa gave an overview of why there was a change of procedures causing the 2012 leave balances not to be used for calculation purposes. Siera commented the prior administrator provided the actuary with only the 2012 balance and Foster & Foster provided the balance at the time of DROP entry and the 2012 balance to the actuary. iii. Siera Feketa briefly reviewed the research prepared by Michelle Rodriguez and the members that would potentially need a recalculation should the Board decide the September 13, 2012 leave balances should be used for calculations. iv. Pedro Herrera gave a brief overview of the issue commenting the benefits would need to be recalculated for the members whose September 13, 2012 balances should have been used in their calculation and pension contributions needed to be made respectively. v. Doug Lozen commented that similar language is used in many plans, but it appears that this plan is different in that the intent from negotiations was to use the number of hours in place as of September 13, 2012; most other plans use the lesser of the hours in place as of the snapshot date and hours as of the date of termination. Doug commented if the Board agreed, the benefits could be recalculated. Doug reviewed the ways in which the pension contributions could be paid. vi. Siera Feketa commented there were a couple members whose calculation included the wrong balance based on information provided by the prior administrator such as a 300 hours limit, which did not exist on the leave payouts. Siera also reviewed the contributions commenting it appears contributions were withheld for members who terminated and retired, but not for members who entered DROP. vii. Pedro Herrera asked if the contributions were taken upon separation when the members exited the DROP. Siera Feketa commented the City confirmed pension contributions were not taken out on leave payouts for DROP members. viii. Pedro Herrera read the definition of salary in the Ordinance at Ed Morejon's request. ix. Rick Rhodes asked if Pedro Herrera was comfortable with the plan using the September 13, 2012 leave balances for purposes of the calculations. Pedro commented he was comfortable with that as that had been the past practice for the plan unless he was told that was not the intent of the provision. x. Frank Spitalny asked if using the September 13, 2012 balances would be better for the members. Rick Rhodes confirmed it would be. 2 A Rick Rhodes and Ed Morejon discussed the intent during the union negotiations during that period of time. xii. Ed Morejon requested Siera Feketa review Jill Willis on the research prepared by Michelle Rodriguez. Siera briefly reviewed her payout that was included in her average final compensation in comparison to what her balance was at the time of her termination. Siera pointed out the members that would possibly need recalculations. xiii. Pedro Herrera commented the pension contributions could be debited from the member's DROP. xiv. The Board, Pedro Herrera, Siera Feketa, and Doug Lozen discussed the pension contributions to possibly be made on the leave balances and when and if the members actually received payment for their unused leave balances. xv. Pedro Herrera commented his understanding was that pension contributions should be made on the leave balances if members enter DROP and retired without entering DROP. Pedro asked Doug Lozen to provide his thoughts. Doug commented that would also be his expectation. Doug reviewed the process to revise the calculations and withhold contributions commenting they could debit it from the member's DROP balance when they recalculated the DROP balance. Doug commented it would be more difficult for those who were already retired and separated from the City. xvi. Siera Feketa and Ed Morejon briefly discussed the report provided by the City of the September 13, 2012 unused sick and vacation leave balances. xvii. Pedro Herrera commented if the unused leave balances were included in average final compensation (AFC) pension contributions needed to be taken. Pedro commented we would need to verify if the pension contributions had been taken and if they had not been taken, money may be owed to the plan. Doug Lozen commented he agreed and that was how he had seen it done in every other plan. Doug commented they could get Board direction to net it out of DROP balances for those that were still in DROP and the Board could discuss how to collect the funds from retirees. Pedro briefly reviewed how the funds could be repaid by the members commenting they first needed to agree if the funds should be collected. The Board voted accept the September 13 2012 balance of unused sick and vacation leave to be included in average final compensation for all members upon motion by Jon Currier and second by Eric Bruns, motion moved 5-0 xviii. Ed Morejon asked whose obligation it was to collect pension contributions. Pedro Herrera commented it would be the obligation of the pension fund. Rick Rhodes commented the plan did not withhold the funds as payroll calculated those amounts and withheld the contributions. xix. Ed Morejon and Rick Rhodes asked if the plan was owed money by the member and the City. Pedro Herrera briefly reviewed commenting his understanding was the City's contribution would have been made as a part of the required contribution they made at the end of each fiscal year to fund the plan and deferred that to Doug Lozen. Doug confirmed that was correct. Pedro commented it was just the member's portion that had not been made. xx. Pedro Herrera commented it was a function of the City's payroll through employer pick up to make those contributions on a pre-tax basis to the pension fund. Pedro commented it was ultimately the plan's obligation to collect the contributions from the members and the City. xxi. Rick Rhodes asked if the members were receiving the money or just getting an increase in their AFC. Ed Morejon commented both were happening. Pedro Herrera commented it was being included in their AFC so their benefit was based 3 on that amount of money. Ed Morejon commented the members could get paid for the lump sum, but the only way to capture the value of the money was to have the actuary calculate it. xxii. The Board, Siera Feketa, and Pedro Herrera discussed when the members were actually paid for their unused sick and vacation leave and if they were paid for their leave balances. xxiii. Pedro Herrera commented the actuary would have to calculate the pension contributions owed if they were not being withheld by the City. Pedro commented the Board would have to decide how they would like to collect those contributions and reviewed the ways they could do so. xxiv. Stephen Medford asked how he would make the pension contributions on an amount he did not receive as a payment as he did not receive a lump sum payment for the amount of leave hours he had on September 13, 2012. xxv. Pedro Herrera, Stephen Medford and the Board further discussed when the members received payment for the unused sick and vacation leave balances. Rick Rhodes commented based on Stephen's example, the amount of unused sick and vacation leave was being used for AFC, but hours were not being paid to the member. xxvi. Jon Currier commented the Board should decide if pension contributions should be withheld and if so, how would those funds be collected. Jon commented it seemed the amount should be pensionable, and the contributions should be withheld. xxvii. Ed Morejon briefly reviewed the study prepared by GRS in 2011 when the changes were being made to the plan and commented the member contributions were not mentioned in the study. Doug Lozen commented the actuaries calculated total required contributions and how those were determined. Doug commented this was a discussion of administrative policy and procedure and this detail would not be found in an impact statement prepared by an actuary as they calculated total contributions. xxviii. Stephen Medford commented he had not received payment for the hours he had on September 13, 2012 and would not receive payment as his current leave balances were lower than what his balances were on September 13, 2012. Pedro Herrera asked Doug Lozen how this would be handled. Doug reviewed how his benefit was determined and how it would be recalculated. Doug commented his monthly benefit would go up because of the inclusion of more hours even if he did not receive a lump sum payment for those hours. Doug commented his opinion was that contributions should be made when the benefit goes up as that was what he had seen in every other plan. xxix. Pedro Herrera asked if members got a payout of the unused sick and vacation leave balances when they entered DROP. Stephen Medford commented they did not receive a payout of those amounts. Ed Morejon reviewed his DROP experience commenting his September 13, 2012 balance was included in his calculation, but he did not receive payment until the end of DROP. Pedro asked if they got a payout of those hours at some point. The Board confirmed they could if they did not use their entire balance while in DROP. Stephen Medford commented he would not be getting paid out his September 13, 2012 balance because his balance at DROP exit would fall below his balance on September 13, 2012. xxx. The Board, Siera Feketa, and Pedro Herrera discussed periodic payouts that were made to the members that elected to receive lump sum payouts of their unused leave balances while they were still active and members who used their balances between 2012 and their DROP entry or exit. xxxi. Pedro Herrera commented even if they were not receiving payment for the time, they were getting credit for it in their calculation. 0 xxxii. Eric Bruns suggested getting the recalculations done and getting more information on the pension contributions and making a more informed decision at a future meeting. Rick Rhodes commented he agreed and would like to be presented with some options at the next meeting. The Board agreed by consensus to continue this discussion at a future meeting. xxxiii. Pedro Herrera commented there would be a cost associated with the actuary calculating the member contributions to be made. Doug Lozen commented that was correct, but it would not be a significant amount. xxxiv. Stephen Medford reviewed the joint annuitant option he selected asking if the COLA he received would continue to his joint annuitant. Doug Lozen commented unless the Ordinance said something to the contrary, the annuitant picks up where the COLAs left off. Doug briefly reviewed an example. 5. Approval of Minutes a. Rick Rhodes requested it be noted in the roll call that Eric Bruns attended at 1:58 pm on the April 29, 2020 quarterly meeting minutes. The Board approved the April 29 2020 quarterly meeting minutes with requested revision upon motion by Frank Spitalny and second by Jon Currier• motion carried 5 0 6. Reports a. AndCo Consulting, John Thinnes, Investment Consultant i. Quarterly report as of June 30, 2020 1. John Thinnes gave a brief overview of the market environment for the quarter commenting the quarter was more successful than the prior quarter. 2. The market value of assets as of June 30, 2020 was $113,135,664. 3. John Thinnes commented as of this morning the plan was at about $115,500,00, so there had been much recovery since the quarter ending March 31, 2020. 4. John Thinnes reviewed the cash flow for the plan commenting they were not back to their all-time highs, but the plan was close if they accounted for cash flows. 5. John Thinnes reviewed his previous work with the administrators to raise cash as needed commenting there had been no issues. 6. The total fund gross returns for the quarter were 12.67%, underperforming the benchmark of 13.75%. The total fund trailing gross returns for the 1,3, 5, 7 and 10-year periods were 2.75%, 6.66%, 6.88%, 8.41 % and 9.43% respectively. Since inception (5/1/98), total fund gross returns were 6.20%, slightly outperforming the benchmark of 6.16%. 7. John Thinnes gave a brief overview of why the plan's performance was a little lower than some other local plans commenting they had more exposure to large cap growth on the domestic and equity side. 8. John Thinnes reviewed the returns of the investment managers. 9. John Thinnes reviewed the strategy of Fiduciary Management commenting he was watching them closely. John commented there were other managers in that space they liked that the Board could transition to, but he was not ready to recommend termination as he understood why they were not successful during the quarter. 10. John Thinnes reviewed the strategy of Templeton commenting he had done an analysis on global bond space and there may be a better use of that capital in the private debt market. John commented he may bring recommendations to the next meeting. 11. John Thinnes reviewed the areas of concern in real estate. 0 12. Frank Spitalny commented he was not sure about real estate in this market. Frank asked John Thinnes about the report he received from Agincourt and his thoughts on it. John commented they paid Agincourt and Garcia Hamilton for their opinions and sometimes they differed. John reviewed the portfolio positions of Agincourt and Garcia Hamilton. 13. Eric Bruns commented he agreed with John Thinnes' opinion of Fiduciary Management not just because of their performance, but also because of the risk the plan was taking with them. Eric asked if they were able to adjust their criteria for when they evaluate their investment managers, so they could evaluate everything holistically on the risk and reward side. John reviewed the Investment Policy Statement (IPS) and the criteria in the IPS commenting he would get with Eric after the meeting to discuss this further. 14. Ed Morejon requested John Thinnes provide more detail on Templeton. John briefly reviewed the thought process when Templeton was added to the portfolio. John commented there may be more efficient use of the capital in that space and the Board could evaluate the search he prepared to determine if they wanted to stay in the global fixed income space. 15. John Thinnes reviewed the Blackrock fund commenting he did a sweep analysis. John commented there was now a share class for that fund with a lower fee. John reviewed the process commenting there was just a share conversion letter that would get sent to Salem Trust. The Board authorized AndCo Consulting to work with the custodial bank to switch share class of Blackrock_ Multi Asset Fund upon motion by Eric Bruns and second by Ed Moreion• motion carried 5 0. 16. Ed Morejon requested John Thinnes distribute the ICMA-RC DROP handout. b. Foster & Foster, Doug Lozen, Plan Actuary i. Self -Directed DROP account audit 1. Doug Lozen briefly reviewed the analysis prepared commenting the four members who participated in the ICMA-RC self -directed accounts were overpaid. 2. Doug Lozen commented in January 2016 there were two transfer of benefit payments rather than one for each of the four members. Doug commented the audit reflected the amount of the overpayments and the Board would need to decide if any action should be taken to have these funds repaid. 3. Doug Lozen briefly reviewed the process of auditing the payments. 4. The Board briefly discussed the previous DROP audit that was presented to the Board. 5. Ed Morejon asked if Doug Lozen was able to determine why the overpayment occurred. Doug Lozen commented he did not have the details as to why it occurred. 6. Pedro Herrera gave a brief overview of the audit and overpayments. Pedro commented it was determined that four members were overpaid, and it was recommended the Board recoup the funds that were overpaid. Pedro commented they could request the members repay the funds as a lump sum or allow them to repay the funds over a period of time through deductions of their monthly benefit. 7. The Board and Pedro Herrera discussed the ways the members could repay the funds and a fair time period for repayment. Pedro commented there was an obligation to attempt to recover the funds from the members. 6 8. The Board requested the attorney and administrator prepare a letter to be sent to the retirees letting them know the amount of overpayment and their options of repaying the funds as a lump sum or as installment payments over a 24-month period. The Board approved the collection of the funds overpaid to the four members that participated in the self directed DROP accounts to be palid as a lump sum or within a 24-month period as installment payments and directed the plan attornev and administrator to prepare a letter to be sent to the four members upon motion by Jon Currier and second by Ed Morejon; motion carried 5 0 9, Frank Spitalny requested the members be contacted via phone prior to receiving the letter. 10. Ed Morejon requested additional documentation be provided to the members to reflect the overpayment. 11. Pedro Herrera commented the administrator could provide the documentation and letter with context to him for review before sending it to the members. c. Sugarman and Susskind, Pedro Herrera, Plan Attorney i. DROP Exit Dates 1. Pedro Herrera briefly reviewed the email correspondence between himself and the plan administrator regarding DROP exit dates commenting there was concern with members staying employed past their DROP exit date. 2. Pedro Herrera commented it was the City's decision to terminate an employee and the Board did not have much authority to enforce that provision. Pedro commented the Ordinance was silent on this circumstance and the Board would have to discuss how the pension would be handled if the member stayed past their DROP exit date, such as additional credited service in the plan. Pedro commented the best circumstance was for the City to enforce the provisions in the Ordinance by terminating members when they were exceeding their DROP exit date, but the Board did not have the authority to terminate members. 3. Rick Rhodes and Pedro Herrera briefly discussed a potential issue with in- service distributions. Pedro commented it should not be an issue as they were not receiving a payment. Pedro confirmed they were not risking their tax exemption, but they were increasing their liability in the plan. 4. The Board and Pedro Herrera discussed the end date of the members' DROP period. Rick Rhodes commented his understanding was members start DROP on the 151 of the month since that was when the first deposit happens so they would be able to work until the end of the month. 5. Ed Morejon commented there was not a problem with the Board's interpretation, but that the City was allowing members to stay past the 60- month period. Ed commented he talked to the City Finance Director who was going to address this issue. 6. The Board and Pedro Herrera briefly discussed the liabilities associated with members working past their DROP exit date. 7. The Board and Siera Feketa discussed the DROP application that the members signed stating the members' entry date and maximum participation date. 8. Siera Feketa reviewed the process in which they contact DROP members when their maximum participation date was approaching. 9. Ed Morejon recommended one of the two council appointed trustees discuss this with the City. Eric Bruns commented he would talk with the City about it and update the Board at the next meeting. 7 10. The Board and Pedro Herrera discussed when the members' DROP entry date was even if their last active date was in the middle of the month. Pedro and Rick Rhodes commented their understanding was the entry date would the first date of the month following their last day as an active member. 11. The Board agreed by consensus to add this to the next agenda for Eric Bruns to update the Board. Proposed Ordinance change — SECURE Act 1. Pedro Herrera briefly reviewed the SECURE Act and the changes in the proposed Ordinance to comply with the Act. Pedro commented the only change was to the Required Minimum Distribution (RMD) age. Pedro commented it was a no impact amendment item. The Board approved the proposed Ordinance to be sent to City for adoption upon motion by Eric Bruns and second by Jon Currier; -motion carried 5 0 7. New Business (continues) a. Administrative Access to Plan Portal i. Siera Feketa informed the Board they could receive access to the plan portal to view members' accounts. ii. The Board agreed by consensus that was not necessary and they did not want to receive administrative access. b. Elyse Trask, request for option selection extension i. Siera Feketa briefly reviewed the extension requested by Elyse Trask. The Board approved Elyse Trask's request for an extension to make her option selection upon motion by Ed Moreton and second by Eric Bruns; motion carried 5 0 c. Leave payouts and pension contributions i. This was discussed earlier in the meeting. d. Amended 2018-2019 expenses i. Siera Feketa briefly reviewed the amended 2018-2019 expenses and the reason for the increase. The Board approved the amended 2018-2019 expenses as presented upon motion by Eric Bruns and second by Frank Spitalnv motion carried 5 0 e. Amended 2018-2019 proposed budget i. Siera Feketa briefly reviewed the amended 2018-2019 proposed budget commenting it was the same amount as the amended expenses just presented. The Board approved the amended 2018-2019 budget as presented upon motion by Frank Spitalnv and second by Jon Currier motion carried 5-0 Proposed 2020-2021 budget i. Siera Feketa briefly reviewed the proposed 2020-2021 budget commenting there was a slight increase in budget from the proposed 2019-2020 budget and reviewed the increased expenditure types. ii. Siera Feketa and Eric Bruns discussed why the investment management fees were not included in the budget. The Board approved the proposed 2020-2021 budqet as presented upon motion by Frank Spitalnv and second by Jon Currier motion carried 5-0 8. Old Business — None. Consent Agenda a. Payment ratification i. Warrant #32, #33 and #34 b. Payment approval i. None c. Fund activity report for April 23, 2020 through July 22, 2020 The Board voted to accept the Consent Agenda as presented, upon motion by Jon Currier and second by Eric Bruns; motion carried 5 0 10. Staff Reports Discussions and Action a. Foster & Foster, Siera Feketa, Plan Administrator i. Educational Opportunities 1. Siera Feketa briefly reviewed the FPPTA 36th Annual Conference from October 4, 2020 through October 7, 2020 in Orlando, FL. 2. The Board discussed the CEUs for the current year. Siera Feketa commented she had heard there had been discussion regarding the CEUs and providing an extension to obtain the CEUs, but as of now, she had not heard anything officially. ii. Siera Feketa asked the trustees if they sent their financial disclosure forms to the City Clerk. All trustees confirmed they sent their financial disclosure forms to the City Clerk, with the exception of Ed Morejon. iii. Siera Feketa commented at a previous meeting the Board decided to have the member -elected trustees' terms begin on January 1st and Ed Morejon's term would be expiring on 2119/2021. Ed Morejon explained why his term was later than what it should have been. Pedro Herrera commented they could begin the next trustee's term on January 1st if Ed was willing to cut his term short to end on December 31, 2020. Ed stated he had no issues stepping down for the next trustee's term to begin January 1, 2021. 11. Trustee's Reports Discussion and Action — None. 12. Adjournment — The meeting was adjourned at 3:49pm. 13. Next Meeting — October 28, 2020, at 1:OOpm, quarterly meeting. Respectfully submitted`, by: ". L ke SSii ra Feketa, Plan Administrator Approv J Currier, Secretary Date Approved by the Pension Board: 0 Z�I 2,E1 Zd 6