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HomeMy WebLinkAboutMinutes Police Pension 121020Palm Beach Gardens Police Officers' Pension Fund Minutes of the Meeting Held: December 10, 2020 Chair Jay Spencer called the regular Quarterly Meeting of the Board of Trustees of the City of Palm Beach Gardens Police Officers' Pension Fund to order at 9:22 AM in the Council Chambers and called roll. Those persons present included: TRUSTEES PRESENT Jay Spencer, Chairman Brad Seidensticker, Secretary (Electronically) Marc Glass, Trustee Greg Mull, Trustee OTHERS PRESENT Scott Baur & AC Lovingood (Resource Centers) Bonni Jensen (Klausner Kaufman Jensen & Levinson) John McCann, Consultant (AndCo Consulting) Steve Stack, Investment Manager (Highland Capital) Pete Strong, Actuary (Gabriel Roeder Smith) Marc Glass amended the Agenda to include a finding of Extraordinary (Exigent) Circumstances for Trustees joining the meeting electronically. The motion received a second from Greg Mull, approved by the Trustees 3-0. Greg Mull made a motion to find extraordinary circumstances due to COVID to allow Trustee Brad Seidensticker to join the meeting electronically. The motion received a second from Marc Glass, approved by th Trustees 3-0. While the Board had a physical quorum and complied with all aspects of Florida Statutes and current orders issued by the Governor, the City of Palm Beach Gardens registered an objection to the format of the meeting. Ms. Jensen will clarify with the City Attorney the position of the City regarding the format for future Board meetings. 2. REPORTS Actuary (Pete Strong, GRS) Actuary Pete Strong addressed the mortality and return assumptions previously adopted by the Board. He explained that the Florida Retirement System (FRS) updated mortality in 2019, which will slightly lower the contribution requirements and liabilities if adopted by the Board. The Trustees can adopt the new mortality assumptions this year or next year. The Pension Fund also uses a 6.5% investment return assumption. Mr. Strong recommended that the Board should lower return expectations closer to 6% in line with current capital market forecasts. If the Board adopts the new mortality assumptions this year, the Board can also lower the return assumption to 6.37% without increasing contributions. The Trustees considered the recommendations and market expectations; the Trustees previously lowered the return assumption from 7.5% to 6.5% over a 10-year period. Brad Seidensticker made a motion to adopt the new mortality assumptions for the October 1, 2020 valuation report and use the savings to lower the investment return assumption to 6.3%. The motion received a second from Greg Mull, approved by the Board 4-0. Brad Seidensticker made a motion to lower the investment return assumption from 6.3% to 6.0% over the next 3 years, reaching 6.0% with the October 1, 2023 valuation report. The motion received a second from Greg Mull, approved by the Board 4-0. Investment Manager (Steve Stack, Highland Capital) Mr. Stack reported that Board initially funded the ICC large cap growth allocation with $1.5 million in 2007. The portfolio now has $12,616,337 with a 466% cumulative gain to average 11% per year over the 12 year period. For the trailing 5 years, the large growth mandate produced a 17.31% average annual gain. Mr. Stack noted the wide performance gap between growth and value particularly in the last year. Accordingly, Highland now has the portfolio positioned neutral to the benchmark. Mr. Stack also reviewed the fixed income and short term fixed income performance. Investment Consultant (John McCann, AndCo) John McCann reported that the assets gained 7.73 for the fiscal year compared to 9.15% for the benchmark for the fiscal year ending September 30, 2020. The Pension Fund had total invested assets of $102,890,158 as of the fiscal year end. He then reviewed individual manager performance, noting that the fixed income assets performed under the benchmark for those assets. American Realty also had a -0.41% return, the first negative return in 10 years. Mr. McCann reviewed the performance for other portfolio managers as well. Ms. Jensen inquired about an executive order prohibiting investment in certain Chinese companies starting January 2021. The order requires that managers divest the assets by November 2021. Rhumbline should report how the index fund manager will comply, particularly if the stocks become illiquid. Ms. Jensen will provide a copy of the executive order. Mr. McCann stated that the assets increased to $114.4 million as of November 30 including $4 million in contributions, for an estimated 7% gain in the first 2 months of the fiscal year. The allocation to bonds dropped from 25% down to 21% as the equities gained. He recommended that the Board rebalance $4.4 million from large cap stocks at Rhumbline and Highland Capital to fixed income. The Board considered the recommendation. Marc Glass made a motion to rebalance $4.4 million from the Highland large growth equity portfolio to the Highland fixed income portfolio. The motion received a second from Greg Mull, approved by the Trustees 4-0. Attorney (Bonni Jensen, Klausner Kaufman Jensen & Levinson) Ms. Jensen reported that the ordinance to amend the plan submitted to the City has moved forward to Council. Administrator Resort (Scott Baur & AC Lovineood. Resource Centers Mr. Baur provided a brief overview of the impact of COVID on normal plan operations. He also explained the DROP balances reported on the prior meeting benefit approval, which appeared confusing due to the timing of the reporting. Certain members took multiple DROP Account distributions during the quarter. The administrator reports the DROP Account balance on the approval form as an additional control or confirmation of the funds available to the member taking a distribution. Mr. Baur then reviewed the Share allocation process in detail. He explained the calculation of the administrative expense ratio applied to accounts. He reviewed the process to reconcile membership and eligibility before allocating the annual Chapter 185 premium tax receipts to members. The Trustee reviewed the membership reconciliation and provided possible corrections. The Board noted that the Share Account ordinance was missing from the Pension Fund website. 3. MINUTES The Trustees reviewed the draft Minutes for the September 18, 2020 meeting and provided corrections. Marc Glass made a motion to approve the minutes for the September 18, 2020 Quarterly Meeting as amended. The Motion received a second from Brad Seidensticker, approved by the Trustees 4-0. 4. DISBURSEMENTS AND FINANCIAL STATEMENTS The Board reviewed the Warrant dated December 10, 2020 for payment of expenses. Greg Mull made a motion to approve the expenses on the Warrant dated December 10, 2020 in the amount of $150,627.83. The Motion received a second from Marc Glass, approved by the Trustees 4-0. The Board received, reviewed, and filed the interim financial statement through September 30, 2020. Minutes: December 10, 2020 Page 2 S. BENEFIT APPROVALS The Benefit Approvals for September 18, 2020 were presented for review. Greg Mull made a motion to approve the Benefit Approvals for December 10, 2020. The Motion received a second from Marc Glass, approved by the Trustees 4-0. 6. OTHER BUSINESS The Board noted a conflict on the next meeting date with City elections. The Trustees rescheduled the next meeting from March 9, 2021 at 9:00 AM to March 17, 2021 at 2:00 PM. 7. PUBLIC COMMENTS No members of the public had any comment. 8. ADJOU RN There being no further bus' ess, Chair Jay Spencer adjourned the meeting at 11:05 AM. ;r Respectfully m itted, Brad Seidensticker, Secretary Minutes: December 10, 2020 Page 3