HomeMy WebLinkAboutMinutes Police Pension 09092111 City of Palm Beach Gardens Police Officers' 11
Pension Fund
Minutes of the Meeting Held
September 9, 2021
The regular meeting of the Board of Trustees of the City of Palm Beach Gardens
Police Officers' Pension Fund was called to order at 9:04 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
Brad Seidensticker, Secretary
Marc Glass, Trustee
Greg Mull, Trustee
Allan Owens
JOHN MCCANN
OTHERS PRESENT
Scott Baur (Resource Centers)
A.C. Lovingood (Resource Centers)
Bonni Jensen (KKJ&L)
John McCann (AndCo Consulting)
Jennifer Gainfort (AndCo Consulting)
Investment Monitor John McCann introduced Jennifer Gainfort who will be taking his
place after his retirement at the end of the year. Mrs. Gainfort thanked Mr. McCann
for the introduction and Mrs. Gainfort gave the Board an overview of her
qualifications and tenure at AndCo. The Board welcomed Mrs. Gainfort.
Mr. McCann then gave the Board an overview of the three manager presentations for
a Large Cap Value Manager. He reviewed that the Board's historical investments in
the Large Cap Value sector and noted that a Large Cap Value Manager will function
as a satellite manager to generate alpha returns in its sector for the fund.
MELLON LARGE CAP GROWTH PRESENTATION — BNY MELLON
Ms. Amanda Long and Mr. William Adams appeared before the Board to present
information regarding their company and the large cap growth asset strategy. Ms.
Long noted that she would be their relationship manager if hired. They have three
other clients in Florida and 16 in the US and they are currently transitioning the
strategy and team internally. Mr. Adams explained they have a long tenured
investment team that has been through many market cycles, a deep research team
and they are a value strong fund with an integrated risk management program. He
reviewed their investment philosophy and strategy in detail noting they had a risk
management approach with daily, weekly, and monthly meetings. Their team stayed
the course in January 2020, even when the market favored otherwise. Mr. Adams
reviewed their portfolio characteristics and responded to specific questions from the
trustees and investment consultant. Mr. McCann explained he had asked each
manager a specific list of questions and Mellon reported the following: They are a
large cap growth and core (split); 52% value, they have 79 stocks, their standard
deviation the past five years was 21% versus 16% for the index and their turnover is
82%. The fee is 25 basis points (bps), the performance fee based on a tiered
structure and capped at 100 basis bps or they offered a flat fee of 45 bps.
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Brad Seidensticker questioned holding of Alphabet in the portfolio. Mr. Adams
explained that even with high multiples, the company remains intrinsically
underrated.
ARISTOTLE LARGE CAP GROWTH PRESENTATION — ARISTOTLE
Ms. Keri Hepburn and Mr. Will Averill appeared before the Board to present
information regarding their company and the large cap growth asset strategy. Ms.
Hepburn explained they would be the team on the account if hired. She reviewed
information about their company noting they are 100% employee owned. Mr. Averill
reviewed the investment team, all are either on track or are currently equity owners
of the company. They are a value firm, and the quality review begins with the "who
cares" test; if that company went away tomorrow, does the customer care? When
Aristotle purchases the company, they tend to own the company for five to seven
years. Ms. Hepburn reviewed their returns with the Trustees. Mr. McCann explained
he had asked each manager a specific list of questions and Aristotle reported the
following: They are a true large cap value manager with 47% value and 47% large
cap, the fee for the value equity is 50 bps for a separate account or 39 bps for their
collective trust, they have 43 stocks, 13.7% five-year standard deviation and their
turnover is 14%. They are an investment trust with daily liquidity and their primary
index bench is R1000. They are open to doing a performance -based fee if the Board
prefers. Mr. Averill responded to additional questions from the Trustees.
SEIZERT LARGE CAP GROWTH PRESENTATION — SEIZERT CAPITAL
PARTNERS
Mr. David Collin and Mr. Thomas Kenny appeared before the Board to present
information regarding their company and the large cap growth asset strategy. Mr.
Collin introduced their company noting they only manage domestic equity portfolios.
Mr. Kenny reviewed their company philosophy. The manager is also an analyst,
which they feel is critical to their process. He reviewed their principles and favorable
investment attributes they seek for their stocks. He reviewed their investment
process describing how they identify, analyze, and build the portfolio. Mr. Kenny
explained they do the research themselves looking for the durability of the company.
He explained if both managers do not agree, then they do not purchase the
company. Mr. Kenny reviewed their current snapshot explaining they will not hold a
sector where they cannot find a good company to own; explaining that is why there
are currently four sectors in which they have no holdings. Turnover is typically 25%-
30%. Mr. McCann explained he had asked each manager a specific list of questions
and Seizert reported the following: They are 51% value and 77% large cap, they
are a concentrated portfolio with only 35 stocks, their risk is 16.7% versus the index
of 16.2%, turnover averages 31% which equates to one every three years, the fee is
45 bps for the collective trust or 55 bps for a separate account. Mr. Kenny
responded to additional questions from the Trustees and noted that their firm is
offering no fees for the first 12-months unless the manager performs well above the
benchmark.
INVESTMENT CONSULTANT REPORT - ANDCO
Large Cap Value Manager Search: The Trustees discussed the presentations. Trustee
Brad Seidensticker noted that the liked the team depth in the larger firms as they
seem to offer greater stability. Trustee Marc Glass discussed his perceived fit of
Aristotle to the objectives of the Pension Fund. Mellon offers less downside
protections, Aristotle historically offers more downside protections. Aristotle also had
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the longest holding period, the highest information ratio, and the greatest
consistency in performance. The Board considered the amount to potentially invest
which resulted in the consideration of the reallocation of assets.
• Marc Glass made a motion to hire Aristotle as an active value manager. The
Motion received a second from Brad Seidensticker and was approved by the
Trustees 5-0.
• Greg Mull made a motion to allocate $10 million from the S&P 500 and invest
$5 million to the Rhumbline 1200 Value Fund and $5 million to Aristotle
Founders Account. The Motion received a second from Allan Owens and was
approved by the Trustees 5-0.
Mr. McCann reported that as of June 30, 2021 the Plan had total assets of
$127,315,246. For the quarter ending June 30, 2021, the Plan earned a net gain of
5.28% compared to the benchmark of 5.16%. The Fiscal -Year -to -Date returns were
22.57% compared to the benchmark of 21.39%, the one-year trialing returns were
28.56% compared to the benchmark of 27.03%, the three-year return was 11.92%
versus the benchmark of 12.28%, and the five-year return was 11.80% compared to
the 11.96% benchmark. Since inception, the Plan has had a net investment return
of 8.20%. Mr. McCann then reviewed how each manager in the Plan is doing, noting
that there were strong results across the board. Mr. McCann stated that American
Realty will call $230,000 on September 21, 2021, and then informed the Board that
IFM Global is expected to call all $5 million in committed capital soon. Mr. McCann
recommended that the Board move $2 million from the S&P 500 over to the Highland
Capital Short Term Fixed Income Fund. The Board had a lengthy discussion on when
to move the funds and decided to wait until the beginning of the next fiscal year.
• Marc Glass made a motion to sell $2 million of the S&P 500 and invest those
funds into the Highland Capital Short Term Fixed Income Fund on October 1,
2021. The Motion received a second from Brad Seidensticker and was
approved by the Trustees 3-0.
ATTORNEY REPORT
CHAPTER 185 PREMIUM TAX DOLLARS: Attorney Bonni Jensen informed the Board
that the Plan received $746 thousand from Chapter 185, noting that the amount
increased from the previous year. Mrs. Jensen reviewed the 2019 and 2018 Chapter
185 allocations with the Board, noting that the 2018 amount seems like it was an
anomaly.
JENSEN MEMO - FEDERAL DEATH BENEFIT AND COVID - REV: Mrs. Jensen informed
the Board that her firm has had several active member deaths from COVID-19 and
wanted to review the Federal death Benefit and COVID Memo with the Board once
again. Mrs. Jensen reviewed the requirements and the presumptions in order to
qualify for this benefit.
JENSEN MEMO - FEDERAL, STATE, AND LOCAL DEATH BENEFITS: Mrs. Jensen
reviewed the Jensen Memo regarding the Federal, State, and Local Death Benefits in
detail with the Board. Mrs. Jensen also strongly recommended that members keep
their beneficiary designations up-to-date.
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ADMINISTRATOR REPORT
RESOURCE CENTERS MEMO - PAYMENT VERIFICATION UPDATE: Scott Baur
reviewed the Payment Verification Letter process and results with the Board in detail.
Mr. Baur then informed the Board that his firm is looking into alternative services
that will assist in identifying members who may be deceased and will make
recommendations soon. The Board discussed payment verifications on retired
members on ensuring that the Plan has the most recent contact information on each
retiree.
ACTIVE DROP PARTICIPANTS LIST DATED: 08-30-2021
Albert Lovingood presented the Board with the Active DROP Participants list Dated
August 30, 2021 for informational purposes.
2021-22 CONFERENCE LIST:
Mr. Lovingood presented the Board with the 2021-22 Conference List that The
Resource Centers has created. Mr. Lovingood noted that not all conferences are
listed and that some of the conferences are more focused on Police and Fire Pension
Plans, while other conferences are more focused on General Employee Pension Plans.
CHERRY BEKAERT 2021 AUDIT ENGAGEMENT LETTER:
Mr. Lovingood presented the Board with the 2021 Audit Engagement Letter.
IN -LINE DUTY DISABILITY - HUGHES, ROBERT:
Mr. Lovingood provided the Board with an update regarding Mr. Hughes disability
application. The Resource Centers is still in the process of gathering medical records
and Mr. Lovingood noted that some medical records may not be available due to
record retention issues. The City has provided Mr. Hughes Workers' Compensation
files. The Board noted that Mr. Hughes has until October 28, 2021, before he will be
terminated due to there not being a light -duty permanent position available within
the Police Department. Mrs. Jensen explained the disability application process with
the Board in detail along with the time required to gather the required medical
records for the Independent Medical Review (IME). Mrs. Jensen also stated that
finding a physician that specializes in the member's illness or injury that is willing to
perform the IME can be difficult to locate at time. Mr. Lovingood explained the
average turnaround with physicians when requesting medical records and explained
the process when The Resource Centers does not receive a response in a timely
manner. Mr. Lovingood noted that Mr. Hughes attorney wants all communications
with Mr. Hughes to go through her as she is representing the member, Mrs. Jensen
informed the Board that the Plan can engage with the member directly throughout
this process. Mrs. Jensen then reviewed the Informal Hearing Process with the
Board along with the requirements to determine if the member is permanently and
totally disabled, along with if the disability is duty or non -duty related along with, if
needed, the process of a formal disability hearing. Mrs. Jensen recommended that
the Board authorize The Resource Centers to hire a physician from her firm's pre -
approved physician list to perform the IME for Mr. Hughes.
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• Greg Mull made a motion to grant The Resource Centers the authority to hire
a physician from the Plan Attorney's approve physician list to perform the
Independent Medical Examination for Robert Hughes disability claim. The
Motion received a second from Marc Glass and was approved by the Trustees
5-0.
ANNUAL BENEFIT STATEMENTS:
Mr. Lovingood presented the Board with the 2022 Board Meeting Dates noting that
the City Council Chambers has been reserved for these dates. The Board had no
objection to the meeting dates.
2022 PROPOSED BOARD MEETING DATES:
CYBER SECURITY INSURANCE POLICY: Mr. Lovingood informed the Board that their
Cyber Security Insurance Policy will be up for renewal at the end of December and
wanted to make the Board aware that Lloyds no longer offers a $250,000 policy
anymore and that the new minimum amount is $500,000. Mr. Baur reviewed the
average policy renewal rates that The Resource Centers has seen with other Cyber
Security Policy renewals with the Board. Mr. Lovingood also noted that the Fiduciary
Liability Policy will be up for renewal at the beginning of December.
• Marc Glass made a motion to grant Chairman Jay Spencer discretion to
authorize renewal of the Plan's Fiduciary Liability Policy. The Motion received
a second from Brad Seidensticker and was approved by the Trustees 5-0.
MINUTES
The June 10, 2021, minutes were presented in the Trustee packets for review and
were tabled till the next Board Meeting. Mrs. Jensen noted a few minor changes to
the minutes.
• Marc Glass made a motion to approve the June 10, 2021 minutes as
amended. The Motion received a second from Greg Mull and was approved by
the Trustees 5-0.
DISBURSEMENTS
The Disbursements dated September 9, 2021, were presented in the Trustee packets
for review. Mrs. Jensen made the Board aware that the invoice from her firm is
incorrect.
• Marc Glass made a motion to approve the Disbursements with the exception
of the July 31, 2021 KKJ&L Invoice. The Motion received a second from Brad
Seidensticker and was approved by the Trustees 5-0.
FINANCIAL STATEMENTS
The interim financial statements through July 2021 were provided for informational
purposes.
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BENEFIT APPROVALS
The Benefit Approvals for September 9, 2021 were presented in the Trustee packets
for review.
• Marc Glass made a motion to approve the Benefit Approvals as presented for
September 9, 2021. The Motion received a second from Brad Seidensticker
and was approved by the Trustees 5-0.
OTHER BUSINESS
PUBLIC COMMENTS
There were no public comments at this time.
ADJOURN
There being no further business, the Trustees officially adjourned the meeting at
12:32 PM. The next meeting is scheduled for Thursday, December 9, 2021, at 9:00
AM.
Respectfully submitted,
Brad Seidensticker, Secretary
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