HomeMy WebLinkAboutMinutes Police Pension 031022Palm Beach Gardens Police Officers' Pension Fund
Minutes of the Meeting Held: March 10, 2022
1. 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 9:08 AM in the Council Chambers and called roll. Those persons present
included:
2. TRUSTEES PRESENT
Jay Spencer, Chairman
Brad Seidensticker, Secretary
Marc Glass, Trustee
Greg Mull, Trustee
3. REPORTS
Investment Manager (Steve Stack, Highland Capital)
OTHERS PRESENT
Scott Baur, Alison Lichter & A.C. Lovingood (Resource
Centers)
Bonni Jensen (Klausner Kaufman Jensen & Levinson)
Jennifer Gainfort, Consultant (AndCo Consulting)
Steve Stack, Investment Manager (Highland Capital)
Brian Liffick, Auditor (Cherry Bekaert & Holland)
Pete Strong (GRS)
Steven Stack with Highland Capital started his presentation by informing the Board that the Plan's Auditor had found
a Bond within the fund that was not A rated and admitted that it was error within Highland Capital. Mr. Stack
informed the Board that the Bond in question did make money for the Plan and there was no financial loss due to
the Bond's rating. The Bond has since been sold after this was brought to our attention. Attorney Bonni Jensen
requested proof of the Bond sell as to keep a clear paper trail. Trustee Brad Seidensticker asked if the lower grade
rating would boost yield, which Mr. Stack stated that it would. There was a detailed discussion regarding investing
in investment grade bonds and the pros and cons of doing so. Inflation, stagflation, and the potential of a bear
market was also discussed, which resulted in Trustee Brad Seidensticker suggesting that the Investment Policy
Statement be changes to reflect the ability for 15% investment in investment grade bonds. Investment Monitor
Jennifer Gainfort stated that she felt comfortable with the Plan investing in BBB rated investment grade bonds with
a 15% cap on those rated below A.
Brad Seidensticker made a motion to update the Investment Policy Statement to allow investment grade bonds with
a 15% cap on those below an A rating. The motion received a second from Marc Glass, approved by the Board 4-0.
Mr. Stack then reviewed some of the highlights for the Highland Capital Funds for the Period ending December 31,
2021 and stated that for Year -To -Date, that Growth is down 18%, Value is down 6%, and Fixed is down 2%. Mr.
Stack went on to say that the total Portfolio is probably down about 7 to 8%.
Audit (Brian Liffick)
Auditor Brian Liffick appeared before the Board to present the Audited Financial Statement for the period ending
September 30, 2021. Mr. Liffick started his presentation by reviewing the required communications section, noting
that there is an unmodified, clean opinion. The audit found no material weaknesses and there are no significant
deficiencies reported. Mr. Liffick then informed the Board that his firm noticed an investment within Highland
Capital that was rated below the allowable rating as stated in the Investment Policy Statement. Mr. Liffick then
reviewed the financial highlights with the Board in detail, noting that the Plan's net position increased by
$22,998,476 or 22.0% during 2021, primarily due to contributions and investment income. For the year ending
September 30, 2021, the Plan's net position was 100.5% of the total pension liability of $126,859,259. Mr. Liffick
concluded his presentation with reviewing the financial in detail with the Board. Mr. Baur noted the Administrative
Costs for the Plan was 0.12% and Management costs totaled out at 0.40%.
Greg Mull made a motion to approve the Audited Financial Statement for the Year ending September 30, 2021, as
presented. The motion received a second from Marc Glass, approved by the Board 4-0.
Greg Mull made a motion to approve the Cherry Bekaert Management Representation Letter as presented. The
motion received a second from Brad Seidensticker, approved by the Board 4-0.
Actuarial Valuation Report (Pete Strong, GRS)
Pete Strong appeared before the Board to present the Actuarial Valuation Report for the period ending September
30, 2021. Mr. Strong reported that the required employer contribution for the fiscal year ending September 30,
2023, is $4,719,149 or 45.94% of covered payroll, which is slightly lower form the previous year and Mr. Strong
noted that there were fewer DROPs than expected. Mr. Strong then reviewed the revisions in actuarial assumptions
in detail with the Board. The Assumed Rate of Return was lowered from 6.30%, down to 6.15%, which Mr. Strong
stated is one of the lowest rates of any open Plan that he is the Actuary for. Mr. Strong then reviewed the DROP
interest rate difference with the Assumed Rate of Return in detail, noting that the difference has caused a liability
load increase from 0.4% to 0.7%, and the Assumed Rate of Return is set to decrease to 6.0% next year. The Plan had
a net actuarial experience gain of $4,070,471 for the year and the gain was primarily due to a recognized invest
above the assumed rate of 6.3%. The investment return was 22.3% based on market value of assets and 10.3%
based on actuarial value of assets. Mr. Strong then noted that even with a 10% loss for 2021-2022 fiscal year, the
Plan will still meet the Assumed Rate of Return. The Funding Ratio of the Plan is 83.6%, which is good for a Plan of
this age.
Mr. Strong then informed the Board that the Plan's Actuarial Experience Gain is now at a negative $533,429. The
Plan Ordinance states that earnings above 8.5%, however it is unclear if the 8.5% earnings listed is the Assumed
Rate of Return or if it is based on actual returns of the Plan. There was a detailed discussion regarding the COLA
which resulted in the need for the City and the Police Union to give the Plan some clarification on the matter.
Greg Mull made a motion to send a letter to the City and the Police Officer's Union detailing the questions that the
Plan has regarding the language of the Ordinance with regards to the Gain Share COLA. The motion received a
second from Brad Seidensticker, approved by the Board 4-0.
Trustee Brad Seidensticker inquired on how inflation is accounted for within the Actuarial Valuation Report. Mr.
Strong stated that the inflation assumption is at 2.25% and that this is a long-term assumed rate. Mr. Strong then
stated that in about 5-6 years, he will want to revisit the inflation assumptions.
Marc Glass made a motion to approve the Actuarial Valuation Report dated October 1, 2021, as presented. The
motion received a second from Brad Seidensticker, approved by the Board 4-0.
Greg Mull made a motion based on the recommendation of the investment consultant; to set the expected rate of
return to 6.15% as the Board expects to receive 6.15% for the short-term, mid-term, and long-term thereafter. The
motion received a second from Brad Seidensticker, approved by the Board 4-0.
Investment Consultant (Jennifer Gainfort, AnclCo)
Jennifer Gainfort started her presentation by reviewing the recent investment changes in detail with the Board,
including the recent Capital Calls from American Realty. Miss. Gainfort then reviewed the changes within AndCo,
noting that AnclCo is now has a total staff of 91 team members advising approximately $100 billion in client assets.
The Firm's investments made into the organization for 2020 were reviewed along with the forecast of continued
investments for 2021. The Plan's Total Fund Composite from July 1, 1992 to December 31, 2021 was reviewed
with the Board, noting that the Total Fund Composite has started to increase substantially compared to the Net
Cash Flow for the Plan. In 1992 the Plan had a beginning market value of $484,222 with $102,491,739 in
contributions, $73,866,579 in withdrawals, and $107,609,826 in gains as of December 31, 2021, which has resulted
in a $136,719,208 ending market value and a total 8.47& rate of return. The Asset Allocations were reviewed with
the Board, with Miss. Gainfort informing the Board that there is no need to rebalance the Plan at this time.
Trustee Brad Seidensticker inquired if any of the Plan's International Investments have exposure in Russia, Miss.
Gainfort informed the Board that the Plan has no investments currently in Russia. For the quarter ending
December 31, 2021, the returns were 5.70% compared to the benchmark of 6.31%. The Three -Year trailing returns
were 16.57% compared to the benchmark of 17.20%. The Five -Year returns were 11.87%, compared to the
Minutes: March 10, 2022
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benchmark rate of 12.29%, and since inception the Plan has an 8.27% net return on investments. Miss. Gainfort
then concluded her presentation by reviewing each investment managers performance with the Board
Attorney Report (Bonni Jensen, Klausner Kaufman Jensen & Levinson)
Special Tax Notice: Mrs. Jensen presented the Board with an updated Special Tax Notice for the members of the
Plan. Mrs. Jensen reviewed the changed in detail with the Board.
COVID-19 Bill: Mrs. Jensen informed the Board that the COVID-19 Bill has stalled, is not in the hands of any
committees, and does not expect the Bill to be voted on this legislative session.
Bryan Broehm Retirement Application: Mrs. Jensen and the Trustees had a lengthy discussion regarding Mr.
Broehm's Retirement Application and if his pending charges could cause him to lose his Pension. Mrs. Jensen stated
that she will make a request for additional documentation to assist in determining if this matter could have an
impact on the Member's Pension.
Administrator Report (Scott Baur & AC Lovingood, Resource Centers)
Share Account Allocations: Scott Baur presented the Board with the Fiscal Year 2020-2021 Share Allocation and
Balance Roll Forward Report for the Board to review and inquired on several clarification questions regarding
forfeitures.
Active DROP Participants: Mr. Lovingood provided the Board with the Active DROP Participants as of March 10,2022.
Resource Centers — Application Status Notifications: Mr. Baur informed the Board that The Resource Centers is
implementing an automatic notification system that will notify Members of the status of their application. Mr. Baur
went on to explain that they notifications work similarly to tracking a package and the member will receive an
update as their application goes through the processing steps and will notify the member of any delays. Mr. Baur
also informed the Board that each Plan that The Resource Centers is the Administrator for has a dedicated team
within the Client Services Department.
4. MINUTES
The Trustees reviewed the draft Minutes for the December 9, 2021, Board Meeting.
Marc Glass made a motion to approve the Minutes for the December 9, 2021, Quarterly Meeting as ammended.
The Motion received a second from Brad Seidensticker, approved by the Board 4-0.
5. DISBURSEMENTS AND FINANCIAL STATEMENTS
The Board reviewed the Warrant dated March 10, 2022, for payment of expenses.
Marc Glass made a motion to approve the expenses on the Warrant dated March 10, 2022, as amended. The
Motion received a second from Brad Seidensticker, approved by the Board 4-0.
The Board received, reviewed, and filed the interim financial statement through December 31, 2021.
6. BENEFIT APPROVALS
The Benefit Approvals for March 10, 2022, were presented for review.
Marc Glass made a motion to approve the Benefit Approvals for December 10, 2020. The Motion received a second
from Brad Seidensticker, approved by the Board 5-0.
7. OTHER BUSINESS
Minutes: March 10, 2022
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There was no other business to discuss at this time.
8. PUBLIC COMMENTS
No members of the public had any comment.
9. ADJOURN
There being no further business, Chair Jay Spencer adjourned the meeting at 11:40 AM.
Respectfully submitted,
Brad Seidensticker, Secretary
Minutes: March 10, 2022
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