HomeMy WebLinkAboutMinutes Fire Pension 042722CITY 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, April 27, 2022, at 1:OOPM
TRUSTEES PRESENT: Rick Rhodes
Mike Zingaro
Jon Currier
Thomas Topor
Eric Bruns
TRUSTEES ABSENT: None
OTHERS PRESENT: Siera Feketa, Foster & Foster
John Thinnes, AndCo Consulting
Pedro Herrera, Sugarman and Susskind
Janice Rustin, Lew Longman Walker (City Representative)
Doug Lozen, Foster & Foster
Alison Wester, Mauldin & Jenkins, LLC
Karen Russo, Salem Trust
1. Call to Order— Rick Rhodes called the meeting to order at 1:OOPM.
2. Roll Call —As reflected above.
3. Public Comments
a. Janice Rustin introduced herself commenting she was representing Chief Bryer. Janice
reviewed the prior discussion with the Board where they had agreed Chief Bryer would
continue to earn interest on his DROP and Share Plan accounts and would receive a
benefit amount to include the Cost -of -Living -Adjustments (COLAs) upon separation as if
he was collecting a monthly benefit upon his DROP exit. Janice commented Chief Bryer
would like a letter or memo reflecting this decision was made so when he goes to
separate this memo was in the file. Janice commented she would just like this in his file to
reflect this. Rick Rhodes commented they were going to wait for the attorney to arrive to
further discuss this and let her know.
4. Approval of Minutes
The Board approved the Janua 26 2022 uarterl meetingminutes upon motion by, Jon Currier
and second by Eric Bruns• motion carried 5 0
5. New Business
a. Foster & Foster fee proposal
i. Rick Rhodes commented he would like to add this under the "Staff Reports" section
of the agenda. The Board agreed by consensus.
6. Old Business —None.
7. Reports
a. Salem Trust Company, Karen Russo, Board Custodian
i. Discussion of Pacific Gas & Electric class action
1. Karen Russo reviewed the company that filed the class actions for the
Plan, Chicago Clearing Corporation (CCC), commenting they filed a class
action for Pacific Gas & Electric (PG&E). Karen commented after the class
action was filed, PG&E went into bankruptcy and the claim went to
collections. Karen commented the company that filed the class actions
went out and hired another firm, RKS, to handle the class action since it
was in bankruptcy and CCC did not handle bankruptcies. Karen
commented CCC negotiated a fee structure with them, and the fees were
15% of any settlement if the Board wanted to engage with RKS to handle
the class action. Karen commented they did not have to engage with RKS
if they did not want to proceed with the class action. Karen commented the
settlement amount for this plan would only be about $100 as determined
by CCC.
2. The Board discussed the fees and the class action suit.
3, Pedro Herrera reviewed the class action and the fee structure with this firm
commenting it was just different than the fee structure they are used to.
4. Karen Russo commented CCC would still get 12% and RKS would get
15%.
5. The Board discussed the amount of damages and agreed by consensus
not to engage with RKS as the damages were so little and the costs
associated with filing were not worth it.
ii. Pension portal introduction
1. Karen Russo reviewed the pension portal they would be offering through
US Bank. Karen reviewed the enhancement to the retirees. Karen
reviewed the items members could view/change on the portal.
2. Karen Russo commented if the members used the portal, they would no
longer get the paper advice of credit. Karen commented if members did
not want to use the portal, they would continue to get the paper advice of
credit.
3. Karen Russo commented if any changes were made Foster & Foster could
pull a report to see the list of changes made by the member.
4. Karen Russo commented there would not be any fees to the plan for this
portal.
5. Mike Zingaro asked if Foster & Foster offered something like this. Siera
Feketa commented this would be an enhancement for retirees as their
portal was geared toward active members.
6. Pedro Herrera commented there were some that may have difficulty with
it, but he felt more people would like it. The Board discussed the benefits
on the portal.
7. Karen Russo asked if they wanted to allow people to make changes
online. Mike Zingaro asked what the downside of that would be. Karen
Russo commented fraud could be a concern anytime you allowed people
to make changes online. Siera Feketa reviewed the current process for
members to update their information and asked if members could still
make those changes with Foster & Foster. Karen commented they could.
8. The Board discussed and agreed to allow members to use the online
portal. Karen Russo commented she would add them to the queue and
reviewed the process to rollout the portal.
The Board approved moving forward with Salem's online pension portal and to allow members to
make changes online, upon motion by Mike Zingaro and second by Eric Bruns motion carried 5 0
Mauldin & Jenkins, LLC, Alison Wester, Board Auditor
i. September 30, 2021 audit report
1. Alison Wester reviewed the independent auditor's report. Alison
commented in their opinion the financial statements referred to were
presented fairly in all material aspects. Alison commented this was
basically a clean opinion.
2. Alison Wester reviewed the statements of fiduciary net position.
3. Alison Wester reviewed the statement of changes in fiduciary net position.
4. Alison Wester briefly reviewed the notes to financial statements.
5. Alison Wester reviewed the required supplementary information.
6. Rick Rhodes asked about the audit adjustments on page eight and asked
if those were just received later. Alison Wester reviewed commenting they
were received later.
7. Alison Wester reviewed the auditor's discussion and analysis.
8. Alison Wester reviewed the required communications commenting there
were no issues.
9. Alison Wester commented if the Board needed to meet education
requirements, they could contact their education coordinator and hold a
session for the Board.
The Board voted to accept the Se tember 3 2021 audit report as presented. u on motion by Jon
Currier and second by Mike Zingaro• motion carried 5 0
8. Public Comments (continued)
a. Janice Rustin commented she was representing the City and they were concerned about
how the Chief's benefits were being administered. Janice Rustin commented he would
like a memo or something about how his benefit was being calculated. Pedro Herrera
commented had he responded to her email with the information he received from Siera
Feketa. Janice Rustin asked for a letter reflecting that his benefit was going to be
administered like everyone else. Pedro commented he could draft that.
9. Reports (continued)
a. Foster & Foster, Doug Lozen, Board Actuary
i. October 1, 2021 actuarial valuation report
1. Doug Lozen commented as of September 30, 2021 they had great
investment returns.
2. Doug Lozen reviewed the investment return assumption commented with
this report they would be at 6.95%, whereas last year they were using
7.05%.
3. Doug Lozen reviewed the smoothing technique.
4. Doug Lozen reviewed the summary of the report and the required
contributions.
5. The required contribution from the combination of City and State sources
for the year ending September 30, 2023, would be 60.87% of the actual
payroll realized in that year. As a budgeting tool, the City may contribute
52.96% of each Member's Salary and then make a one-time adjustment
to account for the actual State Monies received. The City had access to a
prepaid contribution of $44,494.17 that was available to offset a portion of
the stated requirements for the Fiscal Year ending September 30, 2023.
6. Doug Lozen commented the Minimum Required Contribution showed a
decrease when compared to the results in the October 1, 2020 actuarial
valuation, which was attributable the net favorable actuarial experience.
Doug commented this decrease was partially offset by a reduction in the
investment return assumption from 7.05% to 6.95%.
7. Plan Experience was favorable overall on the basis of the plan's actuarial
assumptions. The primary source of actuarial gain was an investment
return of 9.64% (Actuarial Asset Basis) which exceeded the 7.05%
assumption. This gain was offset in part by a loss associated with an
average salary increase of 7.92% which exceeded the 4.41 % assumption,
in addition to interest crediting on DROP and Share Plan Balances that
exceeded the actuarial assumption for investment return.
8. Rick Rhodes and Doug Lozen discussed the actuarial losses associated
with the salary increases and the interest crediting on the DROP and
Share Plan balances exceeding the actuarial assumption for the
investment return. Doug reviewed why the interest crediting being higher
than assumed was an actuarial loss for the plan.
9. Doug Lozen reviewed the history of the funding progress commenting the
funding status had been maintained and slightly growing over the last
decade even with the reductions in the investment return assumptions.
10. Doug Lozen reviewed why the funding status in the valuation report was
different than the funding status in the audit and commented GASB did not
allow for smoothing. Doug commented they were at 85% funded now.
11. Rick Rhodes reviewed the average annual payroll growth commenting it
appeared the payroll decreased by about two million dollars over the last
decade. Rick reviewed his concerns about the payroll being lower and
commented he felt someone in the fire department should look at the
payroll to confirm it was being reported correctly. The Board discussed the
payroll and the different factors that could impact the figures. Doug Lozen
commented that section only included active firefighters.
12. Siera Feketa reviewed the payroll that was provided for the State Annual
Report commenting that figure was about $13 million for the most recent
Annual Report that was submitted. The Board and Pedro Herrera
discussed the payroll and the fact that the valuation only included active
members, but the Annual Report used all employees/staff.
13. Doug Lozen commented there were more firefighters added and reviewed
the changes in the department.
14. Siera Feketa, Pedro Herrera, and the Board discussed what payroll
items/employees were included in the payroll for the State Annual Report.
Siera commented any employees that participated in Florida Retirement
System (FRS) were excluded. Siera commented the payroll reported for
the Annual Report increased this year from about $11.6 million to $13
million. Siera commented the payroll for the Annual Report was reported
on a calendar year basis.
15. Rick Rhodes asked Jon Currier to get with the City and firefighters to
confirm the payroll sounded accurate.
16. Doug Lozen commented with the approval of the valuation report they
would be at 6.95% investment return assumption and reviewed the
glidepath decrease the Board previously approved. Rick Rhodes asked if
the Board wanted to discuss the investment return assumption at this time.
The Board briefly discussed and agreed to the stick to the glidepath
decrease.
The Board approved the October 1 2021 actuarial valuation report, upon motion by Eric Bruns and
second by Mike Zingaro• motion carried 5 0
17. Pedro Herrera reviewed the declaration of returns. John Thinnes
commented 6.95% was reasonable.
The Board declared the returns for the plans shall be 6.95% for the next ear the next several years, and the Iona -term thereafter, net of investment related expenses upon motion by Eric Bruns and
second by Jon Currier motion carried 5 0
AndCo Consulting, John Thinnes, Investment Consultant
i. Quarterly report through March 31, 2022
1.
John Thinnes briefly reviewed the cash that was raised to make benefit
payments.
2.
John Thinnes reviewed the market environment for the quarter.
3.
John Thinnes reviewed the schedule of investable assets.
4.
John Thinnes reviewed the asset allocation
5.
The Market Value of Assets as of March 31, 2022 was $142,750,736.
6.
The total fund gross returns for the quarter were-4.90%, slightly
underperforming the benchmark of-4.16%. The total fund trailing gross
returns for the 1, 3, 5, 7, and 10-year periods were 5.66%, 10.38%,
9.48%, 8.40% and 9.54% respectively. Since inception (May 1, 1998),
total fund gross returns were 6.76%, slightly underperforming the
benchmark of 6.81 %.
7.
John Thinnes reviewed the returns of the investment managers. John
reviewed the performance of Dana and reviewed the factors that
impacted their performance. John Thinnes commented he did not feel
any changes were needed, but they would monitor Dana.
8.
Mike Zingaro asked if John Thinnes could bring some options to the next
meeting to be prepared just in case. John Thinnes commented he could
4
bring the Parnassus option at the next meeting, and they could discuss if
they would eliminate Dana going forward.
9. Rick Rhodes asked what part of the portfolio was not rated based on
what was presented in the audit. John Thinnes commented the auditor
just looked at the individual securities that were rated. Alison Wester
reviewed why it was disclosed differently on the financial statements and
reviewed the leveling.
ii. Updated Investment Policy Statement (IPS)
1. John Thinnes commented this policy gave them more flexibility. John
Thinnes commented if they adopted this today, they did not have to
make changes to the portfolio as it just provided for more flexibility.
2. John Thinnes reviewed the change he wanted to remove from Section
IV.(A)(2) and commented he wanted to take this out because they had
addendums with the managers that already stated this information so it
was not necessary to be included here. The Board and John Thinhes
briefly discussed the manager addendums.
3. John Thinnes reviewed the factors that impacted his recommendations
for changes.
4. John Thinnes reviewed the remaining changes to the IPS.
5. John Thinnes reviewed the changes to the target allocations table.
The Board approved adopting the Investment Policy Statement as presented by the investment
consultant, upon motion by Eric Bruns and second by Mike Zmgaro• motion carried 5.0.
C. Further discussion of direct lending
i. John Thinnes reviewed the discussion from the last meeting commented they
had everything prepared to move forward with Golub. John Thinnes reviewed the
different amounts they discussed investing and recommended allocating five
million dollars to Golub. John Thinnes commented five million dollars was
appropriate based on their current market value. John Thinnes reviewed the
different managers and the benefit of going with Golub.
ii. Jon Currier asked where the funds would come from. John Thinnes commented
generally fixed income, but it depended based on where their allocations were at
the time the funds were called. John Thinnes commented any time he moved
money it reflected back to the targets in the IPS
iii. John Thinnes and Jon Currier discussed the liquid funds they could pull assets
from.
iv. Mike Zingaro asked if the current interest rate market affected the returns that
were happening in that market. John Thinnes commented it should go up
because they charged a higher rate.
The Board approved committing five million dollars to Golub direct lending fund based on the
recommendation of the investment consultant and havingthe attorneywork on a contract with
Golub, upon motion by Mike Zin-garo and second by Jon Currier- motion carried 5 0
Sugarman and Susskind, Bob Sugarman, Plan Attorney
i. Pedro Herrera briefly reviewed the conversations surrounding Golub commenting
he did not foresee any issues from that perspective.
ii. Legislative update
1. Pedro Herrera gave a brief update and discussed the proposed bill to add
Covid as a presumption for an In -the -Line -of -Duty (ILOD) benefit. Pedro
commented it did not move forward so no action was needed.
2. Pedro Herrera reviewed the financial disclosure forms commenting they
needed to be filed by July 1, 2022.
3. Pedro Herrera commented the Department of Labor issued some
guidance for ERISA plans for the private sector as it related to cyber
security. Pedro commented it did not govern the plan, but they did develop
a policy they thought their boards should adopt commenting if the Board
was interested, he could present it at the next meeting. The Board
expressed interest in having the policy presented at the next meeting.
10. Consent Agenda
a. Payment ratification
i. Warrant #51, #52, #53
b. Payment approval
i. None
c. Fund activity report for January 20, 2022, through April 20, 2022
The Board approved the Consent Agenda as presented upon motion by Jon Currier and second by
Eric Bruns, motion carried 5 0
11. Staff Reports. Discussions and Action
a. Foster & Foster, Siera Feketa, Plan Administrator
i. Update on State Annual Report
1. Siera Feketa commented the State Annual Report was submitted on
March 11, 2022.
ii. Financial disclosure forms
1. Siera Feketa commented this was covered earlier in the meeting.
iii. Upcoming educational opportunities
1. Siera Feketa reviewed the upcoming FPPTA Annual Conference from
June 26-29, 2022, in Orlando, FL.
iv. Update on collection of contributions on accrued unused leave
1. Siera Feketa commented all remaining contributions to be made had
been deducted from the April 1, 2022 payment. Siera commented
George Ferguson's was debited from his April 1, 2022 DROP deposit
and Steve Rogers' was deducted between April 1 and May 1s' payments
as his alimony deductions were too high to deduct it all from the April 1 sr
payment.
v. Siera Feketa asked if the Board wanted the option to upload documents to the
pension portal presented by Salem Trust. The Board agreed they would like that
option.
vi. Foster & Foster, fee proposal
1. Doug Lozen briefly reviewed the fee letter and the reason for the
requested fee structure.
2. Doug Lozen commented right now there was only one item they billed
annually that had an automatic increase and that was the valuation
report.
3. Doug Lozen reviewed the fees commenting all fees right now were about
$76,000 to about $80,000. Doug commented the initial increase was just
under 5%.
4. Doug Lozen commented there was a schedule for hourly rates, but those
rarely apply since its just for when they did special projects.
5. Doug Lozen reviewed the fee increases.
6. The Board briefly discussed the proposed annual increase based on
Consumer Price Index for All Urban Consumers (CPI-U). Mike Zingaro
asked about how they determined the proposed fees. Doug Lozen
commented it was based on the market rates.
7. Rick Rhodes commented he preferred to see a fixed rate for the annual
increase and asked if Foster & Foster was willing to negotiate. Rick
asked about the fees that were on the most recent actuarial invoice to
just provide information to the auditor. Rick commented he did not like
the CPI-U increase and expressed his concerns with it. Doug Lozen
reviewed the fees for the most recent invoice. Doug commented his first
desire was to have all plans approve the CPI-U as proposed, but they
may be able to offer something if they wanted to negotiate.
8. Eric Bruns commented he did not like the automatic increase without a
cap.
9. Rick Rhodes commented when they moved to Foster & Foster for the
administrator, they were more expensive. Rick commented he believed
0
there were a lot of good things about the firm, and they had caught a lot
of issues created by the prior administrator.
10. Rick Rhodes commented the CPI-U was a deal breaker. Rick
commented he would not have an issue putting out a Request for
Proposal (RFP) for both administrator and actuary if they were not willing
to negotiate. Doug Lozen discussed and asked what they would like to
see. Rick Rhodes commented he would be comfortable with 3%. Rick
commented he liked the current structure with a two-year fee guarantee.
Rick commented he thought Foster & Foster deserved the fee increase
as they had done a great job, but he did not like the annual increase.
Rick commented according to the actual expenses they paid Foster &
Foster approximately $100,000 last year.
11. The Board discussed the fees and agreed they preferred to see CPI with
a cap of 3%. Doug Lozen commented he would get back with the Board
after discussing internally.
12. Trustee's Reports Discussion and Action
a. Jon Currier commented they were going to try to do a pension seminar for the members
the same date of the next meeting around 10AM. Jon asked if Pedro Herrera and John
Thinnes were available. Both confirmed they were available. John Thinnes asked what
they wanted him to cover during the seminar. Jon commented he would send out a
questionnaire to the membership and gather questions ahead of time, so the consultants
knew what the members were interested in learning.
b. Pedro Herrera, Siera Feketa, John Thinnes, and the Board discussed the different topics
they could cover at the seminar.
13. Adjournment,— The meeting was adjourned at 3:22PM
14. Next Meeting — July 27, 2022, at 1:OOPM, quarterly meeting.
Respectfully submitted by: Approved by:
s�
sera Feketa, Plan Administrator Jo urrier, Secre
Date Approved by the Pension Board: _ I2.� 12V2Z