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HomeMy WebLinkAboutMinutes Police Pension 090822Palm Beach Gardens Police Officers' Pension Fund Minutes of the Meeting Held: September 8, 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 9:02 AM in the Council Chambers and called roll. Those persons present included: TRUSTEES PRESENT Brad Seidensticker, Secretary Marc Glass, Trustee Greg Mull, Trustee 3. REPORTS OTHERS PRESENT Scott Baur & A.C. Lovingood (Resource Centers) Bonni Jensen (Klausner Kaufman Jensen & Levinson) Jennifer Gainfort, Consultant (AndCo Consulting) Steve Stack, Investment Manager (Highland Capital) Karen Russo, Custodian (Salem Trust) Highland Capital Investment Manager (Steve Stack, Highland Capital) Steven Stack reported that fixed income assets held up well through the quarter, noting that Highland Capital has been avoiding treasuries and takes less risk when it comes to investing in the fixed income sector. Fixed income assets were down 17% over 25 months, noting that this is the worst fixed income performances in 40 years. Pension Plans, meanwhile, have rebalanced very little into fixed income assets during the period. The yield curve now remains inverted, which is a recession indicator. Mr. Stack then informed the Board that the Fund has modestly increased duration but expects Federal Reserve rate increases to continue. Mr. Stack stated that his firm also expects value to continue to outperform growth except for the month of July. It was reported that United Healthcare went from value to growth and Meta went from growth to value. The portfolio has regained about 3% on the fixed income assets for the current quarter. Mr. Stack concluded his presentation with sating that even with the Board's decision to allow Highland Capital to hold lower credit quality of fixed income holdings, the Highland Capital Fixed Income Fund currently has a very high -quality tilt. Investment Consultant (Jennifer Gainfort. AnclCo Jennifer Gainfort reported that the investment managers had a difficult quarter with all of the asset classes with the exception of Real Estate posting losses for the quarter ending June 30, 2022. The Plan's Total Fund Composite from March 31, 2022 through June 30, 2022 was reviewed with the Board. For the quarter ending June 30, 2022, the net returns were -9.66% compared to the benchmark of-10.09%. The Fiscal -Year -To -Date returns were -8.35% compared to the benchmark rate of-7.53%. The Three -Year trailing returns were 6.81% compared to the benchmark of 7.26%. The Five -Year returns were 7.27%, compared to the benchmark rate of 7.73%, and since inception the Plan has an 7.55% net return on investments compared to the benchmark rate of 8.44%. Miss. Gainfort then reviewed each investment manager in detail, noting that ARA Core Property Fund had net earnings of 4.55% and American Strategic Value Realty earned 2.75% for the quarter. Mrs. Gainfort then reviewed the asset allocation of the Plan with the Board and recommended investing and additional $2.5 million in the IFM Infrastructure fund. Brad Seidensticker made a motion to allocate $2,500,000.00 to FIM Global with $2,000,000.00 coming from Short Term Fixed Income and $500,000.00 from the Rhumbline S&P 600. The Motion received a second from Greg Mull, approved by the Board 3-0. Mrs. Gainfort then presented the Board with an updated Investment Policy Statement and reviewed the changes to increase infrastructure to 7.5%. Marc Glass made a motion to approve the Investment Policy Statement as Presented. The Motion received a second from Brad Seidensticker, approved by the Board 3-0. Salem Trust (Karen Russo, Salem Trust Karent Russo with Salem Trust provided the board with a recap on the accounts that Salem Trust has for the Plan and the sundry assets. Mrs. Russo stated that Salem Trust does not make payments for the Plan; however, the custodian does receive and transfer assets by wire. Mrs. Russo then reviewed some housekeeping items for the Board, which included the confirmation of what individuals should be receiving statements and requested that the Board submit an updated Authorized Signature Form to ensure that Salem Trust has all the current Trustees and authorized users on the accounts. Attorney Report (Bonni Jensen, Klausner Kaufman Jensen & Levinson) Jensen Memo — IRS Milage Rate for Mid -Year 2022: Mrs. Jensen informed the Board that the Internal Revenue Service released its updated Standard Milage Rate for the remainder of the 2022 Calendar Year. The new rate is 62.5 cents per mile for miles driven on or after July 1, 2022. This is up 4 cents from the rate effective at the start of the year. Chapter 185 Premium Tax Dollars: Mrs. Jensen informed the Board that the State of Florida has released the 2021 Chapter 185 Premium Tax Dollar Distribution Amounts. The Palm Beach Gardens Police Officers' Pension Fund will receive $856,513.45, this is up $110,350.46 from the 2020 Chapter 185 amount of $746,162.99. American Realty: Mrs. Jensen reviewed the changes to the American Realty mandate increasing holdings to sing family units, but the manager does not perceive a headline risk. Mrs. Jensen reported that American Realty develops entire new communities for family housing. The Board of Trustees considered timing of having investments by American Realty, noting that transactions have slowed, but pricing remains firm. Collective Bargaining Agreement: Mrs. Jensen inquired on the status of the Collective Bargaining Agreement with the City, noting that the new agreement does have COLA increased for pensions, which will also require the Pension Ordinance to be updated. Mrs. Jensen noted that Police Officers leaving will get small increases, depending on when they separate from service. Mrs. Jensen also reminded the Board that the 13t" Check still requires clarification since the Collective Bargaining Agreement died not include any clarification regarding the rate of return, therefore, the Board will continue to rely on the current ordinance language. The Board and Mrs. Jensen discussed the Supplemental Benefit, noting that it has remained unchanged since 1992. Administrator Report (Scott Baur & AC Lovingood, Resource Centers) Share Account Distributions: Albert Lovingood provided the Board with an update regarding the Share Distributions for those members who have since retired. Mr. Lovingood also informed the Board that the Plan has not received the 2021 Chapter 185 Premium Tax Dollars yet and will notify the Board once those funds are received. 2022-2023 Plan Budget Draft: Scott Baur and Albert Lovingood presented the Board with the 2022-2023 Plan Budget for review and approval by the Board of Trustees. Mr. Baur reviewed the annual Plan Budget requirements per Florida State Statute. Brad Seidensticker made a motion to approve the 2022-2023 Plan Budget as presented. The Motion received a second from Greg Mull, approved by the Board 3-0. 2023 Board Meeting Schedule: Mr. Lovingood provided the Board with the 2023 Board Meeting Schedule. Mr. Lovingood reported that the 2023 schedule follows the historical meeting dates of the Plan. Cherry Bekaert Audit Planning Letter and Audit Engagement Letter: Mr. Baur and Mr. Lovingood presented the Board with the Cherry Bekaert Audit Engagement Letter along with the Audit Planning Letter for review and approval. Mr. Baur stated that this year's audit will cost the Plan $17,950, this is up $1,300.00 from last year's audit cost of $16,650.00. Minutes: September 8, 2022 Page 2 Greg Mull made a motion to approve the Cherry Bekaert 2022 Audit Engagement Letter as presented. The Motion received a second from Greg Mull, approved by the Board 3-0. Fee Increase Letter: Mr. Baur presented the Board with the requested supplemental information to consider The Resource Centers proposed Fee Increase. Marc Glass made a motion to approve the $1,000.00 Resource Centers Fee Increase with an Annual COLA tied to The Consumer Price Index and not to exceed 3% effective October 1, 2022. The Motion received a second from Greg Mull, approved by the Board 3-0. 4. MINUTES The Trustees reviewed the draft Minutes for the June 9, 2022, Board Meeting. Greg Mull made a motion to approve the Minutes for the June 9, 2022, Quarterly Meeting as amended, The Motion received a second from Brad Seidensticker, approved by the Board 3-0. DISBURSEMENTS AND FINANCIAL STATEMENTS The Board reviewed the Warrant dated September 8, 2022, for payment of expenses. Greg Mull made a motion to approve the expenses on the Warrant dated September 8, 2022, as presented. The Motion received a second from Brad Seidensticker, approved by the Board 3-0. The Board received, reviewed, and filed the interim financial statement through July 31, 2022. 6. BENEFIT APPROVALS The Benefit Approvals Dated September 8, 2022 were presented for review. The Board discussed the small account balances of some DROP Accounts and the risks of possible overpayments. Mr. Lovingood stated that he would reach out to GRS for final interest calculations so that closeout distributions can be processed Greg Mull made a motion to approve the Benefit Approvals dated September 8, 2022. The Motion received a second from Brad Seidensticker, approved by the Board 3-0. The Board questioned the DROP Distribution for Jack Schnur as the distribution amount was over the $35,000.00 threshold that requires prior Board Approval before disbursement. Mr. Lovingood stated that he will investigate the matter to see how this occurred. 7. OTHER BUSINESS Brad Seidensticker mentioned the possibility of using additional Securities Litigation Firms. The Board had a detailed discussion regarding the possibility to add additional Securities Litigation Firms and it was noted that the Plan has a relatively small allocation to separately managed accounts. The Board discussed the possible need to send a letter to the City regarding the 13th check due to the likelihood that the Plan will need to pay a supplemental distribution in the near future. 8. PUBLIC COMMENTS No members of the public had any comment. Minutes: September 8, 2022 Page 3 9. ADJOURN There being no further business, Trustee Marc Glass adjourned the meeting at 11:18 AM. Respectfully submitted, Brad Seidensticker, Secretary Minutes: September 8, 2022 Page 4