HomeMy WebLinkAboutMinutes Police Pension 042111City of Palm Beach Gardens Po /ice Officers'
Pension Fund
Minutes of the Meeting Held
April 21, 2011
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 AM by Chairman 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, Chair
David Pierson, Trustee
Brad Seidensticker, Trustee
Jules Barone, Trustee
Wayne Sidey, Trustee
OTHERS PRESENT
Audrey Ross (Resource Centers)
Bonni Jensen (Law Offices of Perry & Jensen)
Donna Cannon (PBG Clerk's Office)
Brendon Vavrica (Thistle Asset Consulting)
Felecia Relief (Comerica Bank)
Brad Rinsem (Salem Trust Company)
Greg Beard (Salem Trust Company)
Karl Hutchinson (Wells Fargo)
CUSTODIAL RFP INTERVIEWS
• Comerica Bank — Presented by Felecia Relief
Ms. Relief introduced herself to the board and thanked them for their time. She
explained that Comerica Bank is a diversified financial services Company and their
headquarters are in Dallas, Texas. Comerica was established in 1949, and is among
the 25 largest banking companies in the US with $53.78 in assets. They are also
among the 10 largest commercial business leaders, and have multiple locations
throughout the US. Ms. Relief stated that she has been with Comerica for 11 years
and is part the Institutional Trust department, in which she would be working with
this fund if chosen. The Trust department has over 1,000 clients, and has $83B in
trust assets. They also have in house Attorney's that work in their office. Comerica
has about 7 Florida Public Pension Plans in which they provide full custodial services
to.
Ms. Relief reviewed some of the benefits that Comerica offers including great
reporting and great client service, in which they never have had a turnover. Also
they have a very competitive fee schedule, and lastly Ms. Relief commented that
Comerica would be the right size provider for this fund. Next she explained some of
the services that they provide designated for public pension plans. Comerica
performs all custody related services including securities settlement & safekeeping,
income & dividend collection, and much more. They also do all information based
services on a daily and monthly basis, and they also have value enhancing services
such as cash sweep, training and education, and much more. Ms. Relief briefly
explained their online system which is very user friendly in which you can go online
and download statements, customize them, etc. She
Ms. Relief explained how the transition process would work. Comerica has an actual
transition team that will customize a "transition plan" that will have minimal impact
on the client. The transition process usually starts 2 months prior to the actual
transition date, and takes about 2 weeks to complete. Lastly Ms. Relief reviewed
the standard fee schedule. There is a $500 annual per account fee, and all
Minutes 4 -21- dog
Page 1 of 6
separately held securities are 5 basis points on the first $50M and 2.5 basis points on
the next $50M. In addition there is a $1,000 annual per account fee for all
commingled accounts. The Trustees confirmed that ICC's assets would fall under the
asset schedule, and then they have 8 separate commingled /mutual funds would be
line items on the statements. She commented that the line item fee may be able to
be negotiated, in which she will look into when she returns to the office.
• Salem Trust Company — Presented by Brad Rinsem & Greg Beard
Mr. Rinsem introduced himself to the board and stated that he is the President and
CEO of Salem Trust. He also introduced Mr. Beard who is from the Illinois office and
is the Senior President of Salem Trust. Mr. Rinsem explained that he has 2 primary
responsibilities which are to make sure that he runs a sound and successful
company, and since the clients are the ones that make that happen they need to
make sure that they provide excellent service. Salem Trust is a State of Florida
chartered bank, is ranked the 4t" largest trust company in Florida, they have over
$6.6B in assets, they have over 220 municipal clients in Florida, and they are
employee owned. Salem Trust is also very active with FPPTA in which Mr. Rinsem
regularly teaches at. Mr. Rinsem reviewed the Company's principals, which show
how dedicated they are to serving their clients. Also he reviewed the services the
Salem Trust provides which include ADR foreign tax reclaim, cash
management /sweep service, class action processing, consolidated accounting, loan
distributions, and much more.
Mr. Beard reviewed the fee schedules and commented that the weighted annual cost
would be 3.48 basis points or $14,310 for this fund based on their current assets.
This fee schedule is guaranteed for 2 years. He also referenced their client list and
commented that all their clients are defined benefit plans and mostly in Florida. Mr.
Beard did note that they just recently lost Orman Beach, but that was the only one
within the last 6 months.
Lastly Mr. Rinsem handed out samples of the some of the research and articles that
Salem Trust and Mr. Rinsem are involved in. He explained that as part of their
commitment to the public sector he sends out documents to the retirees that will
help educate them on the State of Florida Government, and he also writes articles for
FPPTA. He concluded by stating that the board needs to decide whether they are
looking for a generalist or a specialist when it comes to a pension custodian. The
Trustees asked Mr. Rinsem if his company had any risks and he responded that his
only concern is that they have all their eggs in one basket. He explained that they
only service defined benefit plans, so if all defined benefits plans were to close then
he would have concerns. Although he stated that he does have a succession plan if
something were to happen to him. Mr. Rinsem commented that he has 2 great
managers that back him up already and know how to run the show on their own.
Lastly the board discussed the fee schedule and Mr. Rinsem stated that he can agree
to this fee schedule for 3 years instead of 2 years, seeing that no major changes
happen to the plans assets.
• Wells Fargo Institutional Retirement & Trust — Presented by Karl
Hutchinson
Mr. Hutchinson introduced himself and stated that he is the relationship manager
with Wells Fargo for the retirement and trust department. Wells Fargo has very
diversified financial services, but their Trust is their key component and makes up
about 10 %. They have over $1.4T in assets with over 11,000 locations over the US.
Mr. Hutchinson explained that they grow their business from new accounts and also
by takings over other custody accounts from other businesses. Wells Fargo has a
Minutes 4- 21- 11.dor
Page 2of6
dedicated team that will be in charge of the transition to make sure everything runs
smoothly.
Mr. Hutchinson reviewed some of the tools that they offer which include weekly
newsletters, market alerts, online seminars, and much more. He also pointed out
some of the qualities that make them different from other financial institutions, and
reviewed the broad scope of services they offer. Lastly Mr. Hutchinson reviewed the
fee proposal and commented that he will send out a revised schedule shortly as he
does not have the mutual fund fees included on this one.
Board Discussion:
The board discussed the presentations and the different fee schedules. The Trustees
authorized Ms. Jensen to send a letter to the 3 presenters today to give them a
chance to submit a final fee quote since they received revised account information
today. Ms. Jensen stated that she will bring back their responses to the next
meeting.
DISCUSSION OF EXCESS CHAPTER 185 MONEY
Gabriel, Roeder, Smith & Company (GRS) — Presented by Steve Palmquist
Mr. Palmquist explained that the pension fund has extra State money in their reserve
account that can be used for benefit increases. He explained that any money the
fund receives in excess of the $459K goes into this reserve account in which there is
currently $249K in there. Although Mr. Palmquist stated that with the new bills
passing through in Tallahassee, the board might be required to have individual share
accounts created for each member that this money in the reserve would be split up
and disbursed into. Also he commented that now would not be a good time to look
at additional benefits. Mr. Barone questioned what kind of effect it has on the
pension fund with so many members entering the DROP at once and therefore will
not be contributing into the pension plan anymore. Mr. Palmquist replied that they
anticipate so many retirements per year, and if you actually go over that number
they assume then that creates an experience loss for the Plan which adds to the
unfunded liability. Mr. Palmquist commented that if this pattern keeps continuing
over a long period of time, then the board might want to consider a change in their
probability tables.
Mr. Spencer reiterated his thoughts about lowering the actuarial assumed rate of
return. He explained that he attended a meeting with the City and they stated that
the property values in Palm Beach Gardens will once again decrease, which means
that the City will have to dip into their reserve account to fund the budget. Mr.
Spencer commented that that he would like to make a proposal to the budget
committee to reduce prices including the pension plan. His intentions are not to take
away or reduce any benefits, but to help cut costs where they can be cut without to
much effect on either parties end. Mr. Spencer reminded the board that all the
changes they implemented a couple years ago benefited the City during the down
times, and now he wants to continue on that mind track and move forward with the
idea of gradually lowering the Plan's actuarial assumption rate from 7.5% to 6.5 %.
Mr. Palmquist commented that he thinks that is a wonderful goal and if you can
decrease it overtime it will cost the City an estimated increase of 1% of covered
payroll. The Trustees discussed when the best time to make this change would be
since the City is looking to cut costs right now, and by lowering the actuarial
assumption rate it will actually cost the City more up front. Mr. Palmquist explained
that you can also lower the pay increase assumptions in which will offset the cost for
lowering the assumption rate. Also Mr. Palmquist noted that all /any changes will be
reflected in the 2012/2013 Actuarial Valuation Report.
Minutes 4- 21- 11.dor
Page 3of6
MOTION: Mr. Pierson made a motion to reduce the Plan's current
Actuarial Assumed Rate of Return (7.5 %) one tenth of a
percentage for the next 10 years until it reaches 6.5 %.
SECOND: Mr. Sidey seconded the motion.
CARRIED: The motion carried unanimously 5 -0.
INVESTMENT CONSULTANT REPORT
Thistle Asset Consulting - Presented by Brendon Vavrica
Mr. Vavrica commented that it was a very good quarter and that everything was
positive, including fixed income and equities. For the quarter ending March 31, 2011
there was 66% in equities, 34% in fixed income, and 0% in cash. The total fund net
of fees slightly underperformed for the quarter at 4.20% versus the index at 4.29 %.
The total equities outperformed the index at 6.50% versus 6.37 %, and the total
fixed income also slightly outperformed at .55% versus .49 %. Mr. Vavrica the
reviewed the risks versus reward chart and stated that although the fund was behind
for the quarter, they are still getting a better return for the little amount of risk they
are taking. He then briefly reviewed each mangers performance for the quarter:
Rhumbline S &P 500 - Slightly ahead the index for the quarter at 5.94%
versus 5.92 %.
Rhumbline S &P 400 - Also ahead of the index for the quarter at 9.39% versus
9.36.
Rhumbline S &P 600 - Fell short of the benchmark for the quarter at 7.68%
versus 7.71 %.
ICC Large Cap Growth - Had a great quarter at 7.11% versus the index at
6.03 %.
ICC Fixed Income - It was a better quarter for fixed income. The fund was
ahead the benchmark at .57% versus .43 %.
International Eguity - Underperformed for the quarter at 3.32% versus the
index at .45 %.
International Fixed Income - Had a great quarter and outperformed the
benchmark at 1.57% versus .97 %.
ATTORNEY REPORT
Law Offices of Perry & Jensen - Presented by Bonni Jensen
Ms. Jensen reviewed the Board's current buyback policy and commented that in the
Ordinance it does not prohibit a member from doing multiple buybacks throughout
their career as a Police Officer with the City. She recommended that that language
should be revised in the Board's buyback policy to reflect this clause. She noted that
there is no impact to the plan when members do multiple buybacks throughout their
career with the City.
MOTION: Mr. Sidey made a motion to approve and allow members to do
multiple buybacks throughout their career as a Police Officer
with the City of Palm Beach Gardens, and to also remove that
restriction language from the Board's buyback policy.
SECOND: Mr. Pierson seconded the motion.
CARRIED: The motion carried unanimously 5 -0.
Ms. Jensen stated that she will send out a revised memo with the most recent
amendments to Senate Bill 1128 because the one she has with her today has already
changed.
Minutes 4- 21- 11.dor
Page 4of6
Ms. Jensen notified the Trustees that they do not have to report the FPPTA
conference as a gift because each Trustee received a free registration for the event.
Ms. Jensen announced that she now has joint venture with Klausner & Kaufman.
She commented that the joint venture will not have any impact on this fund.
Lastly Ms. Jensen reminded the Trustee's that their Form 1 Disclosures are due July
1, 2011.
ADMINISTRATOR REPORT
Resource Centers — Presented by Audrey Ross
N/A
MINUTES
MOTION: Mr. Pierson made a motion to approve the minutes from the
January 27, 2011 regular meeting.
SECOND: Mr. Seidensticker seconded the motion.
CARRIED: The motion carried unanimously 5 -0.
DISBURSEMENTS APPROVALS
MOTION: Mr. Barone made a motion to approve the disbursements.
SECOND: Mr. Pierson seconded the motion.
CARRIED: The motion carried unanimously 5 -0.
BENEFIT APPROVALS
MOTION: Mr. Sidey made a motion to approve the applications to enter
the DROP for Joseph Sheehan and Richard Geist, the
application for distribution of DROP account (effective May 15,
2011) for Ronald Council, and the application for a refund of
contributions for Jose Pico.
SECOND: Mr. Pierson seconded the motion.
CARRIED: The motion carried unanimously 5 -0.
FINANCIAL STATEMENTS
The board reviewed and discussed the financial statements that were provided
through March 2011.
The board received and filed the financial statements through March 2011.
OLD BUSINESS
Ms. Jensen reviewed what she found out regarding Mr. George Smith's participation
in the fund. She concluded that since Mr. Smith did not participate in the pension
plan for a certain amount of time, then he will need to be treated the same as
someone who is buying time from another entity for any time before his participation
in the plan.
Minutes 4- 21- 11.doc
Page 5 of 6
OTHER BUSINESS
N/A
PUBLIC COMMENTS
N/A
AJOURN
There being no further business, and the future meetings are scheduled for the 3rd
Thursday of the first month proceeding the quarter. The next regular meeting was
scheduled for Thursday July 21, 2011 at 9AM; the Trustees officially adjourned the
meeting at 12:11PM.
Respectfully submitted,
DAVID PIERSON, Secretary
Minutes 4- 21- 11.doc
Page 6of6