HomeMy WebLinkAboutMinutes Police Pension 033023Palm Beach Gardens Police Officers' Pension Fund
Minutes of the Meeting Held: March 30, 2023
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 9:00 AM in the Council Chambers and called roll. Those persons present
included:
2. TRUSTEES PRESENT
Jay Spencer, Chairman
Brad Seidensticker, Secretary
Sean O'Brien
Greg Mull, Trustee
Marc Glass, Trustee (Joined at 9:42)
Audit (Brian Liffick)
OTHERS PRESENT
Scott Baur & A.C. Lovingood (Resource Centers)
Jennifer Gainfort, Consultant (AndCo Consulting)
Steve Stack, Investment Manager (Highland Capital)
Justin Conley & Brian Liffick (CBH)
Pete Strong (GRS Consulting)
Auditor Brian Liffick appeared before the Board to present the Audited Financial Statement for the period ending
September 30, 2022. 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. Justin Conley reviewed the financial highlights with the Board in detail, noting that the Plan's
net position was $111,825,514, which was down from the $127,508,035 net position in 2021. The decrease
resulted from unforeseeable investment results. Mr. Conley then reviewed the Administration and Investment
Expenses along with the Plan's financial highlights in detail with the Trustees. Mr. Baur noted the Administrative
and Management costs totaled out at 0.495%, which is very efficient operation costs of the Plan.
Greg Mull made a motion to approve the Audited Financial Statement for the Year ending September 30, 2022, as
presented. The motion received a second from Sean O'Brien, 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 Sean O'Brien, 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, 2022. Mr. Strong reported that the required employer contribution for the fiscal year ending September 30,
2024, is $5,205,649 or 48.98% of covered payroll, which is $541,675 or 2.13% higher form the previous year's
contribution amount of $4,663,974. The Plan has a 6% Assumed Rate of Return, which is one of the lowest in the
State, net of investment expenses. Most of the increases to the required contribution amount resulted from the
lack of investment returns. The DROP Accounts receive a fixed earnings rate of 6.25%, so the actuary included a
slight load for DROP Account balances.
Mr. Strong reported that the Plans market value return was-11.3%, compared to a 5.3% return on an actuarial
value. The Funded Ratio of the Plan is 83.1% compared to 83.6% for the previous year, which is very strong
considering the conservative investment return assumptions. The Plan had a $16,000,000 unrecognized gain last
year on market values of assets, now a $4,000,000 unrecognized loss on the actuarial value of assets. Mr. Strong
then reviewed the amortization schedule noting that there are two amortization bases that have one year
remaining, which will be fully amortized next year, resulting in the required employer contribution to decrease by
approximately $248,000. The Plan does not have sufficient positive experience to pay a COLA this year; however,
the funded ratio has steadily increased over the past 15 years. Mr. Strong concluded his presentation by reviewing
the smoothing and the actuarial valuation of assets with the Trustees in detail.
Greg Mull made a motion to approve the Actuarial Valuation Report dated October 1, 2022, as presented. The
motion received a second from Sean O'Brien, approved by the Board 4-0.
Brad Seidensticker made a motion based on the recommendation of the investment consultant; to set the expected
rate of return to 6.00% as the Board expects to receive 6.00% for the short-term, mid-term, and long-term
thereafter. The motion received a second from Greg Mull, approved by the Board 4-0.
Highland Capital Investment Manager (Steve Stack, Highland Capital)
Steven Stack reported that the Portfolio dies not have any exposure to Silicon Valley Bank (SVB); however, the bank
failure did have a minor impact on other investment holdings. The Fund Manager was able to liquidate some bond
holdings from SVB, rated AA+ at 4.37%, as the failure of the bank was unexpected. The Fund Manager also
underweighted financial holdings in the portfolio. Mr. Stack informed the Board that five stocks make up 30% of the
Large Cap Growth benchmark and reported that the Highland Capital Large Cap Growth Portfolio had a return of
1.53% for the Fourth Quarter and a total of-28.85% for the 2022 calendar year. The Portfolio still has a 9.2%
average annual gain for the trailing five years. Fixed Income returned 0.72% for the Fourth Quarter and-11.14% for
the 2022 calendar year end. The Short -Term Fixed Income Portfolio returned 0.71% for the Fourth Quarter and had
a -3.33% for the 2022 calendar year.
Investment Consultant (Jennifer Gainfort, AndCo)
Jennifer Gainfort started her report by reviewing the growth in the Plan Assets since 1992, and the current asset
allocation. The Plan has a slight overweight to fixed income and underweight to infrastructure holdings as the Board
waits for the Infrastructure Managers to call capital. For the quarter ending December 31, 2022, the net returns
were 4.93% net, compared to the benchmark of 6.30%. The 2022 Calendar Year returns were-12.14% net
compared to the benchmark rate of-11.48%. The Three -Year trailing returns were 5.10% compared to the
benchmark of 5.50%. The Five -Year returns were 5.94%, compared to the benchmark rate of 6.48%, and since
inception the Plan has an 7.47% net return on investments compared to the benchmark rate of 8.35%. Miss.
Gainfort then reviewed each investment manager in detail with the Board of Trustees. Mrs. Gainfort concluded her
presentation by informing the Board that the Plan's assets gained about another 4.5% so far this quarter; however,
the markets remain volatile.
Chairman Jay Spencer reviewed the actions of the Board over time to strategically position the Pension Fund to
weather a down market. Mr. Spencer discussed an enhanced indexing approach that was presented at a recent
conference presentation and Mr. Spencer stated that he would like to invite the Investment Manager to come
present at a future Board Meeting. Ms. Gainfort informed the Board that TWIN Capital does serve some of AndCo's
clients and that she has a meeting scheduled with this manager.
Attorney Report (Bonni Jensen, Klausner Kaufman Jensen & Levinson)
Attorney Bonni Jensen was unable to attend this Board Meeting due to unforeseeable circumstances. The Board of
Trustees opted to table the Attorney Report until the next Quarterly Board Meeting in June.
(Marc Glass Joined the Board Meeting)
Administrator Report (Scott Baur & AC Lovingood, Resource Centers)
Resource Centers — Internal Controls: Scott Baur reviewed his Firm's internal controls in detail with the Board. Mr.
Baur reported that his firm has various departments where roles are separated to mitigate the risk of theft or fraud
for the Penson Plans that his Firm is the Administrator for. Mr. Baur noted that the annual SOC1 Type 2 Audit that is
reported to the Board on an annual basis is an external audit of his Firm's own Policies and Procedures to ensure
that they are being followed as stated.
Minutes: March 30, 2023
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Resource Centers — Internal Controls: Mr. Baur revived the Secure Act 2.0 with the Trustees in detail, noting the
$3,000.00 exemption for medical insurance, normal retirement age, and Mandatory Retirement Distribution
changes.
Direct Deposit Form & Address Change Form Updates: Albert Lovingood presented the Board with copies of the new
Address change and Direct Deposit Forms that now include a notary block. Mr. Lovingood informed the Board that
the new notary requirement was added to mitigate the risk of fraud. Mr. Lovingood then presented the Board with
a Fraudulent Direct Deposit Change request that he received for another Pension Plan and reviewed the red flags
that prevented this request from being processed, noting that this fraud attempt is what prompted the addition of
the notary requirement on the Direct Deposit form.
Palm Beach Gardens Police Officers' 12-31-2022 Active DROP Summary: Mr. Lovingood provided the Board with the
Active DROP Participant Summy as of December 31, 2022
Broehm, Bryan — Outstanding Checks Update: Mr. Lovingood informed the Board that retired Police Officer' Bryan
Broehm had finally cashed his Share Distribution and Reto Pension Payment Checks that had to be reissued to him
for becoming stale dated.
Local Checking Account Signature Card: Mr. Lovingood informed the Board that he needs each Trustee to sign the
new Local Checking Account Signature Card. The reason for the update is so that former Trustee Allen Owens can
be removed, and new Trustee Sean O'Brien can be added to the Plan's bank account.
4. MINUTES
The Trustees reviewed the draft Minutes for the December 8, 2022, Board Meeting.
Greg Mull made a motion to approve the Minutes for the December 8, 2022, Quarterly Meeting as amended, The
Motion received a second from Marc Glass, approved by the Board 5-0.
5. DISBURSEMENTS AND FINANCIAL STATEMENTS
The Board reviewed the Warrant dated March 30, 2023, for payment of expenses and inquired about a few
distributions for clarification which Mr. Baur answered in detail.
Marc Glass made a motion to approve the expenses on the Warrant dated March 30, 2023, as presented. The
Motion received a second from Brad Seidensticker, approved by the Board 5-0.
The Board received, reviewed, and filed the interim financial statement through January 31, 2023.
6. BENEFIT APPROVALS
The Benefit Approvals Dated March 30, 2023 were presented to the Board for review.
Brad Seidensticker made a motion to approve the Benefit Approvals dated March 30. 2023. The Motion received a
second from Sean O'Brien, approved by the Board 5-0.
Trustee Marc Glass informed the Board that he had to excuse himself from voting on his wife, Tiffany Glass' Benefit
Approval and provide his Form 8B to Mr. Lovingood. The Board reviewed the Benefit Approval for Tiffany Glass.
Greg Mull made a motion to approve the Benefit Approval Dated March 30, 2023, for Tiffany Glass. The Motion
received a second from Brad Seidensticker, approved by the Board 4-0.
7. OTHER BUSINESS
Minutes: March 30, 2023
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Plan Member Brian Smith was called to active duty by the miliary while employed as a police officer. The City had
kept the member on payroll throughout his deployment and now is back on the department as a police officer. Mr.
Smith had made an inquiry regarding what he needed to do to get his time for the period that he was deployed.
Attorney Bonni Jensen provided a memo back in 2019 that addressed this situation. According to the memo, the
member does get service credit for his time that he was deployed; however, the question is if the member needs to
make any contributions. This discussion resulted in the Board asking Mr. Lovingood to get the answer from Mrs.
Jensen and update the Trustees when he receives the answer.
Sean O'Brein introduced himself to the Board and informed the Trustees that he used to be in the Finance
Department of the City; however, he now does accounting consulting.
8. ADDITIONAL REPORTS
The Board received the 2022 Actuarial Confirmation of Use of States Moneys, 2022 GASB 67 Disclosures, and the
GASB 68 Disclosures.
9. PUBLIC COMMENTS
No members of the public had any comment.
10. ADJOURN
There being no further business, Chairman Jay Spencer adjourned the meeting at 11:05 AM.
Respectfully submitted,
Brad Seidensticker, Secretary
Minutes: March 30, 2023
Page 4
Plan Member Brian Smith was called to active duty by the miliary while employed as a police officer. The City had
kept the member on payroll throughout his deployment and now is back on the department as a police officer. Mr.
Smith had made an inquiry regarding what he needed to do to get his time for the period that he was deployed.
Attorney Bonni Jensen provided a memo back in 2019 that addressed this situation. According to the memo, the
member does get service credit for his time that he was deployed; however, the question is if the member needs to
make any contributions. This discussion resulted in the Board asking Mr. Lovingood to get the answer from Mrs.
Jensen and update the Trustees when he receives the answer.
Sean O'Brein introduced himself to the Board and informed the Trustees that he used to be in the Finance
Department of the City; however, he now does accounting consulting.
8. ADDITIONAL REPORTS
The Board received the 2022 Actuarial Confirmation of Use of States Moneys, 2022 GASB 67 Disclosures, and the
GASB 68 Disclosures.
9. PUBLIC COMMENTS
No members of the public had any comment.
10. ADJOURN
There being no further business, Chairman Jay Spencer adjourned the meeting at 11:05 AM.
Respectf ly su itted,
rad ei ensticker, Secrets
Minutes: March 30, 2023
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