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HomeMy WebLinkAboutMinutes Police Pension 060823Palm Beach Gardens Police Officers' Pension Fund Minutes of the Meeting Held: June 8, 2023 1. Secretary Brad Seidensticker 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 Brad Seidensticker, Secretary Greg Mull, Trustee Marc Glass, Trustee 3. REPORTS OTHERS PRESENT A.C. Lovingood (Resource Centers) Bonni Jensen (Klausner Kaufman Jensen & Levinson) Jennifer Gainfort, Consultant (AndCo Consulting) Steve Stack, Investment Manager (Highland Capital) Highland Capital Investment Manager (Steve Stack, Highland Capital) Steven Stack started his presentation by reviewing the Top Ten Domestic Equity Holdings in the Portfolios compared to the Russell 1000 Growth and S&P 500 benchmarks as of March 31, 2023. Mr. Stack reviewed unemployment fraud, the one-year best performers and the signal from the Federal Reserve of the possibility of two additional rate hikes of 0.25% each. Deutsche Bank has indicted that it expects unemployment to level out at 4% and Mr. Stack noted that the employment rate based on age has shifted since the Pandemic with 28-54 age group currently at a 83.4% employed rate and the 55+ age group at 23% employed. CORE has been purchasing mortgage pools and Trustee Marc Glass inquired if there is a concern of default on those loans? Mr. Stack stated that if the economy tanks, yes; however, right now the economy is very strong. Secretary Brad Seidensticker inquired if the elimination of the LIBOR rate is having any affect on the markets? Mr. Stack stated that the elimination of the LIBOR Rate hasn't influenced the markets as most financial institutions have already moved away from LIBOR. The Highland Capital Growth Fund earned 13.88% for the quarter ending March 31, 2023, the Fiscal -Year -to -Date return was 15.61%, and the Five -Year rolling returns totaled 75.86%. The Highland Capital Fixed Income Fund earned 3.21% for the quarter ending March 31, 2023, 3.96% for the Fiscal -Year -to -Date, and 7.97% for the trailing Five -Years. The Highland Capital Short Term Fixed Income Fund earned 1.55% for the quarter ending March 31, 2023, and the Fiscal -Year -to - Date returns were 2.27%. Investment Consultant (Jennifer Gainfort. AnclCo Jennifer Gainfort started her report by reviewing the schedule of investable assets from June 1992 through March 2023 in detail with the Board of Trustees along with the Plan's Asset Allocations, noting that there is no need to rebalance at this time. For the quarter ending March 31, 2023, the net returns were 3.93%, compared to the benchmark of 4.21%. The 2023 Fiscal -Year -to -Date returns were a net 9.05% compared to the benchmark rate of 10.77%. The Three -Year trailing returns were a net 12.01% compared to the benchmark of 12.72%. The Five -Year returns were a net 6.82%, compared to the benchmark rate of 7.41%, and since inception the Plan had a net 7.54% return on investments compared to the benchmark rate of 8.43%. Miss. Gainfort then reviewed each investment manager in detail with the Board of Trustees, noting the pullback in Real Estate. Trustee Marc Glass inquired as to why this is happening, which Ms. Gainfort informed the Board that rising interest rates and write -downs on commercial property have had a negative effect on Real Estate. The Board requested that Richelle Cook attend the September Board Meeting to give an update on the Fund and the Real Estate Market and have Ms. Cook attend the Board Meetings semi-annually moving forward. Marc Glass asked if the Plan is on track, which Ms. Gainfort confirmed. Ms. Gainfort concluded her presentation by informing the Board that April has been a flat month in the markets and Marc Glass informed the board that the Plan is expecting 10-15 DROP Entries in the coming months. Attorney Report (Bonni Jensen, Klausner Kaufman Jensen & Levinson) Jensen Memo — Form 1: Attorney Bonni Jensen provided the Board of Trustees with a memo regarding the annual filing of the 2022 Form 1. Mrs. Jensen reviewed the memo in detail with the Trustees and reminded them of the filing deadline. Jensen Memo — Internal Controls: Mrs. Jensen presented the board with a memo regarding Internal Controls. Mrs. Jensen reported that in November of 2022, an administrator of a South Florida pension fund was arrested, charged with theft of pension fund assets, and related offenses. Mrs. Jensen then reviewed recommendations from her firm that will add an extra layer of protection in safeguarding the pension plan assets and help to mitigate any potential losses. Mrs. Jensen concluded her review of this member noting that Mr. Lovingood will have some additional information regarding his firm's internal controls. Jensen Memo — IRS Milage Rate for 2023: Mrs. Jensen provided the Board of Trustees with a memo informing them that the Internal Revenue Service (IRS) released its updated Standard Milage Rate for 2023. The new rate is $0.655 per mile for miles driven on or after January 1, 2023. This rate is up 3 cents from the rate effective at the end of 2022. Jensen Memo — Secure 2.0 Final Section -by -Section: Mrs. Jensen presented the Board with a memo detailing the amendments relevant to public safety officers and governmental plans. Mrs. Jensen reviewed the memo in detail with the Board, noting the changes to the Required Minimum Distributions along with changes for the $3,000.00 gross exclusion amount for health insurance premiums. Ordinance Update: Mrs. Jensen provided the Board with an update on the proposed Ordinance Changes. As more information becomes available, Mrs. Jensen stated that she would let the Board know. Jensen Memo — Klausner Kaufman Jensen & Levinson Fee Increase: Mrs. Jensen presented the Board with a fee increase request from $300.00 an hour to $350.00 an hour. Mrs. Jensen reviewed in detail how the new amount was determined with the Board of Trustees. Marc Glass made a motion to approve the Klausner Kaufman Jensen & Levinson Fee Increase as presented, The Motion received a second from Greg Mull, approved by the Board 3-0. Palm Beach Gardens Police 01-01-2023 KTMC Fee Addendum: Mrs. Jensen informed the Board that KTMC had changed its fee structure. The service was free; however, to cover rising costs, KTMC is requesting to be compensated on a contingency basis of 4% of gross recoveries from settlement and other claims filed by KTMC on Client's behalf in shareholder and antitrust litigation in the United States and globally. Greg Mull made a motion to approve the KTMC Fee Addendum as presented, The Motion received a second from Marc Glass, approved by the Board 3-0. Jensen Memo — House Bill 3: Mrs. Jensen informed the Board of Trustees that House Bill 3 has been signed into Law with an effective date of July 1, 2023. Mrs. Jensen reviewed the law in detail with the trustees, noting that investment decisions can only be based on pecuniary factors and the Plan may not invest to further any social, political, or ideological interests. The Law also states that Plans must comply with these requirements with regards to voting proxies and by December 15, 2023, and each odd -numbered year thereafter, the Plan must file a comprehensive report detailing and reviewing governance policies. Mrs. Jensen concluded her review by informing the Board that she is unsure what exactly needs to be included in the comprehensive report at this time. Administrator Report (AC Lovingood, Resource Centers) 2023-2024 Plan Budget Draft: A.C. Lovingood provided the Board with the proposed 2023-2024 Plan Budget for review and approval. The Board of Trustees, Mr. Lovingood and Mrs. Jensen reviewed the Budget in detail and discussed several modifications that will better reflect the recent fee changes and ensure that the Plan stays under budget for the next fiscal year. Minutes: June 8, 2023 Page 2 Greg Mull made a motion to approve the 2023-2024 Plan Budget as amended, The Motion received a second from Marc Glass, approved by the Board 3-0. Website Updates and Enhancements: Mr. Lovingood reviewed The Resource Centers Website Updates and Enhancements that his firm recently performed. Mr. Lovingood reported that the hardware and software upgrades offer more security to protect Plan and member data. TMI Holdings Inc. Merger with Argent Financial Group: Mr. Lovingood provided the Board with an announcement of TMI Holdings Inc. merging with Argent Financial Group. Mr. Lovingood informed the Board that the notice only states that the only change the Plan will see is just a name change and that there are no software changes or integrations associated with this merger. 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 March 31, 2023. 4. MINUTES The Trustees reviewed the draft Minutes for the March 30, 2023, Board Meeting. Greg Mull made a motion to approve the Minutes for the March 30, 2023, Quarterly Meeting as amended, The Motion received a second from Marc Glass, approved by the Board 3-0. 5. DISBURSEMENTS AND FINANCIAL STATEMENTS The Board reviewed the Warrant dated June 8, 2023, for payment of expenses. Marc Glass made a motion to approve the expenses on the Warrant dated June 8, 2023, as presented. The Motion received a second from Greg Mull, approved by the Board 3-0. The Board received, reviewed, and filed the interim financial statement through March 31, 2023. 6. BENEFIT APPROVALS The Benefit Approvals Dated June 8, 2023, were presented to the Board for review. Marc Glass made a motion to approve the Benefit Approvals dated June 8. 2023. The Motion received a second from Greg Mull, approved by the Board 5-0. 7. OTHER BUSINESS Mr. Lovingood informed the Board that he has two upcoming DROP Distribution Requests that exceed the DROP Distribution Policy that require prior Board Approval. The first DROP Distribution is for Timmothy Lawrance in the amount of $61,399.80. Mr. Lovingood informed the Board that this amount is Mr. Lawrance's full DROP Account Balance with all interest earned up to the distribution date of June 15, 2023. Minutes: June 8, 2023 Page 3 Greg Mull made a motion to approve the June 15, 2023, DROP Distribution request in the amount of $61,399.80. The Motion received a second from Marc Glass, approved by the Board 3-0. The second upcoming DROP distribution request is for Edward Vistein. Mr. Vistein is in the process of purchasing a home and will need to make a DROP distribution before his closing and has requested that the Board pre -approve a one-time DROP Distribution with a limit not to exceed $135,000.00. Marc Glass made a motion to approve a one-time DROP Distribution with a gross limit of $135.000.00 for retiree Edward Vistein. The Motion received a second from Greg Mull, approved by the Board 3-0. 8. ADDITIONAL REPORTS The Board received the Aristotle 04-30-2023 Monthly Performance Report, ARA Core Property Fund 03-01-2023 Service Provider Disclosure Statement, KTMC 03-16-2023 Case Summary Foreign Exchange Benchmark Rates (Netherlands), and the KTMC 04-14-2023 Case Summary Alphabet Reports. 9. PUBLIC COMMENTS No members of the public had any comment. 10. ADJOURN There being no further business, Secretary Brad Seidensticker adjourned the meeting at 10:46 AM. Respectfully submitted, Brad Seidensticker, Secretary Minutes: June 8, 2023 Page 4 Greg Mull made a motion to approve the June 15, 2023, DROP Distribution request in the amount of $61,399.80. The Motion received a second from Marc Glass, approved by the Board 3-0. The second upcoming DROP distribution request is for Edward Vistein. Mr. Vistein is in the process of purchasing a home and will need to make a DROP distribution before his closing and has requested that the Board pre -approve a one-time DROP Distribution with a limit not to exceed $135,000.00. Marc Glass made a motion to approve a one-time DROP Distribution with a gross limit of $135.000.00 for retiree Edward Vistein. The Motion received a second from Greg Mull, approved by the Board 3-0. 8. ADDITIONAL REPORTS The Board received the Aristotle 04-30-2023 Monthly Performance Report, ARA Core Property Fund 03-01-2023 Service Provider Disclosure Statement, KTMC 03-16-2023 Case Summary Foreign Exchange Benchmark Rates (Netherlands), and the KTMC 04-14-2023 Case Summary Alphabet Reports. 9. PUBLIC COMMENTS No members of the public had any comment. 10. ADJOURN There being no further business, Secretary Brad Seidensticker adjourned the meeting at 10:46 AM. Respec ul itt dl ,L - - 6ra4teidensticker, Secretary Minutes: June 8, 2023 Page 4