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HomeMy WebLinkAboutMinutes Fire Pension 021704PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND MINUTES OF MEETING HELD February 17, 2004 A meeting of the Board of Trustees was called to order at 11:05 A.M. at the Main Station, Palm Beach Gardens, Florida. Those persons present were: TRUSTEES OTHERS Ed Morejon Scott Baur, Pension Resource Center, Richard Beladino Administrative Manager Steve Rogers Joe Bodgahn, Bogdahn Consulting, Tom Murphy Investment Monitor Robert Sugarman, Attorney Steve Gordon, Auditor MINUTES The Board reviewed the minutes of the meeting held November 17, 2003. A motion was made, seconded and carried 4 -0 to accept the minutes of the meeting held November 17, 2003. ANNUAL AUDIT Steve Gordon appeared before the Board to present the audit for the period ending September 30, 2003. He advised that the audit was in draft form due to information he still needed on the gross share account balance. He noted that the Actuary was waiting on data from the City. The total assets of the Fund as of September 30, 2003 were $7,739,720 of which most were in investments. Mr. Gordon stated that the investment gain contributed substantially to the increase in assets for the fiscal year. There was a total net investment income of $723,265. He noted that the City contributed the amount as was stipulated by the Actuary. The employee contributions increased as the total wages increased. Mr. Gordon reviewed the administrative expenses and noted that the charges for the Actuary and the Fiduciary Liability were pre -paid during the prior years. It was also noted that assets kept pace with the accrued liability reported in the last Actuarial Valuation. Ed Morejon expressed concerns from the City on the timing of the financials. He stated that the Finance Director is still waiting on the audit. The Board decided to accept the audited financial statements when the Board receives the audit in final form. INVESTMENT MONITOR REPORT Joe Bogdahn appeared before the Board to discuss investment performance for the quarter ending December 31, 2003. The Fund was up 7.83% for the quarter and 19.67% for the calendar year. The fixed income trailed the benchmark slightly due to higher grade bonds in the portfolio as the market favored lower quality bonds. Equities for the year were up 30.45% versus the S &P 500 which was up 28.63 %. The good investment performance is attributed to the change in the investment manager and also the addition of some small and mid cap to the portfolio. 2 Ed Morejon questioned about the commissions on trades. Mr. Bogdahn stated that all of the reports are net of fees and costs. Mr. Bogdahn recommended that the Board continue to retain Dana as the Investment Manager for the Fund. There was then discussion on the statute of limitations for various actions that Board may have against Bank of America. It was noted that the statute of limitations is 5 years for breach of fiduciary duty and there is no limitation on fraud. There was discussion on whether the investments made by Bank of America conformed to the Investment Policy. The Board directed Mr. Bogdahn to investigate the matter. It was also noted that there were other issues about continuity of management with Bank of America spinning off management to Chicago Equity Partners, which firm subsequently folded with Bank of America resuming management. Mr. Bogdahn stated that there was no prior evidence of wrongdoing, just underperformance. Mr. Morejon stated that there are still questions further back with Travelers and they need information. The City Manager had a connection at Travelers and noted that the fees were high with the net returns being so poor. PENSION OBLIGATION BONDS Sandra Little from William Hough & Company appeared before the Board to discuss pension obligation bonds. She stated that there is an obligation bond pool that is being worked through Palm Bay to reduce overhead on the bond issue. She noted that there were 2 series of bond issues. Amback Insurance Company will insure the bonds. William Hough & Company is merging with another company which will ultimately be Smith Barney. It was noted that smoothing will continue to realize the losses over the next couple of years. With respect to funding, money would be borrowed at 5% instead of at the assumed rate of 8 %. Money can be borrowed up to 3 years. Each-participant of the pool will go through a credit review process to determine which series of government they would participate in. Each series can have a variance on fixed or variable rates or maturity. Palm Bay receives an annual administrative fee. The minimum size for individual issues is at $1 million for the pool or separate at $15.2 million. She stated that there is no crossing of participants in the pool so there is no negative for ratings impact. It was noted that the City has not yet approached William Hough & Company. The City must undergo a credit review process. After the credit review process it is another 30 -60 days to price the bond issue. Ms. Little stated that she would follow -up with the Finance Director. TRUSTEE ELECTION It was reported that Ed Morejon was re- elected to the Board to serve another two year term. A motion was made, seconded and carried 4 -0 to reseat Ed Morejon as a Trustee on the Board. ATTORNEY REPORT Bob Sugarman reported that he attended a Membership meeting in December with the City Attorney and the Finance Director. He stated that he sent the Ordinance to the City Attorney and has not heard anything as of yet. It was noted that the Board endorsed the changes and advised the City of that. He noted that if the Ordinance is not adopted before the new Actuarial Valuation comes out the numbers will change. It was noted that the Chairman and Secretary would send a letter regarding the matter. There was then a discussion on a Participant who had a break in service due to military leave. It was questioned whether he accrued sick and annual leave while he was out on military leave. Mr. Sugarman stated that he sent a letter to the City a couple months ago. He stated that the law requires the City to make pension contributions for the break in service but not for sick or annual leave. However, it does require employees to be treated the same as everyone else is treated for disability, maternity, etc. It was noted that such time accrues on workers' compensation and maternity. Mr. Sugarman reviewed the changes in the proposed Ordinance. There was then discussion on sick and vacation time for Participants in the DROP. It was noted that the Board did not want to force a Participant to cash out their sick and vacation time on entry into the DROP. Those amounts are included in the final average compensation anyway. Mr. Sugarman reviewed the Partial Lump Sum Option and the COLA. A motion was made, seconded and carried 5 -0 to accept the proposed Ordinance. It was noted that Steve Rogers did not file the Financial Disclosure and a fine of $1,500 has been imposed. Mr. Sugarman reviewed the appeals process and noted that Mr. Rogers does not meet the criteria. A reply must be done by February 28h. It was determined that Mr. Rogers should send a letter of appeal that he did not recall receiving the forms and was having a difficult time during that due to a death in the family. He should request a hearing before the Commission. ADMINISTRATIVE REPORT Scott Baur presented the list of disbursements to be made. A motion was made, seconded and carried 4 -0 to approve the disbursements listed. OTHER BUSINESS Ed Morejon reported that he was working with the City toward a process for physicals. There being no further business, and the next meeting being scheduled for Monday, May 17, 2004 at 11:00 A.M., the meeting adjourned at 2:50 P.M. Respectfully submitted, Ed Morejon, Secretary