HomeMy WebLinkAboutMinutes Fire Pension 112805PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND
MINUTES OF MEETING HELD
November 28, 2005
A meeting of the Board of Trustees was called to order at 11:30 A.M. at Station 3, Palm
Beach Gardens, Florida. Those persons present were:
TRUSTEES
Richard Beladino
Philip Buttaravoli
Tom Murphy
Ed Morejon
Steve Rogers (1: 15 A.M.)
OTHERS
Margie Adcock, Pension Resource Center,
Administrative Manager
Joe Bogdahn, Bogdahn Consulting,
Investment Monitor
Robert Sugarman & Pedro Herrera,
Attorney
Mike Dana, Investment Manager
It was noted that Steve Rogers was taking care of some arrangements for the funeral of
Shawn Thurman but would be attending the meeting a little later.
MINUTES
The Board reviewed the minutes of the meeting held August 15, 2005. A motion was
made, seconded and carried 4 -0 to accept the minutes of the meeting August 15, 2005.
DANA INVESTMENT ADVISORS
Mike Dana appeared before the Board. He reported on the performance of the portfolio
for the quarter ending September 30, 2005. He reviewed the key money rates. He noted
that interest rates have come up a bit since last year. He stated when interest rates go up,
prices go down. He discussed the performance for the quarter ending September 30,
2005. The total portfolio was up 4.84% for the quarter while the benchmark was up
2.23 %. For the fiscal year to date the total portfolio was up 14.29% while the benchmark
was up 8.54 %. The fixed income portfolio for the quarter was down .37% while the
benchmark was down .52 %. Equities for the quarter were up 7.50% while the benchmark
was up 3.6 %. He noted that there was 48% in large cap equities; 12% in small cap
equities; 20% in corporate bonds; 6% in federal agencies; 1 % in government bonds; 8%
in international; 4% in ARMs; and 1% in cash. Mr. Dana discussed the treasury yield
curve and noted that they were keeping it short. They are keeping it at 2, 3 and 4 years
and there is no real reason to go out any further than that. He noted that they are sector
neutral and are invested in all sectors. He reviewed the holdings in the portfolio as of
September 30, 2005. He then reviewed the compliance material.
Mike Dana departed the meeting.
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INVESTMENT MONITOR REPORT
Joe Bogdahn appeared before the Board. He discussed the investment performance for
the quarter ending September 30, 2005. The Fund was up 4.69% for the quarter while the
benchmark was up 2.90 %. The total market value of the Fund as of September 30, 2005
was $13,656,000. The asset allocation at market was 67% in equities; 32% in fixed
income; and I% in cash. The fixed income portion of the portfolio was down .60% for
the quarter while the benchmark was down .52 %. The total market value of the fixed
income portion of the portfolio was $4,373,000. Equities for the quarter were up 7.36%
versus the S &P 500 which was up 4.62 %. The total market value of the equity portion of
the portfolio was $9,152,000.
With respect to the status on the contracts with Freedom Management and ING, Mr.
Bogdahn stated that he understood that the contract with Freedom Management has been
taken care of. He stated that the money to fund that account would be taken from the
ishares Dana is holding. The Board asked how the Fund would have done if there had
been no delay in the contract and the money had been invested with in Freedom. Mr.
Bogdahn stated that the Fund would not have earned as much. It would have earned about
11% versus the 16% it did with Dana. Mr. Bogdahn stated that although the Fund did
better with the ishares held by Dana, for the long term he believes it is better for the Fund
to have a true active manager for this asset class. Mr. Bogdahn stated that he understands
that ING will not accept fiduciary liability. He stated that there are reasons why they can
not accept fiduciary liability and he feels that makes the product better in his opinion. He
stated that there is an issue of self - dealing as they have their own money in the product.
He stated he still has confidence in the ING product. Real estate has become a little
wacky lately, more on the residential side. However, it is different on the commercial
side. From diversification it is a good idea to get into real estate. From a timing
standpoint it is not a bad investment but he does not think the Fund will get an 8% return
on a short term basis. There is too much volatility in the market for the short term with
the inflated prices that are being paid for buildings right now. Additionally the Ordinance
to allow real estate has not passed as of yet. There are other firms similar to ING but they
do not have as long a track record although they will accept fiduciary liability. He stated
that real estate should give a return on an annualized basis of 5 %. Mr. Bogdahn stated
that the nice thing about Dana is that they will look for alternative ways on a risk adjusted
basis to enhance the returns.
ATTORNEY REPORT
Mr. Sugarman stated that there were three projects from the last meeting that they were
given. He stated that they have taken longer than they should have and he apologized to
the Board for the delay. Mr. Sugarman stated that the first item was the contact with the
new Actuary. He stated that he has the contract ready for the Chairman to sign. The next
items were the contracts with the investment managers Freedom and ING. He stated that
it took his office a long time to resolve the confidentiality of private placement
memoranda proposed by the managers. He stated that as his invoice was rather high for
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this matter, he was writing off $3,000 from the invoice. With respect to the ING contract,
he stated that it was a commingled trust with an unregistered security offered through a
private placement memorandum governed by another state. He stated that the issues with
the contract are that of fiduciary liability and the law that governs. Mr. Sugarman stated
that ING would not agree to a side letter. He stated that another client of his, Boca Raton
Police and Fire, accepted the risk of a similar arrangement with another manager at a
meeting last week because of the attractiveness of the investment. He noted that in that
particular scenario the manager was also investing their own pension money which held
them to an ERISA standard which is very high. He advised that this Board could do that
too. It is legal. The problem with ING though is that it is not investing its own pension
money like the situation in Boca, but just their own money. So they are not holding
themselves up to a high standard of a pension trustee. He noted that when ING made
their presentation they stated that they would be a fiduciary but the contract they are
willing to execute states that they are not.
The Board expressed their concern about the delay and cost involved in the process trying
to obtain contracts with the three companies (GRS, Freedom, and ING). The Board
wanted to make sure this does not happen again. Mr. Sugarman responded that the Board
could put them on a retainer, have Mr. Bogdahn bring only those who have successful
contracts in Florida that have been approved by one of the predominant pension attorneys
in the state, or prescreen the presenters by telling them of the requirements before they
come in. There was a lengthy discussion on the matter. There was then discussion on
funding the Freedom account. Mr. Bogdahn stated that he would advise Dana to
liquidate the ishares and those monies would be given to Freedom to invest.
Joe Bogdahn departed the meeting. Steve Rogers entered the meeting.
Mr. Sugarman discussed the disability review of Kevin Mitchell. He stated that Mr.
Mitchell was sent for a functional capacity exam performed by Dr. Karen Lunda in
Arizona. He noted that Dr. Luna stated that Mr. Mitchell does not meet the physical
demands required to perform work as a firefighter /emt. Mr. Sugarman stated that he
recommended the Board carefully read the report and determine if someone with those
recommendations can still be a firefighter in this Department. Mr. Sugarman noted that
he thinks she has listed some severe restrictions on someone who is a firefighter /emt. A
motion was made, seconded and carried 5 -0 to accept the report and find that Kevin
Mitchell continues to be qualified to receive a disability pension.
There was a discussion on the disability application of Shawn Thurman and the effect of
same since he passed away on Saturday. It was noted that Mr. Thurman completed a
beneficiary designation and the beneficiary is his father Tommy Thurman who will be
receiving a benefit. Mr. Sugarman stated that Tommy Thurman will receive either a
pension benefit Shawn Thurman would have received as he was partially vested or he
will receive a 10 year certain benefit if a service connected disability is granted. There
was a lengthy discussion on the matter. It was noted that Shawn Thurman filed an
application some time ago. The Board had not acted on it as of yet as they were waiting
on additional information of a list of treating doctors. Mr. Sugarman stated that the
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question is what stopped Mr. Thurman from working. Mr. Sugarman stated that if he
recovered and came back to work he would have to reapply for a disability pension.
However, if he was trying to come back to work and it did not work out, the original
application is still good. There was a lengthy discussion with Steve Rogers, Tom
Murphy and Ed Morejon noting what happened when Shawn Thurman came back to
work for a brief time. It was noted that Shawn Thurman was under the command of Steve
Rogers and Mr. Rogers stated that he removed him from work because he was unable to
perform. Mr. Sugarman stated that he was comfortable that Mr. Thurman's return to
work was for a trial period and advised that the Board should process the application with
the belief that Mr. Thurman did not recover and then become disabled. Mr. Sugarman
advised that he was of the opinion that this was a valid application and that the delay in
giving the list of doctors was in the hopes he would get better. There was then discussion
on the cause of death. It was noted that the primary cause was metastatic thyroma to
pericardium with a secondary cause of congestive heart failure. Mr. Sugarman stated that
the question is what disabled him, not what killed him. Mr. Sugarman stated that the
Board could authorize the payment of the death benefit and then continue to investigate
the matter and change it to a service connected disability if so determined. Mr. Rogers
noted that they were looking into obtaining two shadow boxes for Shawn Thurman's
funeral. Mr. Sugarman stated that the Board cannot make a money contribution but it can
pay for the shadow boxes in lieu of flowers. A motion was made, seconded and carried
5 -0 to approve payment for shadow boxes up to $200 in lieu of flowers. A motion was
made, seconded and carried 5 -0 to approve the application of a single sum death benefit if
under $5,000 without prejudice to the pending disability benefit application and for
distribution of the share account.
Steve Rogers departed the meeting.
ADMINISTRATIVE REPORT
Margie Adcock presented the engagement letter from Steve Gordon for the annual audit
for the fiscal year ending September 30, 2005. A motion was made, seconded and carried
4 -0 to execute the engagement letter.
Ms. Adcock presented the list of disbursements to be made. A motion was made,
seconded and carried 4 -0 to approve the disbursements listed.
OTHER BUSINESS
There being no further business, the meeting adjourned at 3:00 p.m.
Respectfully submitted,
Ed Morejon, Secretary