HomeMy WebLinkAboutMinutes GEPB 050905General Employees Pension Board
May 9, 2005
2:00 PM
The General Employees Pension Board met on May 9, 2005. The meeting was called to
order at 2:08 PM.
Members present: Allan Owens,
Dindial Laliee
Kenneth Steele
Stephen Parella arrived at 2:28 P.M.
Also Present: Joe Bogdahn
Scott Christiansen
Mary Durkin
Douglas Lozen of Foster and Foster
Hank Dufour
The board approved the minutes from the February 14, 2004 meeting.
The board approved three bills to be paid in a 3 — 0 Vote.
Report from Trustco
Mary Durkin from Trustco gave the board a report and a market snapshot of how the
markets performed for the 1 ' quarter of the year. She stated the S &P was down 2, the
Dow was down 1.6 and the NASDAQ was down 8 due to coming off a post election rally
in the 4th quarter. There was moderate job growth, consumer spending was still positive
and there were strong capital expenditures. She stated there were record high oil prices,
concerns about inflation and the Federal Reserve raising the rates all played into the
market to make it negative. When looking at the 6 month column it is still positive. She
discussed the trends for the past 4 years which included small and mid cap have out
performed large cap and mid cap out performed large and small cap. She explained the
account activity summary over a 6 month period of time. Market value as of 9/30/04 is
almost 2.7 million, contributions at 58,000, withdrawals of 128,000, a gain of $137,700,
interest and dividends of $3,000 with and ending portfolio value as of 3/31/2005 is a little
over 2.7 million. She reported on the performance of the portfolio. It was down 1% for
the quarter, up 5.3 for the fiscal year to date and up 5 for the 12 months and up 8.65
annualized. She gave breakdown of allocations and where the plan is currently
invested. She also gave a breakdown of the expenditures and money coming into the
account. A board member asked why there was cash listed. She explained that cash is
there in case there are any fees that come through the cash is there so they won't have to
sell out as much.
Report from Joe Bogdahn of Bogdahn Consulting
Mr. Bogdahn went through the General Employees Retirement System Book. He went
over the performance against 60% the equity markets and 40% of the buy market and
used the S & P 500 as the equity proxy and the Lenland Government Credit Bond Index
as the bond proxy. He stated that they started off with 2 million 8 hundred and 5
thousand with a negative cash flow of $27,000. This is a trend of this plan where more
money goes out than in. The investment loss for the quarter is $33, 000. Since inception
when the markets have been up they have captured 87% of the upside and when the
markets of been down they have captured 87 '/z % of the downside. The three year
number reflects that. It is the opposite of where they would like the numbers to be. For
four consecutive quarters they have dropped below the 501' percentile, last quarter they
were back up in the top side of it and now they are back in the top 3`a. He explained the
equity of the plan. This most recent quarter they were negative. Because the plan has not
captured enough of the upside has hurt them over time.
Mr. Bogdahn handed out a book of Investment Managers Alternatives. He went through
the different firms that manage money on a balance basis, in the range that this fund is
running. He went through the different firms and gave a background on each one. He
also discussed the different products that each firm has to offer. He explained the
difference between the plan they currently have and the plans these companies are
offering.
Mr. Bogdhan would like to have 3 companies give a presentation to the board to help
them decide which company to go with.
Other Business
Stephen Parella brought up the issue of reinstating retired employees to the board. Hank
Dufour stated that the City is currently looking into expanding the pension board and
opening it up to all employees. The board would like to encourage the city to do this.
Alan stated that he City has a third party company that is doing a study to decide if it
makes sense to have 2 separate plans or offer the current plan to the employees. They
would also like Foster and Foster to see what the possibility is to offer the plan to other
employees.
Stephan Parella stated that before they hire a new plan manger they should have an idea
of where the plan is going in the next few years and if it is going to be opened up to the
general employees. Alan stated he would like to see this in place by October 1", 2005.
There was a motion made that past 4 -0 to give Foster and Foster the figures to look at and
to help determine if new employees can be added to this plan.
Election of Secretary
Alan Owens was elected Secretary to the Board in a 4 -0 vote.
Review of Contract by Bogdahn Consulting
Alan Owens stated the Contract with Bogdahn Consulting was approved and signed.
Actuarial Report by Douglas Lozen — Foster and Foster
Mr. Lozen handed out the Actuarial Valuation Report and went over it page by page with
the board. He discussed the summary of the report and stated that during the past year
the actuarial has been less favorable than expected. The primary components of the
unfavorable experience included average salary increases that exceeded the assumed rate
and a 1.8% investment return that was less than the 8.0% assumption. He recommended
a new method of accounting which included is to take the loss that has occurred up to this
point in time and spread them out over 30 years. This is essentially a refinance of the
pension plan. The board asked if it is common practice for the fund to be carried out over
30 years. Mr. Lozen stated that many plans in the same situation resort to this method
and it is very acceptable. The board approved the new method in a 4 -0 vote.
Attorney Scott Christiansen Report
Mr. Christiansen discussed the Financial Disclosure Forms that will be sent to the board
by the State. They are due July 1'` and there is as fine for not sending them in on time.
He stated that Alan Owen's term will be expiring in June.
He suggested putting a provision in the plan that instead of a mandatory cash out the
employees do not use the money within 5 years of retirement must roll it over into an
IRA. He is suggesting this language be put in the plan.
Adjournment
With no further business to discuss the board adjourned at 4:04 P.M.
Submit d
Sus Bell, Public Information/ Co
Rec ordinator