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HomeMy WebLinkAboutMinutes Fire Pension 043007PALM BEACH GARDENS FIREFIGHTERS' PENSION FUND MINUTES OF MEETING HELD April 30, 2007 A meeting of the Board of Trustees was called to order at 10:00 A.M. at Station 3, Palm Beach Gardens, Florida. Those persons present were: TRUSTEES Ed Morejon Steve Rogers Tom Murphy Philip Buttaravoli OTHERS Margie Adcock, Administrator Ken Harrison, Attorney Joe Bogd" Investment Monitor Brad Armstrong, Actuary PRESENTATION BY GALLIARD CAPITAL Carrie Callahan appeared before the Board. She stated that Galliard Capital was founded in 1995 as a wholly owned subsidiary of Wells Fargo and Company. The firm is headquartered in Minnesota. They have 41 professionals. The firm manages $24.5 billion in assets with $5.7 billion in the core broad fixed income strategy. She stated that the entire focus of the firm is fixed income management. Ms. Callahan discussed the representative client list. She stated that the senior management team has been managing portfolios together since 1988. They have outperformed in 10 of the last 11 calendar years. For the 3, 5 and 10 year periods they have been in the top 10`" percentile. They have outperformed 100% of the rolling 3 and 5 year periods since their inception. Ms. Callahan reviewed their investment philosophy. The role of fixed income is to generate income and control risk. She stated that they avoid timing interest rates, have active sector rotation and aggressive trading strategies. She stated that their performance objective is 50 to 70 basis points above the benchmark. She noted that they have historically accomplished their performance objective. She reviewed the portfolio as of March 31, 2007. They participate in all sectors and provide a lot of diversification. Their duration is slightly longer than the benchmark at 4.65 versus 4.50. There was a lengthy discussion. Mr. Bogdahn noted that they have a number of other Florida clients that use Galliard so they could provide the Board's Attorney with one of those contracts. Mr. Harrison stated that if there is existing language for another Florida client then he thought there should be no problem in finalizing a contract for the next meeting. Carrie Callahan departed the meeting. MINUTES The Board reviewed the minutes of the meeting held March 19, 2007. A motion was made, seconded and carried 4 -0 to accept the minutes of the meeting held March 19, 2007. 2 ACTUARY REPORT Brad Armstrong appeared before the Board. He presented the September 30, 2006 Actuarial Valuation which determines contributions for the fiscal year beginning October 1, 2007. He stated that the principal sources of experience gains and losses were: a gain of approximately $.1 million due to the rate of return on the value of assets of 9.3% versus the assumption of 8.5 %; a gain of approximately $.8 million due to a 1.9% average salary increase versus an expected salary increase of 5.3 %; a loss due to 3 terminations versus the expected 10.9; a loss of approximately $.2 million due to one death in service; and a gain of approximately $.1 million due to no retirements. Mr. Armstrong stated that the Valuation adopts the proposed assumptions and methods that were presented and adopted by the Board at the February 19, 2007 meeting. He stated that the City contribution requirement increased by 6.25% of payroll to 30.40%. There was discussion on the Share Account and inclusion of those monies in the funded ratio. He stated that he did not include the Share Accounts in the funded ratio and the funded ratio was 46.8% versus 38.41% a year ago. He stated that since the Share Accounts are 100% funded, including it in the funded ratio would increase the funded ratio to 52 %. Mr. Armstrong reported that the total normal cost was 23.13 %. The total unfunded actuarial accrued liability was 13.35 %. The investment and administrative expenses were 1.83 %. The total adjusted contribution requirement was 38.31 %. He noted that the about $650,000 or 5% was a direct result of what the City asked the Board to do with the assumption and method changes. He stated that the changes are more conservative and in the best interests of the Fund in total. He reviewed the schedule of funding progress. He stated that the funded ratio is highly likely to increase year after year even if the Fund has a down year. He believes it is moving towards 100% on a fairly consistent basis. Mr. Armstrong provided a report on the cost associated with certain proposed benefit changes. He stated that the funded ratio is moving up but it is still low on a relative basis compared to other plans. He stated that if a change is made in increasing the multiplier from 3% to 3.5% that would drop back down the funded ratio. Rather than proposing a multiplier of 3.5% for all years of service, what is being proposed is 3.25% for the first 20 years of service plus 4% for the next 5 years of service, as well as a 20 and out. He stated that they were deliberately proposing the multiplier change in that way in order to affect the funded ratio less. There was a lengthy discussion. Mr. Harrison discussed the requirement from the State for a separate letter regarding the annual expected rate of return. Mr. Armstrong stated that he believes the assumed rate of the Fund is reasonable for the 1, 5 and 25 year period. Mr. Harrison stated that he would draft the appropriate letter for the Board to send the State. A motion was made, seconded and carried 4 -0 to approve the September 30, 2006 Valuation and annual expected rate of return. Brad Armstrong departed the meeting. 3 INVESTMENT MONITOR REPORT Joe Bogdahn appeared before the Board. He provided an update on the performance of the Fund for the quarter ending March 31, 2007. He stated that both Freedom and Dana outperformed the benchmark. Freedom was up 5.7 %. The equity portfolio for Dana was up 3.14% versus the benchmark which was up .6 %. The bond portfolio for Dana was up 1.6% and the benchmark was up the same. He stated that he would have a full report at the next meeting. A motion was made, seconded and carried 4 -0 to hire Galliard Capital Management. ATTORNEY REPORT Mr. Harrison discussed the status of the workers' compensation settlement for Kathleen Bush. He stated that a letter was sent advising that a total offset of $603.70 would be deducted from the June payment unless Ms. Bush objected at the April meeting. He stated that they received a response back that Ms. Bush did not object. A motion was made, seconded and carried 4 -0 to reduce the June payment to Kathleen Bush by $603.70 for the workers' compensation offset. Mr. Harrison reviewed the new GASB requirements and noted that the Actuary is going to have to account for those requirements next year. He stated that he would contact Mr. Armstrong to see if Mr. Armstrong could provide the Board with the effect of GASB. Mr. Harrison stated that the Administrative Services Agreement with Pension Resource Center was updated and ready for execution. The Board discussed the timing of the online calculator. The Board decided to table the matter until next month. ADMINISTRATIVE REPORT Margie Adcock presented the list of disbursements to be made. Mr. Rogers inquired as to what was considered "miscellaneous" in the billing of the Attorney. It was noted that the "miscellaneous" charge was for a prior bill that the Board already approved. Ms. Adcock stated that she would provide the Board with a copy of that prior bill for their information. A motion was made, seconded and carried 4 -0 to approve the disbursements listed. OTHER BUSINESS It was noted that Richard Beladino resigned from the Board effective April 15 as he moved out of the State. A motion was made, seconded and carried 4 -0 to appoint Ed Morejon as the Chairman. A motion was made, seconded and carried 4 -0 to appoint Tom Murphy as the Secretary. Evan Bestland appeared before the Board. He stated that he wanted to provide some past history to the Board as he used to be a Trustee on the Board. Mr. Bestland noted that when the Plan was first established it was with Travelers and had the minimum benefits 4 of a normal retirement age at 60 and a 1.5% multiplier. At that point the Fund was overfunded and the City did not have to contribute to the Plan. The Board hired Lee Dehner in 1993 as legal counsel and started to negotiate with Travelers to remove themselves from that situation. In 1999 there were Plan improvements and the establishment of the Share Account and that is when the City first started contributing to the Fund. He noted that the attorney at the time said that the Board could possibly pursue a claim against the City but the costs would expensive. Because the Fund was so small at the time, the attorney stated that it would not be worth the time or money to pursue. Mr. Bestland stated that there was no allegation of impropriety. He also noted that there was no unfunded actuarial liability when he left the Board in 1998. There was a lengthy discussion. There being no further business, the meeting adjourned. Respectfully submitted, Tom Murphy, Secretary