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HomeMy WebLinkAboutMinutes Police Pension 021407City of Palm Beach Gardens Police Officers' Pension Fund Minutes of the Meeting Held February 14th, 2007 The regular meeting of the Board of Trustees of the City of Palm Beach Gardens Police Officers' Pension Fund was called to order at 9:10 AM by Chairman, Jay Spencer in the Council Chambers at the Palm Beach Gardens City Hall at 10500 North Military Trail, Palm Beach Gardens, Florida. Trustee, David Pierson was not present at these meeting. TRUSTEES PRESENT OTHERS PRESENT Jay Spencer, Chairman John McCann, GRS Asset Consulting Jules Barone Grant McMurry, ICC Capital Brad Seidensticker Bonni Jensen, Hanson, Perry, & Jensen, P.A. Wayne Sidey Scott Baur, The Pension Resource Center, LLC Bonnie Lindberg, The Pension Resource Center, LLC E.C. Blackburn, Cherry, Bekaert & Holland, LLP Rowana Flitan, Cherry, Bekaert & Holland, LLP MINUTES MOTION: Mr. Sidey made a motion to approve the minutes of the meeting held on November 16th, 2006. SECOND: Mr. Barone seconded. CARRIED: The motion carried unanimously 4 -0. ELECTION RESULTS The Pension Resource Center — Bonnie Lindberg Ms. Lindberg reported on the election results for member Trustees. Jay Spencer and Jules Barone were the only eligible candidates who filed to run, and therefore were elected by default. Jay Spencer asked about extending the two year term for trustees. Bonni Jensen advised that if legislature passes they will be able to extend the trustee terms with appropriate changes to the ordinance. REPORTING OF PLAN FINANCIALS Cherry, Bekaert & Holland, LLP — E.C. Blackburn Mr. Blackburn distributed the Draft Financial Statement and stated that there were a couple of items which need to be cleared and will be finished in a couple of days. He commented that the number will not be changing. Mr. Blackburn reported that Peter Alfele was promoted to manager of the Virginia Beach office. He then reported that there were no material problems with the financial statements. Cherry, Bekaert & Holland gave an unqualified ( "clean'l opinion. The Draft Audit report included Management's Discussion and Analysis. Mr. Blackburn reported that plan net assets increased from $19,539,635 in 2005 to $22,997,225 as of September .30, 2006. Returns on investments slightly exceeded the actuary's assumed rate. Mr. Blackburn then reviewed employer, member and Minutes 2-16-07 F-Ialmt Beach Gardens rinlice State of Florida contributions. Mr. Seidensticker questioned the decrease in the 2006 member contributions versus 2005, likely due to the number of pay periods included in the prior year and buyback contributions.. Mr. Blackburn stated that he will look Into the member contributions. He then reviewed the Statements of Plan Net Assets. Mr. Seidensticker questioned the money in the checking account. Mr. Baur explained that the Plan does not hold a significant cash balance in the local checking account. Cash gets wired to the account for contributions, typically at the end of each month and then it is used to pay benefits the next day. Mr. Blackburn reviewed the changes to the income and plan expenses between 2005 and 2006. In conclusion, Mr. Blackburn reviewed the notes accompanying the audited financial statement. He stated they already provided a copy of the draft financial statement to the finance department at the City. The plan had a funded ratio of 63.7% as of the fiscal year end. As a younger plan, this ratio does not indicate that the plan is unsound. Mr. Seidensticker questioned if there is a minimum on funded ratio. Ms. Jensen noted that most of the public plans have a funded ratio between 60% - 80 %, per a meeting she recently attended. Bonni Jensen also explained some details regarding funding. Mr. Sidey stated that new plans like this one always begin with a 0% funding ratio and the actuary true's up the required funding with each valuation to bring the funding ratio back to 100 %. Mr. Spencer commented that now that the plan has competitive benefits with peer municipalities, funding should become the focus and priority of the plan. Mr. Spencer also stated that the auditor did not find any weaknesses to internal controls or procedures. Mr. Spencer then stated that he would like to build this plan to be the best. Ms. Jensen then questioned if there were any issues with the transfer of plan administration from ASI to The Pension Resource Center. Mr. Blackburn responded that the transition proceeded very smoothly. Mr. Baur closed this section of the meeting with a brief discussion about data problems. INVESTMENT MANAGER REPORT ICC Capital; Management — Grant McMurry Mr. McMurry discussed the market environment for bonds. The bond portfolio returned .98% compared to the 1.04% for Lehman Brothers Gov /Credit Index benchmark. The cash in the bond portfolio actually increased returns. ICC currently has the portfolio "bar- belled" to both short term and long term maturities in response to a flat yield curve. He also discussed the impact of a monetary policy and foreign investment on the bonds market. Grant has very minimal expectations for bonds going forward. ICC previously adjusted duration to expectations but then the duration bets started to fail about 2 years ago. A new partner firm, Harbor Capital Management, now manages the fixed income portfolio. Mr. McMurry stated that he trades more actively but that he makes fewer duration bets. The Board briefly discussed investment in foreign bonds, which not only incorporates a yield but currency exchange rates. Mr. McCann will discuss rebalancing the portfolio. INVESTMENT CONSULTANT REPORT GRS Asset Consulting — )ohn McCann Mr. McCann began by stating that he had changed the name of his firm to "Thistle Asset Consulting" the national emblem of Scotland. Ms. Jensen advised the Board that will need a new contract which she will draft. Mr. McCann briefly discussed investment in hedge funds, which he does not support and he does not agree with investing in emergency markets due to the political risk. Mr. McCann reviewed the performance of International Equity Funds held by the plan. He reported the MorningStar ratings. Vanguard Global Equity received a five star rating; Vanguard International Growth received a three star rating; Vanguard International Value received a four star rating; and Mainstay ICAP International received a four star rating. John McCann then reviewed The Callan Periodic Table of Investment Returns. Minutes 2-14-0- 7. Palm Beach Gardens Police For 7 years running Large Cap Growth has lagged in all asset classes except Fixed Income. This kind of performance is unprecedented historically. Mr. McCann continued by reviewing-the market. environment..and__current asset allocation with .: --.. - -- 54% In Equities, 39% in Fixed Income and 7% in Cash (ICC holds the $1.7M cash). He commented that Plan has nicely diversified funds and they will need a new manager to handle.. International Bonds. Mr. McCann recommended moving 5% from Fixed Income to Large Growth to rebalance assets. He suggested allowing Grant McMurry, to manage the large growth portfolio for the Plan. If not, he would split amounts (p ingex funds (approximately 1.2 million dollars each). Mr. McCann reported that the performance of ICC Large Cap Growth was 4.13% for the quarter, 10.63% for one year, 6.71% for two years, 7.03% for three years and 3.47% for five years. ; MOTION: Mr. Seidensticker made a motion to approve the movement of $1.2 million from ICC Fixed Income into ICC Growth. SECOND: Mr. Barone seconded. CARRIED: The motion carried unanimously 4-0. Mr. Baur will provide a letter of direction to move the $1.2M to Grant McMurray copying John McCann. Grant does not need a separate account with Fiduciary Trust. Mr. McCann reported that the plan assets returned 4.23% for the quarter compared - to the benchmark at 4.56% and 9.89% for one year compared to 10.35% benchmark. He stated all returns were net of fees. Performance was in top 37th of peer manager universe. Mr. McCann reported that International Equity returned 8.82% for the quarter which is a little bit behind the 10.40% benchmark return Mr. McCann commented that the Plan use to have a recapture account with Lynch, Jones & Ryan (UR) in place. Mr. McCann suggested the direction letter that Scott Baur is sending to include direct trading to UR subject to best execution. ATTORNEY REPORT Hanson, Perry & 3ensen, P.A. - Bonni 3ensen Ms. Jensen provided revisions to the buyback policy for discussion. She commented that the vesting provision cannot be changed until the ordinance has been changed. The Board requested service to count for all purposes except for vesting. MOTION: Mr. Barone made a motion to approve Buyback Policy revisions. SECOND: Mr. Seidensticker seconded. CARRIED: The motion carried unanimously 4-0. The Board then considered the proposed ordinance for buybacks to count for all purposes "except" vesting. Ms. Jensen also advised that an ordinance would be needed for the Board to increase investment in foreign securities once Florida statute changes. MOTION: Mr. Sidey made a motion to recommend ordinance changes for buyback to count for all purposes except for vesting and to increase investments in foreign securities. SECOND: Mr. Barone seconded. CARRIED: The motion carried unanimously 4-0. Minutes 2-14-07 Palm Beach Gardens Police page 3 of b Ms. Jensen reported that the IRS recently increased mileage reimbursement to 48.5 cents per mile. She then reviewed guidance for the Pension Protection Act of 2006 provided by the IRS. There was a question concerning whether the City was fully insured or self- insured through Blue Cross Blue Shield. Mr. Jensen reported that the member workshops were cancelled due to scheduling conflicts with the City. Mr. Sidey asked about social security offset for public pensions. She advised that there are provisions for public safety officers participating in social security and not participating. Mr. Spencer asked about offset and asked Ms. Jensen to research the issue. Marty Greenberg asked if he can work as a reserve when he retires. Ms. Jensen advised, since he does not receive compensation, she would say yes. The reserves are certified volunteers that do not contribute in the Plan. The Board asked Bonni to look into the issue of retirees working as reservist. Jay Spencer mentioned that another individual is in the last year of the DROP Plan who would like to continue his employment after he leaves the DROP. Ms. Jensen will examine DROP issues as well. DISBURSEMENTS AND BENEFIT APPROVALS MOTION: Mr. Seidensticker made a motion to approve the Disbursements. SECOND: Mr. Baron seconded. CARRIED: The motion carried unanimously 4 -O. ADMINISTRATOR REPORT The Pension Resource Center, LLC — Scott Baur Mr. Baur reviewed the Balance Sheet and the Income and Expense Statement. He then gave an update on the data issues and showed the Board an example. Mr. Baur commented that the best way to deal with these issues is to go back to the City and get the date with correct dates. Until he has this data from the City, he does not feel comfortable giving a final calculation. Mr. Baur reported that the online calculator on the website has been turned on. SCHEDULE NEXT MEETING The date for the next meeting was scheduled for Tuesday, May 15th at 9: 00 AM. Ms. Lindberg will notify the City on how to set the Chambers up for the meeting; the Board prefers to meet at the table Respectfully submitted, DAVID PIERSON, Secretary Y