HomeMy WebLinkAboutMinutes Fire Pension 091012PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND
MINUTES OF MEETING HELD
September 10, 2012
A meeting of the Board of Trustees was called to or der at 9:06.M. at Council Chambers,
Palm Beach Gardens, Florida. Those persons present were:
TRUSTEES OTHERS
Rick Rhodes, Chair Audrey Ross, Administrator
Tom Murphy, Secretary Pedro Herrera, Attorney
Donna Wisneski Troy Brown, Investment Consultant
Ed Morejon Brad Armstrong, Actuary
Mark Joyce Doug Lozen, Actuary
Clement Johns, Auditor
Jim Burdick, Auditor
RFP PRESENTATIONS:
Actuaries
• Foster & Foster, Inc. – Presented by Doug Lozen
Mr. Lozen introduced himself to the board and state d that Foster & Foster was founded in
1974 by Ward & Eileen Foster. Foster is one of the largest actuarial firms that consult
exclusively to the public sector. They work for ov er 250 public retirement programs,
with 140 of those being Florida Police and Fire pla ns. Mr. Lozen noted that their Firm is
over weighted with credential actuaries who have ne arly 200 years of public sector
actuarial experience all together. 45% of Foster’s clients have been with them for 15 plus
years and Foster has never lost a client to date.
In addition Mr. Lozen stated that Foster does there own financial reconciliations
throughout the year. Therefore, they are able to h ave their Valuations completed by
December 31 since they don’t have to wait on the au dited financial statements to be
completed and finalized. He reviewed the services that they would be providing to the
board if chosen, and also commented that they have an online calculator that would be
available to the members for an additional charge. The flat fee proposed today is $9K for
the 2012 Valuation Report, and then a 5% increase e ach year thereafter. Mr. Lozen noted
that the flat fee includes the preparation and pres entation of the Valuation and the annual
employee benefit statements (share statements are a separate fee).
• Gabriel, Roeder, Smith & Co. (GRS) – Presented by B rad Armstrong
Mr. Armstrong welcomed himself back and reviewed a little about GRS as a firm. GRS
is the oldest firm that is dedicated to serving the public sector with over 65 years in the
business. There are 5 offices located throughout t he US that help serve their clients. Mr.
Armstrong noted that most of their clients have bee n with them for over 50 years. GRS’s
approach is to work smoothly with the other service providers in order to get things done
in a timely manner, they are involved with the FPPT A, and they work closely with the
Division of Retirement. Mr. Armstrong noted that G RS and himself have an exceptional
amount of experience with the Chapter 175 Plans and all the Florida rules and
regulations.
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Mr. Armstrong stated to the board that he is here t oday because he is taking this RFP
process very seriously and values the board’s relat ionship and does not want to lose it.
He has been working for the board for a very long t ime and has helped the board in
numerous decisions regarding benefits. Mr. Morejon stated that the board has not
directed him to prepare an impact statement yet reg arding the pending Ordinance,
although he has heard that the impact statement is almost completed and would be ready
for the second reading of the Ordinance in 2 days. Mr. Armstrong stated that the impact
statement is not completed although he has started to put some work into it. Mr. Morejon
stated that he was not pleased with the fact that M r. Armstrong had started on some work
that was requested on behalf of the City, and not t he pension board.
Auditors
• Cherry, Bekaert & Holland (CBH) – Presented by Jim Burdick
Mr. Burdick introduced himself and stated that he a partner in the firm and is located out
of the Orlando office. He noted that he has been i n accounting for over 30 years, with 20
of those years focusing solely on defined benefit p lans. CBH was founded in 1947 and
they currently have 25 offices from Miami to Northe rn Virginia. In addition CBH is one
of the nation’s largest accounting and consulting f irms. Mr. Burdick reviewed their client
list and stated that they have over 300 defined ben efit plans. He noted that his firm has a
good working relationship with the Resource Centers since CBH is also the Auditors for
the Palm Beach Gardens Police Fund and other mutual clients. Lastly Mr. Burdick stated
that they are proposing a fee of $13,750 for the 20 12 Audit.
Ms. Wisneski stated that recently there were new GA SB rules and regulations that were
issued and she wanted to know how CBH thinks this w ill impact the financials
statements, if at all. Mr. Burdick commented that the new rules and regulations issued by
GASB will not add any additional liabilities to the financials statements, but rather they
will have to add more footnote disclosures in.
• Goldstein Schechter Koch (GSK) – Presented by Cleme nt Johns
Mr. Johns briefly introduced himself and stated tha t his firm has a total of 137 employees
with 23 partners, 86 professionals, and 28 administ ration staff. He reviewed the list of
services that his firm provides and also briefly re viewed the audit process. Mr. Johns stated
that GSK also offers other services such as Trustee education. Lastly he noted that the
proposed fee for their services is $18K per year.
PUBLIC COMMENTS
An active member had some questions regarding the n ew benefits and the implementation
of them under the new Ordinance. Regarding the pay out of their unused sick and vacation
hours, Mr. Herrera explained that all members will automatically get credited for the
number of hours they have in their “bank” as of Sep tember 13, 2012 (the day the new
Ordinance is effective) when they retire or enter t he DROP. The board briefly discussed
the COLA benefit and its implementation as well.
INVESTMENT MONITOR REPORT: THE BOGDAHN GROUP (TROY
BROWN)
Mr. Brown reviewed the funds performance for the mo nths of August and September 2012.
He commented that there is still a lot of volatilit y going on with ICC Capital and would like
to invite them to the November meeting for an updat e. In addition he commented that if ICC
does not start turning things around, then he will be recommending a replacement manager.
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Mr. Brown stated that the fund received the Chapter 175 monies into the Plan’s R&D
account in August for $612,314. Therefore he is re commending an allocation of $585K to
the Dana core account from the R&D account.
A motion was made by Ed Morejon to authorize the tr ansfer of $585K from the
Plan’s R&D account to the Dana core account based o n the Consultants
recommendation. The motion was seconded by Tom Mur phy and carried 5-0.
MINUTES
The Board reviewed the minutes of the regular meeti ng held on July 16, 2012.
A motion was made by Donna Wisneski to approve the minutes of the July 16, 2012
regular meeting. The motion was seconded by Tom Mu rphy and carried 5-0.
ATTORNEY REPORT: SUGERMAN & SUSSKIND (PEDRO HERRERA )
The Trustees asked Mr. Herrera whether an ordinance can be passed if an impact
statement has not been issued. Mr. Herrera explain ed that the State law requires that an
impact statement needs to be issued in conjunction with the revised ordinance, so it is up
to the City as to whether or not they want to pass the second reading of the ordinance
without the impact statement.
Mr. Herrera stated that at the last meeting the boa rd was notified that the City had passed
the 1 st reading of the Ordinance with some unanswered ques tions. For example, there
needed to be clarification on what payroll is going to be used to compute a member’s
final average salary. Mr. Herrera noted that they concluded that no overtime will be
included in final average salaries.
Mr. Herrera stated that he has received a request f rom the City’s Finance Director asking
that the issuance of the impact statement by the Bo ard of Trustees’ be added onto today’s
agenda. He also noted that the first request to co mplete the impact statement came from
the City and was sent directly to GRS, and that is where all the confusion came into play.
Mr. Herrera explained that there was some email exc hanges between himself and the
City’s Attorney regarding the Boards Fiduciary role , but Mr. Herrera can confirm that
these issues have since been taken care of.
A motion was made by Donna Wisneski to authorize an d direct GRS to prepare the
Actuarial Impact Statement in accordance with the p roposed Ordinance. The
motion was seconded by Tom Murphy and carried 3-2.
Mr. Herrera updated the board on House Bill 401 whi ch became effective July 1, 2012.
This bill states that when a member gets divorced t hey are considered pre-deceased for
pension purposes on a joint and survivor annuity, u nless there is a court order. He stated
that his office has prepared a template letter that is to be sent out to all active and retired
members of the Plan. The board directed Mr. Ross t o send out the letters provided by
Mr. Herrera’s office regarding House Bill 401 to al l active and retired members.
Lastly Mr. Herrera reviewed the August 2012 securit ies litigation reports from SFMS.
He noted that there were no new security filings or settlements.
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ADMINISTRATIVE REPORT: RESOURCE CENTERS (AUDREY ROS S)
DISBURSEMENTS
The Board reviewed the disbursements presented for approval by the Administrator.
A motion was made by Tom Murphy to approve the disb ursements that were
presented by the Administrator. The motion was sec onded by Mark Joyce and
carried 5-0.
OLD BUSINESS
The board reviewed the Division of Retirement memo regarding the Plan’s minimum
funding basis: percentage of payroll versus fixed-d ollar contributions with Mr.
Armstrong. Mr. Armstrong stated that his biggest c oncern along with the Division of
Retirements is consistency, therefore changing it f rom year to year is not recommended.
He stated that the best thing to do is to allow the Board and the City to make the decision
together. Currently his Valuations reflect the con tribution method both ways; fixed
dollar amount and percentage of payroll. The board discussed the differences between
the contribution methods and decided not to change any of the process at this time.
A motion was made by Tom Murphy to authorize the Ac tuary to continue to reflect
both contribution methods; fixed dollar amount and percentage of payroll in their
Valuation Reports. The City can continue to contri bute based off the fixed dollar
amount as they have been in the past. The motion w as seconded by Ed Morejon and
carried 5-0.
BOARD DISCUSSION
The board reviewed and discussed the presentations that they saw today from the
Auditors. The Trustees stated that they saw 2 diff erent presentations today and shared
their thoughts.
A motion was made by Donna Wisneski to hire Cherry, Baekert & Holland to
perform their September 30, 2012 Audit. The motion was seconded by Ed Morejon
and carried 5-0.
The Trustees discussed the Foster & Foster presenta tion. Also Ms. Wisneski gave her
thoughts on the issue between the City and GRS rega rding the work on the impact
statements. Mr. Morejon commented that GRS should not have started the work on the
impact statement if he was not directed by the boar d to do so. He stated that he has lost
all confidence in GRS and this is just one of the i nstances that have occurred like this.
A motion was made by Ed Morejon to terminate their contract with GRS and hire
Foster & Foster for Actuarial services, and to auth orize the Plan’s Attorney to draw
up the agreement between the Plan and Foster and Fo ster. The motion was
seconded by Tom Murphy and carried 4-1.
OTHER BUSINESS
Mr. Herrera explained that the Division of Retireme nt issued new guidance on how they
deal with the premium tax money from the State. In the past the Division has always
stated that in order for Plans to receive their Cha pter 175 & 185 monies each year, they
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cannot lower their benefits past to what they were in 1999. Therefore they said that the
benefits in place in 1999 were the minimum benefits , and that any money received in
over the frozen amount in 1999 can be used for extr a benefit funding. Now, recently the
Division issued a new statement saying their old in terpretation was incorrect and the
correct interpretation is that Plans can lower thei r benefits past the minimum benefits that
were in place in 1999 and still receive their Chapt er 175 & 185 monies. The board
discussed what this plan’s minimum benefits were in 1999 and commented that some of
the recent changes to the Ordinance could have opte d them out of their Chapter 175
monies if the Division did not just recently change their interpretation. Mr. Herrera
stated that he has spoken to the Division regarding this Plans changes specifically, and
the Division told him to put all his questions and concerns in writing and they will
respond accordingly.
Lastly Mr. Murphy asked if Ms. Mauser (a DROP membe r) has returned her benefit
election form yet. Ms. Ross stated that she has no t returned the form yet, but she has
been in contact with her. Ms. Ross stated that she will notify Ms. Mauser that if she does
not return her form within the next couple of weeks , then her benefit will automatically
default to the 10 year certain option since she has maxed out her time to return the form.
There being no further business, the meeting adjour ned at 1:04PM.
Respectfully submitted,
Tom Murphy, Secretary