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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. 2 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. 3 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. 4 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 5 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