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HomeMy WebLinkAboutMinutes Fire Pension 020613PALM BEACH GARDENS FIREFIGHTERS’ PENSION FUND MINUTES OF MEETING HELD February 6, 2013 A meeting of the Board of Trustees was called to order at 1:03 PM. at Council Chambers, Palm Beach Gardens, Florida. Those persons present were: TRUSTEES OTHERS Rick Rhodes, Chair Audrey Ross, Administrator Tom Murphy, Secretary (arrived 1:18PM) Pedro Herrera, Attorney (arrived 1:11PM) Donna Wisneski Jim Burdick, Auditor Ed Morejon Troy Brown, Investment Consultant Mark Joyce PUBLIC COMMENTS N/A MINUTES The Board reviewed the minutes of the regular meeting held on January 14, 2013. A motion was made by Donna Wisneski to approve the minutes of the January 14, 2013 regular meeting. The motion was seconded by Ed Morejon and carried 4-0. PRESENTATION OF THE SEPTEMBER 30, 2012 AUDITED FINANCIAL STATEMENTS: CHERRY BEKAERT (JIM BURDICK) Mr. Burdick stated that effective January 1, 2013 they changed the firm name to Cherry Bekaert, LLP and dropped off the name Holland. He noted that this change was strictly due to the structure of their firm and does not have any impact to this Plan. Mr. Burdick reviewed the required communications and stated that there were no material weaknesses or deficiencies found while performing the audit. Also there were no non-compliant issues while performing the audit either. He noted that there were no new accounting standards published this year, but there will be more adopted in 2014. Mr. Burdick explained that the only question that did arise this year was to do with the DROP liabilities and how they should be recorded. Currently the DROP liabilities are being included with the Plans assets because DROP members are considered retired and therefore their monies are a liability of the pension plan as well. Ms. Wisneski commented that she did speak to Mr. Burdick regarding this prior to the meeting and her opinion is that she thinks the State will accept the report either way, but it is just the board’s preference on how they want to record the DROP liabilities because it has been done both ways in the past. Mr. Burdick commented that right now the DROP liabilities start being recorded when a member enters the DROP and he thinks it is more transparent this way. The Trustees had a lengthy discussion on the DROP liabilities and how they should be recorded in the plans financials. They concluded that they would like to continue with the same practice in the past and record the DROP liabilities as part of the Plans assets. Mr. Burdick reported that the Plans assets increased this fiscal year to $49,785,877 from $37,906,384 last year. He noted that this increase was primarily due to a great investment year. The employer contributions increased as the employee contributions 2 deceased. The administrative expenses increased mostly due to the Actuary fees, but they are still in line compared to other plans this size. Lastly Mr. Burdick commented that they are waiting on the audit representation letter before they can release the final audit, but that will not change any of the figures presented here today. The Trustees deferred approving the audit until a final copy is released. INVESTMENT MONITOR REPORT: THE BOGDAHN GROUP (TROY BROWN) Mr. Brown reviewed the Plans R&D account which is used to pay out benefit payments and account payables. He noted that if the board feels more comfortable, they can increase the cash held in that account because the account was overdrawn around the beginning of this year. Currently that account holds around $225K in cash and if the board would like to increase the amount, Mr. Brown would recommend increasing it by another $100K for a total amount of $325K. Mr. Brown commented that he does not think it is very urgent to raise the cash in the account immediately because they try to keep as much invested in the market as possible, and also the account has only been overdrawn once which was more then likely due to the holiday schedule. The Trustees discussed and stated that they would like to increase the R&D account so that future overdrafts do not occur. Also they noted that the account should be reviewed once a year to make sure that no other changes are necessary. A motion was made by Donna Wisneski to increase the Plan’s receipt and disbursement account by $100K for a total amount of $325K. The motion was seconded by Ed Morejon and carried 5-0. Mr. Brown reviewed the report for the quarter ending December 31, 2012 and stated that overall it was a great quarter. ICC outperformed for the quarter and they are coming back very strong, although they are still the reason why the Plan underperformed for the year. For the quarter the total fund net of fees outperformed the index at 1.29% versus 1%, and for the one year they are also ahead at 13.07% versus 12.76%. Six managers outperformed during the quarter and four managers underperformed. Mr. Brown commented that currently the Plan has a slight underweight to Real Estate and an overweight to fixed income. Therefore he would recommend a slight rebalance by adding a little more to Real Estate at this time. The board can have American Realty attend their next meeting to discuss and then decide at that time about adding more into Real Estate. The Trustees concurred and asked Mr. Brown to invite American Realty to their next meeting. Mr. Brown updated the board on ICC’s transition with Munder which is no longer going to occur. He briefly explained to the board why the transition did not happen, which was mostly due to management issues. Bogdahn will be meeting with ICC sometime in March to review their performance and discus their firm. Mr. Brown will more than likely have a recommendation regarding ICC sometime after that meeting. Also he noted that he will bring back other fixed income alternatives to the next meeting to be prepared in advanced for any change that may occur in the near future. The Trustees also discussed ICC’s heavy weighting in gold. They shared their thoughts and concerns with ICC and also noted that they hired ICC knowing that they are a more volatile manager and they take big swings. 3 Mr. Brown continued the discussion of adding an index fund account into the portfolio. He reminded the board that this is a way of diversifying the portfolio on the fixed income side. He explained that he would draw down both the Dana and ICC portfolios to fund the new index fund and that way no one manager would have more than a 20% position in the portfolio. Mr. Brown also noted that by adding in an index fund, it drops the management fees of the portfolio. He would recommend taking $6M from Dana and $5M from ICC to fund the index fund. Also he would recommend Vanguard for the account. Mr. Brown explained that Vanguards average return over the last 5 years is about 20%, and they are the ones that have been doing this for the longest and they are also the cheapest. He reviewed some asset allocation scenarios that he put together and explained that whatever changes they do make, he would recommend using a transition manager. The Trustees had a very lengthy discussion on the index fund and where the assets would be coming from to fund it. They asked Mr. Brown to bring back other index fund managers in addition to Vanguard to review before they make a decision. Lastly Mr. Brown updated the board on the funds performance through the end of January. He stated that the fund has earned another 3.3% in the month of January, which puts them at 4.8% for the fiscal year ending September 30, 2013. Mr. Brown noted that currently the cash account is a little over weighted and therefore he would recommend that the board move $640,000 from the Plans cash account to the Templeton Global Bond fund. The Templeton fund has been doing great and is already up another 4.4% for the fiscal year. The Trustees discussed and concurred with the recommendation. A motion was made by Mark Joyce to approve the transfer of $640K from the Plans cash account to the Templeton Global Bond account per the Consultants recommendation. The motion was seconded by Tom Murphy and carried 5-0. ATTORNEY REPORT: SUGERMAN & SUSSKIND (PEDRO HERRERA) Mr. Herrera stated that the pending Ordinance has been reviewed by legal council and will be on the City’s Council agenda for first reading tomorrow night. He noted that per the board’s direction he will attend the meeting for first reading. Mr. Herrera explained that since the Ordinance is going up for first reading, the board will need to direct the Actuary to prepare the impact statement because the City will need it by second reading. The Trustees discussed this and commented that they thought an impact statement was already completed for this Ordinance since it has been pending for years. Ms. Ross commented that she thinks that impact statements are only valid for so long and since she came on the board about 2 years ago there has not been one issued for these changes. Also if one was completed before she came on board, it would have been by the prior Actuary and now they have a different Actuary. A motion was made by Tom Murphy to direct the Actuary, Foster & Foster to prepare an impact statement regarding the pending Ordinance, contingent on passing of the first reading. The motion was seconded by Donna Wesneski and carried 5-0. Mr. Herrera commented that the City has provided the plan with a list of unused sick and vacation time for each member as of the Ordinance change on September 12, 2012. 4 Mr. Herrera explained that as a follow up from last meeting regarding the buyback discussion the board had; if a member has already purchased time and they will not be able to use the benefit in the future, then the board needs to consider refunding the member their buyback contributions. Mr. Murphy stated that the one particular member they were referring to at the last meeting will not be affected by the changes and will get to use his buyback benefit. Also it was noted that there are no other members in this situation either. Mr. Herrera passed out the revised Board Officer’s Election Procedure. He briefly reviewed the changes and noted that he removed the language that stated that the nomination of the Chair and Secretary had to be posted 30 days in advance. Mr. Herrera notified the Trustees that the Division of Retirement is holding their annual conference this year from May 20-22, 2013. Mr. Herrera briefly updated the board on the bills that are being proposed this Legislative session. He commented that some of the proposed bills will effect the Chapter 175/185 plans, but he also stated that the session hasn’t officially began yet so he will update the board as more information becomes available. ADMINISTRATIVE REPORT: RESOURCE CENTERS (AUDREY ROSS) DISBURSEMENTS The Board reviewed the disbursements presented for approval by the Administrator. A motion was made by Donna Wisneski to approve the disbursements that were presented by the Administrator. The motion was seconded by Ed Morejon and carried 5-0. BENEFIT APPROVALS The Board reviewed the applications to enter the DROP for Ed Morejon and Matt Haywood. A motion was made by Tom Murphy to approve the application to enter the DROP for Ed Morejon. The motion was seconded by Mark Joyce and carried 4-0 (Ed Morejon abstained from the vote). A motion was made by Donna Wisneski to approve the application to enter the DROP for Matt Haywood. The motion was seconded by Mark Joyce and carried 5- 0. OLD BUSINESS Ms. Ross stated that the board needs to select a Chair, Vice Chair, and Secretary according to their policy. A motion was made by Tom Murphy to nominate Rick Rhodes as Chair. The motion was seconded by Ed Morejon and carried 5-0. Mr. Rhodes accepted the nomination as Chair. 5 A motion was made by Tom Murphy to elect Rick Rhodes as Chair. The motion was seconded by Ed Morejon and carried 5-0. A motion was made by Tom Murphy to nominate Donna Wisneski as Vice Chair. The motion was seconded by Ed Morejon and carried 5-0. Ms. Wisneski accepted the nomination as Vice Chair. A motion was made by Tom Murphy to elect Donna Wisneski as Vice Chair. The motion was seconded by Ed Morejon and carried 5-0. A motion was made by Tom Murphy to nominate Mark Joyce as Secretary. The motion was seconded by Ed Morejon and carried 5-0. Mr. Joyce declined the nomination as Secretary. A motion was made by Mark Joyce to nominate Tom Murphy as Secretary. The motion was seconded by Ed Morejon and carried 5-0. Mr. Murphy accepted the nomination as Secretary. A motion was made by Mark Joyce to elect Tom Murphy as Secretary. The motion was seconded by Ed Morejon and carried 5-0. Ms. Ross stated that Foster & Foster is working on updating the Summary Plan Description. Ms. Ross updated the board on the Trustee term expiration for Rick Rhodes and commented that everything has been straightened out and his term expires on September 30, 2015. Ms. Ross notified the board the Foster & Foster will be taking over the DROP accounting effective January 1, 2013. At the last meeting the board tabled the motion to allow members to leave their money in their DROP accounts after separation of service. The Trustees discussed and Ms. Wisneki wanted to know what kind of impact this would have on the plan. Mr. Herrera commented that it would be cost neutral to the Plan and the City. The board commented that they did not see a problem with adding in this provision and ask Mr. Herrera if there is anyway we can draft this language into the current pending Ordinance. Mr. Herrera commented that he will have to check with the City council and will let the board know. A motion was made by Tom Murphy to un-table the prior motion from the last meeting, and authorize members to leave their money in their DROP accounts upon separation of service. The motion was seconded by Mark Joyce and carried 4-1. The Trustees discussed the Share accounts and allowing members to leave their money’s in there upon separation of service as well. 6 A motion was made by Mark Joyce to amend the prior motion and add in the language to allow members to leave their money in their share accounts (as well as DROP accounts ) upon separation of service, and to direct the Plans Attorney to contact the City regarding adding in this language into the current pending Ordinance. The motion was seconded by Ed Morejon and carried 4-1. There being no further business, the meeting adjourned at 4:03PM. Respectfully submitted, Tom Murphy, Secretary