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HomeMy WebLinkAboutMinutes Police Pension 013113 Minutes 1-31-13.doc Page 1 of 6 City of Palm Beach Gardens Police Officers’ Pension Fund Minutes of the Meeting Held January 31, 2013 The regular meeting of the Board of Trustees of the City of Palm Beach Gardens Police Officers’ Pension Fund was called to order at 9:05 AM by Jay Spencer in the Council Chambers at the Palm Beach Gardens City Hall at 10500 North Military Trail, Palm Beach Gardens, Florida. TRUSTEES PRESENT OTHERS PRESENT Jay Spencer, Chairman Audrey Ross (Resource Centers) David Pierson, Secretary Bonni Jensen (Law Offices of Perry & Jensen) Brad Seidensticker, Trustee Donna Kramer (PBG Clerk’s Office) Greg Mull, Trustee Denise D’Entremont (RhumbLine Advisors) John McCann (Thistle Asset Consulting) Jonathan Davidson (KTMC) Jim Burdick (Cherry Bekeart) CLASS ACTION REPORT Kessler, Topaz, Meltzer & Check (KTMC) – Presented by Jonathan Davidson Mr. Davidson introduced himself and stated that he was here today because a settlement has been reached Medtronic, Inc. and the fund should be receiving a check for this shortly (the amount is still unknown at this time). He also reviewed the quarterly litigation report that his firm provides and commented that there is another class action lawsuit that is currently pending. Mr. Davidson discussed the filing process and explained that they have access to the Plans transaction history so that way they are able to review all trades. He noted that the plan does have online access as well, if any of the Trustees are interested. He continued to explain that if they do find a trade that was not valid, then his firm will start the class action filing process and will actually file all the forms on behalf of the fund. Mr. Davidson explained that the Plan’s Custodian, Salem Trust also provides this type of service to the board and therefore there could be duplicate documents being filed, which could ultimately have a negative impact on the Plan. Ms. Jensen reminded the Trustees that a couple of months ago Salem Trust issued a letter to the board stating that they were going to start charging for the class action services that they provide. Shortly after that letter was issued, Salem Trust sent out another letter redacting the first one. The second letter stated that since it was currently in their contract to provide these services for the boards and they will continue to do so for now, but Salem Trust may come back at a later date and revisit their contract. With that said, Mr. Davidson stated that he would like the boards permission to keep on filing the class actions on behalf of the fund, but to also direct Salem Trust to stop filing so that there is no negative impact on the fund for multiple class action filings. Lastly Mr. Davidson reminded the board that the service his firm provides is free of charge. The Trustees discussed and commented that they understood that both parties did not need to be filing on behalf of the fund. MOTION: Mr. Seidensticker made a motion to allow KTMC to continue performing the class action services that they are currently providing on behalf of the fund, and to also authorize the Chair to execute the direction letter to Salem Trust to notify them to Minutes 1-31-13.doc Page 2 of 6 cease the class action filing services that they are currently providing. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 4-0. PRESENTATION OF THE SEPTEMBER 30, 2012 AUDITED FINANCIAL STATEMENTS Cherry Bekaert – Presented by Jim Burdick Mr. Burdick welcomed himself back and stated that it was a clean audit for the fiscal year ending September 30, 2012. He also noted that there were no significant changes from last year to this year. Mr. Burdick reported on the required communications under GASB and noted that an unqualified opinion was issued, which is the highest level that can be issued. He reviewed the internal controls and commented that there were no material weaknesses, deficiencies, or no reportable noncompliances that were found while performing the audit. Mr. Burdick did note that there are new GASB requirements that will change the disclosure of the financial statements, but this change is not effective until September 30, 2014. Also he noted that the plan still does need to sign the audit representation letter before the final audit is released. The representation letter is currently being reviewed by Mr. Burdick’s partner, and then it will be sent over to the Administrator to be executed by the Chair. Mr. Burdick commented that the letter will not change any of the numbers or assets being reported here today. Mr. Burdick reviewed and compared the Plan’s assets from 2011 to 2012. The net assets did increase in 2012 to $55,261,152 from $44,279,384 in 2011. Although the City’s contributions did decrease from $3,885,572 in 2011 to $3,785,539 in 2012, as well as the employees’ contributions decreased to $559,305 in 2012 (from $690,226 in 2011). Therefore Mr. Burdick reported that the plan had a net increase this year of $10,981,768, which is up from last year at $2,875,532. Lastly he reviewed the benefit payments which increased this year, and the administrative expenses which decreased. MOTION: Mr. Mull made a motion to approve the September 30, 2012 Audited Financial statements as presented by the Plan’s Auditor. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 4-0. INVESTMENT MANAGER REPORT RhumbLine Advisors – Presented by Denise D’Entremont Ms. D’Entroment commented that it has been a couple of years since she has been here to visit the board, but welcomed herself back. Mr. McCann asked her to explain how the index funds are actually beating the index. Ms. D’Entremont stated that they don’t trade every day which decreases their turnover and saves cost. She also noted that it also has to do with the timing of when they put the money into the market place to be invested. She explained their investment process and noted that all new contributions are isolated into a separate investment account and are invested the day that they receive the money. Ms. D’Entremont reported that they only trade when there are contributions or withdrawals to the fund, or when dividends build up in the account. Therefore trading only takes place about once a month. Minutes 1-31-13.doc Page 3 of 6 Ms. D’Entremont reviewed each accounts performance. The S&P 500 made 15.96% for the fiscal year ending September 30, 2012, but for the last quarter they were down -0.36% versus the benchmark at -0.38%. Since inception the fund has been up 1.91% each year versus the benchmark at 1.77%. The S&P 600 has performed very well and is 2.22% for the quarter ending December 31, 2012. Since inception this fund has outperformed by 8.24% versus the benchmark at 8.19%. Lastly the S&P 400 is also outperforming the year and since inception at 3.57% and 10.37% respectively. Ms. D’Entremont announced that altogether this plan has $10M since inception, which is almost double their initial investment. She also noted that the fee for all 3 accounts combined together is less than 10 basis points, which is a huge discount. Lastly Ms. D’Entremont reported that RhumbLine also has a fixed income product, which currently has about $3M in assets. She noted that the fixed income product has been around since 2005 and the return since then is 5.67%. Also RhumbLine just recently funded an emerging market product, but this is a custom fund for 1 client, although they eventually hope to open more funds down the road. INVESTMENT CONSULTANT REPORT Thistle Asset Consulting – Presented by John McCann Mr. McCann reviewed the Callen periodic table of investment returns worksheet for 2012. He noted that it is a mirror image of last years table and that the emerging markets will more than likely be at the bottom of the chart this year. Mr. McCann commented that this is why he would like the board to consider moving into emerging markets at this time. The fund’s risk may increase, but it will add value to the fund and it will also diversify the portfolio some more. Mr. McCann stated that he will bring back more detailed information on emerging markets to the next meeting. The Trustees concurred. Mr. McCann reviewed the report for the quarter ending December 31, 2012 and stated that it was a great quarter for International. He reviewed the Plan’s compliance checklist and noted that the total fund is trailing for the 3 year period. As of December 31, 2012 there was $54.7M in assets, which was a gain of $668K during the quarter. Mr. McCann reviewed the asset allocation and commented that the fund will add another $1.5M to American Realty on April 1, 2013, which will more the real estate allocation up to 5%. For the quarter the total fund outperformed the benchmark net of fees at 1.23% versus 0.98%, but for the year they are slightly behind the benchmark net of fees at 11.89% versus 12.14%. Lastly he reviewed the risk versus reward chart and reported that the plan is currently taking a little more risk then in the past, but is still getting an average return. Therefore that is why the board would want to explore into diversifying their portfolio some more. ATTORNEY REPORT Law Offices of Perry & Jensen - Presented by Bonni Jensen Ms. Jensen reviewed the American Realty agreement regarding the board’s $1.5M commitment on April 1, 2013. She noted that these funds would be coming from the ICC Capital portfolio. MOTION: Mr. Seidensticker made a motion to approve the American Realty agreement regarding the board’s $1.5M commitment on April 1, 2013. SECOND: Mr. Pierson seconded the motion. Minutes 1-31-13.doc Page 4 of 6 CARRIED: The motion carried unanimously 4-0. Ms. Jensen noted that the IRS mileage reimbursement rate increased to $0.565 effective January 1, 2013. Ms. Jensen explained that she received a letter from the City asking the board’s permission to use the GRS valuation data to review some benefits. She stated that the City wants to use the information that is provided to GRS from the City and Administrator for their own studies. Mr. Owens briefly explained the options that the City is looking to explore and also explained why it would be easier to use the pre- existing data. He also noted that the City will pay for any cost that this request may incur. The Trustees discussed and stated that they did not foresee a problem with the City using the data information that is sent to GRS on an annual basis for Valuation purposes, as this information is all considered public records anyways. Ms. Jensen reviewed the current DROP distribution policy. Currently the policy allows for distributions to take place on a quarterly basis and the Trustees would like to change the open enrollment period to a monthly basis. The Board discussed and Mrs. Ross noted that if they were to move forward with the change, all applications would need to be by the 15th of each month for a distribution on the following 1st business day of the month. Also the Trustees stated that any distribution over $35K must be approved by the board of Trustees prior to a payment being issued. MOTION: Mr. Pierson made a motion to authorize the Plan’s Attorney to revise the DROP Distribution policy to allow distributions to take place on a monthly basis, and to also include the guidelines stated above. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 4-0. Ms. Jensen briefly spoke about Senate Bill 458 which is currently in the Legislative session right now. She reviewed some of the things that this bill would change, such as: it would add a floor to the City’s contribution rate and it would guide the pension plans on how to distribute the premium tax monies. Ms. Jensen commented that she will send out a memo regarding the changes once the bills have been passed. ADMINISTRATOR REPORT Resource Centers – Presented by Audrey Ross Ms. Ross presented the board with the Salem Trust class action report for the quarter ending December 31, 2012. She noted that there were no new class actions filed on behalf of the fund and there were no new settlements received in during the quarter either. MOTION: Mr. Seidensticker made a motion to pay out the non-duty death benefit to the Estate of Mr. Thomas Juric. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 5-0. Ms. Ross explained that the Plan’s local checking account is held at BB&T, formally Bank Atlantic. She stated that BB&T has slightly different rules from Bank Atlantic in regards to benefit payments falling on a holiday or a weekend. Therefore the board needs to give direction regarding when a benefit should be paid if the first of the Minutes 1-31-13.doc Page 5 of 6 month falls on a weekend or holiday. Does the board want the payment to be issued on the last business day of the prior month if the first falls on a weekend or a holiday, or should the payment be issued on the first business day of that current month (for example: if January 1st falls on a Saturday, should the payments be issued Friday December 31, or should they be issued Monday January 3)? The Trustees discussed and noted that during the holidays there could be a longer hold up (other than just the weekend), so they rather their retirees get paid sooner rather than later. MOTION: Mr. Seidensticker made a motion to authorize the pension department and BB&T to issue pension payments on the last business day of the prior month if the first of the month falls on a weekend or holiday. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 4-0. Ms. Ross noted that she had to get the Salem Trust authorized signors form updated today because Salem Trust requires an update every 3 years. MINUTES MOTION: Mr. Pierson made a motion to approve the minutes from the November 28, 2013 regular meeting. SECOND: Mr. Seidensticker seconded the motion. CARRIED: The motion carried unanimously 4-0. *Ms. Ross noted that Mr. Spencer abstained from a benefit approval vote last meeting due to his own benefit approval being presented. She noted that he did fill out the required Form 8b following the meeting and that form is attached to the original signed copy of the minutes on file. DISBURSEMENTS APPROVALS MOTION: Mr. Seidensticker made a motion to approve the disbursements. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 4-0. BENEFIT APPROVALS MOTION: Mr. Seidensticker made a motion to approve the applications to enter the DROP for Avrham Tawil and Eleanora Lovejoy, the application to exit the DROP for Jules Barone, the applications for distribuions from DROP accounts for Wayne Sidey, Ronald Council, and George Betscha, and the application for a refund of contributions for Curtis Riddick. SECOND: Mr. Pierson seconded the motion. CARRIED: The motion carried unanimously 4-0. Minutes 1-31-13.doc Page 6 of 6 FINANCIAL STATEMENTS The board reviewed and discussed the financial statements that were provided through December 2012. The board received and filed the financial statements through December 2012. OTHER BUSINESS Ms. Ross stated that GRS will start working on the analysis that the board requested once the 9/30/2012 Valuation is completed so that they can use current numbers. PUBLIC COMMENTS N/A AJOURN There being no further business, the Trustees officially adjourned the meeting at 11:41 AM. The next meeting is scheduled for Tuesday April 23, 2013 at 9AM. Respectfully submitted, _____________________________ DAVID PIERSON, Secretary