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HomeMy WebLinkAboutMinutes_Pension General_08/04/2008SYNOPSIS OF GENERAL EMPLOYEES PENSION BOARD MEETING 8/4/08: Deanna Mayo. was sworn in as a new member of the Board. 2. Meeting minutes of May 5, 2008 were approved as submitted. 3. Steve Palmquist of Gabriel, Roeder and Smith advised asset smoothing would not be launched until October 1, 2009 when another actuarial evaluation would be done. The Board voted to table a decision on asset smoothing until closer to that date. 4. Mr. Palmquist explained there had been a workshop by the Division of Retirement regarding proposed changes in administrative rules, and there would be a second workshop September 10, 2008 on this subject. 5. Mike Dana of Dana Investment Advisors reviewed fund performance for the quarter ended 6/30/08. The Board approved the investment manager's report. 6. Dave West of Bogdahn Consulting, LLC presented their quarterly report for the period ended June 30, 2008. 7. Dave West proposed relaxing the current investment policy to allow other types of investments. Chair Rhodes requested a special meeting to address this issue, with the attorney and Mr. West present. Attorney Jensen advised she would send a copy of Florida Statute 215.47, to use as a starting point for the special meeting. 8. The Board approved Mr. West's report. 9. Steve Palmquist presented the impact to the plan of adding a 3% and a 2% automatic cost of living increase starting 5 years after a person retired, compared to increasing the multiplier from 2% to 2.2%. Mr. Palmquist advised that in most cases the COLA was more valuable to employees; and the annual contribution increase for 3% COLA would be 3.13% more of payroll; 2% COLA would be 1.96%. Mr. Palmquist was requested to cost one and three year delays before receiving COLA benefits. 10. The Board voted to keep the actuarial evaluation report on a biannual basis. 11. The following items were approved on the Consent Agenda: Ratification Of Invoices Paid Since Last Quarterly Meeting: • Business Services Connection, Inc. - Recording and Minutes of 5.5.08 meeting $ 331.31 • Hanson, Perry & Jensen, P.A. $ 696.89 SYNOPSIS OF GENERAL EMPLOYEES PENSION BOARD MEETING 8/4/08 • Gabriel Roeder Smith & Company Payments To Be Reviewed And Approved: • Hanson, Perry & Jensen, P.A. Through 7/15/08 • Bogdahn Consulting, LLC • Dana Investment Advisors • Gabriel Roeder & Smith Company $ 1,509.00 $ 529.50 $ 1,125.00 $ 1,416.78 $ 2,478.00 2 Approval of new applicants for participation in Pension Plan: Evelyn Shields Accounting Clerk II Hired 5/12/08 John D. Kupor Water Distribution Service Tech Trainee Hired 5/12/08 Approval of withdrawal of contributions: Debra Espinosa Dispatcher(became part-time) $1,279.22 Gross; Withholding $255.84; Net 1,023.38 Marsha Ragozzino Accounting Clerk $483.42 Gross; Withholding $87.68; Net $350.74. Statement of Activities - no questions END OF CONSENT AGENDA 12. The Board approved transfer of compensation for Betty Laur, Recording Secretary. 13. Attorney Jensen advised the new IRS mileage rate had increased from 50-1/2 to 58-1/2 cents. 14. The proposed budget for the coming fiscal year was discussed. 'h person was added to attend trustee school; $5,600 was added for Mr. Palmquist's fees. Mr. West presented a fee increase proposal with a 3-year guarantee. The Board approved the fee increase for Bogdahn Consulting as submitted. 15. Attorney Jensen reviewed the updated Summary Plan Description. The board requested Attorney Jensen email the legacy document which existed prior to the present plan document to use for discussion at the next meeting, to see how the present definition had been developed that overtime and one-time bonuses were not included in the pension. The Board voted to table approval of the summary plan description to the next meeting. 16. Attorney Jensen reviewed the Hero's Earnings and Assistance Tax Act of SYNOPSIS OF GENERAL EMPLOYEES PENSION BOARD MEETING 8/4/08 3 2008. The Board voted to table incorporation of the mandatory Hart Act provisions into the plan and a decision on the buy back provision to the next meeting. 17. Attorney Jensen reported on the Division of Retirement workshop she and Steve Palmquist attended, and promised to keep the Board updated. 18. Attorney Jensen reported the IRS had encouraged governmental plans to file for an IRS determination letter. Finance Director Jody Forsythe was requested to find out if the Village auditors had done this. Consensus was to delay this decision to the November meeting. 19. Secretary Hansen mentioned the option to go back to FRS: Board Member Couzzo advised the cost would be considerable. Secretary Hansen felt he and the board needed to be better educated regarding pension matters as more and more complicated items were coming before the board. 20. Attorney Jensen presented her fee agreement for execution. END OF SYNOPSIS TEQUESTA GENERAL EMPLOYEES PENSION TRUST FUND QUARTERLY BOARD OF TRUSTEES MEETING August 4, 2008 I. Call To Order And Roll Call The Tequesta General Employees Pension Trust Fund Board of Trustees held a regular quarterly meeting at the Tequesta Village Hall, 345 Tequesta Drive, Tequesta, Florida, on Monday, August 4, 2008. The meeting was called to order at 1:05 p.m.. A roll call was taken by Betty Laur, Recording Secretary. Board Members in attendance at the meeting were: Chair Michael Rhodes, Secretary Carl Hansen, Board Member Michael R. Couzzo, Jr., and Board Member Deanna Mayo. Also in attendance were Attorney Bonni Jensen, Pension Coordinator Lori McWilliams, Finance Director Joann Forsythe, Senior Accountant Monica Rahim, Dave West, Bogdahn Consulting LLC -Monitor, Steve Palmquist„ Gabriel, Roeder, Smith & Company -Actuary, Mike Dana, Dana Investment Advisors - Investment Manager. Absent from the meeting was Board Member Archie Mangum. II. APPROVAL OF AGENDA MOTION: Board Member Couzzo moved approval of the agenda as submitted. Secretary Hansen seconded the motion, which carried by unanimous 4-0 vote. III. SWEARING IN New Board Member Deanna Mayo to be sworn in Village Clerk McWilliams swore in new board member Deanna Mayo. IV. APPROVAL OF MINUTES 2. Tequesta General Employees' Pension Trust Fund Board of Trustees Quarterly Meeting Minutes -May 5, 2008 MOTION: Secretary Hansen moved approval of the minutes of the May 5, 2008 meeting as submitted. Board Member Couzzo seconded the motion, which carried by unanimous 4-0 vote TEQUESTA GENERAL EMPLOYEES PENSION TRUST FUND QUARTERLY BOARD OF TRUSTEES MEETING AUGUST 4, 2008 PAGE 2 V. PRESENTATIONS* *[PRESENTATION/REPORT BOOKLETS LOCATED INSIDE BACK COVER OF AGENDA BOOK] 3. Presentation by Actuary -Asset Smoothing Steve Palmquist of Gabriel Roeder Smith & Company advised that the board might want to defer this matter since it would not be launched until October 1, 2009 when another actuarial evaluation would be done.. MOTION: Secretary Hansen made a motion to table a decision on asset smoothing until closer to October 1, 2009, since it would have no effect until that time. Board Member Couzzo seconded the motion, which carried by unanimous 4-0 vote. 4. Proposed Pension Changes Mr. Palmquist advised there had been a workshop held in Tallahassee by the Division of Retirement regarding proposed changes in administrative rules regarding State mandated mortality rates. He had given comments at the workshop and advised no one who made comments agreed with the proposed changes. Mr. Palmquist advised the Board not to spend any money on the proposals now as there would be a lot of changes made. A second workshop was scheduled for September 10, 2008, which Mr. Palmquist planned to attend. 5. Presentation by Investment Manager Mr. Mike Dana of Dana Investment Advisors reviewed the fund performance for the quarter ended 6/30/08. Mr. Dana discussed the economy, commenting there were 800,000 foreclosed homes that needed to be sold, and alternatives to oil needed to be developed, such as the electric vehicle being developed by GM. Banks had tightened credit, which would continue until they cleared their balance sheets, and Mr. Dana predicted about 700 small banks would go under, but the impact would be mostly psychological. In response to a question from Chair Rhodes, Mr. Dana indicated he felt it would be fine to look into additional investment alternatives. Mr. Dana advised the bond portfolio was very safe; and explained investments were equally weighted- in every sector, which would not change. Mr. Dana expressed confidence in the Fed, reporting he had attended a Federal Reserve briefing and although their work was not an exact science, the people were brilliant, and things would straighten out. A recession here would definitely impact economy in other parts of the world. When real estate sales picked up, that would indicate we were coming out of the current situation. TEQUESTA GENERAL EMPLOYEES PENSION TRUST FUND QUARTERLY BOARD OF TRUSTEES MEETING AUGUST 4, 2008 PAGE 3 MOTION: Secretary Hansen made a motion to approve the Dana Investment Advisors' report. Board Member Couzzo seconded the motion, which carried by unanimous 4-0 vote. 6. Presentation By Monitor David West, Bogdahn Consulting LLC, reviewed the attribution supplement and report, which showed positive stock selections during the quarter ended 6/30/08. Since retaining Dana, the fund had showed a consistent upward trend, and downside preservation had been 75%. Mr. West explained how the current investment policy in the ordinance limited types of investments, such as mutual funds and others that could be desirable as the fund grew; the objective was to reduce risk and lower the cost. Chair Rhodes indicated he would like a special meeting to entertain revisions to the investment policy to allow investment options. Attorney Jensen gave a synopsis of the discussion of this issue with the Village Council earlier that morning regarding the Council relaxing restrictions so that investments could be diversified, which would allow investing in index funds. The next step would be for this Board to consider if they wanted to recommend to Council they expand the Board's ability to invest or remove restrictions. There were a number of ways to accomplish this, such as to work within the current framework adding specific investments, or remove the restrictions entirely-- working within State Law and their fiduciary responsibilities for creating investment policy, which would set parameters for investing. Mr. West explained that investment provisions for general plans fell under Florida Statute 215.47, which was very broad and allowed a multitude of different investment classes, while the ordinance language governing this plan was very restrictive. Even if the ordinance language was broadened, this Board still had the authority to keep tight control of what happened in this fund via the investment policy statement. Mr. West advised they were working with Dana to come up with a solution, such as an index fund. Chair Rhodes expressed app7eciation, and his desire to hold a special meeting to address only this issue on the agenda, and having input with people like Mr. West, and Attorney Jensen to define the framework of consideration before moving forward, deciding if the Board should move forward, and he did not want to make such an important decision without another meeting. Mr. West asked if there was enough interest to have Attorney Jensen craft some language for consideration. TEQUESTA GENERAL EMPLOYEES PENSION TRUST FUND QUARTERLY BOARD OF TRUSTEES MEETING AUGUST 4, 2008 PAGE 4 Secretary Hansen asked how the Board could get more information, and what the Public Safety Board had done regarding this issue. Mr. West responded they had taken no action; their fund was larger and their return was bigger-this plan could benefit more from this change than the Public Safety plan. Attorney Jensen advised she would send a copy of Florida Statute 215.47, which could be a starting point for the special meeting. Mr. Dana commented if it would be easier for Bogdahn Consulting, and Mr. West's preference, his firm would go along with it. It was not driving investment performance-equities were driving investment performance. Mr. Dana advised the Board to ask themselves if they wanted another equity that owned bonds, explaining that he worked with these commonly and it was no problem switching, but it would always underperform the index; it would have 15 basis points fee and also activity fees, so ask what would be easiest. Chair Rhodes asked on a net net net basis what would have the most potential for the fund; Mr. Dana responded he could not tell; in a fund of this size it could very easily be justified to take the easier course of buying an exchange trade fund which would diversify, and he would do whatever was easiest for Bogdahn. Mr. West clarified they were trying to come up with the most cost effective delivery to get bonds for the funds, recognizing it would not add up to a lot of dollars, but they had looked at everything. Consensus was to hold a special meeting to discuss this matter. Secretary Hansen made a motion to approve the Bogdahn Consulting LLC report. Board Member Couzzo seconded the motion, which carried by unanimous 4-0 vote. VI. UNFINISHED BUSINESS 7. Comparison between a 2.2% multiplier and a 3% COLA Steve Palmquist, of Gabriel Roeder Smith & Company, presented the impact to the plan of adding a 3% and a 2% automatic cost of living increase starting 5 years after a person retired, compared to increasing the multiplier from 2% to 2.2%, and advised that in the vast majority of cases, the COLA was more valuable to employees in the plan. Annual contribution increase for 3% COLA would be 3.13% more of payroll, for 2% COLA 1.96%. Mr. Palmquist reported last year's report on increasing the multiplier had used 2005 figures, when the fund had less assets. It would be preferable to require COLA for everyone in the plan. Chair Rhodes clarified with Mr. Palmquist that this was separate from the multiplier. Board Member Couzzo commented that after five years the employee TEQUESTA GENERAL EMPLOYEES PENSION TRUST FUND QUARTERLY BOARD OF TRUSTEES MEETING AUGUST 4, 2008 PAGE 5 would stop losing money, and he felt five years was too long. He expressed his opinion this was important for retention and recruiting. Mr. Palmquist advised the figures would be much larger if the COLA started sooner than five years, and that dividing by two would give the amount for 50/50 contribution. Mr. Palmquist indicated the trend was that employees were staying with their jobs longer. Mr. Palmquist advised that people underestimated how long they were going to live and did not understand the term "life expentancy" (if 22 years that was not the end-half the people would die before that and half after). Mr. Palmquist was requested to cost one and three year delays before receiving COLA benefits. 8. Cost of annual actuarial reports as requested by the Board at their August 7, 2007 meeting Mr. Palmquist advised if the reports were done annually, trends could be identified earlier and boards seemed to get better educated regarding the liability side of the plans. This plan was relatively small and new, and it was not mandatory to be done every year. MOTION: Secretary Hansen moved to keep the actuarial evaluation report on a biannual basis. Board Member Couzzo seconded the motion, which carried by unanimous 4-0 vote. VII. CONSENT AGENDA Secretary Hansen commented he believed the items listed for payment under item 10 were shared with Public Safety and asked how that division was figured. Response from staff was these payments were solely those incurred by the General Employees Pension. 9. Ratification Of Invoices Paid Since Last Quarterly Meeting: • Business Services Connection, Inc. - Recording and minutes of 5.5.08 meeting $ 331.31 • Hanson, Perry & Jensen, P.A. $ 696.89 • Gabriel Roeder Smith & Company $ 1,509.00 Balance of fee for actuarial report TEQUESTA GENERAL EMPLOYEES PENSION TRUST FUND QUARTERLY BOARD OF TRUSTEES MEETING AUGUST 4, 2008 PAGE 6 10. Payments To Be Reviewed And Approved: • Hanson, Perry & Jensen, P.A. Through 7/15/08 $ 529.50 • Bogdahn Consulting, LLC $ 1,125.00 • Dana Investment Advisors $ 1,416.78 • Gabriel Roeder Smith & Company $ 2,478.00 06/06/08 letter re: effect of investment earnings on required Village contributions;/ 6/5/08 supplemental actuarial valuation report Re: cost of living adjustments; Preparation of 2 schedules for Summary Plan Description 11. Approval of new applicants for participation in Pension Plan: Evelyn Shields Accounting Clerk II Hired 5/12/08 John D. Kupor Water Distribution Service Tech Trainee Hired 5/12/08 12. Approval of withdrawal of contributions: Debra Espinosa Dispatcher (went to part-time) $1,279.22 Gross; withholding $255.84; Net $1,023.38 Marsha Ragozzino Accounting Clerk 438.42 Gross; withholding $87.68; Net $350.74 13. Statement of Activities END OF CONSENT AGENDA MOTION: Secretary Hansen moved to approve the Consent Agenda. Board Member Couzzo seconded the motion, which carried by unanimous 4-0 vote. VIII. BUDGET REPORT 14. Transferring compensation for Betty Laur, Pension Board Recording Secretary Pension Coordinator McWilliams explained that payment to Betty Laur for her services for the pension board needed to be paid by the pension board instead of TEQUESTA GENERAL EMPLOYEES PENSION TRUST FUND QUARTERLY BOARD OF TRUSTEES MEETING AUGUST 4, 2008 PAGE 7 by the Village Clerk. As of 10/1/08, $12,500 would be placed in the budget for the 2008-2009 fiscal year for Ms. Laur's services, to be paid by the pension boards, divided equally between the Public Safety Officers and the General Employees pension funds. Ms. Laur would continue to do the agenda, imaging of Public Safety documents, and the minutes during the day, which was reflected in the budget. It was clarified the Board would no longer receive a separate billing for minutes, only for attending the meetings. Attorney Jensen clarified this would be an increase to the Board's expenses and an increase to the Village contribution back to the pension fund; the Village ultimately reimbursed the pension funds for these expenses. MOTION: Secretary Hansen moved to approve the transfer of compensation for Betty Laur, Recording Secretary. Board Member Mayo seconded the motion, which carried by unanimous 4-0 vote. 15. IRS Mileage Rate Increase Attorney Jensen advised the new IRS mileage rate had increased from 50-1/2 cents to 58-1/2 cents effective July 1, 2008. 16. Review of Quarterly Budget Report and Two-Year History Finance Director Forsythe reviewed budget projections for the coming fiscal year. The following changes were made to the figures presented: One person had been included for attendance at a trustee school; it was clarified the board had already approved sending Board Member Mayo and Pension Coordinator McWilliams, who would be going in February, and the Public Safety Board had approved splitting the cost of Ms. McWilliams' attendance. Therefore, '/2 person was added. Mr. Palmquist advised he did not know how much his fees would be; it was agreed to insert $5,600 until the actual cost was known. Board Member Couzzo asked that insurance coverage be checked for him because he might already be covered for fiduciary liability, which could lower the premium. Discussion ensued regarding $10.00 bank wire transfer charges. Senior Accountant Rahim explained that several bills were grouped each time payment was needed so there would be only one $10.00 fee. Ways to avoid the wire transfer fee were discussed-depositing contributions directly into the bank account or having the custodian pay the invoices; however, the custodian charged $15.00 per transaction. TEQUESTA GENERAL EMPLOYEES PENSION TRUST FUND QUARTERLY BOARD OF TRUSTEES MEETING AUGUST 4, 2008 PAGE 8 Mr. West presented a fee increase proposal for Bogdahn Consulting which was an 88% increase. It was clarified there had been no increase for four years, so this would be the fifth year without an increase. The fee would include additional services as shown on exhibit A of the fee proposal; those had been extra in the past. Mr. Hansen asked where the money came from to pay invoices; Ms. Forsythe explained money was transferred from the custodian, Salem Trust, to Sun American Bank, and checks were written. Mr. West confirmed their new fee would be guaranteed for 3 years. MOTION: Board Member Couzzo moved approval of the proposed fee increase for Bogdahn Consulting as submitted. Secretary Hansen seconded the motion, which carried by unanimous 4-0 vote. IX. NEW BUSINESS 17. Review Updated Summary Plan Description Attorney Jensen announced an updated Summary Plan Description was due every two years, and noted the following changes: page 1 -credited services had been clarified; page 4 -clarification on the early retirement provision; page 7 - the new change made to the benefit which was to refund members' contribution with 3% interest; page 8 -anew forfeiture provision if one was convicted of committing a crime against a child; and a claims review procedure if a member wanted to challenge a decision of the Board; -page 10 -administration of the plan would now allow a legal resident of the Village to serve as a trustee filling an employee member position and elected by the employees; pages 12 and 13 - she would insert financial and actuarial data obtained from the actuary to be provided to the members. Attorney Jensen confirmed for Board Member Couzzo that under the present definition in the plan, overtime and one-time bonuses would not be included in the pension. Attorney Jensen was requested to email to the Board the legacy document which existed prior to the present plan document, in order to determine how this definition had been developed, and to use for discussion at the next meeting. MOTION: Board Member Couzzo made a motion to table approval of the summary plan description to the next meeting. Secretary Hansen seconded the motion, which carried by unanimous 4-0 vote. 18. Recent Legislative Changes -Federal and State Legal Updates TEQUESTA GENERAL EMPLOYEES PENSION TRUST FUND QUARTERLY BOARD OF TRUSTEES MEETING AUGUST 4, 2008 PAGE 9 Attorney Jensen reported federal law had recently been changed to allow for the Hero's Earnings and Assistance Tax Act of 2008 (Hart Act) which provided tax benefits to active duty military personnel. The law mandated the benefits be paid to survivors that the member would have received under the plan if they had resumed participation under the plan and then terminated on account of death. The Act also provided for additional benefit accrual for participants who died or were disabled while performing qualified military service and were unable to return to work because of that disability. The Board could also allow them to purchase that service. Under the Village's plan, if an individual left employment to serve and then returned, they were entitled to purchase the years they were gone up to five years, provided they made contributions into the plan. Purchasing service was not mandatory, it was permissible under the law. Provisions were retroactive to January 1, 2007. The plan did not have to be amended until the plan year beginning on or after January 1, 2010, so the plan would not have to be amended until October 1, 2011. Also the Hart Act provided differential pay must be included as a pensionable item, effective for wages paid after December 31, 2008. MOTION: Secretary Hansen made a motion to table incorporation of the mandatory Hart Act provisions into the plan and decision on the buy back provision to the next meeting. Board Member Mayo seconded the motion, which carried by unanimous 4-0 vote. 19. Recent Legislative Changes - H.R. 6081 Attorney Jensen reported she and Steve Palmquist had both attended the July workshop in Tallahassee given by the Division of Retirement and advised the attendees unanimously felt they were exceeding their authority. Proposed rules would apply to actuarial determinations for the plan, imposing actuarial assumptions without regard to circumstances, imposing substantially more reporting and disclosure requirements, and the proposed rules would dilute the authority of the trustees. Gabriel Roeder. Smith & Company had proposed a task force . A phased effective date and a way to delay implementation until plans could determine their own cost impact was desirable. A second workshop was scheduled for September 10, and Attorney Jensen advised she would keep the Board updated. 20. Recent Legislative Changes -IRS Determination Letters - Attorney Jensen reported the IRS encouraged governmental plans to file for an IRS determination letter to assure compliance with the tax laws. Surveys would be sent out which must be completed. Finance Director Forsythe was requested TEQUESTA GENERAL EMPLOYEES PENSION TRUST FUND QUARTERLY BOARD OF TRUSTEES MEETING AUGUST 4, 2008 PAGE 10 to find out if the Village's auditors have done this. Consensus was to delay this decision to the November meeting. X. ANY OTHER MATTERS Secretary Hansen commented when he pension was with FRS and it had been th pension plan; now it seemed there were There was always the option to go back t that. He felt he and the board needed to matters. Board Member Couzzo advised be considerable. had been on the Village Council the e Council's decision to have their own more and more complicated matters. o FRS, although he was not suggesting be better educated regarding pension that the cost to go back to FRS would Attorney Jensen presented her fee agreement for execution. XI. COMMUNICATIONS FROM CITIZENS There were no communications from citizens. XII. ADJOURNMENT Board Member Mayo moved to adjourn the meeting at 3:40 p. m. Motion was seconded by Board Member Couzzo and carried by unanimous 4-0 vote. Respectfully submitted, ~~ Betty Laur Recording Secretary