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HomeMy WebLinkAboutDocumentation_Pension Public Safety_Tab 3A_6/7/1996 .. .„..,,.. ,,,..._ . . .„, 1 W-4 VILLAGE OF TEQUESTA Post Office Box 3273 • 357 Tequesta Drive Tequesta,Florida 33469-0273 • (407)575-6200 � . . .~�e Fax: (407)575-6203 TEQUESTA MUNICIPAL FIREFIGHTER'S PENSION TRUST FUND BOARD OF TRUSTEES MEETING MARCH 18, 1996 I . ' CALL TO ORDER AND ROLL CALL The Tequesta Municipal Firefighterts Pension Trust Fund Board of Trustees held a regularly scheduled meeting at the Village Hall, 357 Tequesta Drive; Tequesta, Florida, on Monday, March 18, 1996. The meeting was called to order at 9:04 A.M. by Chairman Ron Mackail. A roll call was taken by Betty Laur, the Recording Secretary. • Boardmembers in attendance at the meeting were: Chairman Ron T. Mackail, Boardmember Thomas G. Bradford, Boardmember Bill Sharpless, and Boardmember Shawn Thurman. Also in attendance was Finance Director Bill Kascavelis. Attorney Tracey • Biagiotti, sitting in for Village Attorney John C. Randolph, arrived at 9 :07 A.M. . II. APPROVAL OF AGENDA Boardmember Sharpless commented that the minutes of the last meeting stated that Finance Director Kascavelis had distributed revisions to the plan regarding disabilities and had requested that the Boardmembers review that material and report to him before the next meeting because it would be on the agenda. Mr. Kascavelis reported he had not been able to do the analysis due to lack of time and that it would be on a later agenda. Boardmember Bradford reported he had completed the review of the Summary Firefighters Pension Firefighters Pension Trust Fund Board of Trustees Meeting March 18, 1996 Page 2 Plan, and had dictated the changes, so that it should be distributed to the Boardmembers during this week. BoardMember Thurman made a motion to approve the agenda as written. Boardmember Bradford seconded the motion. The vote on the motion was: Ron T. Mackail - for Tam Bradford - for Bill Sharpless - for Shawn Thurman - for the motion was therefore passed and adopted and the Agenda was approved as submitted. III. APPROVAL OF PREVIOUS MEETING MIZNOTES (Meeting Minutes of December 19, 1995) Boardmember Sharpless moved to approve the minutes of the December 19, 1995 meeting of the Tequesta Municipal Firefighter's Pension Trust Fund Board of Trustees as . submitted. The motion was seconded by Boardmember Bradford. The vote on the motion was: Ron T. Mackail - for Tom Bradford - for Bill Sharpless - for Shawn Thurman - for the motion was therefore passed and adopted and the minutes . were approved as submitted. IV. STATUS REPORT ON THE FIREFIGHTER'S PENSION TRUST FUND (Bill C. xascavelis, Finance Director) Firefighters Pension Trust Fund Board of Trustees Meeting • March 18, 1996 Page 3 h) Financial Report (NationsBank Trust) Bill C. Kascavelis, Finance Director, presented the status report on changes in finances since the last meeting and stated that as of 1/31/96 the total assets of the Fund were $276,009.51. Boardmember Bradford made a motion to accept the Financial Report. Chairman Xackail seconded the motion. The vote on the motion was: Ron T. xackail - for Tam Bradford - for Bill Sharpless - for Shawn Thurman - for the motion was therefore passed and adopted. B. Report of Contributions (Employees/Bmployer) Finance Director Kascavelis commented that reports had been distributed to the Boardmembers for December, January, and February total contributions. Boardmember Sharpless questioned the large amount of gross salary shown for Mr. Flint. Boardmember Bradford responded that the amount included all accruals which were paid at separation. Finance Director Kascavelis explained that vacation pay plus five months of accruals were included. Boardmember Bradford made a motion- to accept the Financial Report. Boardmember Sharpless seconded the motion. The vote on the motion was: Ron T. xackail - for Tom Bradford - for Bill Sharpless - for Firefighters Pension Trust Fund Board of Trustees Meeting March 18, 1996 Page 4 Shawn Thurman - for the motion was therefore passed and adopted. C. Employee Changes Finance Director Kascavelis reported that one employee, Mr. Flint, had terminated employment on February 11, 1996, and another, Darryl Gustafson, was hired on February 27, 1996, making the average age of the current employees 30.9. D. Atlanta Capital's Quarterly Review of the Florida Municipal Pension Trust Fund dated December 31, 1995. (1) Quarterly report provided to Board Member William Sharpless, Esq. , for his review and analysis. (2) Investment Return section of report provided to members. Finance Director Kascavelis distributed a copy of the village of Tequesta Firefighter' s Pension Trust Fund Annual Report for the Fiscal Year Ending September 30, 1995 . The Finance Director explained that the Village had passed one ordinance during the past year which changed the death benefit to lifetime for a surviving spouse. On this report, assets as of 9/30/95 totaled $224,482. Revenue expenditures during the year consisted of employee contributions of $26,445; the state premium insurance tax of $14,959; contributions from the Village at 14.4% of $76, 161, and interest for the year of $29,810, making the total proceeds added to the fund for the year $147,375. Termination payments totaled $2,998, the cost of the actuarial report was $4, 000, and administrative expense was $3, 162, making total expenditures $10,160. The fund increased during the year Firefighters Pension Trust Fund Board of Trustees Meeting March 18, 1996 Page 5 by $137,215 and closed out the year at $224,482. The report included detail to support all of the entries. Boardmember Sharpless commented on the high expense of the actuarial report. Finance Director Kascavelis stated he would correspond with the Florida League of Cities to determine their requirement and try to get them to change their policy so that this would not need to be done annually. Chairman Mackail questioned whether the state ISO rating in 1996 would be the same as in 1995 and whether the revenue would be the same. Boardmember Bradford explained the ISO rating did not affect the revenue, however, since homeowners insurance rates had gone up the revenue would most likely increase. The ISO rating was discussed. Chairman Mackail commented that if the rating could go down it would be better for the Village, and that with the Hazmet program and NAMAC and the fact that the department was clearly able to handle everything with sufficient backup, possibly the rating could go down. Boardmember Bradford stated that in all probability the League would not change their actuarial policy, and if the Board was interested he could bring in Steve Palmquist, the actuary for a number of plans in this area, who could advise how the Village Plan could be switched over from the League to a stand-alone independent actuarial setup, such as that used by Jupiter, Lake Park, and other area municipalities. Boardmember Bradford commented that Mr. Palmquist' s fee was about half the amount currently being paid to the League. It was the consensus of the Board to request Mr. Palmquist to provide a presentation. Boardmember Bradford commented that the money manager might also have to be changed, and that would have to be checked. Finance Director Kascavelis was requested by Boardmember Bradford to contact Steve Palmquist with Gabriel Reuter in Ft. Lauderdale. Firefighters Pension Trust Fund Board of Trustees Meeting March 18, 1996 Page 6 Boardmember Sharpless reviewed Atlanta Capital' s Quarterly Review of the Florida Municipal Pension Trust Fund. Investment Returns were reviewed as of 12/31/95. Boardmember Sharpless commented that the return on fixed income had been 4.4%, compared to the Lehman Intermediate G/C Aggregate of 4.3% and the Lehman G/C High Quality Interest Aggregate of 3.4%. The extra yield of 4.4% was obtained by investing in mortgage-backed securities with short maturities, and had done very well to get that slightly higher return. The equities for the quarter were 6.3%, and the S&P 500 Index was 6.0%. Looking at it for one year the fixed income was 20 .5%, Lehman Brothers was 18.5% and 15.7%, which was very good. The equity for one year was 35.8% against the S&P 500 Index of 37. 6%. Mr. Sharpless stated he believed the results were getting better and better, and explained that their policy was sticking to high quality equities. Mr. Sharpless commented that high quality equities varied at certain times, so that when earnings were going up the high quality equities lagged behind and when earnings were coming down they did much better; therefore, now was the time when we would see a decline in earnings. Mr. Sharpless indicated that the kinds of equities the Florida Municipal Pension Trust Fund invested in were capital investments, consumer goods, interest sensitive stocks, and intermediate goods and services, and they did not invest in areas such as utilities, energy, and oil, and were only in 39 companies at the present time. Their instructions from the Florida League of Cities were that they should have no more than 55% equities, and they were at 50.6%. Mr. Sharpless analyzed the quarterly review, stating their investment objective was the same as for the previous quarter- -high quality stocks and bonds with a maximum exposure to stocks of 55%. Their outlook on the economy was similar to the previous quarter and saw the GEP growth at 2.4%, with inflation also at 2.4%, slightly Firefighters Pension Trust Fund Board of Trustees Meeting larch 18, 1996 Page 7 below the consensus of other economists. They saw long- term interest rates declining slightly, the yield curve steepening, earnings growth slowing, and felt stocks were reasonably valued because earnings had increased so much. They found bonds attractive, and their strategy was to remain fully invested, with sector emphasis in capital investment and exports, and consumer multi-nationals and emerging markets, which were not allowed for investment. The company focus was earnings stability, above average sales growth, and improving margins. They found small cap stocks attractive. Their fixed income strategy was to push the duration of the investments out longer, and sector emphasis was in short duration mortgage-backed securities and underweight corporate bonds. Their equity investment philosophy was that high quality growth companies produce consistently increasing earnings and dividends, thereby providing superior returns with moderate risk over the long term. Investment themes they were pushing were companies with predictable growth such as American International Group, health care such as Merc, rapid growth in developing countries through U.S. companies such as Foster Wheeler, multi-national consumer such as Gilette and Coca Cola, exports such as Boeing, and companies with strong gains in productivity such as Hewlett Packard and Equifax. Their philosophy for fixed income investments was high quality, medium term portfolios, in which mortgage-backed and asset-backed securities offer improved yields. Bonds secured by the American Express card accounts receivable would be an example of asset-backed securities. Their process included the forecast. of__. . interest_ rates, ____ with.___ __ ._____ identification of undervalued sectors. The two undervalued sectors were the asset-backed and the mortgage-backed securities. Under a section of the report called The Trials and Tribulations of High Quality Investing, high quality was defined as a measure of a company' s ability to grow earnings and dividends steadily over several economic cycles. An example of some companies on the Dow who fit that definition were high Firefighters Pension Trust Fund Board of Trustees Meting arch 18, 1996 Page 8 quality companies such as Coca Cola and GE, and lower quality companies such as American Express, Chevron, and Eastman Kodak. Mr. Sharpless explained that in this report how high quality companies did in both stronger and weaker markets was compared to how lower quality companies performed; and found that in times of rising earnings the lower quality companies seemed to outperform, however, the quality companies outperformed when earnings began to falter. In this year' s portfolio 10-12 companies had been sold and 5 companies purchased-- none of which they had not had in the past. At the present time their portfolio consisted of 39 equities, compared with 50 the prior quarter. Mt. Sharpless stated he would like to see more stocks in more sectors to provide better diversification; however, commented that they had done an excellent job. Chairman Mackail commented that of the equities and stocks shown, several had gone into the international market, and some were projected for substantial growth, and although he would also like to see them more diversified, the ones they had were projected through other security companies to be very strong and very successful because of their liquidity. E. Village of Tequesta Firefighter's Pension Plan Outline (To be provided to all current employees and new employees at time of hiring) Boardmember Bradford explained that Florida Statute 126 required a summary plan to be prepared and distributed, which he had updated this past week and had sent a letter to Finance Director Kascavelis requesting that everyone review the changes and respond to him with any comments, so that he could place the summary plan on the agenda for the next meeting so that Board could formally adopt the new summary plan. Firefighters Pension Trust Fund Board of Trustees Meeting March 18, 1996 Page 9 VII. ANY OTC 1 TT.&B Mr. Sharpless requested that Boardmember Bradford share any new developments with the Board that he might learn by attending the annual meeting of the Municipal Firefighters and Police Officers Pension Funds held in Tallahassee on March 19 and 20, 1996. Councilmember Hansen, who was present in the audience, complimented Boardmember Sharpless on his report, and questioned whether any information. was provided on what the investments should be. Mr. Sharpless responded that Atlanta Capital was the investment manager and took direction from the Florida Municipal Pension Trust Fund which was run by the League of Cities, who met with the investment advisor and provided the instructions. Mr. Sharpless explained that Tequesta was only one of many small municipalities represented by the League of Cities, and unfortunately had nothing to say about the investments. Boardmember Bradford reported that in December the Village Council had taken the first steps to opt out of the Florida Retirement System for Police and General Employees, and currently Mr. Bradford was in negotiations to implement both of those plans. Mr. Bradford explained that it was the intention of the village Council to have one Board for all three plans under the enabling ordinance. The Board would administer the Firefighter's Plan, the Police Plan, and the General Employees' Plan and would consist of one representative- chosen by each group, 3 representatives chosen by the Village Council, and a 7th chosen by the other six representatives who made up the Board. Mr. Bradford explained that he assumed the present board members would be incorporated to be on the new board. Mr. Bradford expected this to be accomplished within the next 60 days and hoped to provide a more thorough report at the next meeting. Mr. Firefighters Pension Trust Fund Board of Trustees Meeting March 18, 1996 Page 10 Thurman was requested to report this matter to the firefighters, and to assure them that the firefighter premium tax contributions would be kept clearly separated from the other employee plans. VIII. ADJOUBMMBMT Boardmember Bradford moved that the meeting be adjourned. Boardmember Thurman seconded the motion. The vote on the motion was: Ron T. Mackail - for Tom Bradford - for Bill Sharpless - for Shawn Thurmond for The motion was therefore passed and adopted and the meeting was adjourned at 9:47 A.M. Respectfully submitted, Betty Laur Recording Secretary ATTEST: Joann Manganiello Village Clerk DATE APPROVED: