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HomeMy WebLinkAboutDocumentation_Regular_Tab 7-E_5/14/1998 1.f ov„. A VILLAGE OF TEQUESTA Post Office Box 3273 • 357 Tequesta Drive = r Tequesta, Florida 33469-0273 • (561) 575-6200 a 11 a Fax:(561)575-6203 'e ,�, ; 4 elf CO 1. TEQUESTA EMPLOYEES' PENSION TRUST FUND BOARD OF TRUSTEES MEETING JANUARY 28, 1998 I. CALL TO ORDER AND ROLL CALL The Tequesta Employees' Pension Trust Fund Board of Trustees . held a regularly scheduled meeting in the Village Administration Office conference room, 250 Tequesta Drive, Suite 300., Tequesta, Florida, on Wednesday, January 28, 1998 . The meeting was called to order at 9:07 A.M. by Secretary Thomas G. Bradford, who conducted the meeting in the absence of Chairman Ron T. Mackail. A roll call was taken by Betty Laur, the Recording Secretary. Boardmembers in attendance at the meeting were: James B. Trube, William Sharpless, Carl C. Hansen, Allan Oslund; and Thomas G. Bradford. Also in attendance were Finance Director Bill Kascavelis, Attorney Tracey Biagiotti sitting in for Village Attorney John C. Randolph, and. Loomis, Sayles & Company representative Peter V. Van Beuren. Chairman Ron T. Mackail and Boardmember Shawn Thurmond were absent from the meeting. II. APPROVAL OF AGENDA ' Boardmember Hansen requested addition under Any Other Matters of discussion of terms of office. Finance Director Kascavelis requested addition under Any Other Matters of authorization of a member of the Board to sign the annual report. Boardmember Hansen made a motion to approve the agenda as amended. Boardmember Oslund seconded the motion. The vote on the motion was: Recycled Paper BOARD OF TRUSTEES TEQUESTA EMPLOYEES' PENSION TRUST FUND MEETING MINUTES January 28, 1998 PAGE 2 Thomas Bradford for Carl Hansen - for Allan Oslund - for William Sharpless - for James Trube - for The motion was therefore passed and adopted and the Agenda was approved as amended. III. APPROVAL OF MINUTES A) Tequesta Employees' Pension Trust Fund Board of Trustees meeting minutes for December 15, 1997 . ' Boardmember Trube made a motion to approve the minutes as submitted. Boardmember Sharpless seconded the motion. The vote on the motion was: Thomas Bradford - for Carl Hansen - for • Allan Oslund - for William Sharpless. - for James Trube - for The motion was therefore passed and adopted and the minutes were approved as submitted. IV. STANDING REPORTS A) Approval of New Applicants for Participation in Plan (December '1997) : 1) None B) Approval of Beneficiary Changes (December 1997) BOARD OF TRUSTEES TEQUESTA EMPLOYEES' PENSION TRUST FUND FETING MINUTES January 28, 1998 PAGE 3 1) None C) Request for Withdrawal of Contributions (employees terminating employment with village (December 1997) 1) None No action was needed on these three items since there had been no activity. V. FINANCIAL REPORTS (Bill Kascavelis, Finance Director) A. Report of Employee and Employer Contributions and Reconciliation to Custodial Broker Statements (September - December, 1997) 1) Florida Municipal Pension Trust Account Statement 9/30/97 A) Clarification of transfers reported under Employer Section of Report Finance Director Kascavelis explained that Boardmember Trube had requested clarification of expenditures on the 9/30/97 report entitled "Transfers". Research through Florida League of Cities clarified that the $3,491.81 listed on the Fire Department report and $211.99 on the General Employees report were amounts paid from the individual funds for custodial banker and investment management fees for a one-year period. Boardmember Hansen made a motion to approve the Florida Municipal Pension Trust Participant Account Statement for the period 10/1/96 through 9/30/97 as submitted. Boardmember Trube seconded the motion. The vote on the motion was: Thomas Bradford - for BOARD OF TRUSTEES TEQUESTA EMPLOYEES' PENSION TRUST FUND MEETING MINUTES January 28, 1998 PAGE 4 Carl Hansen - for Allan Oslund - for William Sharpless - for James Trube - for The motion was therefore passed and adopted. 2) Prudential Securities, Inc., Account Statements 10/31/97 and 12/31/97 Finance Director Kascavelis distributed replacement pages for the November reconciliation because of an incorrect figure for dividend income for November. Finance Director Kascavelis explained that the reconciliation statement took all account activity and placed it into a spread sheet to account for all transactions at cost rather than market value, and that he received an account statement from Loomis Sayles and Company showing the actual cost. The spread sheet information was used to transfer the acttal allocation to Fire, Police, and General Employees. Finance Director Kascavelis reported that the Prudential statements had been reconciled for October, November, and December, 1997. Secretary Bradford questioned the value of reconciliation to the Village, to which Finance Director Kascavelis responded that since Prudential reported at market value a monthly reconciliation at cost was necessary to produce an income and expense statement for the three funds. Finance Director Kascavelis explained that with Florida League of Cities they had done this work, however, it must now be done locally; and a computer template had been set up with the help of'' the external auditor. Finance Director Kascavelis explained that there had been a reconciliation of the custodial broker's statement with Loomis Bayles 7 BOARD OF TRUSTEES TEQUESTA EMPLOYEES' PENSION TRUST FOND MEETING MINUTES January 28, 1998 PAGE 5 and Company's statement for October, November, and December 1997, including allocation of funds to the three separate accounts. Small differences were attributed to rounding figures. Finance Director Kascavelis reported that the League had understated the amount to be transmitted to the Village for which he had just received a check, and that amount would be reported on a future report. Boardmembers expressed concern that the reconciliation was a lot of work; Finance Director Kascavelis responded that reconciliation was necessary in order to make proper allocations to the three separate funds. Discussion ensued regarding whether the information needed to be presented to the Board. Finance Director Kascavelis expressed his opinion that the Board should be aware of whether the figures balanced monthly, and confirmed that in the future these reports would be a part of the Boardmembers' packets. Boardmember Oslund made a motion to approve the Prudential Securities, Inc. account statements for 10-1-97 through 12-31-97. Boardmember Sharpless seconded the motion. The vote on the motion was: Thomas Bradford - for Carl Hansen - for Allan Oslund - for William Sharpless - for James Trube - for • The motion was therefore passed and adopted. B. Loomis, Sayles & Company, L.P. , Investment Manager's Financial Statement Quarter Ending 12/31/97, Peter V. Van Beuren, V.P. & Senior Partner) BOARD OF TRUSTEES TEQIIESTA EMPLOYEES' PENSION TRUST FUND MEETING MINUTES January 28, 1998 PAGE 6 1) Review and Discussion: Mr. Van Beuren presented an Investment Review booklet for the Village of Tequesta Employees' Pension Trust Fund dated January 28, 1998 prepared by Loon4s, Sayles & Company. Section One contained information regarding the firm and highlighting personnel which made up the investment team and the Florida office strategies. Mr. Van Beuren explained that Loomis, Sayles and Company's style of management for equities was in looking for wealth creator companies with unique characteristics of growing at a much higher rate than benchmark companies; a high return on equity; and al reasonable relationship between earnings and growth rates. The style of management for fixed income was described as to stay within the high quality parameters of the guidelines and to find incremental yields and returns through going down through the top three investment grades of the fixed income spectrum, A through AAA. Section two contained a general boilerplate for investment guidelines. Investment objectives, long-term asset mix guidelines, restrictions, and benchmarks were listed.1 The investment strategy of the Village was shown at 50% equities, 50% fixed income, with cash at the, discretion of Loomis Sayles and Company. Boardmember Hansen questioned what would have been done five or ten years ago compared to the present time and how often the guidelines were changed. Mr. Van Beuren explained that assets should be longer term in pension funds, and the same approach should have been taken in the past as now, as long as the ' economic environment was realistic. The Asian problems had caused difficulty since October, 1997, however, strategy was still to find better companies which would achieve objectives. The goal was to increase appreciation and decrease risk, and BOARD OF TRUSTEES TEQIIESTA EMPLOYEES' PENSION TRUST FUND MEETING MINUTES January 28, 1998 PAGE 10 portfolio investment mix from 50% stocks and 50* bonds to 60% stocks and 40% bonds. Finance Director Kascavelis read aloud from a letter from the Village Attorney which . advised the proposed investment policy was legal but the Board would have to recommend its approval to the Village Council, the Village Council would have to adopt the plan, and the Board would then be authorized to conduct business per the revised plan. During discussion, Secretary Bradford pointed out that the current plan required the adoption of investment guidelines. Mr. Van Beuren reviewed the draft proposed investment guidelines, and suggested changes which could be made so that the guidelines would conform to the current plan and could therefore be adopted by the Board. This would assure that guidelines were in place as required by the current plan; and the original draft proposed investment guidelines could be recommended to the Village Council for their adoption. After discussion, the following deletions/changes were recommended by W. Van Beuren: 1. Page 1, item 2 (A) 1: strike out (60%) and (40%) . 2. Page 2, item 3 (A) 3 (b) I: strike out (25% of the bonds at time of purchase may be rated Baa investment grade) . 3. Page 3, item 3 (A) 3 (b) iii: this item could be stricken out or left in if some lower grade bonds were desired, which Loomis Sayles and Company recommended in order to get a little better incremental performance on the margin. 4. Page 3, B (1) : Strike out (60%) . Secretary Bradford commented that item 3 (a) 1 on page 2 r% BOARD OF TRUSTEES TEQUESTA EMPLOYEES', PENSION TRUST FUND MEETING MINUTES. January 28, 1998 PAGE 9 Palmquist at the end of two years, and that prices would probably increase. Discussion ensued regarding ways the proposal could be changed to make , it perpetual. Boardmember Sharpless recommended that this agreement be accepted as written but that Mr. Palmquist be informed that a perpetual agreement was desired at renewal. Attorney Biagiotti pointed out that item 7 stated the agreement could be renewed for subsequent periods upon mutual agreement by the parties. Finance Director Kascaveli$ commented this would be presented to the Board in September 1999 before it expired. Boardmember Sharpless made a motion to approve the Actuarial Services Agreement from Gabriel, Roeder, Smith & Company as written at this time. Boardm tuber Hansen seconded the motion. The vote on thejmolion was: Thomas Bradford - for Carl Hansen - for Allan Oslund. - for William Sharpless - for James Trube - for The motion was therefore passed and adopted. VII. EMPLOYEES' PENSION FOND INVESTMENT POLICY (Draft prepared by Loomis, Bayles & Company, L.P. ) A) Review Finance Director Kascavelis distributed a handout of the current plan. 1Mr. Van Beuren announced that a draft of a proposed investment policy had been submitted for the Board' s consideration, which proposed change in the BOARD OF TRUSTEES TEQUESTA EMPLOYEES' PENSION TRUST FUND MEETING MINUTES January 28, 1998 PAGE 8 The motion was therefore passed and adopted. VI. Agreements to be Reviewed and Approved A) Actuarial Services Agreement Gabriel, Roeder, Smith & Company, Consultants and Actuaries 1) Review for Approval Attorney Tracey Biagotti stated that the agreement • had been reviewed for form . and sufficiency. Finance Director Kascavelis reported that the original agreement had called for an actuarial audit every year, and the Board had requested an audit every other year to lower costs. Mr. Palmquist had revised his actuarial services agreement to meet the Board' s request. The two- year agreement contained a provision that the contract could be terminated upon 30 days written notice. Discussion ensued regarding item 3, which was unclear regarding fees. Attorney Biagiotti explained that the first agreement had called for an audit annually for a flat $525 per month, then the subsequent agreement was drafted which called for an actuarial audit every two years so that the charge for the year no audit was performed was dropped to $200 per month, while the charge for the year an audit was done remained at $55 per month. Finance Director Kascavelis commented that the Board was not saving money, but the Board had wanted to go to an arrangement where better information would be provided. Boardmember Oslund questioned whether a perpetual agreement should be considered so that it would not have to be renewed every two years. . Finance Director Kascavelis speculated that a new proposal would be made by Mr. • r, 1 BOARD OF TRUSTEES TEQUESTA EMPLOYEES'iPENSION TRUST FUND MEETING MINUTES January 28, 1998 PAGE 7 history had shown large cap stock returns 10% - 11W, iwhich he believed would come back. Mr. Van Beuren verified that he did not foresee the benchmarks changing in the near future. Mr. Van Beuren commented that the page listing financial market review and total returns would ,contain two columns in future presentations for comparison purposes. Total returns for the two months ending 12/97 performance was reviewed. Boardmember Sharp].ess commented that Loomis Sayles and Company had done an excellent job of buying stock in volatile conditions. Section 3 contained the portfolid status report, summary of investment position report, and portfolio diversification report, which were reviewed by Mr. Van Beuren. The difference between duration and maturity as used by bond managers was explained as duration being tied . to correlation between receiving interest payments along ; with principal payments on calls; while maturity was described as a function of the average numberlof. years before bonds mature. Section 4 was a list of economic benchmarks, comparing them over the past five years. Section 5 was a listing of purchases made for the Village from 10/1/97 through 12/31/97. Section 6 was the portfolio as of 12/31/97. II Boardmember Sharpless made a motion to accept the Investment Review as presented by Peter Van Beuren for the financial quarter ending 12/31/97. Boardmember Hansen seconded the motion. The vote on the motion was: Thomas Bradford - for Carl Hansen - for Allan Oslund - for William Sharpless - for James. Trube - for BOARD OF TRUSTEES TEQUESTA EMPLOYEES' PENSION TRUST FUND MEETING MINUTES January 28, 1998 PAGE 11 contained the exact language used in the plan document; however, the operative statute, Florida Statute 280.02, might be more or less restrictive than this language. Therefore, Secretary Bradford suggested the statute might need to be referenced. Discussion ensued. Secretary Bradford questioned whether item B on page 3 disallowed derivatives, to which Mr. Van Beuren responded that a derivative was an investment vehicle that was a substitute for something else, and was covered in B (3) . After discussion, Boardmember Hansen pointed out that page 4, item 7 allowed leeway to make changes. Mr. Van Beuren recommended review of the investment guidelines annually or when things change. Boardmember Sharpless questioned how the Board would know if total fund performance in manager performance rankings fell below the 50th percentile as stated in item 5 W . Mr. Van Beuren explained that the Board would be alerted to this possibility if they saw substantial underperformance by Loomis Sayles and Company for three or four consecutive quarters, and should then request performance rankings. Mr. Van Beuren stated he could provide that information in his quarterly report. In response to Secretary Bradford's question regarding item 5 (B) , Mr. Van Beuren explained that it was the responsibility of Loomis, Sayles and Company to notify the Village of loss by the manager of any senior investment personnel servicing the Village's account. In regard to item 5 (D) , failure to attain a 60% vote of confidence by the Board of Trustees, Secretary Bradford commented that in a hypothetical case where the Board voted 4-3 to make a change, that would not be 60%, but the vote would have to be 5-2 in order to meet the 60% requirement. Discussion ensued that all of item 5 were really flags to alert the Board of potential problems. During discussion, Secretary Bradford questioned whether the current plan was a local law plan, and stated that if so, it could be changed; if not, it could not be changed- BOARD OF TRUSTEES TEQUESTA EMPLOYEES' PENSION TRUST FUND MEETING MINUTES January 28, 1998 - PAGE 12 -which the Village Attorney needed to find out. Another item mentioned by the Village Attorney was that any proposed changes to the plan must be approved by the two unions. Boardmember Oslund recommended adoption of the draft investment guidelines with the changes discussed, as well as beginning the procedure for getting the original draft investment guidelines adopted by the Village Council. B) Motions Boardmember Sharpless made a motion to approve the proposed Investment Policy Statement with the deletions recommended by Mom. Van Beuren. Boardmember Trube seconded the motion. The vote on the motion was: Thomas Bradford for Carl Hansen - for Allah Oslund - for William Sharpless - for James Trube - for The motion was therefore passed and adopted. Secretary Bradford questioned whether the Board desired to recommend to the Village Council to look into the legal ability to amend those sections of the plan that would require amendment per Mr. Van Beuren's original investment policy statement. Boardmember Sharpless suggested that on page 13 of the plan excerpt provided to the Board, starting with B, items 1 through 7 be taken out and in their place insert the investments list on page 2 of Mr. Van Beuren' s guidelines 1 through 3 (3 would include A, B, & C) . Secretary Bradford requested that Finance Director Kascavelis obtain a legal opinion from Village Attorney Randolph whether the authorizing legislation allowing for the opt out of the Florida E 2 BOARD OF TRUSTEES TEQUESTA EMPLOYEES' PENSION TRUST FUND MEETING MINUTES January 28, 1998 PAGE 13 Retirement System enables the Village to amend those provisions because Tequesta' s Police are covered under the plan. Attorney Biagiotti stated she would check and with Attorney Randolph and have a letter sent to the Village. Boardmember Oslund pointed out that in item 15 (C) , 50% would need to be changed also, and that someone should review the whole document to be sure all changes were made. Attorney Biagiotti agreed to review the document. Boardmember Hansen made a motion to recommend that the Village Council pursue making the recommended changes to the existing Plan. Boardmember Sharpless seconded the motion. The vote on the motion was: Thomas Bradford - for Carl Hansen - for Allan Oslund - for William Sharpless - for James Trube - for The motion was therefore passed and adopted. VIII. ANY OTHER MATTERS Secretary Bradford responded to Boardmember Hansen' s question regarding the term of office for Boardmembers that he believed the terms were for two years, and if Mr. Hansen resigned from the Village Council he believed he could still serve as a member of the Board as a Village resident. Secretary Bradford advised that the Plan stated there were seven members of the Board: 3 appointed by the Village Council, 3 appointed by the employees, and the seventh appointed by the Board. The 3 members appointed by the employees were one from Fire, one from Police, and one from the General Employees. The three members appointed by the Village Council were the Village Manager, a resident, and t BOARD OF TRUSTEES TEQUESTA EMPLOYEES' PENSION TRUST FUND MEETING MINUTES January 28, 1998 PAGE 14 possibly the Mayor. Secretary Bradford stated that the Plan would need, to be researched to see if the Mayor was to be a member of the Board. Boardmember Hansen requested a definite date for reappointment of each Boardmember. Secretary Bradford advised that Finance Director Kascavelis should have a regular process to review terms and their terms of office. Finance Director Kascavelis stated he would coordinate with the Village Clerk. Boardmember Sharpless stated that according to the Plan, the Mayor did not have to be appointed as a member of the Board, but that the three members appointed by the Village Council must be legal residents; and that all Boardmembers had two-year terms. Boardmember Trube questioned whether the terms of • the members of the original Firefighters' Board ended when that Board became the present Board. Finance Director Kascavelis explained that the annual report would need to be signed for submittal to the Division of Retirement before the next scheduled meeting. Secretary Bradford commented that he believed this Board had been . appointed approximately January 1996, and if so, two year terms would now be expiring. Boardmember oslund made a motion to authorize the Chairman to sign the annual report which would be submitted to the Division of Retirement by March 15, 1998. Boardmember Hansen seconded the motion. The vote on the motion was: Thomas Bradford - for Carl Hansen - for Allan Oslund - for William Sharpless - for James Trube - for The motion was therefore passed and adopted. IX. ADJOURNMENT BOARD OF TRUSTEES TEQUESTA EMPLOYEES' PENSION TRUST FUND MEETING MINUTES January 28, 1998 PAGE 15 Boardmember Hansen moved that the meeting be adjourned. Boardmember Oslund seconded the motion. The vote on the motion was: Thomas Bradford - for Carl Hansen - for Allan Oslund - for William Sharpless - for James Trube - for The motion was therefore passed and adopted and the meeting was adjourned at 11:20 A.M. Respectfully submitted, alt4Ajt Betty Laur Recording Secretary ATTEST: Joann Manganiello Village Clerk DATE APPROVED: