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HomeMy WebLinkAboutDocumentation_Regular_Tab 8E_4/10/1997 311" f, VILLAGE OF TEQUESTA . DEPARTMENT OF COMMUNITY DEVELOPMENT • '1 ' Post Office Box 3273 • 357 Tequesta Drive � '`\ �" • Tequesta, Florida 33469-0273•(407)575-6220 ,l " o o � Fax: (407) 575-6239 TEQUESTA EMPLOYEES' PENSION TRUST FUND BOARD OF TRUSTEES MEETING JANUARY 20, 1997 I . CALL TO ORDER AND ROLL CALL The Tequesta Employees' Pension Trust Fund Board of Trustees held a regularly scheduled meeting at the Village Hall, 357 Tequesta Drive, Tequesta, Florida, on Monday, January 20, 1997 . The meeting was called to order at 8:32 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, Thomas G. Bradford, Carl Hansen, Allan Oslund, James B. Trube, and William Sharpless . Also in attendance were Finance Director Bill .Kascavelis and Attorney John McCracken, sitting in for • Village Attorney John C. Randolph. Boardmember Shawn Thurmond was absent from the meeting. II. APPROVAL OF AGENDA Boardmember Oslund requested addition under Any Other Matters of discussion pertaining specifically to Village of Tequesta general employees. Boardmember Bradford requested addition under Any Other Matters of discussion regarding Division of Retirement Annual Reports . Boardmember Sharpless made a motion to approve the agenda as amended. Boardmember Hansen seconded the motion. The vote on the motion was: Ron T. Mackail - for Recycled Paper Employees' Pension Trust Fund Board of Trustees Meeting Minutes January 20, 1997 Page 2 Tom Bradford - for Carl Hansen - for Allan Oslund - for James Trube - for William Sharpless - for the motion was therefore passed and adopted and the Agenda was approved as amended. III. APPROVAL OF MINUTES A) Board of Trustees Meeting Held October 28, 1996 Boardmember Hansen made a motion to approve the minutes of the October 28, 1996 Employees' Pension Trust Fund Board of Trustees as presented. Boardmember Trube seconded the motion. The vote on the motion was: Ron T. Mackail - for Tom Bradford - for Carl Hansen - for Allan Oslund - for James Trube - for William Sharpless - 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 (October-December 1996) Finance Director Bill Kascavelis explained that there were three new applicants, Allan F. Oslund, Damian Peduto, and Sharon Carey. In response to Boardmember Employees' Pension Trust Fund Board of Trustees Meeting Minutes January 20, 1997 Page 2 Sharpless' inquiry whether the Village had a plan to give physicals to new employees, Finance Director Kascavelis responded that new hires were given a pre-employment physical and drug screening prior to a job offer, and that those records were on file in employee personnel files, including back x-rays for fire and police personnel . Boardmember Oslund made a motion to approve the new applicants for participation in the plan. The motion was seconded by Boardmember Hansen. The vote on the motion was: Ron T. Mackail - for Tom Bradford - for Carl Hansen for Allan Oslund - for James Trube for William Sharpless - for the motion was therefore passed and adopted. B) Approval of Beneficiary Changes (October-December 1996, none) C) Requests for Withdrawal of Funds (October-December 1996, none) Boardmember Hansen questioned the conditions for withdrawals, to which the response was either termination of employment or retirement. Finance Director Kascavelis explained that upon retirement the amount due an employee could be rolled into an IRA or into another 457 Plan, or the money could be taken in cash. No motion was necessary for Items B or C since there had been no activity. Employees' Pension Trust Fund Board of Trustees Meeting Minutes January 20, 1997 Page 3 V. STATUS REPORT OF THE EMPLOYEES PENSION TRUST FUND (Bill Kascavelis, Finance Director) A) Report of Employee/Employer Contributions and Custodial Bank Statements (September, October, November 1996) Mr. Kascavelis commented that at the previous meeting it had been suggested that the bank statements from the custodial bank, NationsBank, be reconciled. Mr. Kascavelis reported reconciliation through November, 1996, since December account information had not been received. Opening fund balance as of 8/31/96 was reported as $347, 076 . 08, with total contributions for September, October, and November of $28, 596.27, and earnings of $37, 305. 15; which would make \the balance of invested funds as of 11/30/96 $412,978. 15 . However, in the process of reconciliation it was discovered that a check paid to Florida League of Cities for the 10/4 payroll was not outstanding but had not been credited, making the balance per statement $408,269.20. The check, in the amount of $4, 709 . 30, was believed to have been credited in error to another account. Boardmember Oslund made a motion to approve the report of Employee/Employer Contributions and Custodial Bank Statements for September, October and November, 1996 as submitted contingent upon the $4,709.30 item being in fact a payroll not credited, which would bring the balance to $412,978.50. Boardmember Hansen seconded the motion. The vote on the motion was: Ron T. Mackail - for Tom Bradford for Carl Hansen - for Allan Oslund - for James Trube - for William Sharpless - for • Employees' Pension Trust Fund Board of Trustees Meeting Minutes January 20, 1997 Page 4 the motion was therefore passed and adopted. B) Florida Municipal Pension Trust Fund Quarterly Review September 30, 1997 . Finance Director Kascavelis reported that his efforts to obtain the report for the period ending December 31, 1996, had not yet been successful, so that information would be presented at a later date. Mr. Kascavelis reviewed the investment returns from the Florida Municipal Pension Trust Fund Quarterly Report for the quarter ended September 30, 1996, which reflected a 2 . 1% gain and equity of 5.3%, with total gain for the quarter of 3 .5%. This was compared to the lower investment \returns reflected in the Lehman and S&P indexes.- Mr. Kascavelis responded affirmatively to Mr. Sharpless' question of whether the percentages compared to the indexes were figured before management fees and costs were deducted. Boardmember Sharpless reviewed Atlanta Capital' s investment strategy of economic assumptions, bond strategy, and equity strategy. Mr. Sharpless explained that he disagreed somewhat with the economic assumption stated as Federal Reserve policy bias toward tightening, since Chairman Greenspan was inclined to avoid tightening. The Balanced Account Strategy was stated as to continue to move towards bonds and away from stocks and to hold minimal cash. Mr. Sharpless explained that Atlanta Capital felt stocks are fully valued at this point. Finance Director Kascavelis expressed concern over the difficulty of obtaining timely reports from Florida League of Cities, and stated that he would write to them requesting that reports be sent timely and request that they provide copies for each member of the Board. Mr. Employees' Pension Trust Fund Board of Trustees Meeting Minutes January 20, 1997 Page 5 Kascavelis expressed his opinion that their fee, 77 basis points of the portfolio, should cover reports for each Boardmember. Boardmember Bradford made a motion to accept the Florida Municipal Pension Trust Fund Quarterly Report ended September 30, 1996 subject to the Director of Finance issuing a letter to Florida League of Cities questioning the timeliness of their reports. Boardmember Oslund seconded the motion. The vote on the motion was: Ron T. Mackail - for Tom Bradford - for Carl Hansen - for Allan Oslund - for JamesTrube - for William Sharpless - for the motion was therefore passed and adopted. VI. INFORMATION - REQUESTED AT THE OCTOBER 28, 1996 TRUSTEES MEETING A) Actuarial Reviews/Custodial Accounts/IRS Determination Letter 1) Letter, Joyce Case, Florida League of Cities, Inc. 2) Letter, Steve Palmquist, Gabriel, Roeder, Smith & Co. , Inc. Finance Director Kascavelis explained that at the last meeting concern had been expressed that three plans were in one fund. Under Florida statute, General Employees funds could not be co-mingled; therefore, two funds had been created, one for General Employees and the other for both\Police and Firefighters. Insurance premium taxes were received from the State of Florida from casualty Employees' Pension Trust Fund Board of Trustees Meeting Minutes January 20, 1997 Page 6 insurance for Police and from homeowners insurance for Firefighters . Since the insurance premium tax contributions were not the same for Police as for Firefighters, there was concern that the assets of the Firefighters could be used by Police if the funds were co-mingled. A letter from Joyce Case of Florida League of Cities was presented, which listed advantages and disadvantages of keeping the funds in one account . Mr. Kascavelis explained that the cost of management fees would be reduced so that the cost per employee would be less, and that only one actuarial review would be needed instead of two, thereby saving $4, 000 annually. Mr. Kascavelis reported that an actuarial review was required once every three years by State Statute, once every two years by the Village' s plan, and recommended annually by Florida League of Cities\. Mr. Kascavelis reported that a letter proposal from Steve Palmquist of Gabriel, Roeder, Smith & Co. Inc. , indicated their cost would be $9 , 600 every other year as compared to $8, 000 from Florida League of Cities for two plans. Mr. Kascavelis commented that the list of services in Mr. Palmquist' s letter was more specific than those provided by Florida League of Cities, and that Gabriel, Roeder, Smith & Co. was probably superior to the present administrator. Mr. Kascavelis expressed the opinion that the Police and Fire should stay in one plan. Mr. Kascavelis stated that the Board must make a decision how often they wanted an actuarial review and must decide on a money manager. Proposals had been received from Sun Bank (STI) and from Barnett for money manager services. Mr. Kascavelis reported that STI seemed superior to Barnett. Chairman Mackail commented that there were three areas on which the Board should concentrate: 1) First : Decide whether to have separate Fire and Police plans; 2) Second: Decide whether the actuarial review should Employees' Pension Trust Fund Board of Trustees Meeting Minutes January 20, 1997 Page 7 be done every two or every three years; 3) Third: Decide on a money manager. Boardmember Sharpless commented that when he had attended the seminar in Tallahassee that he had spoken to a number of Boardmembers of other Plans who had advised not to have Police and Firefighters ,in the same Plan because there would always be problems, i.e. , there would be different disability and termination costs, etc. , as well as different amounts contributed from insurance premium taxes. Mr. Sharpless expressed his opinion that it was important to keep the Firefighters and Police plans separate. Boardmember Bradford expressed agreement. Boardmember Trube explained that the Firefighters were concerned over co- mingled funds and expressed preference for separate plans. Boardmember Trube questioned why the Village plan required actuarial review every two years instead of every three years as the State required. Boardmember Bradford stated that he thought the village plan requirement was also every three years. It was the consensus of the Board that the Police and Firefighters' plans should be separate. Boardmember Bradford questioned the logistics of separate plans . Mr. Kascavelis stated that he would separate up three separate accounts, one for each of the three plans; and that there would be three separate and distinct plans and custodial accounts. Mr. Kascavelis stated that he would set up the Police account prior to receipt of the insurance premium- tax monies. Boardmember Trube questioned the actual amount in insurance premium tax dollars that the Police would receive, to which the Finance Director responded that he had spoken to a representative of the Police and Fire Pension Fund Department in Tallahassee, who had reported that the tax money received by Police was generally greater than that received by Firefighters, simply because there was more casualty insurance written than homeowners insurance, and • Employees' Pension Trust Fund Board of Trustees Meeting Minutes January 20, 1997 Page 8 that the amount was unknown. It was anticipated that the figures would be available for the next meeting. Boardmember Bradford made a motion to direct Finance Director Kascavelis to set up three separate custodial accounts: one each for Police, Firefighters, and General Employees. Boardmember Trube seconded the motion. The vote on the motion was: Ron T. Mackail - for Tom Bradford - for Carl • Hansen - for Allan Oslund - for James Trube - for William Sharpless - for the motion was therefore passed and adopted. - Frequency of actuarial reviews was discussed. Boardmember Bradford recalled that Florida League of Cities required a review annually. Mr. Kascavelis felt that they only ,recommended an annual review. Chairman Mackail commented that he believed it would be best to do an actuarial review every three years with monitoring by the Board between reviews, because the plans were so new and no one was near retirement; however, as long as Florida League of Cities was the money manager, the Village might not have a choice. After further discussion, consensus of the Board was that actuarial review was preferred every three years. Chairman Mackail requested that Finance Director Kascavelis verify with Florida League of Cities whether they would allow an actuarial review on a three-year basis. Mr. Kascavelis stated that he would get a response in writing. An IRS determination letter was discussed. Finance Director Kascavelis reported that since Florida League of Cities was still in the process of obtaining their first determination Employees' Pension Trust Fund Board of Trustees Meeting Minutes January 20, 1997 Page 9 letter that fees had not yet been set, so that he could not give a cost estimate to the Board at this time. The only cost indication from the League had been a few hundre d dollars. The League had prepared a base plan, and would charge extra for municipalities whose plan was different. Mr. Palmquist' s proposal had indicated that for him to handle an IRS determination letter the cost would be $2, 500 plus a $700 IRS filing fee. Mr. Palmquist' s proposal was felt by the Board to be more realistic. Chairman Mackail commented that Mr. Palmquist' s proposal covered many items for which the Board had been asking. Chairman Mackail suggested that an analysis could be done by comparing the costs listed in proposals with those charged by Florida League of Cities for those items the Board had requested. \ Mr. Sharpless commented he would be in favor of retaining Mr. Palmquist' s company rather than staying with Florida League of Cities. Mr. Sharpless commented on services of an investment advisor and the custodial bank, and expressed his opinion that STI should be considered along with others suggested by Mr. Palmquist, acid that Barnett should not be considered. Mr. Sharpless stated that he thought a 1% fee was too high and suggested that an independent advisor might work with a bank and that Atlanta Capital and NationsBank should be consulted to see what they would charge to handle the Village on an independent basis. Mr. Sharpless suggested considering two or three other proposals, although he commented that the people in Tallahassee had all spoken highly of Sun Bank. After discussion, Boardmember, Sharpless and Finance Director Kascavelis agreed to work together to compare different companies' proposals and determine which companies should provide presentations to the Board. Boardmember Bradford, Boardmember Hansen, and Chairman Mackail expressed favor for Mr. Palmquist' s firm as the Plan' s money manager. It was agreed not to hire Mr. Palmquist' s firm until the Village had gone on its own, however, to consult Mr. Palmquist Employees' Pension Trust Fund Board of Trustees Meeting Minutes January 20, 1997 Page 10 during the changeover from Florida League of Cities. Mr. Trube commented that the Board had decided at this meeting to change from two to three separate accounts, which would affect the fee proposed by Mr. Palmquist. Mr. Bradford reported he had found in the Village plan that an actuarial evaluation was required every three years for police, -every three years for firefighters, and that there - was no reference to general employees, since there was. no statutory actuarial review requirement in Florida for general employees. By consensus of the Board, Finance Director Kascavelis was requested to schedule a meeting with Boardmember Sharpless, Mr. Palmquist, and himself to answer questions regarding fees, investment advisors, etc . , and to come back with a final draft so that the Board could make a decision at a meeting to be scheduled in 60 days or less. VIII. ANY OTHER MATTERS Boardmember Oslund reported that General Employees had requested he present their concerns to the Board. Their plan required ten-year vesting and contributions by the employees. The employees felt that since their contributions were not voluntary that if they left the employment of the Village before becoming vested that they should receive their contribution dollars plus interest, and not merely the amount of contributions as was presently set up under their plan. Therefore, they had requested that the Board consider the option of changing their plan from a defined benefit plan to a defined contribution plan. Boardmember Bradford explained that interest stayed in the plan for the benefit of the general employees who chose to retire, and that all of Mr. Oslund' s comments pertained to legislative issues which was a matter for the Village Council to decide. The Village Council had made a decision to maintain continuity between the three groups of employees by having a defined benefit plan for all three. Mr. Oslund Employees' Pension Trust Fund Board of Trustees Meeting Minutes January 20, 1997 Page 11 questioned whether he would need a recommendation from the Board to take this matter to the Village Council, since the contributions were not voluntary. Boardmember Bradford explained that in the long term, paying interest on withdrawn contributions would be detrimental to the plan since an employee who stayed ten years would get 20% of their highest five years regardless of what happened to the stock market, interest earnings, etc. , and if the fund did not have sufficient monies then the taxpayers of Tequesta were required to pay. If the general employees preferred to be out of this process and be in a defined contribution plan, then they would only receive the exact amount earned on their contributions. Boardmember Bradford stressed that Boardmember Oslund should make sure each employee fully understood the pros and cons and the impacts that a decision to change to a defined contribut\ion plan would entail . Chairman Mackail suggested that a hypothetical situation using an average employee and fictitious numbers be presented as a scenario to the employees to help them understand the complete picture. Boardmember Oslund suggested that he and Finance Director Kascavelis put together a scenario to explain all of the pros and cons and if the employees still wanted a change to make sure they understood exactly what could happen. Boardmember Sharpless cautioned that one problem was that the large returns realized over the past several years could not continue indefinitely, and stated that he did not want to make any recommendations as to which kind of plan was better for the employees. Boardmember Oslund explained that if they still felt strongly after the explanation, then he would have to have a vote from the employees and if they voted to change he would bring that result to this Board and then to the Village Council. Boardmember Sharpless questioned whether the employees had a legal right to request such a change. Chairman Mackail responded that pension plans were generally established by corporate entities, and only after a lot of thought . Boardmember Bradford stated that another reason not to pay out interest on contributions before ten years Employees' Pension Trust Fund Board of Trustees Meeting Minutes January 20, 1997 Page 12 was the interest had to go back to the plan to meet the contractual requirement that each employee gets '2% or 3% per year of service. If the plan could not make those payments, the taxpayers of Tequesta would have to meet the obligation. If the employees wanted to go to defined contributions, it would be easier and cheaper for the Village to do that, but the realities must be fully understood by the employees before such a change was made. Mr. Kascavelis commented that when he and Mr. Sharpless met with Mr. Palmquist that information regarding this subject could be obtained, and stressed that portability of pension plan funds was desirable by many general employees who did not plan to stay with an employer long enough to be vested. Mr. Oslund stated that all of the general employees except one wanted to make the change. Discussion ensued regarding the inappropriateness of this discussion by this Board, since this Board` was only empowered to administer the plan as adopted by the Village Council, and the content of the plan was really legislative. Boardmember Bradford stated that if the employees wanted the change that he would take the matter to the Village Council in his capacity as Village Manager, but cautioned that the employees must be absolutely sure of the impacts and have full understanding of what they were doing. Boardmember Oslund stated he would make it very clear to them what they would be doing. Boardmember Bradford stated that Florida Statute required the Chairman of the Board to file a report with the Division of Retirement by February 15 and March 15 annually for Police and Firefighters, and that the Chairman must sign the reports before they were submitted to Tallahassee. Boardmember Bradford expressed his opinion that this Board should approve the reports at a Board meeting and give the Chairman authorization to sign. Under this scenario another meeting of this Board would need to be scheduled before Employees' Pension Trust Fund Board of Trustees Meeting Minutes January 20, 1997 Page 13 February 15 . Consensus of the Board was that a meeting should be called for that purpose. Boardmember Bradford provided information that Firefighters had voted in December to keep premium insurance tax dollars as a part of their benefit plan rather than to use the money for additional benefits. Since the resultsof the election must be provided to the Board of Trustees, Finance Director Kascavelis was advised to put this item on the agenda for the next meeting. VIII. ADJOURNMENT Boardmember Sharpless moved that the meeting be adjourned. Boardmember Bradford seconded the motion. The vote on the\ motion' was: Ron T. Mackail - for Tom Bradford - for • Allan Oslund - for James Trube - for William Sharpless - for The motion was therefore passed and adopted and the meeting . was adjourned at 10:10 A.M. Respectfully submitted, 4jgqi Betty L ur Recording Secretary Employees' Pension Trust Fund Board of Trustees Meeting Minutes January 20, 1997 Page 14 ATTEST: Joann Manganiello Village Clerk DATE APPROVED: