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HomeMy WebLinkAboutMinutes_Pension Public Safety_2/11/2019TEQUESTA PUBLIC SAFETY OFFICERS’ PENSION TRUST FUND REGULAR BOARD MEETING MINUTES February 11, 2019 CALL TO ORDER The Regular Quarterly Board Meeting of the Tequesta Public Safety Officers’ Pension Trust Fund Board of Trustees was held at the Village Hall Council Chambers, 345 Tequesta Drive, Tequesta, Florida, on February 11, 2019. The meeting was called to order at 8:31 a.m. ROLL CALL A roll call was taken by Pension Administrator Kerry Dutton. In attendance at the meeting were: Chairman Ed Sabin, Secretary John Terzakis, Board Member Ray Giblin,andBoard Member Kyle Stone. Also in attendance were Attorney Bonni Jensen, Pension Administrator Kerry Duttonand A.C. Lovingood,InvestmentMonitor Jennifer Gainfort,and Actuary Jeffery Amrose. PUBLIC COMMENT There was no public comment at this time. APPROVAL OF MINUTES 1.Tequesta Public Safety Officers’ Pension Trust Fund Board of Trustees Regular Quarterly Meeting Minutes –November 5,2018 The Board reviewed the Quarterly Meeting Minutes for November 5, 2018. MOTION: Board Member Ray Giblinmade amotiontoapprove the minutes fromNovember 5,2018. Board Member Kyle Stoneseconded the motion, which carried by unanimous 4-0vote. PRESENTATIONS 2.Actuarial Valuation Report–Jeffrey Amrose Mr.Amrose presented the Actuarial Valuation report reviewing the Pending Plan Ordinance that will re-open the Pension Plan to the Village of Tequesta Police Officers and that the 401(b) Plan balances would be transferred into the Pension Plan. He went on to explain the details of the Pending Ordinanceand pointed out that the Plan would be eligible to receive future annual Chapter 185 revenueupon state approval. Attorney Bonni Jensen informed the Board that there is also an Ordinance that allows a one-time opt out election to participate back into the Pension Plan. Mr. Amrose stated that theemployer contribution has been adjusted for interest on the basis that payments are made in equal installments at the ending of each month. The required employer contribution was also computed with the assumption that the amount to be received from the State on behalf of the police officers is $88,336.00 for 2020, and on behalf of firefighters is $156,518.00 in 2019 and 2020.In addition there is an estimated Chapter185 Reserve balance of $157,081.00 for 2020 that is assumed to be used towards the city’srequired employer contribution. The Employer and State contributions for police officers for the fiscal year end was $175,116.00 and $0.00, respectively, for a total of $175,116.00, or 30.08% of payroll. The employer, State, and State reserve contributions for firefighters for the fiscal year end was $182,198.00, 156,518.00 and $151,438.00, respectively for a total of $490,154.00, or 32.52% of payroll. The overall experience since the last valuation was more favorable than expected, resulting in an actuarial gain of $90,947.00 which is primarily due to the lower than expected pay increases and due to a slightly greater return on investments. Mr. Amrose continued and stated that the Plan’s Funded Ratiois 98.2% and was 100.6% funded before the Plan Ordinanceas compared to the previous year of 98.1%. The market value of assets is greaterthan the actuarial value of assets by $363,380.00 as of the valuation date. This difference will be recognized over the next several years in the absenceof offsetting losses. Mr. Amrose went on to review the GASB 67 report forthe Village.There was a discussion on the allocation and rate of return policy for the share plan accounts and a brief discussion on the expected pay raises compared to the assumption.Chairman Ed Sabin reviewed a past discussion on reducing the expected rate of return and reviewed the 10 year asset class foreseeable return. Mr. Amrose stated that he is confident that the Police Officers would not causean increase in Village contributions ifthe assumed rate of return is changed from 7.25% to 7%, however he stated that he is unsure of what the Firefighters impact would be if the assumed rate of return was reduced. Trustee Ray Giblin stated that he believes reducing the assumed rate of returnwhilethe plan is healthy would begood and Secretary John Terzakis stated that he is in favor of reducing the rate as well.Investment Monitor Jennifer Gainfort confirmed the decreases in equity returns and is seeing many other Pension Plans reducing their assumed rate of return to a more conservative expectation MOTION: Board Member John Terzakismade amotionto lower the expected rate of return for the Actuarial Valuation Report to 7%.Board Member Kyle Stone seconded the motion, which carried by unanimous 4-0vote. Chairman Ed Sabin requested that Michelle Gload notify the Village that the assumed rate of return is reduced to 7% for this evaluation. There was a discussion on smoothing methods versus market value;Mr. Amrose stated that using theMarket Valueis not commonplace due to volatility which makes it very difficult for the municipality to forecast their costs associated with funding the Pension Plan. Mr. Amrose then reviewed the risks associated with measuring the accrued liability andactuarially determined contribution for the Plan and finally reviewed the GASB 67 reports. Attorney Bonni Jensen informed the Board that they would not be able to approve the Actuarial Valuation Report due to the Board’s vote to change the expected rate of return in the report. Mr. Amrose stated that he will calculate the Firefighters contribution at a 7% rate of return. 3.-Jennifer Gainfort, And Co Consulting Jennifer Gainfort started her presentation with an update on how AndCo is doing. She informed the Board that AndCo is now 89 employees strong with over $90 Billion in client assets. Ms. Gainfort informed the Board that they should expect to receive a client survey from Hellcat Research on behalf of AndCo so that the company can obtain an accurate picture of how they are doing and where they can make improvements to meet their clients’ needs. th Ms. Gainford reported that the stock market suffered losses for the 4Quarter; this was dueto the global growth slowing down, trade tensionsbetween The United States and China, the midterm elections in Congress, the ongoing effects of monetary policy tightening by the Federal Reserve, Federal debt ceiling negotiationsand the recent partial government shutdown. Ms. Gainfort then reviewed the Asset Allocationby Asset Class with the Board and stated that there is no need to rebalance at this time. The quarterly trailing returns werereviewed and Ms. Gainford stated that a manager search was brought along to possibly replace GAMCO due to its poor performance. There was also a mention that PrimeCap has an allocation to Nector, which is very volatile; however PrimeCap has started to decrease the allocation in Nector. The past quarter has been a troubling start to the fiscal year;however the market is up 5.87% thus far in the current quarter. A discussion continued on the allocation target and the details on the benchmarks used to compare the funds returns. 4.-Jennifer Gainfort, And Co Consulting Ms. Gainfort started her presentation for the Small & Large Cap Value Equity Manager Analysis by recommending an 80%-20% allocation due to the small cap being a little more volatile. She then reviewedthe five investment options for the Large Capevaluation reportalong with their managementfees and investment minimums. Ms. Gainfort did point out that the Investment Minimum amount for the JPMorgan Equity Income R6 Mutual Fund was waved. She continued to discussthe Investment Option Comparisons,noting that all of the funds use a primary investment approach of Bottom-Up and that four of the five funds use a secondary fundamental investment approach. The only fund that uses a Quantitative secondary approach is DFA US Large Cap Value I. Ms. Gainfort reviewed the tracking error estimates on all five funds and stating that the Dodge & Cox Stock fund error estimate is closer to 5%, while the JPMorgan Equity Income I Fund’s tracking error estimate is closer to 3%.The decision making structure was reviewed along with the number and names of the decision makers for each fund along with the portfolio construction and performance. Ms. Gainfort stated that JP Morgan has outperformed over the past several years and that JP Morgan has farless risk in the 10 year average, noting that this fund has the least amount of risk. Ms. Gainfort informed the Board that her recommendation is that the Plan goes with the JP Morgan Equity Income I Fund. Ms. Gainfort then went on to review the Small Cap Value Equity Manager Analysis starting off with reviewing the management fees for the three manager options noting that all three options have no minimum investment. All three funds have been around for a long time, noting that Dimensional Fund Advisors uses a quantitative secondary investment approach. Ms. Gainfort then reviewed the portfolio construction of the three investment manager options,notingthat Wells Fargo Special Small Cap Value R6 fund is PM-Led by three CPAsand has 10 investment analysts assigned to thefund. She also noted that thetypical number of holdingsin the Wells Fargo Fundis 80-120holdings, comparedto 1,000-2,000 holdings at DFA,and 500-600 in American Beach Small Cap. Finally Ms. Gainfort reviewed the trailing performance of the three funds compared to the Russell 2000 pointing out that Wells Fargo has for the long haul always beat the benchmark when the markets have done well and with the exception of this past year, always beat the benchmark set in down markets.Ms. Gainfort stated that her recommendation is to go with the Wells Fargo Special Small Cap Value RS Fund due to is low volatility and stability. Trustee Stone statedthat he agrees with Ms. Gainfort’s recommendation of 80% in Large Cap, Trustee Stone went on and stated that he thinks that the Plan should place 10% into Small Cap and 10% into EFT’s as a means to lower the cost of the Plan and capture more of the S&P. Trustee John Terzakis gave a recommendation of rebalancing the Plan and place 80% of the Large Cap allocation into JP Morgan and add a stock picker. Trustee Terzakis stated that the Plan should enter into a defensive market and lean more towards value. Alengthy discussion ensured on pulling from growth and movesthose funds into value. MOTION: Board Member Kyle Stonemade amotionto liquidate Gamco and Primcap, and place 80% into the JP Morgan Equity Income I Fund, and 20% into the Wells Fargo Special Small Cap Value RS Fund.Board Member Ray Giblin seconded the motion, which carried by unanimous 4-0 vote. CONSENT AGENDA Ratification of Invoices Paid Since Last Quarterly Meeting Check #Paid DateVendor / DescriptionAmount 134511/12/2018Pension Resource Center950.00 Administrative Fees-November 2018 134611/12/2018Klausner, Kaufman, Jensen & Levinson2,233.00 Professional Services Rendered through 10/31/18 134711/12/2018Gamco Investors3,563.00 Investment Management Fees-3QTR18 134811/12/2018Garcia Hamilton & Associates1669.66 Statement of Management Fees-3QTR18 134912/12/2018Pension Resource Center1,050.00 Administrative Fee-December 2018 135012/12/2018Klausner, Kaufman, Jensen & Levinson1,442.00 Professional Services Rendered through 11/29/18 135112/18/2018FPPTA1,442.00 2019 Annual Membership Fee –Cart #1527 13521/9/2019Gabriel, Roeder, Smith & Company2.303.00 Services Rendered through 10/31/18 13531/9/2019Pension Resource Centers950.00 Administrative Fee –January 2019 13541/9/2019AndCo Consulting, Inc4,500.00 Consulting Service Fee For QE 12/31/18 $19,260.66 Custodian Fiduciary Trust International Invoices for QE 12/31/18 4Accounts 2,042.51 $21,303.17 The Board reviewed the ratification of invoices paid since last quarterly meeting.The Board noted that there are two new hires for the Fire Department on 10/01/2018, Chris Chance and Zack Whitehurt.The Board also stated that there will also be a new hire on 03/01/2019 named Maximiliano Maravankin and it was noted that Firefighter John Cox will be coming in to fill out his retirement paperwork. MOTION: Board Member Ray Giblinmade a motion to approve the Consent Agenda.BoardMember John Terzakissecondedthemotion,whichcarriedbyunanimous 4-0vote. NEW BUSINESS 5.–Attorney Bonni Jensen, Klausner, Kaufman, Jensen & Levinson House Bill 265 Ms. Jensen reported onthe proposed House Bill 265, which would amend Florida’s Open Meetings Law and impose additional procedural requirements. Ms. Jensen stated that HB 265 would require Boards to publish their agenda and any materials or attachments which would be distributed at the meeting at least three days in advance of the meeting, that at least two copies of the agenda and any materials to be distributed at the meeting must be made available for public inspection at the meeting location, and that emergency meetings must have a minimum 24 hour advance notice to the public. The proposed bill also addresses public participation which states that at least three minutes shall be available to each member of the public that wishes to speak as either the first or last item on the agenda. Ms. Jensen made note that the bill also states that if there are more than twenty people who wish to speak that the time can be limited to one minute per person and groups can allow one individual to speak on behalf of the group, thus allowing the group to pool their time together. Ms. Jensen expressed her concern regarding the requirement of posting materials and attachments for Board Meetings that address a disability determination due to the sensitive medical information that her office has to request from the member’s physicians. She stated that her office requests a large amount of medical information that once it is reviewed may not have any impact on the disability determination and questions how this information would be handled if this bill is passed. There was a discussion on when a Shade Meeting would be allowed, prompting Ms. Jensen to review Shade Meeting rules. Ms. Jensen stated that everything discussed in a Shade Meeting will become public record due to Florida State Law Florida’s Public RecordsLaw Ms. Jensen presented a list of items that are exempt from public inspection that must be removed prior to a public records release. Ms. Jensen also made mention to the amendment of the public records law which now includes the removal the address of a victim of an incident of mass violence; and the removal of any portion of a meeting revealing fire safety system plans. Power of Attorney Ms. Jensen presented a memorandum to the board regarding Florida Statute 709, Power of Attorney. The reason for bringing this information to the board had to do with a recent Power of Attorney that Ms. Jensen’s office received that did not meet the requirements set forth in Florida Statute 709 and New York State Law where the Power of Attorney was established. Ms. Jensen reviewed the information provided in the memorandum and expressed that the Board is required by law to reject a Power of Attorney or Durable Power of Attorney within a reasonable time if it deems that the Power of Attorney is not compliant with Florida State Law in addition to if the Power of Attorney or Durable Power of Attorney is from another state, that it is in compliance with that state’s laws as well. She went on to say that a reasonable time is not statutorily defined within the law; however the Board should have its validity confirmed within a month’s time, whenever possible. Status Update onProposed Ordinance No. 2-19