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HomeMy WebLinkAboutDocumentation_Pension Public Safety_Tab 01_08/03/2009SYNOPSIS OF PUBLIC SAFETY OFFICERS' PENSION BOARD QUARTERLY MEETING HELD 05/04/09 Minutes of the January 28, 2009 Emergency Meeting, the February 2, 2009 quarterly meeting, and the February 24 Joint Meeting were approved as amended with minor corrections as noted in the minutes. 2. Dan Johnson of Bogdahn Consulting, LLC provided a presentation of his report, which was approved by the Board. 3. Chair Sabin requested clarification from Rockwood Capital Advisors at the next meeting on their long-term bond strategy. 4. Steve Palmquist of Gabriel, Roeder, Smith and Company presented a review of the actuarial study and re-addressed the mortality rate tables. 5. Voted to change to the RP 2000 mortality #ables, shift to 5-year smoothing for determining the amount of contribution by the Village, and change from aggregate me#hod to entry age normal funding method. This would begin with the actuarial valuation of 10/1/09 effective for October 1, 2010 and October 1, 2011. 6. Consensus was to budget for two-year premium payments for the Travelers Fiduciary Liability Policy in the future. 7. Voted to add career service pay to the pensionable items list to correct the minutes of the August 2, 2008 meeting. 8. The following payments made since the last meeting were ratified: Hanson, Perry & Jensen, P.A. Services through 1/15/09 $3,401.97 Business Services Connection, Inc. Preparation of 1/28/09 emergency meeting minutes 50.97 Business Services Connection, Inc. Preparation of 2/2/09 joint meeting minutes 101.94 Business Services Connection, Inc. Preparation of 2/2/09 quarterly meeting minutes 135.92 Business Services Connection, Inc. Office Work for weeks ended 2/6/09 through 04/10/09 1,284.70 SYNOPSIS OF REGULAR QUARTERLY MEETING OF PUBLIC SAFETY OFFICERS PENSION BOARD HELD ON 5/4/09 2 IRS Additional Fee for 1RS De#ermination Letter 500.00 Lori McWilliams -Trustee School Expenses Split with General Employees Pension 158.78 9. The following payments were approved: Perry & Jensen, LLC. Services through 04/15/09 889.52 Bogdahn Consulting, LLC Fee for Quarter ending 3/31/09 2,000.00 Rockwood Capital Advisors, LLC Fee for Quarter ending 3/31/09 5,051.83 Gabriel Roeder Smith & Company 2,344.00 Services through 2/28/09 Business Services Connection, Inc. Minutes of Joint Meeting with General Employees' Pension Board held 2/24/09 (1/2 charged to each pension board) 59.46 10. Senior Accountan# Rahim advised of unexpected expenses. Consensus was to leave the budget as it was since its purpose was for estimating and planning. 11. Discussion was held regarding procedure to be followed if a quorum could not be obtained when an item had a time deadline. Attomey Jensen advised a quorum could no# be obtained by telephone; and in the recent situation with the IRS determination letter she could have paid the bill, then included it in her invoice, and the Board could have decided whether they wanted to pay it. Consensus was each future situation would be handled on a one-on-one basis. 12. Attorney Jensen reviewed items in the Worker, Retiree, and Employer Recovery act of 2008 which affected municipal plans. 13. Approved attendance by David Cooper to attend the 30th Annual Police Officers' and Firefighters' Pension Trustees' School May 19-20, 2009. 14. Approved the attorney's contract reflecting the firm's name change to Perry 8~ Jensen, LLC. SYNOPSIS OF REGULAR QUARTERLY MEETING OF PUBLIC SAFETY OFFICERS PENSION BOARD HELD ON 5/4/09 3 15. Pension Coordinator McWilliams announced each member had been provided with a manual of pension documents. New members would also receive this manual, and contracts would be added. END OF SYNOPSIS TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND QUARTERLY BOARD OF TRUSTEES MEETING MINUTES May 4, 2009 I. Call To Order And Roll Cali The Tequesta Public Safety Officers Pension Trust Fund Board of Trustees held a regular quarterly meeting at the Tequesta Village Hall, 345 i equesta urive, Tequesta, Florida, on Monday, May 4, 2009. The meeting was called to order at 10:40 a.m.. A roll call was taken by Betty Laur, Recording Secretary. Board Members in attendance at the meeting were: Chair Ed Sabin, Secretary David Cooper, Board Member Ken Nielson, Board Member Ray Giblin, and Board Member Robert Young. Also in attendance were Attorney Bonni Jensen, Pension Coordinator Lori McWilliams, Senior Accountant Monica Rahim, Dan Johnson representing Bogdahn Consulting LLC, and Steve Palmquist representing Gabriel, Roeder, Smith and Company, and Betty Laur, Recording Secretary.. II. APPROVAL OF AGENDA MOTION: Board Member Nielson made a motion approve the agenda as amended to move the Investment Manager's report ahead of the Monitor's report, if the Investment Manager arrived. Motion was seconded by Secretary Cooper, and unanimously carried. III. APPROVAL OF MINUTES 1. Tequesta Public Safety Officers' Pension Trust Fund Board of Trustees Emergency Meeting Minutes — January 28, 2009 2. Tequesta Public Safety Officers' Pension Trust Fund Board of Trustees Quarterly Meeting Minutes — February 2, 2009 3. Tequesta Public Safety Officers' Pension Trust Fund Board of Trustees and General Employees' Pension Trust Fund Board of Trustees Joint Meeting Minutes — February 24, 2009 MOTION: Board Member Giblin moved approval of the minutes of the January 28, 2009 emergency meeting, the February 2, 2009 quarterly meeting, and the February 24, 2009 joint meeting, with the following amendments: Public Safety Officers' Pension Trust fund Quartedy Board Meeting Minutes May 4, 2009 2 At the request of Chair Sabin, the description of the smoothing example on the last page was changed to read: Mr. Palmquist explained this plan did not use smoothing, so costs would be spread over the future working life; therefore if there were an $800,000 loss; approximately $80,000 per year would need to be replaced by the Village. If smoothing were used, 9/5 of the $800,000, or $960,000 would be -~ecognized in each of the subsequent 5 year periods, so the Village contribution would go up $96,000 this year, $32,000 next year, etc., until it capped out at $80,000 and would stay at tha# level until the full $800,000 was paid. Two changes were requested to the minutes of the January 28, 2009 emergency meeting by Board Member Nielson. Under Item 2, the word "documentation" was changed to "determination", and on page 2 at the beginning of the final paragraph the word "Chair" was changed to Hoard Member". Secretary Cooper seconded the motion, which carried by unanimous 5-0 vote. IV. PRESENTATIONS 4. Presentation By Monitor Dan Johnson, Bogdahn Consulting, LLC, reported he would be the new contact person, since Dave West had a continuing conflict with the meeting time. Joe Bogdahn reported the Rockwood representative had indicated since they had attended the last three meetings they would not attend this meeting. Recording Secretary Laur clarified that they attended the joint meeting in February, but not the regular quarterly meeting, and did not make a presentation. Mr. Johnson indicated he would contact them to attend the next meeting. Mr. Johnson reviewed their quarterly report, which showed positive performance beginning the second week in March, with clear leadership emerging, hopefully indicating a turn around in the economy. Although i# had been a bad quarter, this fund had performed well compared to their peers. Conservative weighting had been used by the investment manager, which had driven performance. Chair Sabin asked for clarification from Rockwood at the next meeting on their tong-term bond strategy. Mr. Johnson felt confident that over time the bonds had performed well, when one did no# consider the fast nine months. Mr. Johnson indicated that although this quarter had showed negative 3-1/2%, the fund was well positioned and doing better than their peers. Pubiic Safety Officers' Pension Trust Fund Quarterly Board Meeting Minutes May 4, 2009 3 Chair Nielson commented this was one of the best ever report from Bogdahn. Joe Bogdahn responded Mr. Johnson had spent a lot of time doing research for this report, and their firm now had a dedicated research team of five working on additional improvements to the report. MOTION: Board Member Nielson moved approval of the report from Bogdahn Consulting, LLC. Secretary Cooper seconded the motion, which carried by unanimous 5-0 vote. 5. Presentation by Investment Manager The Investment Manager was not present at the meeting. 6. Presentation by Steve Palmquist to review Gabriel, Roeder, Smith and Company's Achiarial Study AND 9. Re-Address mortality rate tables (from 05/05!08 meeting) MOTION: Board Member Giblin moved to include agenda item 9, Re-Address Mortality Rate Tables, which had been continued from the May 2008 meeting, in the presentation by Mr. Palmquist. Secretary Cooper seconded the motion, which carried by unanimous 5-0 vote. Steve Palmquist, Gabriel, Roeder, Smith and Company, distributed a handout and advised the Board had asked him to look into the amount of money that had been going into the fund. Referring to the handout, which contained a 10-year history ofi the amount paid into the plan by police, firefighters, the Village, and the State (the baseline amount the Village could take credit for against this contribution). Discussion ensued regarding contributions, Attorney Jensen clarified the plans had split December 11, 2003, and Mr. Palmquist verified he had always figured each plan separately even before the split. Attorney Jensen reported that state revenues, which came from insurance premiums, were predicted to be down this year because people had dropped their car insurance and there were many foreclosures, with property values down. Mr. Palmquist discussed contributions as a percent of payroll which had been around 10% of payroll for the past few years; other plans had been between 15%-20% of payroll. Mr. Palmquist estimated that the Florida Retirement System contribution rate for public safety would be around 25%-26% of payroll beginning July, 2010. The primary reason Tequesta's rate was lower was mainly because it was a young plan. Mr. Palmquist reviewed different scenarios of what would happen to the City's cost if return on market value was minus 15% in 2009 and 8% in each of the Public Safety Officers' Pension Trust -Fund Quarterly Board Meeting Minutes May 4, 2009 4 following five years: cost of the plan would go up 5-3/4% of payroll in the next year and stay there for a number of years. 1f asset smoothing were used it would go up only 1.1 % of payroll each year until it got up to 5-314% of payroll, then stay at that level. The next scenario considered minus 20% in 2009, zero in 2010, and 8% thereafter, which would mean the cost of the plan would go up 6-1/2% of payroll the first year, and over 8% percent of payroll over time. Two more scenarios were presented-all tour scenarios were under the aggregate funding method without smoothing, the method the plan currently followed. Mr. Palmquist explained the differences between aggregate funding method and entry age normal method funding. Since this plan was small and the aggregate funding method was more conservative, he did not recommend changing, even though most other plans in the state used the entry age normal method. Mr. Palmquist reviewed examples of how the smoothing method would work. Actual investment return was compared to what it would have been if 8% had been earned; that amount would be spread over five years. One-fifth of the difference would be taken the first year, adding another one-fifth each year over each of five years. Mr. Palmquist explained that a1#hough the last evaluation was done 1011/07, they updated their database for this report so that the data was as of 10/1/08. Without making any changes, the rate for the Village would go up to 15.3% because of fosses on investments and salary increases larger than the 6% assumption. Those losses caused a 50% increase in percent of payroll and more than a 50% increase in dollars. The Village would be contributing approximately $150,000 more per year. If smoothing had been used, that 15.3% would be around 11.6% of payroll. If the mortality rates were changed from those currently in use to the RP 2000 mortality table, that would make the City's cost go up 2.3% of payroll, to 17.72%. The new table would not be a static table that would have to be re-visited; the new tables contained allowance for continued future improvements and mortality rates. Use of the new table was not widely used, but its use was growing. Discussion ensued. Mr. Palmquist noted this new table would have to be adopted sooner or later, and recommended the new table which was tied to length of service-8% for new hires, and gradually decreasing to 6°l° for people with 10 or more years of services. Chair Sabin suggested getting feedback from Police and Fire representatives and HR as to whether the historical trend was expected to continue over the next few years, since the assumption was being based on historical actions. Mr. Palmquist explained they used a larger population than just the Village because there weren't enough people #o come up with statistically significant figures, and the recommended table was one they had come up with for several of their police and fire funds. Chair Sabin commented that even though this was drawn on a larger population, the question Public Safety Officers' Pension Trust Fund Quarterly Board Meeting Minutes May 4, 2009 remained whether the historical actual activity was still representative of what was expected going forward fora 5-10 year period. Mr. Palmquist acknowledged it would be good to hear from the Village's people to see what they thought. Mr. Palmquist referred to the actuarial valuation for 2007, commenting actual increases over an extended period were shown-an average of 10% for Fire and 9.8% for Police were the actual over a 15-year period. Chair Sabin noted this would indicate the assumptions were fairly conservative across the larger group. Secretary Cooper commented his only concern was with what was going on around the country with departments freezing pay raises, freezing benefits, and layoffs. Mr. Palmquist commented in the actuarial valuations they had done through 9/30/08, they had seen a little bit of mitigation in pay increases, but not a lot, and fie expected to see more in 2009. Discussion ensued regarding 3-year union contracts, the actuarial assume#ion currently at 6%, and step plans. Finance Director Forsythe commented each union had 5% increases. Consensus was the increment above 6% was not needed. Human Resources Director Merlene Reid joined the meeting at #his point and explained there was 5% for police and 5.2% for fire just for this year bu# negotiations would begin again soon. Consensus of the Board was they were comfortable with 6%. In reviewing further information, Mr. Palmquist noted the difference in going to 7% versus 7-1/2% rate of return on investments was 4.4% of payroll. Mr. Johnson expressed his opinion that 8% was a viable long-term rate of return, and advised the General Employees Pension Board had changed their rate from 8% to 7-1/2%. Discussion ensued. Board Member Nielson asked if the retirement age could be changed, #o whicfi Mr. Palmquist responded that would mean the funds would lose their State monies. No one indicated they would like to change the assumption rate, and Mr. Palmquist explained the best time to change it would be when things were going well and costs were going down. Mr. Palmquis# commented all the decisions under discussion were Board decisions, not Village decisions. Board Member Nielson responded he thought it would be prudent to seriously consider changing the mortality rate to the new table; Board Member Gibiin and Secretary Cooper expressed agreement. Chair Sabin expressed his opinion that all of the changes under discussion did not have to be made today, but could be made when timing was right, balancing all the elemen#s of alignment of the plan with others in the State with the leas# amount of impact, changing the method of funding, or make assumption changes that would fiscally impact long-term growth of the plan, as suggested by Board Member Young. During the ensuing discussion, Mr. Palmquist advised that without doing anything at all the Village's cost would be 15.3% and encouraged Finance Director Forsythe #o build that into the ViNage's budget. Smoothing was discussed further. Public Safety Officers' Pension Trust Fund Quarter#y Board Meeting Minutes May 4, 2009 6 MOTION: Board Member Nielson moved to change to the new RP 2000 mortality tables, shift to 5 year smoothing for determining the amount of contribution by the Village, and change from aggregate method to entry age normal funding method. Board Member Young seconded the motion, which carried by unanimous 5-0 vote. Mr. Palmquist advised this would begin with the actuarial vacuation of 10/1109, effective for October 1, 2010 and October 1, 2011. Pension Coordinator McWilliams asked if investment returns and salary assumptions should be put on a calendar to be brought up at a later date. Consensus of the Board was not to calendar these items since they would be included in the actuarial evaluation in two years and could be discussed then, unless the Board felt they should be brought up before #hat time. V. UNFINISHED BUSINESS 7. Consideration of future budgeting for 2-year renewals for Travelers Fiduciary Liability Policy Lori McWilliams, Pension Coordinator, explained this item was being brought before the Board for future premium payments, since the insurance company wanted to bill for two years at a time. There was no difference in the policy amount; this was simply so that this item could be budgeted for two years in the future. Attorney Jensen advised no motion was necessary; it would be budgeted for two years in the future. 8. Total Cash Remuneration Determination -tabled from 02/24/09 Joint Meeting Lori McWilliams, Pension Coordinator, advised that Board Member Nielson had requested this matter be brought back in February, then it was tabled to this meeting. She explained the problem was an unintentional clerical error in the minutes; Attorney Jensen had read into the record the lis# of pensionable i#ems suggested by the Board, based on HR's and Finance's suggestions, but when translating that into the minutes the career service benefits had been omitted. Since it was not on the table in the minutes, this had caused issues with the Finance Department, and they could not consider it a pensionable item. At the special meeting on February 24, Pension Coordina#or McWilliams had asked the Board to amend the minutes; however, there had been discussion and Board Member Nielson had requested she find out what other municipalities considered pensionable items. The career service benefits item had been approved by the Board and was in the recording of the meeting. Attorney Jensen explained there Public Safety Offrcers' Pension Trust Fund Quarterly Board Meeting Minutes May 4, 2009 ~ had been two different charts, and the wrong one had been placed in the minutes. It was explained that the career service benefits item was a longevity pay plan based on years of service. Board Member Nielson commented his concern was who had the authority to determine whicfi items were pensionable- this Board, or Village Council, who was responsible for appropriating monies to cover these financial items. Attorney Jensen clarrfied it was this Board's authority to interpret the definition of total cash remuneration, and in order to do that, the Board went back to the municipality and the collective bargaining agreements and looked at what was included in the definition of pensionable salary. The municipality gave the Board a list of i#ems that were included as pensionable, which the Board adopted as their defnfion of pensionable items. Board Member Nielson asked what the authorizing document was, to which Attorney Jensen responded she did not know where Human Resources obtained the information to make the chart, but she guessed it was the collective bargaining agreement; however this information might precede the collective bargaining relationship. Board Member Nielson wanted it on the record he had asked where the authority came ftom. MOTION: Secretary Cooper made a motion to add career service pay to the pensionable items list to correct the minutes of the August 4, 2008 meeting. Board Member Giblin seconded the motion, which carried by unanimous 5- 0vote. VI. STANDING REPORTS (INFORMATION ITEMS) 10. New applicants for participation in Pension Plan Police Officer - Ariel 1. Ramirez, Jr. Date of Hire 12/22/08 11. Change of Beneficiary None 12. Request for withdrawal of contributions (employees terminating employment with Village of Tequesta) -Ratification of withdrawals made since the last meeting on 2 signature basis: None 13. Terminated Employees who fiave not taken their contributions Officer Charles Malley -Resigned 8/25/08 -Vested Public Safety Officers' Pension Trust Fund Quarterly Board Meeting Minutes May 4, 2009 8 14. Revenue and Expenditure Report There were no questions or comments on information items 10-14. VII. PAYMENTS TO BE RATIFIED (PAYMENTS MADE SINCE LAST MEETING) 15. Hanson, Perry Sz Jensen, P.A. Services through 1/15/09 $3,401.97 Business Services Connection, Inc. Preparation of 1/28/09 emergency meeting minutes 50.97 Business Services Connection, Inc. Preparation of 2/2/09 joint meeting minutes 101.94 Business Services Connection, Inc. Preparation of 2/2/09 quarterly meeting minutes 135.92 Business Services Connection, Inc. Office Work for weeks ended 216109 through 04/10/09 1,284.70 IRS Additional Fee for IRS Determination Letter 500.00 Lori McWilliams -Trustee School Expenses Split with General Employees Pension 158.78 MOT1ON: Board Member Nielson moved approval of the items presented for ratification under agenda item 15. Secretary Cooper seconded the motion, which carried by unanimous 5-0 vote. VIII. PAYMENTS TO BE REVIEWED AND APPROVED 16. Perry 8~ Jensen, LLC. Services through 04/15/09 889.52 Bogdahn Consulting, LLC Fee for Quarter ending 3/31/09 2,000.00 Public Safety Officers' Pension Trust Fund Quarterly Board Meeting Minutes May 4, 2009 9 Rockwood Capital Advisors, LLC Fee for Quarter ending 3/31/09 5,051.83 Gabriel Roeder Smith ~ Company 2,344.00 Services through 2128/09 Business Services Connection, Inc. Minutes of Joint Meeting with General Employees' Pension Board held 2124109 (1/2 charged to each pension board) 59.46 Chair Sabin questioned the amount of the Bogdahn invoice, which had not been updated to the new contract amount. Mr. Johnson advised there would probably be corrected invoices in the future. It was verged the Board had received an invoice in the amount of $2,000 for the quarter. MOTION: Secretary Cooper moved approval of the items presented for payment. Board Member Young seconded the motion, which carried by unanimous 5- 0vote. IX. BUDGET REPORT 17. Quarterly Budget Report Expenditures Senior Accountant Monica Rahim advised there had been unexpected legal expenses, there were five more months to cover and asked if the Board would like to amend the budget. Chair Sabin commented that actuarial services might also increase. Attorney Jensen commented if $2,200 were added into the legal expense budget it would be back on track. Consensus of the Board was to leave the budget as it was since it was for estimating and planning. X. NEW BUSINESS 18. *Discussion and consideration of procedure on how to handle items that might have a time deadline when there is the possibility of not being able to get a quorum Lori McWilliams, Pension Coordinator explained this was almost an issue with the IRS determination letter when having to turn it around in a 24-hour period, and she had been very lucky to get three Soard members for a quorum when it looked like she was not going to be able to do so. She asked if the Board wanted to give someone else authority to do something if this situation arose again. Attorney Jensen advised tha# under the law, the Board had to meet in public to make that decision-she could have gone ahead and billed it and the Public Safety Officers' Pension Trust Fund Quarterly Board Meeting Minutes May 4, 2009 10 Board could have then decided whether or not to pay it. Attorney Jensen clarified that a quorum could not be obtained via telephone. Discussion ensued. Consensus was this would be discussed on a one-on-one basis #or future similar situations. 19. Worker, Retiree, and Employer Recovery Act of 2008 (H.R. 7327) Attorney Bonni Jensen reviewed important items in this Act affecting government pension plans. Previousty, pension plans could not pay any more than a market rate of interest; under this Act pension plans could pay interest at rates set by federal, state, or local law even if it exceeded market ra#es. This was important for DROP programs that paid interest-now the interest rate could be whatever the Board set. The $3,000 exclusion for payment of Public Safety Officers' health insurance premium had been clarified that it also applied to aself-funded health insurance program. Some relief had been granted for the required minimum distribution used in DROP programs. As of December 31, 2009 non spouse beneficiaries would be allowed to roll over pension plan distributions into IRA accounts. There had also been changes in the private sector. 20. Consideration of approval for David Cooper to attend 30~' Annual Police Officers' and Firefighters' Pension Trustees' School May 19-20, 2009 Pension Coordinator McWilliams confirmed with Board Member Cooper he still planned to attend the FPPTA school in October. Senior Accountant Rahim would add the school expenses to the budget. MOTION: Board Member Young moved approval for David Cooper to attend 30tH Annual Police Officers' and Firefighters' Pension Trustees' School May 19- 20, 2009. Board Member Giblin seconded the motion, which carried by unanimous 5-0 vote. 21. Attorney's Agreement due to Firm Name Change Attorney Jensen advised her partner had retired and the firm's name had been changed to the Law Offices of Perry & Jensen, and she had prepared a con#ract reflecting the name change. MOTION: Secretary Cooper moved approval of the contract reflecting the firm name change from Hansen, Perry ~ Jensen, P.A. to Perry 8 Jensen, LLC. Board Member Young seconded the motion, which carried by unanimous 5-0 vote. Public Safety Officers' Pension Trust Fund Quarterly Board Meeting Minutes May 4, 2009 11 XI. ANY OTHER MATTERS Pension Coordinator McWilliams announced each member had been provided with information regarding the FPPTA conference to be held in Boca Raton in June. Also, each member had been provided with a manual, to which contracts would be added, and this would be provided to future new members. Ms. Mclliams requested if anyone wanted something else added to the manual, to let her know. Pension Coordinator McWilliams commented the time allotted for meetings no longer seemed sufficient, so this would be brought up at a future meeting; Chair Sabin noted it seemed like three hours was needed. Attomey Jensen advised the Board would be receiving a discussion of sweeping changes to 175 and 185 increasing the ability to invest in foreign investments, which had recently passed, and would now need the Governor's signature. XII. COMMUNICATIONS FROM CITIZENS XIII. ADJOURNMENT Upon motion by Board Member Glblin, seconded by Board Member Young, and unanimously carried, the meeting was adjoumed at 1:20 p.m. Respectfully submitted, Betty Laur Recording Secretary