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HomeMy WebLinkAboutMinutes_Pension Public Safety_07/07/09TEQUESTA PUBLIC SAFETY OFFICERS' PENSION TRUST FUND SPECIAL MEETING MINUTES July 7, 2009 Call To Order And Roll Call A special meeting of the Tequesta Public Safety Officers' Pension Trust Fund Board of Trustees was held at the Tequesta Village Hall, 345 Tequesta Drive, Teques#a, Florida, on July 7, 2009: The meeting was called to order at 9:00 a.m. A roll call was taken by Recording Secretary Betty Laur. In attendance at the meeting were: Secretary David Cooper, Board Member Ken Nielson, Board Member Ray Giblin, and Board Member Robert Young. Chair Ed Sabin was absent from the meeting. Also in attendance were Village Manager Michael R. Couaao, Jr., Pension Coordinator Lori McWilliams, Fire Chief James Weinand, Police Chief William McCollom, and Recording Secretary Betty Laur. Discussion of Village Increasing the 2008/2009 General Fund Budget for Additional Contribution to the Public Safety Pension Trust; Village Council Funding 11°~ to 27.9% Michael R. Couzzo, Jr., Village Manager, addressed the board, commenting he wanted to bring them the latest developmen#s regarding the Public Safety Officers Pension-some of the assumptions and returns had not been what were hoped. Manager Couzzo commented he appreciated the board having the actuary look at the assumptions. The Manager explained this plan was funded by employee contributions of 5% and the Village contributed the difference to meet the assumption. He had spoken with the Village Council about this, and advised there was reason to be concerned if the current assumptions were not met in the future, since that would be a liability of the Village. He had asked the Council to decrease that liability so as not to send it on to future councils. The Village Council was going to make a contribution to the plan to offset this liability at the Thursday, July 9, 2009 Village Council meeting in the amount of $342,000.00. Village Manager Couzzo commented he did not know how this would affect the assumptions. He spoke with the actuary, Steve Patmquist of Gabriel, Roeder and Smith Company„ who had indicated this contribution would help, but he did not know how much. Manager Couzzo advised that last year the Village had funded the pension at 11 % of salary and would look at changing that up to 27%. This year 15.3% would be in the administrative budget presented to the Village Council, and that did not take into account that the Village Council was contributing $342,000.00. The Manager commented he did not want the Board to be surprised or think actions were being taken behind their backs, and he wanted to get their input to take to the Village Council on the Stn Special Meeting Minutes Board of Trustees of Public Safety Officers' Pension Trust Fund July 7, 2009 2 Secretary Cooper asked what the amount of $342,000.00 had been based on. The Manager explained they had taken the worst case scenario based on the actuarial reviev~this was the difference between what had been funded and 27.9%--it was more than double the previous 11 %. The $342,000.00 would be taken from Village reserves. The Village Manager explained there had been a lot of conversation on whether the Village could sustain this plan in the future, and options had been discussed, such as whether to go to a 457 and freeze defined benefits. The Police Chief and Fire Chief were present today because they represented the employees affected by the Public Safety Officers' pension plan. In good years, the Village had contributed less, but the employees' contribution remained constant at 5%. With the current down market, no one knew the long-term impact on the Village's reserves, but there were a lot of options that could be considered. It was the Board's responsibility to consider options; the Village Manager was not a member of the Board-he was the Chief Executive OfFcer of the Village and there was a link between the Board and his position since he was responsible for the budget. Board Member Young asked if there was a numerical point that the markets must drop to in order to say, look at options. The Village Manager responded he did not think so; no one knew what would happen. He had urged the Council and Board to look at this because in this and the next few years, the impact would be significant for the Village, and he had to find a way to come up with $342,000.00 this year. Since the budget was only $9 million, $342,000 was not easy to come up with. The Village Council might want to budget 27% for next year, which would almost necessitate laying off employees, although he did not think it would be necessary to budget that amount next year, and the Board would have to decide that. Hopefully the markets would start to come back next year. By budgeting 15% next year, that would be an increase of 30%. Board Member Young asked if there was a number the market had to hit to go to 27%. The Village Manager responded, no, but the Council would want to consider all their options, and from a risk tolerance s#andpoint, at the moment, he would rather be where the employee was and know their contribution was fixed at 5% regardless of where the market was. The reality of the economic times was everyone was taking a big hit. Board Member Giblin commented he believed 27.9% was assuming a 7.5% return plus adjusting to the new mortality rates, and not smoothing, which the Village Manager confirmed. Manager Couzzo commented he had done that deliberately so the Council would have to look at 4 or 5 different scenarios, but more could be looked at. The Manager expressed his personal opinion there was too much money out there and this depressed market could not continue for long. The market seemed to be stabilizing itself. The question was where the Special Meeting Minutes Board of Trustees of Public Safety Officers' Pension Trust Fund July 7, 2009 Board stood--it was the Board's decision how to fund the assumptions, because they were responsible to the members. There were many questions--what was the Board going to recaommend to the Village, where should the tolerance break, if a $320,000 contribution were made next year would that be enough offset? Manager Couzzo advised he had recommended to the Council to do a study to look at alternatives to the current plan that basically was everyone currently in the plan stayed in the plan as it was, but alt new employees would go to a mod~ed plan with a 2% multiplier #or all Public Safety employees and a defined benefit, reducing the need for investment, plus possibly offsetting with some type of 457. Board Member Giblin asked about the 175 funds. The Village Manager commented he did not think 175 funds would be impacted. Board Member Giblin noted if the General Employees plan .and this one were changed the same, would basically mean the Public Safety plan losing the 175 funds. The Manager advised it appeared the 175 money was not being challenged by the State. The unions might not challenge the 175 funds because it affected only new members that they did not yet represent. Manager Couzzo explained he was trying for a mechanism not to go to the lowest or highest, but somewhere in the middle. Board Member Nielson reported he had spoken with Tony Brown of Rockwood, the investment manager, who said many of their larger clients were putting in additional funding at this time--there was a definite benefit to doing that. He had also spoken to the Bogdahn Consulting representative, Qan Johnson, who said a lot of municipalities out there did not have money to do this, but if the Village could afford to do it now was the time. The Village Manager indicated now might be the time to make the investment, The Manager commented he believed it was a smart move. The Village had been very disciplined over the years, and had put themselves in#o a strong position to address these issues now. Reserves were about 60%-70% of the Village budget, so the Village could afford to do this-take this money out this year. The Village would take a hit on ad valorem tax, since the Village Council would not raise the millage rate; therefore, most residents would see a decrease in their taxes while the Village saw an increase in the cost of doing business. The Village had put funds away for a rainy day. Other municipalities did not have the money and could not even think about doing this; fortunately, the Village had enough to sustain themselves. Board Member Nielson asked about establishing a task force to deal with the funding and options. Village Manager Couzzo advised that the Board is the task force and he hoped the Board would be very proactive. Board Member Nielson Special Meeting Minutes Board of Trustees of Public Safety Officers' Pension Trust Fund July 7, 2009 4 commented he thought the Board had the talent to do that; the difficulty in achieving the goal would be that they must meet in the sunshine. West Palm Beach had addressed a similar issue, and they had set up a separate committee that was purely informational and did not have to meet in the sunshine. The Village Manager commented that would probably be challenged and the people had a right to know what was discussed. Board Member Nielson expressed his opinion it was just an inconvenience that he could not call any of the other members, and the Board only met quarterly. Manager Couzzo responded the Board could meet more often-this was an important issue-there were a number of options the Board needed to look at, and this would not resolve itself overnight. Secretary Cooper asked if similar action had been taken by the General Employees' Pension Board, to which Manager Couuo responded, no, they had no need. The Public Safety Officers' Board represented a larger portion of the budget, and the higher end of the salary ranges, the General Employees pension had had better investment returns, and there were many more differences. The Village Council was making a big investment here on behalf of the residents. Board Member Giblin commented this had originally been brought up when considering the smoothing method, but doing this seemed to be a year-by-year cost basis, and asked if the Council was still interested in going to a smoothing method. The Village Manager expressed his opinion that smoothing was a smart play, but it was the Board's call whether to do smoothing. He believed smoothing was the way to go, even with the Council making a large contribution now, and if the markets came back and all of a sudden they had a goad return, that was okay, but there was a cost to do that. Board Member Young stated he applauded the Village for having funds in reserve. Village Manager Couzzo commented the Village had had a very disciplined approach and it had taken a lot of effort, including negotiations with the unions, plus a Village Council who made it a commitment. Ultimately it was a benefit to the residents because the Village had maintained an exceptional level of service while reducing taxes. The Village Manager commented he and Chief Weinand had met with Chief Jerold-number 2 in the county-#alking about Tequesta Fire Rescue. He said there was no better department than Tequesta, as good as the county and less expensive. The Manager asked that the Fire Chief pass that on to his employees--it was a very big compliment. Manager Couzzo commented that was the picture; this had been brought up to be addressed so employees could get their pensions some day. People did not always understand fire rescue or police work-that every time they pulled over a car, they put their lives in danger; that was part of the reason for the multiplier Special Meeting Minutes Board of Trustees of Public Safety Officers' Pension Trust Fund July 7, 2009 5 and early retirement and all these considerations, and this could not be done on the cheap. The Village Manager commented he would go into his office so the Board could discuss sending something to the Village Council for the July 9 meeting, such as their thoughts on a funding mechanism going forward. Board Member Giblin commented this was only looked at in a bad market. Village Manager Couzzo responded this would be an important issue, and disclosed that one of every nine dollars the Village spent was for health insurance, and Cigna wanted a 15% increase. That was just a starting point- negotiations would be held and alternatives considered. The Village did not make anything-they just supplied service through people. Service did not fluctuate with the market. Board Member Nielson asked Pension Coordinator McWilliams if it were appropriate at this time to make a motion to support the proposal Manager Couzzo would be taking to the Village Council on July 9 to increase the funding for the pension fund. Ms. McWilliams responded yes, this meeting had been scheduled as a special meeting to allow the Board to act. MOTION: Board Member Nielson made a motion to endorse the recommendation that Village Manager Michael R. Couzzo, Jr. will take to the Village Council on Thursday, July 9, 2009. Board Member Young seconded; the motion carried by unanimous 4-0 vote. Adjournment There being no further business, upon motion by Board Member Nielson, seconded by Secretary Cooper, the meeting was adjourned at 9:40 a.m. Respectfully submitted, . fi _,.~~~` Betty Laur Recording Secretary