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HomeMy WebLinkAboutDocumentation_Pension Public Safety_Tab 03_08/02/2010 SYNOPSIS OF PUBLIC SAFETY OFFICERS' PENSION BOARD SPECIAL MEETING HELD JUNE 15, 2010 1. Dan Johnson, Bogdahn Consulting, reviewed an update to portfolio performance as of May 31, 2010. 2. Chair Sabin signed a revised Investment Policy Statement with addendums which was to have minor changes as discussed. 3. Secretary D'Ambra requested an agenda item for the August meeting that Rockwood discuss the macro environment, asset allocation, and how the macro environment had affected their decisions within each portfolio. Mr. Johnson was to coordinate this with Rockwood. 4. Mr. Johnson reviewed the Domestic Equity Strategies Overview and recommended no current changes. 5. Mr. Johnson provided a handout to address the request from Secretary D'Ambra regarding universe ranking. 6. The Board voted to authorize the Chair to sign the commission recapture contract with DMY Convergex, with minor changes. 7. The Board formally approved the Final Investment Policy Statement. 8. Alternative investment options for DROP program participants were discussed. 9. Consensus was to request HR Director Reid speak at the August meeting regarding the ICMA program. END OF SYNOPSIS DRAFT TEQUESTA PUBLIC SAFETY OFFICERS' PENSION TRUST FUND SPECIAL MEETING MINUTES June 15, 2009 I. Call To Order and Roll Call A special meeting of the Tequesta Public Safety Officers' Pension Trust Fund Board of Trustees was held in the Council Chambers at the Tequesta Village Hall, 345 Tequesta Drive, Tequesta, Florida, on June 15, 2010. The meeting was called to order at 9:48 a.m. A roll call was taken by Recording Secretary Betty Laur. In attendance at the meeting were: Chair Ed Sabin, Secretary Frank D'Ambra, Board Member Ray Giblin, Board Member David Cooper, and Board Member Robert Young. Also in attendance were Attorney Bonni Jensen, Dan Johnson of Bogdahn Consulting, LLC, Pension Coordinator Lori McWilliams, Finance Director Joann Forsythe, and Recording Secretary Betty Laur II. Approval of Agenda Dan Johnson of Bogdahn Consulting, LLC announced he would have some additions and would work them in. MOTION: Secretary D'Ambra made a motion to approve the agenda as submitted. Board Member Cooper seconded the motion, which carried by unanimous 5-0 vote. III. Discussion Regarding Diversifying the Domestic Portfolio within Framework Dan Johnson, Bogdahn Consulting, LLC, reviewed an update to portfolio performance as of May 31, 2010. He mentioned the uncertainties caused by the Gulf oil spill, the Wall street reform bill, and the European debt crisis. Domestic and international stocks had pulled back; however, the fiscal year to date percentage was still positive at 5.56 %. The international portfolio was reviewed. Rockwood had done very well last quarter with the domestic portfolio and was performing better than the index. Mr. Johnson provided a revised Investment Policy Statement. Secretary D'Ambra reported that at the May Council meeting he had pointed out that none of the Board had been at the April meeting when the Council had made a decision to go to 15 %, and he had pointed out the discrepancy between the plans and asked that they reconsider their decision. Chair Sabin commented he had talked to one Council member and said to him that needed to be consistent, and the Council member had said they would take that up. Chair Sabin advised Special Meeting Minutes Board of Trustees of Public Safety Officers' Pension Trust Fund June 15, 2010 2 he would ask Pension Coordinator McWilliams to revisit that. Chair Sabin signed the revised Investment Policy Statement and the addendums. Secretary D'Ambra verified that the reports for the next meeting would include Russell 3000 as an index for the equity strategy. Secretary D'Ambra requested Rockwood come prepared at the August meeting to speak specifically to the economic environment and what actions they were taking with allocations between bonds and equity to address that environment. Mr. Johnson advised that Rockwood did not manage the allocation of stocks to bonds now. Secretary D'Ambra responded between what they held in equity and what they held in bonds the 60/40 target could move based on the macro environment, so he would like them to speak to that macro environment. Mr. Johnson commented they were now in separate accounts and the allocation was now with the Board. Secretary D'Ambra still wanted them to talk about the macro environment, and discuss asset allocation, weighting, and decisions, and their thoughts about allocation. Mr. Johnson was asked to clarify the agenda item that was to be on the August quarterly meeting agenda. Mr. Johnson indicated he would coordinate with Rockwood for specific thoughts on the macro economic environment as well as an open discussion for the asset allocations of the Board and how the macro environment has affected their decisions within each portfolio. Mr. Johnson presented the Domestic Equity Strategies Overview, which had been distributed at the May quarterly meeting but had not been reviewed for lack of time. He advised this was being presented because he had been asked to do so, and he had no recommendations for changes at this time. Rockwood had created a diversified portfolio of stocks; as the plan grew the Board might consider hiring a second manager with a different style and combining two different styles of management. Chair Sabin requested he focus on the diversification strategies. The charts at the back of the report were reviewed, which made up different styles, and Mr. Johnson explained there was no right or wrong way of investing. Rockwood was classified as a quantitative manager — they looked at numbers and the momentum that was driving a stock. There was also growth and value style of management. Secretary D'Ambra commented there might not be a right or wrong way to manage, but if you only had one manager with one style, you would only experience that style and you had no counter weight, so the idea of diversifying, when you had adequate size, into some different styles would provide that counter weight and you also would get people who were very good at their particular style, so you would add expertise. There could be three managers, with the second focused on value and the third focused on growth. The purpose of this would be to add expertise, and these things went in cycles. Another approach was core and satellite —you could have Special Meeting Minutes Board of Trustees of Public Safety Officers' Pension Trust Fund June 15, 2010 3 a quantitative manager like Rockwood and add a singles and doubles manager, with Rockwood being the home run hitter. Board Member Young left the meeting at this point, at 10:15 a.m. Chair Sabin recalled the plan had previously had a growth manager. Mr. Johnson indicated he felt adding another style would be the next evolution of this plan, and also adding a mutual fund, but he did not recommend doing so at this time. International had just been added and he believed the three accounts would work well. Chair Sabin noted the Board was getting a good education. Mr. Johnson provided a handout to address the request from Secretary D'Ambra regarding universe ranking, which showed comparisons to Rockwood's quantitative style. Rockwood had provided as much or similar return as their peer group but were not as volatile. IV. Commission Recapture Presentation Mr. Johnson indicated that through information provided by Recording Secretary Laur and DMY Convergex, he had learned the Board actually did have a contract with DMY for a while, but did not have payment instructions, and they needed to know where to send the money. Mr. Johnson explained the manager would be told to trade at the best price, best execution timing that they could, and if they traded through DMY Convergex the plan would receive some revenue. Rockwood currently did most of their trades through DMY. Mr. Johnson presented the contract, with a recapture rate of 70% which would add up over time. The rate would be retro for approximately six months at 1 -1/2¢ per share instead of the current 2¢ per share. Also, they had some money that had built up but not been disbursed. A check would be disbursed each quarter. Mr. Johnson explained there would be a letter to accompany the agreement, which advised Rockwood to seek best execution for trades, not to only trade through DMY. The undisbursed amount that had accumulated was $1,660.00. An item on the second page needed to be changed from subject to the laws of New York to subject to the laws of Florida. Attorney Jensen explained it was best for them to send the money; however, they could pay bills directly. Consensus was to have them send checks to Salem Trust Company, or ACH deposit if possible if that was no cost. MOTION: Board Member Giblin made a motion to authorize the Chair to sign the contract with modifications, and for Mr. Johnson to coordinate with Finance Director Forsythe. Board Member Cooper seconded the motion, which carried by unanimous 4-0 vote. Special Meeting Minutes Board of Trustees of Public Safety Officers' Pension Trust Fund June 15,2010 4 V. Approval of Final Investment Policy Statement for Signature Because the Investment Policy Statement had been signed earlier in the meeting without a motion to approve the final version, the following motion was made: MOTION: Board Member Giblin made a motion to formally approve the Investment Policy Statement that had been signed. Board Member Cooper seconded the motion, which carried by unanimous 4-0 vote. VI. Any Other Matters Secretary D'Ambra referred to page two of the Domestic Equities Strategy, and asked if anyone wanted more information on additional categories. Consensus was no additional information was needed. Mr. Johnson commented these discussions would be ongoing. Board Member Giblin advised Captain Burnsed was entering the DROP program on July 12, 2010. He could elect to be in the DROP on July 12, which would be his 18 -year anniversary. Then the actuary would calculate his benefit. The DROP program was discussed. Board Member Giblin noted members might be more interested in preservation than large returns in the future as more of them went into the DROP program. Attorney Jensen explained that choosing to go into the DROP was an individual decision— sometimes it was a benefit and sometimes it was not. Mr. Johnson indicated he was comfortable with a lower rate for retirees so that risk was not being imposed upon them. Secretary D'Ambra suggested offering a menu of investment choices for retirees. Attorney Jensen recommended looking to whatever the Village was using for their 457 program. Attorney Jensen advised if a fixed rate of return were offered, the Village Council would have to agree to that, and 1CMA had a stable value type product. Discussion ensued. Chair Sabin suggested making it simpler by saying the plan participant in the DROP had the choice of staying with the plan, which fluctuated, or getting the return from the State at a fixed rate. Board Member Giblin commented that would be a bargaining item with the Village. Secretary D'Ambra commented he would like to see a life cycle plan added. Attorney Jensen advised a platform would have to be set up in order to add something like that. Board Member Giblin commented that now it was commingled, but looking forward it would be nice to have an option. Secretary D'Ambra commented it could be set up so that it was in the name of the plan but with individual accounts; Attorney Jensen advised that was also what she was suggesting, but she recommended using ICMA because this fund was not big enough to go out on its own, and ICMA had Special Meeting Minutes Board of Trustees of Public Safety Officers' Pension Trust Fund June 15, 2010 5 life cycle plans and a stable product. The Village already used ICMA and the fund would be leveraging that existing relationship; also, the plan was small and did not have a stable investing population. Secretary D'Ambra suggested that HR Director Reid as the ICMA representative address the Board at the August meeting. Chair Sabin indicated he felt it was the Board's responsibility to obtain this information. Mr. Johnson offered to have a ICMA representative attend the meeting; consensus was to have it done through the Village. Board Member Cooper commented he preferred to have the union representative present just to listen so that he would not be the only one passing the information on. Board Member Giblin commented the contract on the Fire side had been done and there were no changes to pension benefits so any changes to the plan would have to be ratified by both parties. Starting October 1, 2010 new hires would receive 2% multiplier for the first six years; after six years it would go to 2.5 %, based on base pay. This would create a two -tier system. Attorney Jensen advised the plan would have to be modified, but the Village was waiting for the PBA resolution, and they were still in negotiations. VII. Communications from Citizens There were no communications from Citizens. VIII. ADJOURNMENT There being no further business, the meeting was adjourned at 11:06 a.m. Respectfully submitted, Betty Laur Recording Secretary