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HomeMy WebLinkAboutMinutes_Pension Public Safety_08/02/2010 1 SYNOPSIS OF PUBLIC SAFETY OFFICERS PENSION BOARD MEETING 8/02/10: 1. A physical quorum of 3 was present at the meeting; Secretary D'Ambra attended by telephone. 2, Meeting minutes approved as submitted were Joint Meeting of May 3, 2010, Special Meeting of June 15, 2010, and Joint Meeting of June 15, 2010.. 3. Tony Brown of Rockwood Capital Advisors presented their quarterly report and addressed macro economics. 4. Dan Johnson provided a presentation for Bogdahn Consulting, LLC. 5. Voted to sign a letter authorizing Salem Trust to pay all fees from the fixed income account and provide a consolidated statement for the three accounts with Salem Trust. 6 Signed a letter authorizing commission recapture. 7. Approved the minutes of the quarterly May 3, 2010 meeting with the word "gross" inserted in front of "9 -1/2 %" on page 3, first paragraph. 8. Voted to authorize opening a local bank account to allow Pension Resource Center to handle transactional activity and outside the meetings documents could be signed accordingly. The Finance Department would transfer funds into the account as needed. 9. Attorney Jensen reported nothing new regarding the IRS determination letter. 10. Reviewed Standing Reports (information items) 11. The following payments were ratified: Business Services Connection, Inc. $1,739.40 Business Services Connection, Inc. $214.08 Business Services Connection, Inc. $133.37 Perry & Jensen, LLC 1,147.37 12. Approved the following invoices for payment: Business Services Connection, Inc. $98.12 Business Services Connection, Inc. $142.72 Hanson, Perry & Jensen, P.A. $1,783.37 Bogdahn Consulting, LLC $3,750.00 Rockwood Capital Advisors, LLC $6,027.595 13. Voted to table the ICMA conference call to a later date based on availability of the Fire representative. 2 SYNOPSIS OF PUBLIC SAFETY OFFICERS PENSION BOARD MEETING 8/02110 14. Terminated the current contract with Business Services Connection, Inc. and agreed to a new hourly rate agreement during the transition to Pension Resources Center. 15. Members who were to attend the FPTTA Trustees School September 26 -29 at PGA National in Palm Beach Gardens were to contact Pension Resource Center. END OF SYNOPSIS TEQUESTA PUBLIC SAFETY OFFICERS' PENSION TRUST FUND REGULAR QUARTERLY MEETING MINUTES August 2, 2010 I. Call To Order and Roll Call A regular quarterly meeting of the Tequesta Public Safety Officers' Pension Trust Fund Board of Trustees was held at the Tequesta Village Hall, 345 Tequesta Drive, Tequesta, Florida, on August 2, 2010. The meeting was called to order at 8:12 a.m. A roll call was taken by Recording Secretary Betty Laur. In attendance at the meeting were: Chair Ed Sabin, Board Member David Cooper, and Board Member Robert Young. Consensus of the Board was to allow Secretary Frank D'Ambra to attend via telephone. A phone call was placed to Secretary D'Ambra and placed on speakerphone. Also in attendance were Attorney Bonni Jensen, Recording Secretary Betty Laur, Tony Brown of Rockwood Capital Advisors, and Dan Johnson with Bogdahn Consulting, LLC. Finance Director Forsythe joined the meeting late. Board Member Ray Giblin was absent from the meeting. 11. Approval of Agenda MOTION Board Member Cooper made a motion to approve the amended agenda as submitted. Board Member Young seconded the motion, which carried by unanimous 3 -0 vote. Ill. Approval of Minutes 1. Joint Meeting Minutes - Tequesta Public Safety Officers' Pension Trust Fund Board of Trustees and Tequesta General Employees' Pension Trust Fund Board of Trustees— May 3, 2010 2. Quarterly Meeting Minutes - Tequesta Public Safety Officers' Pension Trust Fund Board of Trustees — May 3, 2010 3. Special Meeting Minutes - Tequesta Public Safety Officers' Pension Trust Fund Board of Trustees — June 15, 2010 3A. Joint Meeting Minutes - Tequesta Public Safety Officers' Pension Trust Fund Board of Trustees and Tequesta General Employees' Pension Trust Fund Board of Trustees— June 15, 2010 Regular Quarterly Meeting Minutes Board of Trustees of Public Safety Officers' Pension Trust Fund August 2, 2010 2 MOTION Board Member Young made a motion to accept the minutes of the joint meeting of May 3, 2010, the joint meeting of June 15, 2010, and the special meeting of June 15, 2010 as submitted. Board Member Cooper seconded the motion, which carried by unanimous 3 -0 vote. Approval of the minutes of the quarterly meeting of May 3, 2010 were deferred until later in the meeting, since Secretary D'Ambra's input was needed and there was difficulty keeping in contact with him via telephone. IV. Presentations 4. Presentation By Investment Manager and 5. Specific Thoughts on the Macro Environment and Open Discussion for the Asset Allocations of the Board and how the Macro Environment has Affected the Manager's Decisions within Each Portfolio Tony Brown of Rockwood Capital Advisors was present to review their quarterly report. He first addressed the macro economics question raised by Secretary D'Ambra at a previous meeting, explaining the performance of different sectors. Mr. Brown commented that equity markets had come back. The large disbursement from the fund during the quarter had been a transfer from equity to the international portfolio. Mr. Brown explained that with troubled economy overseas, people had been buying U.S. treasuries at zero return just to keep their money safe. At that point, Rockwood began to liquidate corporates and commercial backed mortgages and to get into treasuries as they began to move up. Since July, calm had returned to the market because of an alleged stress test where 90 foreign banks had been allowed to move their sovereign debt from an account where they had to maintain its true value into a trading account and show it as a dollar. Mr. Brown provided a reconciliation of the proxies inside their report booklet. Mr. Brown advised he had provided the Recording Secretary with a printed page of the remarks he had made, which is attached to these minutes as Exhibit A. 6. Presentation by Monitor Dan Johnson, Bogdahn Consulting, LLC, reviewed the quarterly report and the attribution report. He reported the markets had suffered uncertainty during the quarter, driving markets down because of the sovereign debt, unemployment, the Gulf oil spill, and the financial reform package. Treasuries had been purchased by individuals looking for return of their money rather than a return on their Regular Quarterly Meeting Minutes Board of Trustees of Public Safety Officers' Pension Trust Fund August 2, 2010 3 money. The Greek economy had contracted to almost half of its value during the quarter. Mr. Johnson reported the total fund was up just shy of 7% for the quarter to date including the month of July. Mr. Johnson pointed out the change from the balanced account to now three asset classes with three different managers. Discussion ensued regarding Rockwood's performance during the quarter. Board Member Cooper expressed dissatisfaction with Rockwood's returns. Mr. Brown was asked if Rockwood was a good fit for this pension and their future expectations. Mr. Brown noted the numbers for fixed income were very tight; on the equity side there was nothing anyone could do during the second quarter not to have a negative return. Mr. Brown explained the advantage of an all -cap investment strategy. He advised that Rockwood anticipated returns over the next decade to exceed the benchmark; however, it would take a long time for that to play out. He explained the consistency of their returns and consistency of their model gave them confidence this could be accomplished. Mr. Johnson reviewed the attribution report, noting sectors in which Rockwood had not been invested that had hurt their returns. Board Member Cooper asked if the report card in Bogdahn's quarterly report was a good one; Mr. Johnson responded it was not good. The report card was discussed, and Mr. Johnson commented there was a lot more to it. Attorney Johnson commented the issue was really that the returns were not consistent. Chair Sabin noted Rockwood had been selected because of their downside protection, and for the last two years one would think the portfolio would have had more downside protection. Secretary D'Ambra commented diversification by style was needed, and when the fund grew to a size where that could be done, the Board should look at adding a couple of different managers with different styles. Mr. Johnson indicated more diversification could be realized by adding an index fund. It was clarified for Finance Director Forsythe this was the Board's third fiscal year quarter; the Bogdahn report covered the total fund, and the Rockwood report only showed their investments. Mr. Johnson commented two more accounts had been opened at Salem Trust, and they had agreed to charge all fees out of the fixed income account and provide a consolidated statement. He provided a letter of authorization to Salem Trust. Attorney Jensen requested a copy of the statement be provided to Pension Resource Center. Mr. Johnson indicated he could show the expense ratio for the mutual fund, which was net of fees. Discussion ensued whether to update signatures and possibly change from two signatures to one; it was agreed to delay that decision. MOTION Board Member Cooper made a motion to sign the fee letter. Board Member Young seconded the motion, which carried by unanimous 3 -0 vote. Regular Quarterly Meeting Minutes Board of Trustees of Public Safety Officers' Pension Trust Fund August 2, 2010 4 Mr. Johnson distributed a commission recapture letter. He explained approximately $1,300 had accumulated in the fund's account. Chair Sabin noted this had been taken care of at the special meeting, and at this point the letter just needed to be signed. Chair Sabin advised Secretary D'Ambra that before he had been connected via telephone, the draft minutes of the May 3, 2010 quarterly meeting had been discussed. On page 3, first paragraph it had been agreed to add the word "gross" to the sentence: "Secretary D'Ambra noted the target should be 9- 112 % ". Secretary D'Ambra agreed that sentence should read "9 -112% gross ". MOTION Board Member Cooper moved to approve the minutes of the May 3, 2010 quarterly meeting with the addition of the word "gross" in front of "9 -1/2 %" in the first paragraph of page 3. Board Member Young seconded the motion, which carried by unanimous 3 -0 vote. V. Unfinished Business 7. Status of Contract with Pension Resource Center Attorney Jensen reported that since the last meeting Finance Director Forsythe, Pension Coordinator McWilliams, and Human Resources Director Merlene Reid had met with Scott Baur of Pension Resource Center, and as a result she now had the contract, which had been signed by Chair Sabin and Secretary D'Ambra and was effective that day. Mr. Baur was present, along with Dixie Martinez from his office, and Attorney Jensen invited them to speak to the Board regarding the division of duties that had been worked out with the Finance Department and a pending DROP application. Mr. Baur advised there had been extensive conversations regarding procedures, one of which was signature authorizations and procedures. Because of the cost for Salem Trust to issue checks in payment of invoices, Mr. Baur asked the Board whether they would agree to transfer that process to Pension Resource Center so the process could be streamlined. They would freely exchange information with the Finance Department for preparation of financial statements. Payment of benefits could be from the same account if the Board desired. Attorney Jensen recalled the bank being used by the Finance Department to pay invoices had lost their status as a Florida Public Depository so the funds had been temporarily transferred to Salem Trust. Discussion ensued during which Finance Director Forsythe indicated she liked the existing procedure at Salem Trust for payment of pension benefits at $3.00 per check, which was inexpensive. Secretary D'Ambra recalled previous discussion regarding having Pension Resource Center assign a couple of people to sign checks so that they could issue checks in payment of invoices and then bring to Regular Quarterly Meeting Minutes Board of Trustees of Public Safety Officers' Pension Trust Fund August 2, 2010 5 the Board for approval at the next meeting, to eliminate the need for Trustees to always be on call to come in to sign checks. Control could be provided by only transferring amounts needed to the checking account. Attorney Jensen advised the process would be the same as now when payments were listed for approval on the agenda, but whether the process of ratification would continue should be decided. The most control would be without the ratification process. Mr. Baur advised there was clear segregation of duties in his office. Limiting the amount of funds transferred to the third party administrator would be a way of keeping control. Consensus was to have Pension Resource Center pay invoices. Mr. Baur indicated they could bring back local bank options to the next meeting. Signatures on the checking account would be the Chair and Secretary as well as someone from Pension Resource Center for a transactional signature. Attorney Jensen advised recent changes to 175 and 185 would allow the Board to authorize Pension Resource Center people to be authorized signers on the checking account. Chair Sabin advised that was his preference since he would not allow his signature to be printed. MOTION: Board Member Cooper made a motion authorizing opening a bank account in the name of the Village of Tequesta Public Safety Officers' pension fund to allow transactional activity to be handled by Pension Resource Center; then outside the meetings documents could be signed accordingly. Board Member Young seconded the motion, which carried by unanimous 3 -0 vote. Mr. Baur advised one member was entering the DROP program. He had discussed with Finance Director Forsythe the calculation of benefit for that member and maintenance of the DROP account during the transition. He explained the timing of deposits, and they had been waiting until their contract was signed before actually processing the benefit. They would communicate with the member regarding processing their benefit. Mr. Baur provided a handout of procedures so that the members could review it to see that it was consistent with the Board's policy of processing benefits in the past. Statements to the members would be sent quarterly when quarterly earnings were posted to the account, but they could see their account activity online at any time. Discussion ensued regarding the processes that would be used. Mr. Baur stressed that the handout of procedures was very important and requested any input from the Board. Mr. Baur was asked to provide his contact information to all the Board members. 8. Status of IRS Determination Letter Attorney Bonni Jensen reported she had attended a conference of the National Association of Public Pension Attorneys where there was an IRS attorney who advised they were trying to be kinder and gentler with governmental plans and Regular Quarterly Meeting Minutes Board of Trustees of Public Safety Officers' Pension Trust Fund August 2, 2010 6 those who did not apply for the IRS determination letter could be fined or penalized and the members taxed. 9. Commission Recapture Documents Chair Sabin noted this had been covered in Mr. Johnson's presentation. VI. STANDING REPORTS (INFORMATION ITEMS) There were no questions or comments regarding the information items below. 10. New applicants for participation in Pension Plan - None 11. 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 12. Terminated Employees who have not taken their contributions - None 13. Revenue and Expenditure Report — No comments VII. PAYMENTS TO BE RATIFIED (PAYMENTS MADE SINCE LAST MEETING) MOTION Borad Member Young moved approval of ratification of payments made since the last meeting and approval of payments to be reviewed and approved. Board Member Cooper seconded the motion, which carried by unanimous 3 -0 vote. Therefore, agenda items 14 and 15 listed below were approved as presented. 14. Business Services Connection, Inc. Office Work for weeks ended 4/16/10 through 7/16/10 $ 1,739.40 Business Services Connection, Inc. Preparation of 5/3/10 Quarterly Meeting minutes 214.08 Business Services Connection, Inc. Preparation of 5/3/10 Joint Meeting minutes Regular Quarterly Meeting Minutes Board of Trustees of Public Safety Officers' Pension Trust Fund August 2, 2010 7 (1/2 charged to each board) 133.80 Hanson, Perry & Jensen, P.A. Services through 5/15/10 1,147.37 VIII. PAYMENTS TO BE REVIEWED AND APPROVED 15. Business Services Connection, Inc. Preparation of 06/15/10 Joint Meeting Minutes (1/2 charged to each board) 98.12 Business Services Connection, Inc. Preparation of 06/15/10 Special Meeting Minutes 142.72 Perry & Jensen, LLC. Services through 7/15110 1,783.37 Bogdahn Consulting, LLC Fee for Quarter ending 6/30/10 3,750.00 Rockwood Capital Advisors, LLC Fee for Quarter ending 6/30/10 6,027.59 Tony Brown of Rockwood Capital Advisors left the meeting at this point at 11:10 a.m. IX. BUDGET REPORT 16. Quarterly Budget Report Expenditures AND 17. Adoption of new Budget Finance Director Forsythe advised she had requested Michelle Gload from the Finance Department to work with the Board on the budget. For expenditures she had been asked to go down the estimated column and put in estimates for year end, and if there was no change in the hourly rate and the same activity as last year it would not change. During discussion of the actuarial budget, Chair Sabin recalled the Board had recommended the Village start making their contribution as if the rate of return were 7 -1/2 % in their contribution for 2011; Mr. Palmquist had indicated it would be $80,000 to $90,000 more than at 8 %; Attorney Jensen was directed to draft a cover letter to go to Village Council with the minutes in order for the Village Council to consider this matter. This item was in the May 3 quarterly minutes on page 2. Secretary D'Ambra suggested this item be brought up under citizens comments. The budgeted numbers for 2011 for Legal Services Regular Quarterly Meeting Minutes Board of Trustees of Public Safety Officers' Pension Trust Fund August 2, 2010 8 were $11,000 Fire and $4,100 Police; Recording Secretary zero. There were enough funds for two members to attend the FPTTA Conference. The year end estimates for items not discussed were to be transferred over to the new 2011 budget. Pension Administration would be budgeted at $950 per month. Ms. Gload commented the amounts for Custodian and Investment Advisor might be low; the board recommended using 7 -1/2 %. Bogdahn Consulting's fee had gone up to $15,000. X. NEW BUSINESS 18. Telephone Conference Call: Discussion with ICMA Board Member Cooper requested this item be delayed to another meeting since the Fire representative was not present. MOTION Board Member Cooper made a motion to table the ICMA conference call to a later date based upon availability of the Fire representative. Board Member Young seconded the motion, which carried by unanimous 3 -0 vote. Consensus was to have Mr. Baur contact the local ICMA representative to attend the next meeting. 19. Termination of Contract with Business Services Connection, Inc. Attorney Bonni Jensen noted Betty Laur's services provided to the Board under her company, Business Services Connection, Inc.'s contract, would be assumed by Pension Resource Center. The contract contained a 14 -day notice. Discussion ensued regarding retaining her services on an hourly rate basis during the transition period. Ms. Laur was agreeable to terminating the contract then working on an hourly basis during the transition. Mr. Baur commented it was very reasonable to have a month or more overlap. Chair Sabin thanked Ms. Laur for her past services on behalf of the Board. Attorney Jensen clarified that the present agreement would be terminated and another agreement on an hourly basis would be signed. 20. Revised Pension Benefit Application Process Attorney Bonni Jensen explained this item had referred to the Village's process; now the policy would be to call Pension Resource Center. Regular Quarterly Meeting Minutes Board of Trustees of Public Safety Officers' Pension Trust Fund August 2, 2010 9 21. FPTTA Trustees School September 26 -29 at PGA National Resort, Palm Beach Gardens, Florida Chair Sabin noted this item had previously been discussed. Xl. ANY OTHER MATTERS Attorney Jensen reported the annual report had been approved by the State, so the Village would be receiving the State funds. Attorney Jensen advised that the contract which had been agreed to with the Firefighters contained a second tier of benefits which was significantly reduced for new hires. The State had taken the position that the second tier benefits could not be less than what was in effect on March 12, 1999, when there had been a 3% multiplier. The Village and the union were aware of this from an email from the State, but she would send notice also to the Village Manager, Village Council Members and Village Attorney. Board Member Cooper requested a special meeting to discuss investment manager alternatives and to have the ICMA representative make their presentation. Mr. Baur was asked to follow up on these items and set up the special meeting, and to have Mr. Johnson from Bogdahn Consulting attend. The general target time for the meeting would be September. XII. COMMUNICATIONS FROM CITIZENS There were no communications from citizens. XIII. Adjournment There being no further business, the meeting was adjourned at 12:04 p.m. Respectfully submitted, Betty Laur Recording Secretary EXHIBIT " A " Rockwood Capital Advisors, LLC Strategic Equity Products Investment Highlights and Observations July 2010 • The downdraft continues in June and investors from Main Street to Wall Street are frightened. The news is uniformly • Negative and the fear are palpable. The deep wounds of '08 have had a severe impact on investor psychology. • The good news is that the vast majority of our up- trends, established in '09, are in tact. It's time to step forward. As • Warren Buffet likes to say, he is fearful when others are greedy and greedy when others are fearful. • The up- trending Consumer Discretionary sector finally succumbs to the pressure and retreats sharply in June. Such a pullback is hardly surprising given the enormous strength that this leadership sector has exhibited. The number of current buys has expanded dramatically • The Consumer Staples sector rallies modestly in June. As a result, this sector is upgraded from negative to neutral. • Though still negative, the Energy sector rallies in June despite the horrible news from the Gulf. Interestingly there are more upgrades than downgrades. Also, there are significantly more buys than sells. Let's see how this evolves. • The positively rated Financial sector inches up in June. Our buy list expands significantly. Our group focus buy Recommendation this month is the life and health insurance group. • The neutrally rated Health Care sector demonstrates an equal amount of good and bad. While there are some buy Opportunities it remains scattered. Our neutral rating is warranted. • The Industrials sector retreats further in June, but the longer -term uptrend remains intact for this positive sector. We View the pullback in prices as normal as the sector consolidates some very heady gains off the March 2009 lows. • The Information Technology sector consolidates gains but the longer -term trend remains positive. The clear problem with the technology sector has been within the large -cap space. Downgrades again this month are predominantly Large -cap. Small /mid continues to outperform and many buys exist across the sector. • The Materials sector continues to erode. Despite the sharp rally in gold stocks, it is not enough to keep this negative Sector from underperforming. • The Telecom sector continues to grind out some modest absolute gains and strong relative returns. Whether or not this is just a short -term hiding place for investors or the start of a long -term advance is still up for debate. ® Not surprisingly, the defensive Utilities sector improves during the market downturn. We have upgraded the sector from negative to neutral as several stocks have warranted upgrades to "early acceleration, ( +W)" status. ® While International stocks outperformed in June, the relative improvement was hardly enough to warrant a change to our negative rating on the group. Price rallies should be used as opportunities to reduce exposure. ® Signaled R Reversal Comments Our trend reversal summary is negative for the second month in a row as five (5) issues reverse upward and thirty -five (35) Turn downward. Interestingly, despite the expanded number of overall reversals, there is no dominant theme evident.