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HomeMy WebLinkAboutDocumentation_Regular_Tab 05C_08/12/2004 G� TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND BOARD OF TRUSTEES MEETING MAY 11, 2004 I. CALL TO ORDER AND ROLL CALL The Tequesta General Employees' Pension Trust Fund Boaxd of Trustees held a regular meeting at the Tequesta Recreation Center, 399 Seabrook Road, Tequesta, Florida, on May 11, 2004. The meeting was called to order at 8:30 a.m. A roll call was taken by Beriy Laur, Recording Secretary. Boardmembers in attendance at the meeting were: Chair Jeff Newell, Boardmember Thomas Paterno, Boardmember Greg Corbitt, and Boardmember Bob Garlo. Vice Chair Carl Hansen was absent from the meeting. Also in attendance were Dan Gallagher and Attorney Bonni Jensen. II. APPROVAL OF AGENDA MO� Boardmember Paterno made a motion to approve the agenda as submitted. Boardmember Garlo seconded the motion, which carried by unanimous 4-0 vote. III. APPROVAL OF MINUTES MO_ Boardmember Garlo made a motion to approve the minutes of February 10, 2004 as submitted. Boardmember Paterno seconded the motion, which carried by unanimous 4-0 vote. MOTION: Boardmember Garlo made a motion to approve the minutes of February 19, 2004 as submitted. Boardmember Corbitt seconded the motion, which carried by unanimous 4-0 vote. MO_ T� SOARD OF TRUSTEES TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND MEETING MINUTES May i1, 2004 PAGE 2 --------------------------------------------------------------------------------- Boardmember Garlo made a motion to approve the minutes of the joint meeting with Public Safety Officers' Pension Trust Fund Board on March 2, 2004 as submitted. Boardmember Paterno seconded the motion, which carried by unanimous 4-0 vote. MOTION: Boardmember Garlo made a motion to approve the minutes of the joint meeting with Public Safety Officers' Pension Trust Fund Board on April 21, 2004 as amended by changing would to could on page 5, second sentence in the second paragraph. Boardmember Paterno seconded the motion, which carried by unanimous 4-0 vote. IV. UNFINISHED BUSINESS A. ELECTION OF BOARD SECRETARY Chair Newell explained that a Board Secretary would have signatory authority and would chair meetings in the absence of the Chair and Vice-Chair. MOTION Boardmember Bob Garlo nominated Tom Paterno for Board Secretary. Motion was seconded by Boardmember Corbitt and unanimously carried 4-0. B. REPORT BY ATTORNEY JENSEN REGARDING THE LENGTH OF AMORTIZATION USED BY ACTUARY Attorney Bonni Jensen reported she l�ad contacted Steve Palmquist and that he had used an aggregate cost method, amortizing over the remaining average work life of the participants, which was more than 15 years. Mr. Palmquist was using a blended rate for the investment rate of return, and separate tracking, as documented on pages 11 and 16 of his actuarial evaluation, and he was not using asset smoothing. C. DISCUSSION OF ISSUING A DETERMINATION LETTER WITH THE IRS Attorney Bonni Jensen explained the cost would be the issue for this fund, as it would cost over $1,000 to request the IRS review the plan to determine if it was a i BOARD OF TRUSTEES TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND MEETING MINUTES � :; May ii, 2004 ; PAGE 3 � --------------------------------------------------------------------------------- : � tax qualified plan. Attorney Jensen advised that the documents themselves � anticipated it would take approximately 40 hours to complete the documentation. ' A determination letter was a response from the IRS indicating the plan was in compliance with their provisions. Government plans had a less stringent standard than private plans. Attorney Jensen advised she was not recommending this be done at this time, since this plan had nothing different from most other governmental plans in Florida, and everything in the plan had been approved by the IRS. If unusual benefits were implemented, that could change. Another attorney who did this work operated on the theory not to ask for trouble. As an example, when DROP programs first came out, Attorney Jensen had filed for a determination letter for a client. Chair Newell asked what if there was a change to the plan which caused the IRS to determine the plan was not in compliance with the law, to which Attorney Jensen responded if the plan was considered to be not tax exempt and that could not be fixed, the fund could declare non-tax qualified so all growth could be paid by each individual member. Boardmember Paterno commented he agreed somewhat with not contacting the IRS but asked if by getting a letter up to today that would place the plan in a better position. Attorney Jensen advised that anything up to today would be blessed by the IRS and only subsequent changes would require their blessing. If the plan were determined not tax exempt, that would not necessarily affect the board, but growth and contributions would be taxable. D. REPORT BY DAN GALLAGHER ON COST TO UPDATE THE ACTUARIAL STUDY AND PROVIDE STATEMENTS TO EACH EMPLOYEE REGARDING THEIR CONTRIBUTIONS INTO THE PLAN AND THEIR BENEFITS, AND DISCUSSION OF FREQUENCY OF ACTUARIAL STUDIES AS REQUESTED BY CHAIR NEWELL AT THE 2/10/04 MEETING Dan Gallagher reported he had spoken to Steve Palmquist and learned that in order to provide the employees with an annual statement, the cost would be about $1,500. A full-time actuarial study would cost $6,000; however, Mr. Palmquist was researching splitting the plans for actuarial study. Now the $6,000 fee was prorated on the amount of assets in each plan and a study had been done every two years. Mr. Gallagher reported the board was looking at an annual actuarial study this year. Attorney Jensen advised many other plans tried to provide annual benefit statements to their employees. Boardmember Garlo commented there was a personnel policy that said the statements would be done annually. Discussion BOA.RD OF TRUSTEES TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND MEETING MINUTES May 11, 2004 PAGE 4 --------------------------------------------------------------------------------- ensued. MOTION Boardmember Garlo made a motion that pursuant to the personnel policy on retirement plan, each employee shall be provided a statement of his benefits annually on a fiscal year basis at the end of the fiscal year. Boardmember Corbitt seconded the motion. During discussion of the motion, Attorney Jensen advised the figures would be almost a year old when the statements were received. After discussing timing, Mr. Gallagher indicated he would confirm the timing with Mr. Palmquist and get a letter from him stating the most beneficial timing. Chair Newell restated that the motion was to comply with the personnel policy to issue an annual statement to participants in the plan on a yearly basis. Boardmember Paterno seconded the motion, which carried by unanimous 4-0 vote. Mr. Gallagher advised that the statements were a by-product of an actuarial study, and if the fee for the study was $6,000 that would include the statements; if no actuarial study was done the cost for the statements would be $1,500. Chair Newell asked how frequently the Board would like an actuarial study. Boardmember Paterno responded he would like one yearly, otherwise the return for the year was not known. Since the Village had to come up with dollars to make up the difference between the required amount and the actual return, they could get a surprise if the study was not done annually, because a deficit could be compounded the next year. Therefore, Boardmember Paterno recommended an annual actuarial study, and the Board would not have to worry about having statements only, since those would be included witli the study. MOTION Boardmember Paterno made a motion that an actuarial study be done yearly on a fiscal year basis. Boardmember Garlo seconded the motion, which carried by unanimous 4-0 vote. Boardmember Paterno clarified with Chair Newell and Mr. Gallagher that from now on the actuarial study would be for this fund only and no longer included with the Public Safety Officers' Pension Fund. E. CONSIDERATION OF ADOPTION OF THE STATEMENT OF POLICY BOARD OF TRUSTEES TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND MEETING MINUTES May ii, 2004 PAGE 5 --------------------------------------------------------------------------------- FOR TRUSTEE EXPENSES DISTRIBUTED BY ATTORNEY JENSEN AT THE 2/10/04 MEETING. Attorney Jensen responded to Chair Newell's question on item 6, page 3, that if one were gone a fraction of a day, less than 24 hours, they would be paid based on the fraction. Chair Newell asked if he had one day in Tampa and left one day, stayed overnight, and left at 1 p.m. the next day, if that would be per diem. Attorney Jensen advised he could take the per diem but was not required to take it. A good example of the per diem was if he stayed with his grandma and she was feeding him breakfast and dinner, he would get $50 a day; the per diem included lodging, food, and other expenses. The better path was to fill out a reimbursement, which could be done in advance and an advance could be requested. Under per diem he would get $50 a day and nothing else. Chair Newell commented he did not know where one could get breakfast/lunch/dinner for $3, $6, and $12. Discussion ensued about increasing these amounts. MOTION Boardmember Paterno made a motion to change the rate from $3/$6/$12 to $6/$12/$24 for breakfast, lunch, and dinner; or $42 for a whole day. Boardmember Garlo seconded the motion, which carried by unanimous 4-0 vote. F. CONSIDERATION OF ADOPTION OF THE PLAIN ENGLISH SUMMARY PROVIDED BY ATTORNEY JENSEN AT THE 2/10/04 MEETING Chair Newell questioned Attorney Bonni Jensen regarding option 5, page 5 regarding life annuity. Attorney Jensen explained that would be when a participant took the annuity during his life, leaving nothing for a beneficiary. Under the normal plan 120 payments were guaranteed, so if a participant died before receiving all 120 payments the balance would be paid to their beneficiary. There was an option to take less and leave more to the beneficiary. The participant could choose to get 100%, or joint and 75%; or joint and 66-2/3%; or joint and 50%. Option 5, the life annuity, would have no beneficiaries—it would terminate when the participant terminated. MOTION Boardmember Paterno made a motion to accept the plain English summary. BOARD OF TRUSTEES TEQUESTA GENERAI, EMPLOYEES' PENSION TRUST FUND MEETING MINUTES May ii, 2004 PAGE 6 --------------------------------------------------------------------------------- Boardmember Garlo seconded the motion, which carried by unanimous 4-0 vote. G. CONSIDERATION OF SENDING MEMBER(S) TO ATTEND CONFERENCE It was announced that the next FPTTA conference would be held June 27-30 in Naples. Boardmember Garlo commented he could not go to the last one, and would be in Colorado for this one. Boaxdmember Corbitt commented he was not interested in attending since this was a busy time of the year. Attorney Jensen explained this was a conference and not as many classes would be held, this would be mostly a showcase for the associate members. There would be speakers the first couple of days, but not specifically on pension topics. Mr. Gallagher advised that the next school would be in October in St. Petersburg. Boardmember Garlo expressed his opinion that it could be a benefit for someone who had already attended to go to the conference. Chair Newell announced at the August meeting the October schedule would be considered and if no one else wanted to attend, he would go. V. CONSENT AGENDA Boardmember Paterno questioned the Federal Express delivery to Michigan Benefit Consulting. Mr. Gallagher explained that when the Board was seeking a monitor, he had sent them information. Mr. Gallagher advised that the Baard now had their own Federal Express number, so the Village no longer had to be involved. MOTION � Boadmember Garlo made a motion to approve the consent agenda as submitted. Boardmember Corbitt seconded the motion, which carried by unanimous 4-0 vote. The following items were approved on the consent agenda: a) Payments to be reviewed and approved 1) Business Services Connection: Recording 2/10/04 Meeting - $208.87 Recording 4l21 /04 Meeting - $112.90 2) Hanson, Perry & Jensen, P.A. —$1,880.93 i BOARD OF TRUSTEES TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND MEETING MINUTES May ii, 2004 PAGE � --------------------------------------------------------------------------------- 3) Northstar Management, Inc. - $1,573.00 b) Approval of New Applicants for 2nd Quarter (January - March 2004) Thomas Adams - Date of Hire 3/15/04 c) Approval of Beneficiary Changes for 2nd Quarter ((January - March 2004)) None d) Request for Withdrawal of Contributions (Employees terminating employment with Village of Tequesta) for 2nd Quarter ((January - March 2004)) None e) Rati�cation of withdrawals made since the last meeting on two signature basis (under $100) 1. Business Services Connection —$90.32 (Recording meeting of 2/19/04) 2. Business Services Connection -$42.34 (General Employees Fund portion of recording joint meeting of 3/2/04) 3. Federal Express - $22.97 VI. FINANCIAL REPORTS a) Statement of Accounts ((3anuary - March 2004) b) Progress Report by Finance Department — Cash Flow Report for the First Quarter (January - March 2004) Dan Gallagher advised that items (a) and (b) covered the quarter, and since Northstar would be covering the same information it would be redundant for him to go through it. Boardmember Paterno asked what was the $8,000 unlisted gain on investments, to which Mr. Gallagher responded it was the increase in value of 7 BOARD OF TRUSTEES TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND � MEETING MINUTES � � May ii, 2004 - PAGE 8 --------------------------------------------------------------------------------- .. the investments. c) Northstar Capital Management Investment Manager's Report (As of March 31, 2004) Peter V. Van Beuren and Steve Mergler were present representing Northstar Capital Management. Mr. Van Beuren introduced Mr. Mergler as a partner and one of the four members of the voting team. Mr. Van Beuren noted their company had been helping the Village since 1997, and through time, contributions and good investment performance had enhanced the value for the participants. Mr. Mergler described the investment process. Attention was directed to page 3-3 in the presentation booklet, showing their style of investment was large cap quality growth and not as aggressive as many growth styles. They look for solid blue chip investments, and formulated a model portfolio for their clients, which currently had around 8,500 stocks exchange traded. The screening process was described and the chart was reviewed, which indicated they were looking for companies able to grow earnings faster than the market. The portfolio average had grown over 35% over the past five years, while S&P 500 had lost 1.37%. A return on equity higher than the S&P 500 was the goal. Four members of Northstar got together looking for wealth creators, companies number one in their sectors. Then they constructed a portfolio and tried to diversify by sector and weight. This was a good style for being on the conservative side. A mobius study was referred to. Mr. Van Beuren commented this fund was very similar to Public Safety in equities. Page 3-2 showed this fund's account as of 3/31/04, well within the 60/40 guidelines. Less than $150,000 was in bonds—basically 5 bonds, spaced out to get reasonable returns on those investments. A handout was provided to provide up-to-date information since the presentation booklets had been requested early. The fund was above S&P in equities and above Lehman Brothers in bonds. Investment had been done immediately after the January 7, 2004 inception, which had turned out to be the right choice, since there were two good months—January and February. Investments were down in March and April but still well on the plus side. Mr. Van Beuren explained fixed income would always be difficult with an account this small, and it might slightly underperform an index. In bonds, call provisions and maturities were laddered, hopefully to be rolled over into higher yielding situations. Mr. Van Beuren commented economic recovery had been on track; and they were cautiously optimistic on the equities market and had raised cash a BOARD OF TRUSTEES TEQUESTA GENERAL, EMPLOYEES' PENSION TRUST FUND MEETING MINUTES May ii, 2004 PAGE 9 --------------------------------------------------------------------------------- little to have sufficient assets when appropriate. Interest rate increases were expected gradually. Mr. Newell expressed concern regarding the concrete shortage. Discussion ensued. Mr. Newell noted Northstar had a greater history with the Public Safety Officers' Pension Fund. Mr. Mergler cammented investments in a plan like this were for long-term gain; that they had underperformed the maxket last year but did well over the past ten yeaxs. Chair Newell asked to discuss this after the first report had been received, indicating there was a time constraint now. Mr. Van Beuren requested any questions be reported to Mr. Gallagher. VII. NEW BUSINESS Consideration of approval of contract with Bogdahn Consulting LLC Attorney Bonni Jensen indicated Mr. Bogdahn had already signed the contract, documents for services he was to provide, he was accepting fiduciary responsibility for his actions, and she reviewed that there would be no charge for this fund in the first year, $2,000 for the second year, and in accordance with the regular fee schedule for year three. Chair Newell commented he had not seen the contract, to which Attorney Jensen indicated she would send it out. Attorney Jensen explained Mr. Bogdahn had already started working, and yesterday had met with Northstar. Boardmember Paterno favored signing, stating he had confidence in Attorney Jensen's review and it was not costing the Board anything the first year. MOTION Boardmember Paterno made a motion to accept the contract with Bogdahn Consulting LLC on legal counsel's advice that everything was in order as discussed. Boardmember Corbitt seconded the motion, which carried by unanimous 4-0 vote. VIII. ANY OTHER MATTERS Boardmember Paterno requested information on whether general employees in the Florida Retirement System had disability benefits, to which Attorney Jensen responded there was a provision for disability in that plan.