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HomeMy WebLinkAboutDocumentation_Pension Public Safety_Tab 01_02/05/2007• SYNOPSIS OF PUBLIC SAFETY OFFICERS PENSION BOARD MEETING 11.6.06 1. Minutes of August 6, 2006 meeting were approved with changes in spelling. 2. Presentation was made by investment manager, Andrew Holtgrieve, Rockwood Capital. 3. Presentation was made by monitor, David West, Bogdahn Consulting. 4. Mr. Bogdahn advised if numbers at the end of the year were poor he would provide alternatives at the next meeting. Boardmember Nielson requested the process of looking at other investment managers be started. 5. Mr. Bogdahn indicated he would bring to the next meeting comparisons to other benchmark indexes for discussion and to count toward education as an investment seminar. 4. Presentation was made by actuary, Steve Palmquist, Gabriel Roeder Smith & Company 5. Monica Rahim was requested to find out from Finance Director Forsythe when data would be provided to Mr. Palmquist for the employee benefit statements. • 6. Mr. Palmquist advised over the two-year period 10-1-03 to 10-1-OS there was a net experience loss of $129,000. 7. Procedure for new benefits from State funds was outlined. Chair Sabin requested feedback at the next meeting from both fire and police as to the types of benefits they would like; Mr. Palmquist verified he would provide a cost analysis and from their laundry list of ideas he could take off the things that were too expensive and come up with a workable list for presentation to Village Council. 8. Voted to update the trustee expense policy with the mileage reimbursement language changed to the standard IRS mileage rate subject to the maximum payable if the trustee could have traveled by air, and to strike item "D" regazding an audit. 9. Recording Secretary Laur was to contact Joann Manganiello at Jupiter Inlet Colony for their next meeting date and to request time on the agenda for a presentation by Chair Sabin regazding the premium tax they were collecting. Chair Sabin and Secretary Giblin indicated they would plan to attend the meeting. 10. Ratified payment to Business Services Connection, Inc. of $225.54; and to Hanson, Perry & Jensen, PA. For $795.70. • 11. Approved the following payments • Bogdahn Consulting, LLC $2,000; Reimbursement to Village of Tequesta for shipping of pension documents $52.15 for Fire; $15.52 for Police; Salem Trust Fee Advice for Quarter $186.75; and Rockwood Capital Advisors $4,436.94. 12. Voted to ratify the process and approve payment made to Acordia of $3,356.80 for Public Safety Officers' portion of fiduciary liability insurance premium. 13. Elected Ray Giblin as Chair and Ken Nielson as Secretary for the calendar year 2007. 14. Attorney Jensen discussed the Pension Protection Act. END OF SYNOPSIS • • • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND QUARTERLY BOARD OF TRUSTEES MEETING NOVEMBER 6, 2006 I. CALL TO ORDER AND ROLL CALL The Tequesta Public Safety Officers Pension Trust Fund Board of Trustees held a regular quarterly meeting at the Tequesta Recreation Center, 399 Seabrook Road, Tequesta, Florida, on November 6, 2006. The meeting was called to order at 8:00 a.m. A roll call was taken by Betty Laur, Recording Secretary. Boardmembers in attendance at the • meeting were: Chair Ed Sabin, Secretary Ray Giblin, Boardmember Ken Nielson, and Boardmember Kevin Pittman, who arrived a few minutes later. Boardmember Robert Neier was absent from the meeting. Also in attendance were Attorney Bonni Jensen, Andy Holtgrieve of Rockwood Capital Advisors, Joe Bogdahn and David West from Bogdahn Consulting LLC (monitoring consultant); Steve Palmquist with Gabriel Roeder & Smith Company (actuary), and Accounting Clerk Monica Rahim. II. APPROVAL OF AGENDA MOTION: Secretary Giblin made a motion to approve the agenda as submitted. Boardmember Nielson seconded the motion, which carried by unanimous 3-0 vote. III. APPROVAL OF MINUTES 1. MOTION• Boardmember Nielson made a motion to approve the minutes of the August 6, 2006 quarterly meeting with changes to the spelling of Mr. Nielson's name on page one and Mr. Sabin's name on page two. Secretary Giblin seconded the motion, which carried by unanimous 3-0 vote. IV. PRESENTATIONS • 2. SEMIANNUAL PRESENTATION BY INVESTMENT MANAGER BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES NOVEMBER 6, 2006 PAGE 2 Andrew Holtgrieve, Rockwood Capital Advisors, St. Louis, Missouri, reviewed his presentation booklet, indicating both stocks and bonds were happy with the slowing of the economy. Mr. Holtgrieve reported the quarter started with a little over $3 million in the portfolio, and ended with a little over $3.3 million for the quarter, although it trailed the indexes by roughly 1 %. Chair Sabin questioned the policy reference and asked to make sure the consultants were consistent with that policy. Mr. Holtgrieve reported there was a major change from a mid small-cap market which had been in place over the past several years, to a more large-cap dominated market, and it would take Rockwood time to implement that change. Mr. Holtgrieve distributed the periodic table of investments, charting how each azea had performed over the past six yeazs, and explained how Rockwood's all-cap equity style fit and had made money, and reported that an upward turn was expected with purchases of lazger companies' stocks. Discussion of sales ensued in response to questions from the board. The P/E ratio was approximately 20% below the market. Stocks • purchased during the quarter were all above their purchase price at this time except one. Mr. Holtgrieve reviewed bonds, and reported the portfolio was expected to earn 5.1 % from the fixed income portfolio over the next 12 months if nothing changed. It was expected to make more from stocks than bonds with expected rising inflation. Board member Nielson questioned. investments in mortgages. Mr. Holtgrieve explained the mortgage pools were so large that a few defaults would not affect the total. In response to a question from Board member Giblin, Mr. Holtgrieve explained they did not expect the Fed to ease, and pointed out the recent large-cap investments should do well in the anticipated environment. 3. PRESENTATION BY MONITOR David West, Bogdahn Consulting, reported over the past yeaz, performance was not as good as they wanted because of one bad quarter, which weighed very heavily in a short period of time, resulting in 3.46% of underperformance. Most of the returns from the bonds had come during the last quarter of the fiscal yeaz. Mr. Nielson commented consensus of the boazd at their February 14 meeting had been if there was not a pickup the next quarter to look for another manager, and Attorney Jensen had advised there must be four consecutive quarters below the 50`~ percentile of the peer groups, and after that the board needed to look at other potential managers, and asked if that point had been reached. Attorney Jensen advised that language was found in the investment policy guidelines. Mr. West advised there were not four • consecutive quarters-one quarter had been above the 50~`. Mr. Bogdahn noted it was not a requirement to wait for four consecutive quarters to begin the process, and BOARD OF TRUSTEES • TEQUFSTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES NOVEMBER 6, 2006 PAGE 3 explained Rockwood had had one quarter each year which underperformed, but changes they were making were trending them toward the large cap investments. Mr. Bogdahn commented large cap growth had been out of favor and it was due to change, and Rockwood would be positioned right when that happened, but if there were poor numbers at the end of the year, his company would come back with alternatives for the next meeting. Mr. Nielson commented he appreciated that, but a change would not be made quickly; he did not think it was too eazly to start looking at those options; and he would like to start a pazallel path. Chair Sabin wanted to make sure the board realized when looking at investment managers that for the equity piece, the return had been very acceptable for the last two and three quarters, and fixed income was dragging down the return. Mr. West advised there this was not a pretty fiscal year report, because of the terrible March quarter, but going forward in the next fiscal yeaz that quarter would not be dragging down the investments. Chair Sabin commented the overall performance suggested. fixed income was dragging down the return. Mr. Bogdahn explained his company was converting to another • universe from Mobius, and when the switch was completed he expected the bond performance comparisons to look better. Boazdmember Nielson asked if the S&P 500 was the best index to be using; Mr. Bogdahn suggested that his company bring to the next meeting comparisons to other benchmazk indexes for discussion, which could also count toward education as an investment seminar. Mr. West proposed changing the 10% allocation to cash, since a change in accounting meant that a large cash position was no longer necessary, and that could be included in the discussion on indexes. Mr. Bogdahn noted he believed the boazd had already addressed that and made the allocation 60/40; so next quarter that would be reflected. Board member Nielson commented in several places in the report it stated Rockwood had assumed the account on April 4, 2005, but it had been always been stated as April 22, 2005. Response was that the Apri14 date was probably when the account had been assumed from the previous manager and April 22 was probably when it had been fully invested. Mr. Bogdahn reported the previous investment manager, Northstaz, a lazge cap growth investor, had now been updated in their system, and provided a report showing their performance against Rockwood. Mr. Bogdahn indicated he expected Rockwood to perform better going forward. 4. PRESENTATION BY ACTUARY (TABLED FROM PRIOR MEETING) Steve Pahnquist, Gabriel Roeder Smith & Company, reviewed the actuarial report dated October 1, 2005, completed March 2006. Mr. Palmquist explained for the • benefit of new members that their contract was to do an actuarial report every other year, so the next report would be as of October 1, 2007. In the offyeaz, they prepared BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES NOVEMBER 6, 2006 PAGE 4 employee benefit statements, so they had requested from the Village about October 1 an update of information on the members in the plan, new salaries, who left and who was hired. This year they would prepaze the employee benefit statements even though they would not be doing an actuarial report. Employees should expect to receive their statements about six weeks after the actuary received the requested data. Chair Sabin asked for a tazget date from the Village as well as from the actuary. Ms. Rahim indicated she would find out from Finance Director Forsythe when the data would be provided to Mr. Palmquist. Mr. Palmquist advised the plan was a defined benefit plan-where the amount of the pension at the end was known; the unknown was how much had to be deposited each year by the Village over and above member and State contributions in order to meet the promised benefits set forth in the plan document. This contrasted to the 401 k type plans, called defined contribution plans, where the known was the amount (percentage of pay) to go in each yeaz and the unknown was what kind of benefit that would produce at the end. To determine how much would be needed at different points in the future, the actuary must make • assumptions based on known data. Discussion ensued regarding assumptions that had been made; Mr. Palmquist advised that if salary increases continued to be over the amount expected, adjustments would need to be made, and recommended using a table mirroring the way the step rates worked. Mr. Pahnquist verified with the investment manager that investment return for FY 06 was about 4%, which calculated out to roughly a $120,000 loss due to investments for that year. Mr. Palmquist advised that over the two-yeaz period 10-1- 03 to 10-1-OS looking at all assumptions together there was a net experience loss of $129,000, which made the cost of the plan go up. For police, the required Village contribution went from 7-1 /3 % of payroll to 11-1 /2% of payroll, partly due to benefit changes and partly due to the actuarial loss. For FY 06 the minimum required Village contribution was $74,000 and for FY 07 would be $78,000.00. For firefighters, the required Village contribution percent of payroll was 9.73 to 9.75%, and for the current FY was 9.91 %, or about $104,000. Compared to other plans, such as Florida Retirement System, it was close to 21 % for both police and fire. Mr. Palmquist commented the majority of cities in the county would love to have a cost of only about 10% of payroll. Mr. Palmquist reported the funded ratio-ratio of assets to the portion of liability of all future benefits attributable to past service-went into the financial records of the Village, and it had gone down but was still over 100% at 9/30/05. If investments did not turn around during the next yeaz, that number could fall below 100%. Mr. Palmquist reported the funded ratio for this plan looked very good; the median of • BOARD OF TRUSTEES TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES NOVEMBER 6, 2006 PAGE 5 plans he worked with was 82% on the same date. Online at nasra.org (National Association of State Retirement Administrators), one could find updated surveys of funded ratios of mega retirement plans throughout the country. The latest showed a median funded ratio of 83 or 84%, so Tequesta's 107% looked very good in comparison. FRS was about 108%, last year it had been 110%. Mr. Palmquist reviewed information for police officers and firefighters separately and combined. The last three pages in the report showed a brief summary of benefits of the plan. Chair Sabin asked about the supplemental benefits and use of funds from the State. Mr. Palmquist referred to page 3, where State revenue was accounted for, explained that a portion was held in reserve until new benefits were established, and reviewed how that could work for the firefighters. The way new benefits were usually established was the board would make recommendations; if there were a collective • bargaining unit they would have to be involved, and the recommendations would be negotiated with the City. The firefighters' argument would be they had funds from the State that were to be used for this benefit. The Village Council had final say on whether there would be a change in benefits. Chair Sabin commented this board would need to work with the representative from the firefighters to come up with any benefit changes, so perhaps at the next meeting Mr. Giblin could make suggestions, and Attorney Jensen and Mr. Palmquist were available for technical questions; the boazd was favorable towazd improving benefits. Attorney Jensen commented the amount of State funds received by the police officers was actually less than previously, but because of an agreement in the law they were brought up to what they had received previously, and asked what kind of benefits they might purchase. Mr. Palmquist advised the amount available was about 5% of their pay. Chair Sabin suggested that at the next meeting, after receiving feedback from both fue and police, a decision could be made on the type of benefits they would like. Mr. Palmquist verified he would provide the cost analysis; that from the laundry list of ideas he could call out some of those-for instance if the firefighters wanted a 3% COLA, he would tell them they couldn't afford that-he could take off the things that were too expensive and come up with a workable list. V. UNFINISHED BUSINESS 5. REVIEW OF UPDATED EXPENSE POLICY • Attorney Jensen advised the updated expense policy contained a change in the amount of reimbursement for mileage, and meals were to be reimbursed at $6, $12, • BOARD OF TRUSTEES TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES NOVEMBER 6, 2006 PAGE 6 and $18. Ms. Jensen reported the Village was currently using 48-1/2 ¢ per mile; the IRS had increased the rate to 48-112¢ from September through December 2005 but in January it went down to 44-1/2¢. Chair Sabin commented it would be easier to reference the IRS rate, to automatically change as IRS changed the rate. Chair Sabin recommended the mileage language be the standard IRS mileage rate subject to the maximum payable if the trustee could have traveled by air. Attorney Jensen advised the board had the authority to make this change and it did not have to be approved by the Village Council. Boardmember Nielson questioned the language in the document referring to an audit. Attorney Jensen advised there was an audit of the plan, which was a part of the Village's consolidated annual financial statements. Chair Sabin recommended striking item "D"; Boardmember Nielson stated his agreement. Consensus was an independent audit was not needed. MOTION: Board member Pittman made a motion to approve the updated expense policy • with the recommended changes, i.e., that the reimbursement language for mileage be changed to the standard IRS mileage rate subject to the maximum payable if the trustee could have traveled by air, and to strike item "D" regarding an audit. Secretary Giblin seconded the motion, which carried by unanimous 4-0 vote. 5. *STATUS REPORT REGARDING JUPITER INLET COLONY COMPLIANCE WITH HOUSE BILL 1159 PERMITTING FIRE DEPARTMENTS WHO PROVIDE ALL OF THE FIRE PROTECTION SERVICES TO ANOTHER MUNICIPALITY THROUGH AN INTERLOCAL AGREEMENT TO COLLECT PREMIUM TAX FROM THE OTHER MUNICIPALITY Attorney Bonni Jensen reported she had tried to contact the attorney representing Jupiter Inlet Colony, without much success, and recalled that at the last meeting Pension Board Coordinator Carlyle had planned to contact Jupiter Inlet Colony staff. Attorney Jensen suggested just appearing at their town council meeting. Chair Sabin and Secretary Giblin advised they were willing to attend. Chair Sabin indicated he would like to be on the agenda to make a statement. Recording Secretary Laur advised she would contact Joann Manganiello at Jupiter Inlet Colony for the meeting date and to request time on the agenda. • VII. STANDING REPORTS (INFORMATION ITEMS) • BOARD OF TRUSTEES TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES NOVEMBER 6, 2006 PAGE ~ There were no questions or comments regarding the following information items: 7. New applicants for participation in Pension Plan David Cooper -Police Officer -Date of Employment 8/25/06 (formerly in General Employees Pension) Derick Velez -Police Officer -Date of Employment 10/16/06 8. Beneficiary and Name Change Vanessa Smolen -Firefighter 9. 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 10. Budget Report VIII. FINANCIAL REPORTS 11. Account Statements There were no questions or comments regarding the account statements. IX. PAYMENTS TO BE RATIFIED (PAYMENTS MADE SINCE LAST MEETING) MOTION: Secretary GibGn made a motion to ratify the payments in agenda item IX, numbers 12 and 13; and to approve the payments in agenda item X, numbers 14 through 18. Board Member Pittman seconded the motion, which carried by unanimous 4-0 vote. Therefore the following payments were ratified and approved: • 12. Business Services Connection - 4/18/06 meeting and minutes $ 225.54 BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES NOVEMBER 6, 2006 PAGE 8 13. Hanson, Perry & Jensen, P.A. Services through August, 2006 $ 795.70 X. PAYMENTS TO BE REVIEWED AND APPROVED 14. Hanson, Perry & Jensen, P.A. Services through October 15, 2006 $ -0- 15. Bogdahn Consulting, LLC Fee for Quarter 07/01/06 - 09/30/06 $ 2,000.00 16. Reimburse Village of Tequesta for shipping of pension documents Fire $ 52.15 • Police $ 15.52 17. Salem Trust Fee Advice for Quarter 07/01/06 - 09/30/06 $ 186.75 18. Rockwood Capital Advisors Management Fee for quarter ended 06/30/06 $4,436.94 X. NEW BUSINESS 19. FIDUCIARY LIABILITY POLICY ANNUAL PREMIUM -PUBLIC SAFETY OFFICERS PENSION PORTION $3,356.80 Chair Sabin reported the Chair of the General Employees Fund, Bob Garlo, had contacted him regarding the fiduciary liability policy premium being due. Mr. Garlo had been very helpful, and reported he had met with staff regarding this matter. Chair Sabin had approved the payment since it was a payment that had to be made, and Boazd Member Nielson and Secretary Giblin had approved the check to Acordia. The breakdown premium in round numbers was $2,500 to Fire and $800 to police, and this was a policy combined with the General Employees' Fund for purposes of cost effectiveness of the premium. The Chairs of both boazds had needed to approve this because of the short notice. Chair Sabin requested that the board ratify the • process of payment of that premium. It was clarified that the premium was based on the assets in each fund, and proportioned at 75.3% to the Public Safety Officers' • BOARD OF TRUSTEES TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES NOVEMBER 6, 2006 PAGE 9 Fund and 24.7% to the General Employees' Fund. Fire paid approximately 70% of the Public Safety Officers' portion. MOTION: Secretary Giblin made a motion to ratify the process and approve the payment made to Acordia in the amount of $3,356.80 for the Public Safety Officers' portion of the fiduciary liability insurance policy premium. Board Member Pittman seconded the motion, which carried by unanimous 4-0 vote. 20. ELECTION OF CHAIR AND SECRETARY FOR COMING YEAR Chair Sabin commented he had been a member of the Board 3-4 years and when he joined there had been a Chair and Vice Chair who had held those positions for a number of yeazs. Chair Sabin advised he had suggested to the Pension Boazd Coordinator that the board should evaluate and determine how to go forwazd with a • Chair and Secretary for the coming year, as those were the two designated positions of the boazd. Chair Sabin recommended that Ray Giblin become Chair and Ken Nielson become Secretary for the next calendar year, and expressed his opinion it was good to rotate, to get everyone involved. Consensus of the board agreed. MOTION• Board Member Pittman made a motion that Ray Giblin be Chair and Ken Nielson be Secretary for the upcoming calendar year of 2007. Board Member Giblin seconded the motion, which carried by unanimous 4-0 vote. Chair Sabin announced that the new officers would serve at the next meeting. 21. CONSIDERATION OF SENDING A MEMBER TO FPPTA TRUSTEES SCHOOL Chair Sabin announced the next Trustee School would be held in January 2007 in Amelia Island, and commented newer members were encouraged to attend when their schedule permitted. Attorney Jensen advised the State of Florida conference in March would be in Tallahassee, and the dates were not yet posted. Mr. Palmquist advised the State of Florida Conference dealt exclusively with Fire and Police plans, which would be good for this board. • XI. ANY OTHER MATTERS • BOARD OF TRUSTEES TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES NOVEMBER 6, 2006 PAGE 10 22. SUMMARY PLAN DESCRIPTION AS REVISED AT AUGUST MEETING INCLUDED IN PACKETS FOR BOARD MEMBERS' RECORDS 23. PENSION PROTECTION ACT Attorney Jensen reported the Pension Protection Act was passed in August 2006, and most of that law was directed to ERISA-type plans (private sector pension plans), but there were some provisions applicable to public sector plans. Two specific provisions were applicable to Public Safety Officers: Effective in January 2007, retired Public Safety Officers can exclude up to $3,000 annually from their pension income paid from a governmental pension if it is used to pay for qualified health insurance premiums. Requirements were that the member must have been separated from service by reason of disability or attainment of normal retirement age. Attorney Jensen reviewed the definitions of public safety officers and qualified health insurance premiums, and advised this was acarve-out of current benefits. Discussion ensued. The pension community had interpreted that payments can only be made to the municipality or the union for purposes of providing the health insurance premium. Attorney Jensen had concluded that this would not apply to early retirement. Her stated plan of action was to create an election form for the Public Safety Officers prior to January 1, 2007 and look at coordinating the limits with any 457 plan within the municipality. There currently were no retirees to which this would be applicable, so this would become a document added into the retirement package for an individual becoming eligible for retirement, which they would sign as they were entering into retirement. Attorney Jensen advised that another change in the law allowed retirees after age 50 to take a distribution from the pension plan and not be subject to the 10% early withdrawal penalty tax. For public safety officers, this only meant a change from being able to do this at 55 to now be able to do it at age 50. This applied to distributions made after August 17, 2006. 24. STAFF SUPPORT Chair Sabin commented that with the departure of Village Clerk Carlisle, there was currently no Pension Board Coordinator. Recording Secretary Laur assured the board this would not affect staff support to the board. • XII. COMMUNICATIONS FROM CITIZENS BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES NOVEMBER 6, 2006 PAGE 11 There were no communications from citizens. XIII. ADJOURNMENT There being no further business to come before the board, the meeting was adjourned at 10:25 a.m. Respectfully submitted, l Betty Laur Recording Secretary • • • Bogdahn Consulting, LLC $2,000; Reimbursement to Village of Tequesta for shipping of pension documents $52.15 for Fire; $15.52 for Police; Salem Trust Fee Advice for Quarter $186.75; and Rockwood Capital Advisors $4,436.94. 12. Voted to ratify the process and approve payment made to Acordia of $3,356.80 for Public Safety Officers' portion of fiduciary liability insurance premium. 13. Elected Ray Giblin as Chair and Ken Nielson as Secretary for the calendar year 2007. 14. Attorney Jensen discussed the Pension Protection Act. END OF SYNOPSIS • • • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND QUARTERLY BOARD OF TRUSTEES MEETING NOVEMBER 6, 2006 I. CALL TO ORDER AND ROLL CALL The Tequesta Public Safety Officers Pension Trust Fund Board of Trustees held a regular quarterly meeting at the Tequesta Recreation Center, 399 Seabrook Road, Tequesta, Florida, on November 6, 2006. The meeting was called to order at 8:00 a.m. A roll call was taken by Betty Laur, Recording Secretary. Boardmembers in attendance at the • meeting were: Chair Ed Sabin, Secretary Ray Giblin, Boardmember Ken Nielson, and Boardmember Kevin Pittman, who arrived a few minutes later. Boardmember Robert Neier was absent from the meeting. Also in attendance were Attorney Bonni Jensen, Andy Holtgrieve of Rockwood Capital Advisors, Joe Bogdahn and David West from Bogdahn Consulting LLC (monitoring consultant); Steve Palmquist with Gabriel Roeder & Smith Company (actuary), and Accounting Clerk Monica Rahim. II. APPROVAL OF AGENDA MOTION: Secretary Giblin made a motion to approve the agenda as submitted. Boardmember Nielson seconded the motion, which carried by unanimous 3-0 vote. III. APPROVAL OF MINUTES 1. MOTION• Boardmember Nielson made a motion to approve the minutes of the August 6, 2006 quarterly meeting with changes to the spelling of Mr. Nielson's name on page one and Mr. Sabin's name on page two. Secretary Giblin seconded the motion, which carried by unanimous 3-0 vote. IV. PRESENTATIONS • 2. SEMIANNUAL PRESENTATION BY INVESTMENT MANAGER BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES NOVEMBER 6, 2006 PAGE 2 Andrew Holtgrieve, Rockwood Capital Advisors, St. Louis, Missouri, reviewed his presentation booklet, indicating both stocks and bonds were happy with the slowing of the economy. Mr. Holtgrieve reported the quarter started with a little over $3 million in the portfolio, and ended with a little over $3.3 million for the quarter, although it trailed the indexes by roughly 1%. Chair Sabin questioned the policy reference and asked to make sure the consultants were consistent with that policy. Mr. Holtgrieve reported there was a major change from a mid small-cap market which had been in place over the past several years, to a more large-cap dominated market, and it would take Rockwood time to implement that change. Mr. Holtgrieve distributed the periodic table of investments, charting how each azea had performed over the past six years, and explained how Rockwood's all-cap equity style fit and had made money, and reported that an upwazd turn was expected with purchases of larger companies' stocks. Discussion of sales ensued in response to questions from the board. The P/E ratio was approximately 20% below the market. Stocks purchased during the quarter were all above their purchase price at this time except one. Mr. Holtgrieve reviewed bonds, and reported the portfolio was expected to earn 5.1 % from the fixed income portfolio over the next 12 months if nothing changed. It was expected to make more from stocks than bonds with expected rising inflation. Board member Nielson questioned investments in mortgages. Mr. Holtgrieve explained the mortgage pools were so large that a few defaults would not affect the total. In response to a question from Board member Giblin, Mr. Holtgrieve explained they did not expect the Fed to ease, and pointed out the recent lazge-cap investments should do well in the anticipated environment. 3. PRESENTATION BY MONITOR David West, Bogdahn Consulting, reported over the past yeaz, performance was not as good as they wanted because of one bad quarter, which weighed very heavily in a short period of time, resulting in 3.46% of underperformance. Most of the returns from the bonds had come during the last quarter of the fiscal yeaz. Mr. Nielson commented consensus of the boazd at their February 14 meeting had been if there was not a pickup the next quarter to look for another manager, and Attorney Jensen had advised there must be four consecutive quarters below the 50`~ percentile of the peer groups, and after that the board needed to look at other potential managers, and asked if that point had been reached. Attorney Jensen advised that language was found in the investment policy guidelines. Mr. West advised there were not four • consecutive quarters--one quarter had been above the 50"'. Mr. Bogdahn noted it was not a requirement to wait for four consecutive quarters to begin the process, and BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES NOVEMBER 6, 2006 PAGE 3 explained Rockwood had had one quarter each yeaz which underperformed, but changes they were making were trending them toward the lazge cap investments. Mr. Bogdahn commented large cap growth had been out of favor and it was due to change, and Rockwood would be positioned right when that happened, but if there were poor numbers at the end of the yeaz, his company would come back with alternatives for the next meeting. Mr. Nielson commented he appreciated that, but a change would not be made quickly; he did not think it was too early to start looking at those options; and he would like to start a pazallel path. Chair Sabin wanted to make sure the board realized when looking at investment managers that for the equity piece, the return had been very acceptable for the last two and three quarters, and fixed income was dragging down the return. Mr. West advised there this was not a pretty fiscal yeaz report, because of the terrible Mazch quarter, but going forward in the next fiscal year that quarter would not be dragging down the investments. Chair Sabin commented the overall performance suggested. fixed income was dragging down the return. Mr. Bogdahn explained his company was converting to another • universe from Mobius, and when the switch was completed he expected the bond performance comparisons to look better. Boardmember Nielson asked if the S&P 500 was the best index to be using; Mr. Bogdahn suggested that his company bring to the next meeting comparisons to other benchmark indexes for discussion, which could also count towazd education as an investment seminar. Mr. West proposed changing the 10% allocation to cash, since a change in accounting meant that a lazge cash position was no longer necessary, and that could be included in the discussion on indexes. Mr. Bogdahn noted he believed the boadd had already addressed that and made the allocation 60/40; so next quarter that would be reflected. Board member Nielson commented in several places in the report it stated Rockwood had assumed the account on Apri14, 2005, but it had been always been stated as Apri122, 2005. Response was that the Apri14 date was probably when the account had been assumed from the previous manager and April 22 was probably when it had been fully invested. Mr. Bogdahn reported the previous investment manager, Northstaz, a large cap growth investor, had now been updated in their system, and provided a report showing their performance against Rockwood. Mr. Bogdahn indicated he expected Rockwood to perform better going forwazd. 4. PRESENTATION BY ACTUARY (TABLED FROM PRIOR MEETING) Steve Palmquist, Gabriel Roeder Smith & Company, reviewed the actuarial report dated October 1, 2005, completed Mazch 2006. Mr. Palmquist explained for the • benefit of new members that their contract was to do an actuarial report every other year, so the next report would be as of October 1, 2007. In the offyeaz, they prepazed BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES NOVEMBER 6, 2006 PAGE 4 employee benefit statements, so they had requested from the Village about October 1 an update of information on the members in the plan, new salaries, who left and who was hired. This year they would prepare the employee benefit statements even though they would not be doing an actuarial report. Employees should expect to receive their statements about six weeks after the actuary received the requested data. Chair Sabin asked for a target date from the Village as well as from the actuary. Ms. Rahim indicated she would find out from Finance Director Forsythe when the data would be provided to Mr. Palmquist. Mr. Palmquist advised the plan was a defined benefit plan-where the amount of the pension at the end was known; the unknown was how much had to be deposited each year by the Village over and above member and State contributions in order to meet the promised benefits set forth in the plan document. This contrasted to the 401 k type plans, called defined contribution plans, where the known was the amount (percentage of pay) to go in each yeaz and the unknown was what kind of benefit that would produce at the end. To determine how much would be needed at different points in the future, the actuary must make • assumptions based on known data. Discussion ensued regarding assumptions that had been made; Mr. Palmquist advised that if salary increases continued to be over the amount expected, adjustments would need to be made, and recommended using a table mirroring the way the step rates worked. Mr. Palmquist verified with the investment manager that investment return for FY 06 was about 4%, which calculated out to roughly a $120,000 loss due to investments for that year. Mr. Palmquist advised that over thetwo-yeaz period 10-1- 03 to 10-1-OS looking at all assumptions together there was a net experience loss of $129,000, which made the cost of the plan go up. For police, the required Village contribution went from 7-1 /3 % of payroll to 11-1 /2% of payroll, partly due to benefit changes and partly due to the actuarial loss. For FY 06 the minimum required Village contribution was $74,000 and for FY 07 would be $78,000.00. For firefighters, the required Village contribution percent of payroll was 9.73 to 9.75%, and for the current FY was 9.91 %, or about $104,000. Compared to other plans, such as Florida Retirement System, it was close to 21 % for both police and fire. Mr. Palmquist commented the majority of cities in the county would love to have a cost of only about 10% of payroll. Mr. Palmquist reported the funded ratio-ratio of assets to the portion of liability of all future benefits attributable to past service-went into the financial records of the Village, and it had gone down but was still over 100% at 9/30/05. If investments did not turn around during the next year, that number could fall below 100%. Mr. Palmquist reported the funded ratio for this plan looked very good; the median of BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES NOVEMBER 6, 2006 PAGE 5 plans he worked with was 82% on the same date. Online at nasra.org (National Association of State Retirement Administrators), one could find updated surveys of funded ratios of mega retirement plans throughout the country. The latest showed a median funded ratio of 83 or 84%, so Tequesta's 107% looked very good in comparison. FRS was about 108%, last year it had been 110%. Mr. Pahnquist reviewed information for police officers and firefighters separately and combined. The last three pages in the report showed a brief summary of benefits of the plan. Chair Sabin asked about the supplemental benefits and use of funds from the State. Mr. Palmquist referred to page 3, where State revenue was accounted for, explained that a portion was held in reserve until new benefits were established, and reviewed how that could work for the firefighters. The way new benefits were usually established was the board would make recommendations; if there were a collective • bargaining unit they would have to be involved, and the recommendations would be negotiated with the City. The firefighters' argument would be they had funds from the State that were to be used for this benefit. The Village Council had final say on whether there would be a change in benefits. Chair Sabin commented this board would need to work with the representative from the firefighters to come up with any benefit changes, so perhaps at the next meeting Mr. Giblin could make suggestions, and Attorney Jensen and Mr. Palmquist were available for technical questions; the board was favorable toward improving benefits. Attorney Jensen commented the amount of State funds received by the police officers was actually less than previously, but because of an agreement in the law they were brought up to what they had received previously, and asked what kind of benefits they might purchase. Mr. Palmquist advised the amount available was about 5% of their pay. Chair Sabin suggested that at the next meeting, after receiving feedback from both fire and police, a decision could be made on the type of benefits they would like. Mr. Palmquist verified he would provide the cost analysis; that from the laundry list of ideas he could call out some of those-for instance if the firefighters wanted a 3% COLA, he would tell them they couldn't afford that-he could take off the things that were too expensive and come up with a workable list. V. UNFINISHED BUSINESS 5. REVIEW OF UPDATED EXPENSE POLICY • Attorney Jensen advised the updated expense policy contained a change in the amount of reimbursement for mileage, and meals were to be reimbursed at $6, $12, • BOARD OF TRUSTEES TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES NOVEMBER 6, 2006 PAGE 6 and $18. Ms. Jensen reported the Village was currently using 48-1/2 ¢ per mile; the IRS had increased the rate to 48-1/2¢ from September through December 2005 but in January it went down to 44-1/2¢. Chair Sabin commented it would be easier to reference the IRS rate, to automatically change as IRS changed the rate. Chair Sabin recommended the mileage language be the standard IRS mileage rate subject to the maximum payable if the trustee could have traveled by air. Attorney Jensen advised the board had the authority to make this change and it did not have to be approved by the Village Council. Boardmember Nielson questioned the language in the document referring to an audit. Attorney Jensen advised there was an audit of the plan, which was a part of the Village's consolidated annual financial statements. Chair Sabin recommended striking item "D"; Boardmember Nielson stated his agreement. Consensus was an independent audit was not needed. MOTION: Board member Pittman made a motion to approve the updated expense policy • with the recommended changes, i.e., that the reimbursement language for mileage be changed to the standard IRS mileage rate subject to the maximum payable if the trustee could have traveled by air, and to strike item "D" regarding an audit. Secretary Giblin seconded the motion, which carried by unanimous 4-0 vote. 5. *STATUS REPORT REGARDING JUPITER INLET COLONY COMPLIANCE WITH HOUSE BILL 1159 PERMITTING FIRE DEPARTMENTS WHO PROVIDE ALL OF THE FIRE PROTECTION SERVICES TO ANOTHER MUNICIPALITY THROUGH AN INTERLOCAL AGREEMENT TO COLLECT PREMIUM TAX FROM THE OTHER MUNICIPALITY Attorney Bonni Jensen reported she had tried to contact the attorney representing Jupiter Inlet Colony, without much success, and recalled that at the last meeting Pension Board Coordinator Carlyle had planned to contact Jupiter Inlet Colony staff. Attorney Jensen suggested just appearing at their town council meeting. Chair Sabin and Secretary Giblin advised they were willing to attend. Chair Sabin indicated he would like to be on the agenda to make a statement. Recording Secretary Laur advised she would contact Joann Manganiello at Jupiter Inlet Colony for the meeting date and to request time on the agenda. • VII. STANDING REPORTS (INFORMATION ITEMS) BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES NOVEMBER 6, 2006 PAGE ~ There were no questions or comments regarding the following information items: 7. New applicants for participation in Pension Plan David Cooper -Police Officer -Date of Employment 8/25/06 (formerly in General Employees Pension) Derick Velez -Police Officer -Date of Employment 10/16/06 8. Beneficiary and Name Change Vanessa Smolen -Firefighter 9. 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 10. Budget Report VIII. FINANCIAL REPORTS 11. Account Statements There were no questions or comments regarding the account statements. IX. PAYMENTS TO BE RATIFIED (PAYMENTS MADE SINCE LAST MEETING) MOTION: Secretary Giblin made a motion to ratify the payments in agenda item IX, numbers 12 and 13; and to approve the payments in agenda item X, numbers 14 through 18. Board Member Pittman seconded the motion, which carried by unanimous 4-0 vote. Therefore the following payments were ratified and approved: • 12. Business Services Connection - 4/18/06 meeting and minutes $ 225.54 BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES NOVEMBER 6, 2006 PAGE 8 13. Hanson, Perry & Jensen, P.A. Services through August, 2006 $ 795.70 X. PAYMENTS TO BE REVIEWED AND APPROVED 14. Hanson, Perry & Jensen, P.A. Services through October 15, 2006 $ -0- 15. Bogdahn Consulting, LLC Fee for Quarter 07/01/06 - 09/30/06 $ 2,000.00 16. Reimburse Village of Tequesta for shipping of pension documents Fire $ 52.15 • Police $ 15.52 17. Salem Trust Fee Advice for Quarter 07/01/06 - 09/30/06 $ 186.75 18. Rockwood Capital Advisors Management Fee for quarter ended 06!30/06 $4,436.94 X. NEW BUSINESS 19. FIDUCIARY LIABILITY POLICY ANNUAL PREMIUM -PUBLIC SAFETY OFFICERS PENSION PORTION $3,356.80 Chair Sabin reported the Chair of the General Employees Fund, Bob Garlo, had contacted him regarding the fiduciary liability policy premium being due. Mr. Garlo had been very helpful, and reported he had met with staff regarding this matter. Chair Sabin had approved the payment since it was a payment that had to be made, and Board Member Nielson and Secretary Giblin had approved the check to Acordia. The breakdown premium in round numbers was $2,500 to Fire and $800 to police, and this was a policy combined with the General Employees' Fund for purposes of cost effectiveness of the premium. The Chairs of both boards had needed to approve this because of the short notice. Chair Sabin requested that the board ratify the • process of payment of that premium. It was clarified that the premium was based on the assets in each fund, and proportioned at 75.3% to the Public Safety Officers' BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES NOVEMBER 6, 2006 PAGE 9 Fund and 24.7% to the General Employees' Fund. Fire paid approximately 70% of the Public Safety Officers' portion. MOTION: Secretary Giblin made a motion to ratify the process and approve the payment made to Acordia in the amount of $3,356.80 for the Public Safety Officers' portion of the fiduciary liability insurance policy premium. Board Member Pittman seconded the motion, which carried by unanimous 4-0 vote. 20. ELECTION OF CHAIR AND SECRETARY FOR COMING YEAR Chair Sabin commented he had been a member of the Board 3-4 years and when he joined there had been a Chair and Vice Chair who had held those positions for a number of years. Chair Sabin advised he had suggested to the Pension Board Coordinator that the board should evaluate and determine how to go forward with a • Chair and Secretary for the coming year, as those were the two designated positions of the board. Chair Sabin recommended that Ray Giblin become Chair and Ken Nielson become Secretary for the next calendar year, and expressed his opinion it was good to rotate, to get everyone involved. Consensus of the board agreed. MOTION: Board Member Pittman made a motion that Ray Giblin be Chair and Ken Nielson be Secretary for the upcoming calendar year of 2007. Board Member Giblin seconded the motion, which carried by unanimous 4-0 vote. Chair Sabin announced that the new officers would serve at the next meeting. 21. CONSIDERATION OF SENDING A MEMBER TO FPPTA TRUSTEES SCHOOL Chair Sabin announced the next Trustee School would be held in January 2007 in Amelia Island, and commented newer members were encouraged to attend when their schedule permitted. Attorney Jensen advised the State of Florida conference in March would be in Tallahassee, and the dates were not yet posted. Mr. Palmquist advised the State of Florida Conference dealt exclusively with Fire and Police plans, which would be good for this board. • XI. ANY OTHER MATTERS BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES NOVEMBER 6, 2006 PAGE ~o 22. SUMMARY PLAN DESCRIPTION AS REVISED AT AUGUST MEETING INCLUDED IN PACKETS FOR BOARD MEMBERS' RECORDS 23. PENSION PROTECTION ACT Attorney Jensen reported the Pension Protection Act was passed in August 2006, and most of that law was directed to ERISA-type plans (private sector pension plans), but there were some provisions applicable to public sector plans. Two specific provisions were applicable to Public Safety Officers: Effective in January 2007, retired Public Safety Officers can exclude up to $3,000 annually from their pension income paid from a governmental pension if it is used to pay for qualified health insurance premiums. Requirements were that the member must have been separated from service by reason of disability or attainment of normal retirement age. Attorney Jensen reviewed the definitions of public safety officers and qualified health insurance premiums, and advised this was acarve-out of current benefits. Discussion ensued. The pension community had interpreted that payments can only be made to the municipality or the union for purposes of providing the health insurance premium. Attorney Jensen had concluded that this would not apply to early retirement. Her stated plan of action was to create an election form for the Public Safety Officers prior to January 1, 2007 and look at coordinating the limits with any 457 plan within the municipality. There currently were no retirees to which this would be applicable, so this would become a document added into the retirement package for an individual becoming eligible for retirement, which they would sign as they were entering into retirement. Attorney Jensen advised that another change in the law allowed retirees after age 50 to take a distribution from the pension plan and not be subject to the 10% early withdrawal penalty tax. For public safety officers, this only meant a change from being able to do this at 55 to now be able to do it at age 50. This applied to distributions made after August 17, 2006. 24. STAFF SUPPORT Chair Sabin commented that with the departure of Village Clerk Carlisle, there was currently no Pension Board Coordinator. Recording Secretary Laur assured the board this would not affect staff support to the board. • XII. COMMUNICATIONS FROM CITIZENS BOARD OF TRUSTEES TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES NOVEMBER 6, 2006 PAGE 11 There were no communications from citizens. XIII. ADJOURNMENT There being no further business to come before the board, the meeting was adjourned at 10:25 a.m. Respectfully submitted, ~. c~~~hJ' `~~~ Betty Laur Recording Secretary