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1. VILLAGE COUNCIL MEETING:
VILLAGE OF TEQUEST Redistributed
AGENDA ITEM TRANSMITTAL from 5/8/08 Meeting
Meeting Date:
5/8/08 Meeting Type: Regular Ordinance #: 10-08
Consent Agenda: No Resolution #: N/A
Originating Department: Clerk for the General Employee Pension Board
2. AGENDA ITEM TITLE: (Wording form the SUBJECT line of your staff report)
Ordinance 10-08, First Reading, An Ordinance Of The Village Council of The Village of Tequesta,
Palm Beach County, Florida, Amending Exhibit "A" of Section 2-30 of The Code of Ordinances,
Village of Tequesta, Florida, Relating to the Employees' Pension Trust Funds; Amending Exhibit "A"
to Provide for Payment. of Interest on Refunds of Accumulated Contributions; Providing for Repeal of
Ordinances in Conflict; Providing for Codification; Providing for an Effective Date. (Second Reading
6/12/08)
3. BUDGET /FINANCIAL IMPACT:
Account #: ;. Amount of this item:
Current Budgeted Amount Available: Amount Remaining after item:
Budget Transfer Required: Appropriate Fund Balance: "'
4. EXECUTIVE SUMMARY OF MAJOR ISSUES: (This is a snap shot description of the agenda item)
Over the- course of two years (started 4/06), the Pension Board has discussed paying interest on invested
funds to employees who leave employment prior to vesting (employees vest after 6 years). Employees are
required to invest 5% of their salary annually to the Village's Pension Board with no interest earned on their
funds over the six years. A detailed history of the issue is included as backup.
5. AF'F'KUVALS:
;- '^
Dept. Head: '~~ ~ ~ ~ ~ ~~~F'~ Finance Director:
Attorney: (for legal sufficiency) ~~~ ~'
f
Village Manager: ~'"~""~"
• SUBMIT FOR COUNCIL DISCUSSION: ^
• APPROVE ITEM:
• DENY ITEM: ^
Yes [~ No ^
MEMORANDUM
Village of Tequesta
Clerk's Office
TO: Mr. Michael R. Couzzo, Jr., Village Manager
Honorable Mayor and Village Council Members
FROM: Lori McWilliams, Village Clerk ``~~`~ ~`~^
DATE: April 18, 2008
SUBJECT: Ordinance 10-08 -General Employee Pension Board - 3% Interest
Over the course of a several Pension Meetings, the Pension Board discussed paying
interest on invested funds to employees who leave employment prior to vesting. The
Board requested an actuarial report from Steve Palmquist of Gabriel, Roeder, Smith
and Company with calculations ranging from 1 % to 5% on employee contributions.
• February 2007 Pension Board Meeting -The Pension Board agreed to approve
3% interest paid to employees on their investments that leave prior to vesting
and to have Mr. Palmquist make a presentation to the Village Council.
• August 2007 Council Meeting -Council tabled the item.
• October 11, 2007 Council Meeting - Mr. Palmquist made a presentation and
answered Council questions. Council decided it would need to go through the
negotiation process.
• November 13, 2007 the Pension Board sent letter to Council strongly urging
them to reconsider their request to which Council Member Humpage (Council
Member at the time) asked Council to reconsider during the January 2008
meeting.
• January 10, 2008 Council Meeting -Council agreed to continue to the February
Council Meeting to reconsider the General Employee Pension Board request
regarding paying interest on employee contributions pending the outcome of
discussion with the labor attorney (as to whether it required negotiation).
• January 14, 2008 Email from Leonard Carson advising that the Village must give
the union the "opportunity" to negotiation the subject; however the union could
choose to waive their right to negotiate.
• February 4, 2008 - A letter from HR to CWA asking CWA to confirm whether or
not they would be willing to waive their right to negotiate the issue.
• March 31, 2008 -Letter from CWA to HR agreeing to HR's request to waive their
right to negotiate.
The following information is included in your packet for your information:
• Ordinance 10-08
• January 14, 2008 Email from Mr. Carson
• January 8, 2008 Minutes
• February 4, 2008 Letter from HR to CWA
• March 31, 2008 Letter from CWA to HR
• Letter from Pension Board Members
• GRS Actuarial Report
• 11/15/07 Minutes
• 10/11/07 Minutes
• 8/5/07 Minutes
• 2/5/07 Minutes
• 8/7/06 Minutes
• 4/24/06 Minutes
The General Employee Pension Board respectively requests your approval of
Ordinance 10-08.
ORDINANCE NO. 10-08
AN ORDINANCE OF THE VILLAGE COUNCIL OF THE VILLAGE OF
TEQUESTA, PALM BEACH COUNTY, FLORIDA, AMENDING EXHIBIT
"A" OF SECTION 2-30 OF THE CODE OF ORDINANCES, VILLAGE
OF TEQUESTA, FLORIDA, RELATING TO THE EMPLOYEES'
PENSION TRUST FUNDS; AMENDING EXHIBIT "A" TO PROVIDE FOR
PAYMENT OF INTEREST ON REFUNDS OF ACCUMULATED
CONTRIBUTIONS; PROVIDING FOR REPEAL OF ORDINANCES IN
CONFLICT; PROVIDING FOR CODIFICATION; PROVIDING FOR AN
EFFECTIVE DATE, AND FOR OTHER PURPOSES.
BE IT ORDAINED BY THE VILLAGE COUNCIL OF THE VILLAGE OF
TEQUESTA, PALM BEACH COUNTY, FLORIDA, AS FOLLOWS:
Section 1. Those portions of Exhibit "A" to Section 2-30, Code of Ordinances,
Village of Tequesta, Palm Beach County, Florida, as deleted and shown by strike-outs,
and additions shown by bold underlining on Exhibit "A" attached hereto and made a part
hereof, are passed and adopted as amendments to such Exhibits and section as
follows:
Sec. 2. Definitions.
Credited Service means the total number of years and fractional parts of years of
service as a General Employee who makes member contributions to the Plan,
omitting intervening years or fractional parts of years when such General
Employee was not employed by the Village of Tequesta. A plan member may
voluntarily leave his/her contribution in the Fund for a period of five (5) years after
leaving the employ of the Village of Tequesta pending the possibility of being
rehired in a full time position by the Village of Tequesta without losing credit for
the time of active participation as a plan member. Should the employee not be
re-employed with the Village of Tequesta in a full time capacity within five (5)
years, his/her contributions shall be returned to him/her witheet three uercent
interest.
The years or fractional parts of years that a General Employee serves in the
military service of the Armed Forces of the United States or the United States
Merchant Marine, voluntarily or involuntarily, upon being granted leave by the
Village of Tequesta and separation from employment as a Village of Tequesta
plan member, shall be added to his/her years of credited service provided that:
A. The General Employee returns to his/her full time employment with the
Village of Tequesta within one (1) year from the date of his/her military
discharge.
B. The General Employee deposits into the Fund the same sum that the
Member would have contributed if he/she had remained a General
Employee, plus an amount of interest that substantially approximates the
amount earned by the Fund from the date of return to employment to the
date of deposit.
C. The maximum credit for military service shall be five (5) years.
Sec. 10. Vesting.
If a Member terminates his/her employment with the Village of Tequesta, either
voluntarily or by discharge, and is not eligible for any other benefits under this
System, the Member shall be entitled to the following:
1. If the Member has less than six (6) years credited service and
has not attained the age of sixty-two (62) upon termination, the Member
shall be entitled to a refund of accumulated contribution plus three
percent _(3%1 interes or the Member may leave it deposited with the
Fund, in accordance with the definition of credited service.
2. If the Member has six (6) or more years of credited service upon
termination, or alternatively, the Member has attained the age of sixty-two
(62), regardless of credited years of service, the Member shall be entitled
to a monthly retirement benefit that is the actuarial equivalent of the
amount of such retirement income otherwise payable to him/her
commencing at the Member's otherwise normal or early retirement date,
provided heJshe does not elect to withdraw his/her accumulated
contributions plus three percent (3%) interes and provided the Member
survives to his/her normal or early retirement date.
3. Any plan member of the System whose position is terminated, for
whatever reason, but who is employed by the Village in some capacity,
shall have all retirement benefits accrued up to the date of such
termination under this System preserved, provided he does not elect to
withdraw his/her accumulated contributions plus .three percent (3%1
i r from this System. Such Accrued retirement benefits shall be
payable at his/her otherwise normal retirement date hereunder, or later, in
accordance with the provisions of this System.
Section 2. Severability. If any provision of this Ordinance or the application
thereof is held invalid, such invalidity shall not affect the other provisions or applications
of this Ordinance which can be given effect without the invalid provisions or
applications, and to this end, the provisions of the Ordinance are hereby declared
severable.
Section 3. Repeal of Ordinances in Conflict. All other Ordinances of the
Village of Tequesta, Florida, or parts thereof which conflict with this or any part of this
Ordinance are hereby repealed.
Section 4. Codification. This Ordinance shall be codified and made a part of
the official Code of Ordinances of the Village of Tequesta.
Section 5. Effective Date. This Ordinance shall take effect upon passage.
McWilliams, Lori
From: Reid, Merlene
Sent: Monday, January 14, 2008 11:46 AM
To: McWilliams, Lori
Cc: Couzzo, Michael; Harding, Catherine; Laur, Betty; Archive
Subject: RE: Negotiations
Lor's,
This also affects the motion ~~t~hicl~ ~.~~as passed on F{6!0~ by the General Pension Board requesting the Village to present
the discussions in respect of the increase in the muitipfier (from 2% to 2.2°~) to the employees arld to get their
feedback. { will not contact the employees until the CIrVA confirms ~nrhether or not they will ~afaive their rights to
negotiate this issue.
it~~eriene
From: McWilliams, Lori
Sent: Monday, January 14, 2008 11:34 AM
To: Laur, Betty
Cc: Harding, Catherine; Reid, Merlene; Archive; Debbie Telfrin (E-mail); Michael Couzzo (E-mail); Calvin Turnquest;
damero@tequesta.org; Dan Amero; jhumpage@tequesta.org; JRH33469@aol.com; Pat Watkins; pwatkins@tequesta.org;
Tom Paterno; tpaterno@tequesta.org; turnquest@adelphia.net
Subject: FW: Negotiations
Betty,
Please for~~~ard this information tr botl-1 pension. board members a~gd Bonni.
During the 1{1.0/08 Cc;uncil Meeting, Council reconsidered the Genera{ En ~ployee Pension E3oard request to pay interest
on employee contributions. During this meeting, at the recommendation of the Village Attorney, Council agreed to
contact the Village`s Labor Attorney to determine if the Village could agree to provide this benefit or if it would be
required to ga through the negotiatiorti process. As you can see from the below response of the Labcr~~ Attorney, it is
required that the unions have the "opportunity" to negotiate this benefit; however can choose to vuaive their rights to
negotiate the issue.
At this point, the issue is now with Human Resources and the Village Manager to bring before the Unions involved.
Lori McWilliams, CMC
Village Clerk
Pension Board Coordinator
From.: Reid, Merlene
Sent: Monday, January 14, 2008 11:22 AM
To: Couzzo, Michael
Cc: McWilliams, Lori; Archive
Subject: FW: Negotiations
Mike,
wee res~c~nsc frc;rr, r.eo~+ard cn the F'ensiar~ l~ians bei~?~ included ir: negc~tiatic~ns. In additi ,r~ tc fc~r~.n~arcing Fo Council, I
think ibis si~c~uid Gist he .sent icy rrEec~bers ctf the 2 PensiurE Beards.
re~ieriene
From: Leonard A. Carson [mailto:LACarson@Carson-AdkinsLaw.com]
Sent: Monday, January 14, 2008 11:06 AM
To: Reid, Merlene
Subject: Negotiations
Merlene:
Please note my new a-mail address.
This will confirm the information I provided on Friday. Retirement is a required subject of bargaining. This
means that the Village must give the unions the "opportunity" to negotiate over the subject. This is accomplished by
notifying the unions prior to effecting changes. The unions can choose to waive their right to negotiate over the
proposed changes. It is common for retirement to cross two or more bargaining units. This clearly complicates matters.
When confronted with that situation, several of our clients have chosen to conduct pre-negotiations workshops, inviting
all affected unions. This gives the unions the opportunity to hear about the Village issues, and discuss among
themselves what would be in the best interest of all employees. Negotiations are then conducted separately with each
bargaining unit. However, the result is more uniformity of response to the issues.
Call me if you require further information. I am back in Tallahassee today.
LAC
IVlar ~1 UtS 1'L:Uyp (:WA Local ;i1tt1
~ou.rsiea.~r'.o~z~.
PALM BEACH COUNTY Pi/BLiC WORKERS
VILLAGE OFTfiQUESYA PI;BL[C WORKERS
ST. LUCIE COUNTY SCHOOL DIS7'RICTPUBLIC vVORKERS
LOCAL 3181 •AFL-CIO-CLC
Vlaxch 31, 2008
Ms. Meriene Reid, HUlnan Resources Dept.
Village of Tequesta
345 Tequesta Drive
Tequesta, FL 33469
Dear Ms. Reid:
5fi 1 ~i40-9Uy9 p.2
~oz~z~. o{vgm..EZiea
s94 isc srR~fir
(VEST PAL.LI BEACH, FLORIDA 33413
W.P.3. P1iONE: (56t) 6dd-5559 • S.LC. PHO?7E: (877) 475-5359
W.P.$ FAX: 1561)640-9099 • S.L.C. FAX: (877) 852-757)
»~
~K; a are in receipt of your letter dated February 4, 2008 (see attached) in regardsto a 3% interest
on refunds to terminating employees on the General Employee Pension Fund.
This letter is to advise you that the Union is in agreement with your proposal. Please process this
ASAP. Thank you for your cooperation in this important matter. If you have any questions,
please do not besitate to call me.
Sincerely,
Richard R. Poulette, President
RRPfbr (VpTReidPensionFund033108)
cc: Michael Couzu, Village Manager
Michael SUdell, Vice President
Gary McCallister, CWA Staff Rep.
MAR-31-2008 11:15AM FAX:561 640 9099 ID: PAGE: 002 R=94~
iviar J"1 Uts iruyp I;VVA La;al J"1251
~•LAGE OF T~UESTA
February 4, 2008
Mr_ Richard Poulet#e, President
Communications 1Norkers of America
Local 3181
594 1 sr Street
West Palm Beach, FL 33413
5Ei 1-Ei4U-yUyy p.3
3°r6 Interest on Refunds to Terminating Employees:
General Employee pension Fund
Dear Mr. Poulette:
The General Employees Pension Board has recommended that employees
terminating the Village of Tequesta,'s general employee pension fund be given 3%
interest on their savings. The Board has. determined that this payment is in the best
interest of the participants and beneficiaries.
At its quarterly meeting on Monday, February 4, 2008, the Board passed a motion
requesting the Human Resources departrr~en# to formally contact the CWA union to
confirm whether or not you would be willing to waive your rights to negotiate this
proposed change to the plan. This would allow the Board to take the matter directly to
the Council on the behaff of all employees in the plan, including the employees who
are members of the CWA union.
Please advise us in writing of your derision.
Sincerely,
J~~l
erlene Reid
Human Resources Manager
345 Tequesta br., Tequesin, FI 33469
561.575.6200 Fax; 561-575-6203
www"tegV gyn. n 6
MAR-31-2008 11:15AM FAX:561 640 9099 ID: PACaE:003 R=94%
' ~'fr.
~.~
`~'a.~~ .
November 13, 2007
TEQUESTA GENERAL EMPLOYEES'
PENSION TRUST FUND
BOARD OF TRUSTEES
345 Tequesta Drive, Tequesta, FL 33469
Telephone: 561-575-6200
Fax: 561-575-6203
Village of Tequesta
The Honorable Mayor & Village Council
Village Manager, Michael R. Couzzo, Jr.
RE: Interest on Employee Mandatory Contributions to the
Tequesta. General Employees' Pension Trust Fund
Dear Honorable Mayor, Councilmembers and Village Manager:
At our regular quarterly meeting on 11/5/07, the Board of Trustees for the Tequesta General
Employees Pension Trust Fund voted unanimously to encourage the Village Council to support
paying a 3% interest on the mandatory employee pension contribution of 5%.
Our financial consultant, Steve Palmquest, gave a presentation to the Village Council advising that
the payment of interest on such contributions was not unusual in other municipalities and the cost to
our Village would only be $100.00-$200.00 per year.
The General Employees' Pension Board is not involved in politics or unions. We look to preserve
and grow funds in good .faith for the future of our employees. We are entrusted to act on their
behalf and it is for that reason that we seek your support.
Your uly,
v i ,~,.
. ~'a ""'
Catherine A. Harding, Chai
General Employees' Pensio rust Fund
oard Member Merlene Reid
C~
Board Member Arc ie ang , Jr.
f
~~ ( ~i~ G-l .~
Board Member Carl Hansen
Board Member ichae .Rhodes
cu-vex
` ~,abne.l tCoeder Smith & Company 301 Fast Las Olas Blvd. 954.527.7616 phone
Consultants & Actuaries Suite 200 9S4.S25.0083 fax
1't. L.audeidaJe, FI_ 33301-2254 ~waw.~,abrielroede~ ~~r„
January 19, 2007 '
r-r7
Ms. JoAnne Forsythe
Finance Director
Village of Tequesta rC=-t
345 Tequesta Drive
Tequesta, Florida 33469
Re: Proposed changes to General Employees Pension Plan
Dear JoAnne:
Pursuant to the request of the General Employees Pension Board, wie have prepared the
enclosed Supplemental Aciuariai Valuation Report. This Report shows the actuarial impact of
providing interest on employee contributions using rates that range from 1 % to 5%. Below is a
brief summary of the results:
10/1/05
Valuation
ARC for Fiscal year
ending 9/30/2007 $ 92,042
ARC as % of Covered Payroll in
Contribution Year: 8 06
Interest rate on Employee Contributions
1.00% 2.00% 3.00% 4.00% 5.00%
92,042 92,156 92,156 92,270 92,270
8.06 8.07 8.07 8.08 8.08
ARC means the annual required contribution by the Village.
Please refer to the enclosed report for details regarding the above results.
We welcome your questions and comments.
Sincerely yours,
J. Stephen Palmquist, A
Senior Consultant and Actuary
J SP/rb
Enclosures
SfJPPLEMEPdTe4L e4CTtJ~eRIA~ ~dALUATe®~1 b~E~®R~'
PBan
Village of Tequesta General Employees Pensioo~ Trust Fund
`Valuation Cate
October 1, 2005
Cate of Report
January 19, 2007
f2e~ort Recguested by
Pension Board
Prepared by
J Stephen Palmquist
C9roup Vai~sed
All active employees
5~ian Provisions Being Considered for Change
Present Provision Before Change
1) No interest on employee contributions
Proposed Changes
1) Interest would be applied to employee contributions at a rate between 1 % and 5%
Participants Affected
All active General Employees
4ctuarial Assumptions and Methods
Same as October 1, 2005 Actuarial Valuation Report with no exceptions.
Some of the key assumptions/methods are:
Investment return - 8.0% per year
Salary increase - 6.0% per year
Cost Method -Aggregate
~rnortigation Period for Ae~y Oncrease in Actuaria6 Accrueo Liatniiity
NA
Susv~rraary of ®ata Used in Report
NA
Actuarial Brv~pact of Proposal(s)
See attached page(s).
Special Risks 6nvolved With the Proposal ghat the Plan Flas iVot Been Exposed to Previously
None
Other Cost Considerations
None
Possible Cor-flicts bNith !RS qualification Rules
None
~ ~ '
~. phen almquist, ASA, AAA, FCA
Enrolled Actuary 05-1560
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~A~T@C~~A~ET ®~TfA
'BO/1/2005 10/1/2005
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ACTIVE flNEANBERS
Number
Covered Annual Pa roll
y 24
$ 1
24
Average Annual Payroll ,098,039
$ $ 1,098,039
Average Age 45,752 $ 45,752
Average Past Service 43.1
43.1
Average Age at Hire 2.5 2.5
40.6
40.6
RETIREES 8 BEPdEFICIARIES 8 DROP'
Number 0
Annual Benefits 0
$ 0 $ 0
Average Annual Benefit $ 0 $ 0
Average Age 0.0
0.0
DPSABILITY RETIREES
Number 0
Annual Benefits 0
$ 0 $ 0
Average Annual Benefit $ 0 $ 0
Average Age 0.0
0.0
TERnAIPdATED VESTED flAEIWBERS
Number 0
Annual Benefits 0
$ 0 $ 0
Average Annual Benefit $ 0 $ 0
Average Age 0.0
0.0
BOARD. OF TRUSTEES
TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND
REGULAR QUARTERLY MEETING MINUTES
NOVEMBER 5, 2007
PAGE 4
4. Status Report on Village Council discussion on 10/12/07 regarding paying
interest on employee contributions
Pension Coordinator Lori McWilliams reported the Village Council had agreed to put
this matterforth as a union negotiation tool. Chair Harding commented she thought
this was slippage on the part-of the Village Council, that they did not truly
understand the board's request, and this had been the second time this was
presented, along with the ordinance for approval; the first time was just informative.
Ms. Harding read from the Village Council minutes some of the comments made
when this item was presented, and stated as Chair of this Board she saw no
correlation in why required employee contributions would not get any interest on
them. Chair Harding stated she did not agree with it being merged with negotiations
with the union; and she did not think there should be any correlation between the
two. Whatever negotiations went on with the union were between the union
members and what went on with this board was a separate subject, in her opinion.
Secretary Mangum stated he was astounded when he read the Council's comments
because he felt this was not a negotiable matter; the Board had made a
recommendation and it was up to the Village Council to say yea or nay. Secretary
Mangum commented he believed the Mayor and some other members of the
Council had misunderstood. Board Member Hansen asked if the other members
felt this should be brought up to the Council again; Chair Harding indicated she
would like to speak to the Council on this matter because she felt there was
misunderstanding, possibly with the confusion of union negotiations. Attorney
Jensen advised the Village Clerk had reported at this same Village Council meeting
where the Firefighters had proposed using State dollars to reduce their contributions
into the plan and the Council had deferred that decision to collective bargaining.
Attorney Jensen advised the Board that pension benefits were a mandatory subject
of collective bargaining, so either party could bring pension benefits to the table, so
that if there were union members in the pension plan, they could negotiate this
issue; however, this was a very small cost issue and was not the same thing
proposed by the Firefighters, but under Florida law pension benefits were a
mandatory subject of collective bargaining. So in principle, they could table this for
negotiation; however from the minutes it looked like they had not understood there
was a distinction between the Public Safety Officers pension board request and the
request from this board. Village Clerk McWilliams stated she agreed they probably
did not understand, but this was brought up in August as well, and Council had
asked that it be brought back after the budget was finished, and in the current
financial climate did not want to spend more money, but she felt they had not
understood the difference between this request and that of the Public Safety
Officers board. Board Member Reid asked how it would work with having non-union
employees in the same pension plan. Attorney Jensen responded that they could
BOARD OF TRUSTEES
TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND
REGULAR QUARTERLY MEETING MINUTES
NOVEMBER 5, 2007
PAGE 5
not act on behalf of non-_union employees but could act for the union employees to
supply benefits; in most places where there was a pension program and a union,
the unionized employees were the bulk of the participants. Board Member Reid
stated in the Public Safety Officers' plan the bulk were unionized; in the General
Employees plan they would also be in the majority. Attorney Jensen advised that
generally speaking, non-unionized employees were a part of the group who
received the beneht of the negotiations, and confirmed that there was no distinction
when there were members not in the union for purposes of collective bargaining.
Chair Harding expressed her opinion that it seemed a man's money should earn
some interest if it was being taken from him, and called for comments on this item.
Board Member Reid asked where the Board went now; did this just go to
negotiation as requested by the Council. Attorney Jensen responded this board
should receive some notification that the Village had requested to negotiate this
particular item, that there already was a drafted ordinance the Board had already
developed, the cost value of it, and that could be considered in the course of
collective bargaining. Board Member Reid advised collective bargaining had
commenced. Chair Harding asked Board Member Reid to take care of this as
Human Resource Director since she was the only one who had contact with the
unions and negotiations. Board Member Reid responded that was fine but there
was an issue coming up where she needed to understand her role on the board
.versus her role as Human Resources Director, and that would be discussed under
the item about the pension seminar.
Attorney Jensen advised there was nothing wrong with talking to the Village Council
and explaining to them what the Board was really looking for here--dust interest on
the refund of contributions which Mr. Palmquist had said was $100 to $200 per year
cost to the fund. Board Member Hansen noted Chair Harding had volunteered to
talk to the Council on this subject, and asked if it could be on the Council agenda.
Pension Coordinator McWilliams advised it would need to be done before the
December Council meeting since the agenda had already been set for November.
Chair Harding commented this whole thing started innocently as a matter of
recognizing there was no interest being paid on pension money that employees
were required to put in; it had nothing to do with unions or negotiating, and had
been generated from the General Employees Pension Board and not out of a union
negotiating matter. She felt it should be presented to Council in that innocence;
they were not trying to get the most out of the municipality, but to get the most out of
their own money.
Pension Coordinator McWilliams noted one of the Council members had expressed
that their interest was in keeping employees here and not to pay employees to
BOARD OF TRUSTEES
TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND
REGULAR QUARTERLY MEETING MINUTES
NOVEMBER 5, 2007
PAGE 6
leave. Secretary Mangum responded the board was not paying them to leave;
stated he was a very strong supporter of this, because this is a mobile world. You
might not be planning to leave tomorrow, but did not know what might happen-you
might have to move through no fault of your own before you were vested, and it was
not fair for the fund to have had your money all this time. It was not a matter of
keeping you or not keeping you, it was only fairness when somebody had to move,
had to leave, or had to quit work that they get something for the money they had to
put in over the years. Secretary Mangum sta#ed he felt very, very strongly about
this. Ms. McWilliams responded she thought some of the Council members did not
understand this was mandatory. Board Member Reid advised she had been at the
first Village Council meeting where this was presented and the Finance Director had
given a very good explanation, that this money belonged to the staff and it was
mandatory. Ms. McWilliams commented she fully backed this since it was
mandatory. Chair Harding commented that to her it was just fairness. Discussion
ensued regarding how to proceed. Ms. McWilliams suggested the whole board
attend the Council meeting possibly in December since the agenda had already
been set for November, to answer questions and present how they saw it. Ms. Reid
commented there were three unions as well as a group of non-unionized
employees, and it had not yet been brought up to the union.
Attorney Jensen advised that pensions were a mandatory subject of collective
bargaining, which meant either party could bring items to the table. Board Member
Reid commented she saw chaos coming because then it would not be limited just to
interest on the funds but could be every group and every union wanting certain
changes. Chair Harding asked if there would be any harm letting them sort through
it and then the Board bringing it back to Council the beginning of the year. Ms.
McWilliams noted Council had received the minutes back to when this discussion
first started, over a year ago, so they had all the backup and she didn't know what
more could possibly be provided. Chair Harding commented this was now more
political than just a nice gesture of good faith and loyalty; by being a part of
negotiations with the unions it became political to her, and she did not want this
Board to get involved in anything that smacked of politics. Ms. Harding asked if
after the unions were finished whether the Board could go back for reconsideration
if this were not settled for the Board. Attorney Jensen indicated she believed it
would be closed until collective bargaining happened again.
Board Member Hansen commented this was only to pay interest on money
employees had invested into the pension plan, and asked if any union would object
to that, and pointed out that Mr. Palmquist had confirmed that although it was not
required, the vast majority of plans did pay interest. Attorney Jensen responded
the union could waive bargaining on that item if Council said they had seen the light
BOARD OF TRUSTEES
TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND
REGULAR QUARTERLY MEETING MINUTES
NOVEMBER 5, 2007
PAGE 7
and now wanted to pay interest. Secretary Mangum commented the Mayor wanted
to hold this in his back pocket so he could say we will give this to the people if the
union capitulates on something else. It was a bargaining chip.
Discussion ensued regarding writing a letter to the Village Council, composing their
thoughts as to the true nature of what was intended and why, and communicating
that to the Council to separate this from the concept of union negotiations. Chair
Harding saw this as more of a moral issue than a political issue. Board Member
Rhodes expressed his opinion the Board owed resolution of this matter to the
participants; with all due respect to Mayor Humpage, this Board was to serve the
participants, and stated he liked the idea of a letter. Secretary Mangum asked Chair
Harding to prepare a letter, which she agreed .to do and to send it to atl the
members of the Board for input and for everyone to sign.
It was pointed out there was no motion by the Village Council to use this as a
negotiating tool-it was by consensus. Chair Harding commented they also said in
that statement they were going to use the pension request as a bargaining tool, so
when this Board's item came back up, it was just swept up in the package. The
distribution of the Letter would be coordinated through the office of the Village Clerk
to avoid conflicts with the Sunshine Law. Logistics of obtaining a signature from a
member who was out of town were discussed.
MOTION:
Board Member Hansen made a motion to prepare a letter as a Board and sign
it as a Board in favor of paying 3% interest on mandatory monies from
employees held in the pension fund. Secretary Mangum seconded the
motion, which carried by unanimous 5-0 vote.
VII. CONSENT AGENDA
Board Member Hansen made a motion to approve the consent agenda with
Item 7 pulled for discussion. Secretary Mangum seconded the motion,
which carried by unanimous 5-0 vote.
Board Member Hansen advised he wanted to discuss item 8, not item 7. The
motion was withdrawn.
Board Member Hansen made a motion to approve the consent agenda with
item 8 pulled for discussion. Secretary Mangum seconded the motion,
which carried by unanimous 5-0 vote.
Minutes -Regular Village Council Meeting 10/11/07
Page 6
4. Presentation reducing firefighter contributions from 6.1% back to
5%. (Con't)
concern the calculations came out perfectly with zero increase in Village contributions.
Mr. Palmquist explained that was because the baseline for State revenue had been
increased by the amount of the cost increase, which was the way the State required
them to do this exercise, and there was enough State revenue to pay for it. Vice Mayor
Watkins asked if this would continue into the future, to which Mr. Palmquist responded
in both 2006 and 2007 the State revenue amount had been larger that it had been in
2005. There was no guarantee of the amount of State funds in the future, but for
firefighters it was tied to property insurance; for police it was tied to casualty insurance.
Mayor Humpage stated he wanted to wait, thanked Mr. Palmquist for his presentation,
and advised that a decision would be made on this soon.
5. Cost Presentation by Steve Palmquist regarding paying interest on
employee contributions per Gabriel, Roeder & Smith Company
calculations proposal.
Mr. Palmquist noted he had previously reviewed this proposal to allow interest on
member contributions, which almost all other pension plans did, with the Village
Council. Right now, a General Employee who left the Village only received back the
amount of money they had put into the plan, without any interest. The proposal was to
apply 3% interest on any such refund. Mr. Palmquist advised this was one of the most
modest changes in benefits that one could imagine; the cost associated with this would
only add something like $100-$200 per year cost to the Village. Vice Mayor Watkins
verified with Mr. Palmquist this contribution was mandatory for employees. Mayor
Humpage commented he could see a couple of ways, but he would like to do this during
negotiations. Council Member Amero commented he had given his opinion he would
not be voting for this, and had given his reasons, one of which was the six-year vesting
here, and he wanted to give the bonuses to the people who stayed six years; also, he
believed this was not done in government or in private businesses and he saw no
reason to start it here. Mr. Palmquist advised in the great majority of contributory
pension plans interest was paid on contributions. Council Member Amero asked if that
was for voluntary contributions; Mr. Palmquist stated, no, that was for mandatory
contributions; this was mandatory. Council Member Amero commented he had
misunderstood that, and verified with Mr. Palmquist that municipalities in general
government paid interest on mandatory contributions. Mr. Palmquist responded it was
not mandatory that they do so, but the vast majority of plans did. Council Member
Amero commented he had understood it was the opposite way. Mayor Humpage
commented it was the employees' money, it cost the Village nothing, and he would like
to negotiate this. Council Member Amero stated he agreed. Mayor Humpage thanked
Mr. Palmquist for his presentation.
6
Minutes -Village Council Regular Meeting 8/9/07
Page 6
VIII. Communications from Council (Con't)
ouncil Member Turnquest commented on the Dalack case and Mr. Dalack's comments stating
he ould take this to the Supreme Court. Council Member Turnquest reported he had been
conta ed by various supporters and reporters and had responded that he would not comment on
the case; e would not encourage Mr. Dalack's celebrity status and would not mention,:lis name
after tonig Council Member Turnquest referenced the time and money wasted, .and felt the
Village had a ve injustice done to it because of the case.
He also felt that Co cil Member Paterno had taken a beating over the last couple of months; he
was not here to defen him but believed Council Member Paterno was,: a passionate and detail
oriented man and shoul~.ebe commended for his efforts. Council Member Turnquest stated it
takes fortitude, courage and,,time to give of one's self in a small ..community where you were
scrutinized for everything yob do and say and felt Council Member Paterno, at times, had been
misunderstood or his objectives v~ere not received well because~of lack of diplomacy.
Council Member Turnquest referencetitwo months ago when Council Member Paterno called to
reprimand Village Manager Couzzo forlewersights; h~'did not believe it was necessary and felt
the Village Manager did hold his departme~s responsible, but was ultimately responsible for his
department heads and departments. He admire~Council Member Paterno for all he has done and
commended him for being the one detailed per n that found the mistake in the utility billing
issue. Council Member Turnquest concluded'that b 'ng a politician was tough and thankless and
he felt privileged to be serving with him. ~~.
`,~~
Council Member Paterno recalled his trip to Arlington Nat nal Cemetery and was honored to
see Col. Resnick's place of rest and as an American it was an honor to see the cemetery.
~;~
Vice-Mayor Watkins congratulated everyone on National Night Out d confirmed that it was a
great event. She added that they had a good turnout of residents and co ended the Village on
their hard work to organize the event. Vice-Mayor Watkins stated she did nothave an issue with
Council Member Patdrno and noted she had written a letter; copied it to the Vile Attorney and
Department heady so that costs were not incurred. She noted the word malfeasance~as not used;
the letter cleanly stated she appreciated Council's right to ask questions and find an`''swers and
simply ques;Fioned the method and how issues were presented. `°°~.
'Rampage thanked everyone for their efforts on National Night Out and thanked the
for the use of the Church property. Pastor Bearesford mentioned there were over 1,000
pants and he was honored to host the event.
IX. New Business
5. Ordinance 615-06/07. First Reading, An Ordinance Of The Village Council of
~.,~ ~~? the Village of Tequesta, Palm Beach County, Florida, Amending Exhibit "A" of Section 2-30 of
~ ~.` The Code of Ordinances, Village of Tequesta, Florida, Relating to the Employees' Pension Trust
>~` -:,- Funds; Amending Exhibit "A" to Provide for Payment of Interest on Refunds of Accumulated
,~
Minutes -Village Council Regular Meeting 8/9/07
Page 7
IX. New Business (Con't)
Contributions; Providing for Repeal of Ordinances in Conflict; Providing for Codification;
Providing for and Effective Date. (Second Reading 9/13/07)
Attorney Hawkins read Ordinance 615-06/07 into the record.
MOTION: Council Member Turnquest moved to approve the Ordinance 61 S; Vice-Mayor
Watkins seconded the motion. Item was opened for discussion.
Council Member Paterno questioned if the contribution referenced was the Village portion or
employee portion. Village Clerk McWilliams confirmed the 5% contribution was the employee
portion. Council Member Paterno was concerned with the cost to the Village and the possible
encouragement for employees to leave and stated he would like to see employees stay. He asked
how other Municipalities participate.
Manager Couzzo stated that some Municipalities participate and some do not and added this
Ordinance was for consideration as a first reading. Council Member Paterno felt the Village had
gone over and above and would like to reward. employees who stayed long term. Mayor
Humpage commented just because this was being done elsewhere did not mean Tequesta needed
to participate.
Council Member Paterno suggested being open to new ideas for employees who stayed and was
not in favor of rewarding those who left. Village Clerk McWilliams explained that employees
were required to put 5% of their salaries into the account and explained the contribution was
similar to a savings account.
Council Member Paterno asked if the item could be tabled. Mayor Humpage asked Council
Member Turnquest to consider the request made by Council Member Paterno. Discussion
ensued.
Council Member Turnquest withdrew his motion to approve Ordinance 61 S; Vice-Mayor
Watkins withdrew her second.
MOTION: Council Member Amero moved to table the Ordinance to October 11, 2007;
Council Member Turnquest seconded the motion; motion carried unanimously S-0.
~, 6. Resolution 59-06/07, A Resolution of the Village of Tequesta, Palm Beach-~~unty,
FIo'-revising personnel policies i.l, 1.2, 1.3, 2.3, 2.4, 2.6, 3.3, 3.6, 3.8, 3_I4;~.11, 3.12, 3.13,
4.1, 4.2, 5.1, 3~:2;~:3,..5 7, 5.8, 5.9, 6.1, 6.2, 7.9, 7.10, 7.11 ,the~aletio"n of policy 4.11, and the
addition of policy 2.9; and pro~~ effective date.___~ -~- "~
Attorney Hawkins read Resolution.5-9=@6707 into
MOTION: Vice-Mayor Watkins moved to discuss Resolution S9; `~cil_Member Turnquest
-~
seconded the-(notion; Item was opened for discussion. '
~~.~A~.y~7~D ~p+F Tai 1I~{~i7J~~S1~¶'Ep~7~S ~ggy7~ ,t~ 7~g,~ g~ ~7g 7~,7 ~p'+ g.7 ~p+ 7~y 7~y,77~,
.LL 1~~1gLJ~d`~SHA ~~D 7L' 1~~~pf+LgE,~1'E~Yy~ ~1VpY~Hg1~Lg,~1'~g~S'7~T~S' Y1~E71g~~7 S11g.,®LV A~VJ~JI II`~1J1`a!~
~~G.J A•AR ~R.IA~P L' dd,Y.JV J~YA'~JG~g1V~ ~I1V V./~1CiS
PA<Gl~ 2
regular quarterly meeti®g as submittal. 1~oard member- I[l;cid seconded the nrotio®,
svlricb carried by arnanimoars vote.
V. ~'EI.,C®1VIE l~T1EVV B®ARD 1VI)El0'I)BEIt CA12I, >El<.~SEl®1 ANI) INIE~V PEI~TSI®1QI
C'®I3~INAT®I8 ~,®.Rl[ 1!'I.cI~VILI,IAIViS
Chair Harding extended a welcome to new Board member Hansen and to the new Pension
,:_: _.._...._, , ~_, Coordinator and Village Clerk Lori McWilliams.
._:
~~ ~'~. IJ1~iFIl`tISI~ED BUS><1VESS
i
j C'oersideratao® of paying naeterest on etatployee contributions per Gabrie-, R®eder and
ii Smaitb C'oenpany's calculations proposal
I~~~ Pension Coordinator McW' '
illiams advised that calculations which the board had requested
from Steve Palmquist of Gabriel, Roeder, Smith and Company were included in the meeting
packets, with calculations for paying interest at the rate of 1% to 5% on employee
contributions. This item was being brought before the board for a decision on the rate of
interest to be offered. For benefit of new member Hansen, Chair Harding explained that the
board had decided to pay interest on contributions made into the pension plan to departing
employees who left before being vested; the actuary had been requested to provide
calculations on paying interest at rates of 1 % up to 5%, so that the board could make a
decision on what rate to pay. This meant, for example, that an employee who left after four
yeazs and had paid money into the pension fund would receive their money back plus a small
amount of interest rather than only their contribution. Chair Harding advised that Secretary
Mangum had been helping with this, and the boazd had felt interest in the range of probably 2
or 3 percent was warranted for having the money sit in an account. Chair Harding suggested
3 %.
Attorney Jensen advised this would be a change to the ordinance for the pension plan
document; the actuazial impact had already been prepared and was attached showing that
would increase the employer's contribution by .O1 %. It was noted that Mr. Palmquist had
indicated he would attend the next Village Council meeting to present this to the Village
Council for consideration of approval. Chair Harding commented that she. believed the board
should make a decision today on the rate. Monitor Joe Bogdahn and Attorney Jensen
estimated less than 25% of pension plans paid interest on returned contributions. Board
member Reid commented she would like more information on why such a small percentage
paid interest. Attorney Jensen advised of the discussion that led up to this, there was a fairly
high turnover in this pension plan and the boazd wanted to provide those individuals with
some rate of interest, rather than only giving back their contributions. Boazd member Reid
13OARI~ OZF' TRLJS'L'E.ES
T'E~LJES'F'~i C>ENIEISA.I.. El~)Pg.,®'4'EES' PEI~S1t®1~ 'I'RL.jS'I' FUI'~I~
RE~LJI.AIL ~LTARTE~.,'Y 1~9EE'I')iNC 1~I1@TLJ'L'ES
L'ebruary 5,2007
PAGE 3
expressed concern that she was not understanding why 75% of plans did not pay interest.
Board. member Hansen and Chair Harding stated they were in favor of establishing an
amount. Chair Harding explained that in previous discussions with Secretary Mangum
present, the intent had been not to make -the percentage very high just enough so that
employees would get some interest on their money that had been sitting there for some length
of time. Attorney Jensen pointed out there was no cost difference between providing
between one and four percent. .
li'IOTION:
Board meanber Hansen made a motion to pass on to the Village Council a
r, recotaane~mdatiom to approve 3% interest paid to employees leaving before they are
vested in the General Employees Pension Plan. Board nnember)H[ardiag seconded tt~e
motion. 1®'Iotioa carried by unanimous 3-0 vote.
i!
,,
'~,t~ PRESEle1TATIONS _ ..,. ... ._._.._.._,,. _w ., ..
.,.~,
Joe Bogdahn, of~ogdahn Consulting, LLC, reviewed his presentation booklet for the quarter
ended December °1;,.2006. Mr. Bogdahn noted the first page was a simple performance
report showing cash fl~ for the quarter, with gain after fees of $31,397.51. Bond returns
for the past year at 4.07% hh+d_been ri ght on top of the benchmark index of 4.07%, which had
been unexpected. Mr. Bogd 4 viewed equity, noting that the most recent quarter's 6.70%
S&P 500 return had been their lar t single quarter return since 1999. Te ue '
return for the quarter had been 6.02%, w'Is~ch was very strong, and was the firs time in seven
years they had not outperformed the benek}mark. Board member Hansen asked Mr.
Bogdahn's opinion regarding whether changiri~•f~om FRS to their own pension plans had
been a benefit for the Village. Mr. Bogdahn explained, the FRS contribution rate was higher,
and the Village had more control with their own plans;°~nd from the Village's standpoint
they had a better multiplier rate and it was less expensive ~~r the Village than if they had
stayed with FRS. Chair Harding stated on the State pensib~,i the employee made no
contribution, and on the self-funded pension plan, as in the Vill~g~e of Tequesta pension
plans, the employee was making a contribution, so it was employee mossy that had come out
of their paychecks that the board had voted to pay interest on. ' ,
VIII. C'ONSENT' AGIENDA
Board Ynember Reid requested that under Ratification of WitLdraevals made sinc+c the
Dast meeting on 2-signature basil, Bob Garlo and Russell White be pulled, since they
BOARD OF TRUS'T'EES
TEQUESTA GENERAL, EIVIPL,OYEES' PENSION "I'RITST FUNT-
REGLJi,AR Qi7ARTERL.Y MEETING 1VIINUTES
August 7, 2006
PAGE 3
`masked that he not be considered in this decision since this might be his last meeting.
~,
Dis~s~ssion ensued regarding the date.
~~,
..
MOTION: `~ ~~~:
~.
Board member~K,och made a motion to change the meeting date from the 4te Monday to
the first Monday and,,rotate the times of 8:00 a.m. and 10:30 a.m. to synchronize every
other meeting with the~~l~ublic Safety-Officers' Pension board. Secretary Mangum
seconded the motion, wh~clEt tried by unanimous 5-0 vote contingent upon tLe Public
Safety Officers board agreeing .coordinate. It was announced that the next meeting
would be at 10:30 a.m. on Novemti`3er 6.
Chair Garlo noted the fund in comparison to thi~~dexes was doing well and questioned what
the market was like, to which Mr. Bogdahn resp~xded this fund had a better chance of
getting to their assumption than 99% of the funds-mos'd a 4%-S% range. It had been a
tough time, and more and more were asking about hedge ~"uriC~s but his opinion was that
pension funds could not invest in them-they did not tell you wha'~#~iey were doing so you
.did not know if they were violating other rules the pension must follov~,. Mr. Bogdahn
reported hedge funds were blowing up and when they failed it disturbe~~the markets.
Historically the stock market made 10%; last year it was up less than 5%, and~~l~ 2006 it
would not come close to 10%. In his opinion until the regulation of hedge funds the iet
volatility would continue and ii was not a rosy outlook for the market, but this fund was in a
great position with Dana outperforming the market.
....
.a .. , . __ ,.,,....~_u«~,
V• UNFINISHED BUSINESS
s
'i. REPORT BY FINANCE DEPARTMENT REGARDING COST OF A STUDY
~'° REGARDING COST TO PAY INTEREST ON NON-VESTED WITHDRAWALS
Patrice Monaco, Accounting Manager had provided an e-mail indicating Mr. Palmquist
would do the requested study to provide calculations for the fund to pay 3% interest on non-
vested withdrawals for $600-$800, and this would be a minimal increase in the Village
contribution.
Secretary Mangum made a motion for discussion purposes to have Gabriel Roeder Smith
do a study to determine the cost impact to the fund of crediting 3% interest on the
employee contribution prior to vesting. Board Member Koch seconded the motion.
Discussion ensued. Secretary Mangum felt.the calculation could be done very simply on
1 % and then increased to the percentage desired. It was clarified that a study was
required. The. motion was amended to clarify the calculation would be on 1 % through
5% calculated on the balance, not compounded. The amended motion was seconded by
BOARD OF TRUSTEES
TEQi1ESTA GENERAL EMPLOYEES' PENSION TRUST FUND
REGULAR QUARTERLY MEETING MINUTES
August 7, 2006
PAGE 4
Board Member Koch. Motion carved 5-0. It was clarified that this would be effective
on passage. In response to Boazdmember Hazding's question as to whether the Village
Council might change the recommended percentage, it was clarified that the Council
.would look at the amount of increase in the Village's contribution and either approve or
deny this boazd's recommendation.
....:. _
air Garlo referred to page 4 of the minutes, which mentioned Gabriel Roeder Smith,
but ould have been the auditing f rm, and Ms. Carlisle clarified that needed to be
change ~n the minutes to Rachlin Cohen.
RESPONSE ~O CHAIR GARLO REGARDING WHETHER THE EMPLOYEE
BENEFIT STA'MENT IS PROVIDED ANNUALLY OR EVERY TWO YEARS
Gwen Carlisle, Pension~oordinator, advised she had spoken to Mr. Palmquist, who advised
the benefit statements wer`~,_done every other year, and he would be happy to provide them
every year but there would b ~an additional cost for this service. Chair Garlo indicated he
had thought it was in the plan th statements were to be provided every year. Mr. Palmquist
had not indicated what the cost~wc~iuld be. Chair Garlo expressed his opinion em to ees
were entitled to a statement every yea~`"1~ Discussion ensued. It was clarified that although the
Finance Department had the informatid the benefit statements must be provided by the
actuary. In discussing whether the Pu 'c Safety Officers' Pension provided annual
statements, Attorney Jensen indicated she tho t they had their.actuary report one yeaz and
then only the benefit statements the next year. ~ air Garlo commented he would research
this matter, talk with Human Resources, and bring 's back to the next meeting.
VI. CONSENT AGENDA
Chair Gazlo announced he had pulled item 6, Approval of N~e1y Applicants in the Pension
Plan, because Kevin Sossi was no longer here. Attorney Jensen.. dvised he was a member
of the. plan for the time he worked here. Ms. Cazlisle commente~ oger Ramdeen had
also worked fora very short .time, 12 days, and it was pointed out the should have
been listed as a new applicant as well as under ratification of withdra ~ls. Boazdmember
Harding made a motion to approve the Consent Agenda with the additio as stated.
Secretary Mangum seconded the motion, which caried by unanimous 5-Ovate.
Therefore, the following items were approved on the Consent Agenda
Payments:
Business Services Connection - 4/24/06 meeting and minutes $ 265.82
Hanson, Perry & Jensen, P.A. $ 932.20
BogdaLn Consulting, LLC $ 750.00
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12EGb1~,A>E8 ~HA.~~'EliB]LSY MlFET>I1~G MIIVIJ'lt'>E~
April 24, 2006
PAGE ~
forwarded electronically from staff instead of having them in printed form in their
agenda packets.
Board member Koch requested a copy of the draft minutes after they were transcribed; the
other members of the board indicated they preferred to receive the draft minutes in their
agenda packets.
~:
:' Board member Harding raised the issue that it was mandatory for employees to be in the
' pension plan and have 5% taken from their pay as contributions, but they did not receive any
~~ interest on their contributions into the fund. Board member Harding expressed her opinion
~`~ ~ that employees should get some interest on that money when they were leaving. Chair Gazlo
asked Attorney Jensen her experience in this matter. Attorney Jensen advised about 2/3 to
3/4 of the funds she dealt with paid no interest on refunds of contributions, and some paid a
set amount of interest on a refund. Board member Harding requested this be looked into.
Secretary Mangum agreed this issue should be addressed, and commented he thought if
someone had worked five years they should be given something. Board member Koch asked
if she became a policeman if she would get her contributions back, to which Pension
Coordinator Carlisle responded Joe Petrick had been a police officer-and received his payout
when he left, and now as Code Enforcement Officer was in the General Employees Pension.
Attorney Jensen responded some cities had city vesting-so as long as an employee was
working for a municipality for the required number of years they were vested-that was a
new item that was coming up in some plans. Board member Paterno commented it was not
that common. An example was given of an employee who worked 3 years as a general
employee and then became a policeman for 20 years-the general pension fund would pay
them for 3 years and then the police fund would pay them for 20 years. Board member Koch
asked what a reasonable interest amount would be. Attorney Jensen commented the board
could ask the actuary, and it could be tied to a money mazket rate or something else, such as
CPI. Board member Paterno questioned what happened if there was a set rate and the market
fell below that, concluding it probably would be to their advantage because the mazket would
be at a loss. Board member Harding noted average interest over a period could be pro rated.
Secretary Mangum discussed how interest could be calculated, using as an example another
pension fund with which he was involved, and advised that the actuary could tell you exactly
the amount of interest and it would not be difficult for the actuary to do-each employee
would have a percentage of interest. Board member Harding reported at her last job she got
10% and was fully vested the first day. Attorney Jensen advised that Board member Harding
had been in a defined contribution plan, which was very different-this plan was a defined
benefit plan which was geared toward the benefit one would receive at retirement. Attorney
Jensen explained that this plan was guaranteed and participants would never outlive those
dollars, and commented that Board member Harding was talking about a type of fund where
the participants were responsible to make decisions and they could outlive the dollars. Board
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.~pa-il 24, 2006
P.~GE ~
member Patemo explained if Board member Harding retired this year the V illage would pay
for 40 years if she lived 40 years. With the type of plan she had previously, she would have
to make her payout last 40 years. That was the difference in a nutshell. Chair Garlo
commented the boazd was looking at the 24 participants in the plan--those employees were
looking at this plan for the rest of their lives. There had previously been a situation where
payouts had to wait to be approved by the board at their next quarterly meeting so it could
have been 90 days before the employee received payout, with no interest, but this board had
undid that policy. Board member Harding commented she would like to see some kind of
interest, and suggested asking Steve Palmquist how much it would cost to do a cost study.
Attorney Jensen advised there would be a cost to pay interest on refunds of contributions and
the fund's cost savings as a result of turnover would be less. Board member Patemo
commented that $106.,000 for the past year could become zero. Boazd member Patemo
stated he understood Board member Harding's position but his job here was to add benefits
or make sure there was money in the program at the end-and asked if it was the Village
Council's decision to add benefits. Attorney Jensen advised the board's job was to act in the
best interests of the participants and beneficiaries to ensure 'the integrity of this fund.
Improving benefits was something the board could recommend as an advisory board but
ultimate authority to make that decision was by the Village Council and required an
ordinance. Pension Coordinator Cazlisle commented there would be a cost to the Village if
they had to do another actuarial report. Secretary Mangum commented if there was
unfairness it needed to be addressed. It was confirmed that the amount of payouts without
interest during the past year had been $106,000, but the time over which that had
accumulated was unknown.
Board member Koch asked if there were more participants how would that change the
integrity of the pension fund, to which the response was it just made it bigger-there would
be more money involved. Boazd member Patemo commented the cost to the Village would
be less than 1 %. Page l 5 was referred to, which showed a turnover rate of 25%. Board
member Harding suggested paying interest only after one year employment. Secretary
Mangum indicated he would like to know how much money would be involved. If
something happened and an employee had to leave after fow yeazs he only got has money
back, which Secretary Mangum considered unfair, and suggested paying cumulative 2% over
4 yeazs -if the employee put in $7,500 it would cost the Village $700 in interest.
Secretary Mangum expressed his opinion the interest could be calculated easily from the first
day an employee was in the plan to the last day, and if it cost the town a little that was
secondary to this board's concerns, and that was why the residents paid taxes. Secretary
Mangum commented the board should not expect arisk--there was no risk. Chair Garlo
commented it was not unusual for the government to have plans that were all about the
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](~GU][,AJIt ~>11Alft`)('E]Tt1L,~Y M~>ET1i1~C 1~1~ ~T~S
April 24, 2006
PAGE 10
retirement, police and fire employees expected to work there 20 years, and there were really
two different philosophies. Board member Patemo commented there were tradeoffs on both
sides-an employee was guaranteed retirement for the rest of their life in return for only
getting their contribution back if they left. Secretary Mangum was concerned about
employees who had no choice but to leave early. Attorney Jensen advised most plans vested
at l 0 years but this one was only 6 years.
Accounting Manager Monaco spoke as an employee in the plan and suggested offering an
option not to participate, which was then discussed, with the conclusion that this fund would
not remain. viable. Chair Garlo indicated it would cost money to have Mr. Palmquist to this
research; Attorney Jensen advised the board would have to provide parameters. During
ensuing discussion it was noted participation in the plan was mandatory and new employees
were now told they would eam no interest on their contributions if they )eft before six years.
Board member Hazding commented those were issues the employee felt they could worry
about later. Chair Garlo commented it was not unusual not to get interest and he had not
heard anyone complain. Secretary Mangum stated, do not pursue no contributions-it had to
be mandatory, and should be looked at like insurance, but he had been amazed to learn
someone who left got nothing in interest if they worked 4-1 /2 years. Board member Patemo
commented this plan would grow as older employees retired and new people came into the
plan.
The proposal to have Mr. Palmquist do a cost study and the amount of interest to pay was
discussed. Attorney Jensen recommended asking the cost if 1 % interest were paid, and if
that could be doubled to get the amount for 2%, etc. Using the CPI rate, which had been
around 3% lately, was discussed. Board member Harding suggested Secretary Mangum
come up with something as a guide rather than taking it outside; however, Secretary Mangum
indicated he would not want to come up with something for the board=--he would prefer it be
done in a more official capacity.
1!'IOTIOIV:
Board member lElarding made a motion that when an employee left the pension plan
prior to being vested and after a minimum of 12 months employment that they receive
3% on their money when they leave. Secretary Mangum seconded the motion for
discussion purposes. Board member Koch commented she did not know how much a
study would cost-things seemed to cost a lot--and the Council would have to give final
approval. Attorney Jensen advised that there must be a cost study for the Village to
submit to the State between first. and second reading, and most municipal Councils
would like to know the cost in the beginning, so it was much better to have a cost study
going in. Chair Garlo agreed. Board member Patemo commented you would have to
have a cost study either way before it could go to the neat step-Council approval.
'I'EQUIES'I'~ GEI~IIER~L lEI~'dpi,®~'IEIES' PEI~TSI~NI TI2US7I' 1~'I.TI~
>f~GIJf,~ QiJ~1l~'I'IEIBL~' M1E)~'I'>f)~IG lO~II~IgJ'I['IES
April 24, ~00~
PAGE I1
Cbair Gar-o noted any change to the existing plaan realuired ~'i1-age Counci- approval.
Board member Paterno commented it might be better to do a cost study before coming
up with a figure. Secretary Mangum commented he had seconded the motion, but
believed that ®vould be a ®ore appropriate route to know evhat they were talking about,
and he felt a study should not be that expensive--we could ask our actuao-y what it
would cost us and tell him the situation and he might come up with a suggestion-he
would ask the actuary for ideas. Chair Garlo commented the actuary probably had
already done a lot of the work, but he was probably going to do projections on turasover
anticipated and extrapolation, and they all knew before it went to Vi-lage Council they
were going to want to see a study. Board member Paterno commented it needed to be
in a form for the Council that was ready to move on. Board member Harding
withdrew her motion.
Discussion ensued, following which. Secretary Mangum made the following motion:
lid®'I'I®1l1:
Secretary Mangum made a motion to have the Finance»epartmentcontact the actuary
for an estimate of the cost of a study to find out how much it wou-d cost to pay interest
on non-vested vvithdra~vals. Board member Harding seconded the motion, which
carried by unanimous 5-0.
The Finance Department was asked to report the actuary's response at the next quarterly
meeting.
%III. C®MMUlITIC'.~'I'I®1VS )FR®M C]t'I'IZEI~IS
No citizens were present.
?DIV. A~.T®UI;tNMEl~1T
There being no further business, upon motion by Board member ]EIarding, seconded by
Secretary Mangano, the meeting was adjourned at 9:59 a.m.
Respectfully submitted,
,- ,G „~
~n '_~
Betty La~
Recording Secretary