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HomeMy WebLinkAboutDocumentation_Special Meeting_Tab 07_12/08/2005• TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND QUARTERLY BOARD OF TRUSTEES MEETING AUGUST 11, 2005 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 Emergency Operations Center (EOC) of the Public Safety Facility, 357 Tequesta Drive, Tequesta, Florida, on August 11, 2005. 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: Vice Chair Geraldine Genco and • Boardmember Ed Sabin. Also in attendance Ray Giblin, elected by the Firefighters as their new representative; Jason Fleming, elected by the Police Officers as their new representative; Steve Palmquist, Gabriel Roeder and Smith (actuarial consultant); Mike Welker, Bogdahn Consulting LLC (monitoring consultant); Pension Coordinator Gwen Carlisle; Finance Director Joann Forsythe; and Accounting Manager Patrice Maqueda. II. APPROVAL OF AGENDA MOTION• Vice Chair Genco requested and made a motian that Agenda Item XVI (a)(2) Auditor's Report dated June 30, 2005 be moved to Item X(a) Presentation by Actuary. Boardmember Sabin seconded the motion, which was unanimously approved. MOTION: Vice Chair Genco requested item XI (b) be changed to state "discussion of plan administrator'; and that the agenda be approved. Boardmember Sabin made the motion; Vice Chair Genco seconded; motion carried unanimously. III. APPROVAL OF MINUTES MOTION: • Boardmember Sabin made a motion to approve the minutes of the Febraary 18, BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFE'L'Y OFFICERS PENSION TRUST FUND MEETING MIrTUTES August ii, 2005 PAGE 2 2005 and the minutes of the May 10, 2005 meetings as submitted. Vice Chair Genco seconded the motion, which carried by unanimous vote. IV. RE-APPOINT GERALDINE GENCO TO 2-YEAR TERM EFFECTIVE 6/12/05 - MOTION: Boardmember Sabin moved to re-appoint Geraldine Genco for another two-year term effective 6/12/05. Acting Chair Genco seconded; motion carried unanimously. V. ACCEPT RESIGNATION OF JAMES WEINAND AND JOE PETRICK MOTION: Boardmember Sabin moved to accept the resignations of James Weinand and Joe Petrick. Acting Chair Genco seconded; motion carried unanimously. VI. ACCEPT RAY GIBLIN AS NEW FIRE DEPARTMENT EMPLOYEE • REPRESENTATIVE TO FILL VACANCY CREATED BY RESIGNATION OF BOARDMEMBER JAMES WEINAND MOTION• Boardmember Sabin moved to accept new Fire Department Representative Ray Giblin to fill the vacancy created by resignation of James Weinand. Acting Chair Genco seconded; motion carried unanimously. VII. ACCEPT JASON PEENING AS NEW POLICE DEPARTMENT EMPLOYEE REPRESENTATIVE TO FILL VACANCY CREATED BY RESIGNATION OF BOARDMEMBER JOE FETRICK MOTION• Boardmember Sabin moved to accept new Police Department Representative Jason Fleming to 5ll the vacancy created by resignation of Joe Petrick. Acting Chair Genco seconded; motion carried unanimously 3-0. VIIL CONSIDERATION OF RECOMMENDATION TO VILLAGE COUNCIL OF APPLICANT TO FILL VACANCY ON BOARD CREATED BY RESIGNATION OF PETER LUCIA • Vice Chair Genco announced that the following residents had applied to fill the vacant position created by Mr. Lucia's resignation: Joy Kovaichick, Archie Mangum, Kevin BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MIrTUTES August ii, 2005 PAGE g Pittman, and Ken Nielson. All were present at the meeting except Mr. Pittman, and answered questions from the boazd. Vice Chair Genco announced that these were-the best applicants that had ever applied for this boazd, and she wished there could be an alternate. Vice Chair Genco confirmed that all applicants were registered voters and residents of the Village. MOTION• Boardmember Sabin nominated Ken Neilson, because of his current involvement in administering a pension plan for the City of West Palm Beach, as the board's recommendation to Village Council to fill the vacant position created by the resignation of Peter Lucia. Boardmember Fleming seconded the motion. Motion carried by unanimous 4-0 vote. Vice Chair Genco commented she might speak to the attorney about adding alternate members to the boazd, and announced that there would probably be openings on the board after the first of the yeaz. • IX. APPOINT INTERIM CHAIR AND INTERIM SECRETARY TO SERVE UNTIL THE NOVEMBER ELECTION Acting Chair Geraldine Genco passed the gavel to Steve Pahnquist, explaining that the board no longer had a Chair or Secretary, and that the Vice Chair acted as Chair and the Secretary signed documents. Mr. Palmquist advised that by State law the Village Council appointed two seats; there were two employee representatives, one for Fire, one for Police; and the fifth member was chosen by the other four and ratified by Village Council. Vice Chair Genco explained that the person just appointed would be ratified by the Village Council. Mr. Pahnquist advised that all the boazd had done today was make a recommendation to Village Council for an appointment to the board, and only the fifth member chosen by the board was ratified by the Village Council. Mr. Palmquist advised that the board therefore might want to wait until there were officially five boardmembers to appoint officers. Pension Coordinator Carlisle explained that the two Council appointees were Vice Chair Genco and the new applicant; the Fire representative was Boardmember Giblin; the Police representative was Boazdmember Fleming, and the fifth member was Boazdmember Sabin, who had recently been chosen fora 2-yeaz term. Mr. Pahnquist expressed his opinion that the board might want to wait until there were five members to select officers. Pension Coordinator clarified that today's appointments were only to serve until November, when the annual election would take place. Boazdmember Sabin commented that the Vice Chair served as Acting • Chair, but the board did not have a Secretary. Councilmember Genco advised that she would bring up appointment of the new member of the board under Any Other Matters at the next BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES August ii, 2005 PAGE 4 Village Council meeting, so that if the board had to meet again there would be a full board. Councilmember Paterno commented it could be brought up, but the Village Council could not vote on it until the following meeting when it could be on the agenda. Vice Chair Genco commented she would see what could be done. Mr. Palmquist called for nominations for acting secretary for the quarter. MOTION: Vice Chair Genco nominated Boardmember Sabin to be Interim Secretary for the quarter. Mr. Sabin accepted the position aad the board voted 4-0 in favor. X. PRESENTATIONS a) PRESENTATION BY ACTUARY STEVE PALMQUIST, GABRIEL ROEDER & SMITH Vice Chair Genco announced that Steve Pahnquist was present at her request and that she • had thought there would be members of the General Employees' Boazd present. Pension Coordinator Cazlisle advised they had all been invited. Vice Chair Genco expressed surprise that they were not present. Vice Chair Genco asked about constantly amending and changing the plan document, how often it must be done. Mr. Palmquist responded there was no requirement to update the plan document at any one time; but sometimes amendments to laws required updating the plan. Mr. Pahnquist reviewed recent changes in benefits which needed to be reflected in the plan, and commented he assumed those changes had been made. Vice Chair Genco indicated she had been referring to changes in verbiage, or definition issues, none of which she believed were as a result of a change in the law, and it became burdensome to keep track of changes. Vice Chair Genco commented usually i 2 months were given to comply with changes in the law, and asked if it was normal to review the plan once a yeaz for needed changes and amendments, to which Mr. Palmquist responded he believed that would be a good idea, and hazdly any boards did that. Vice Chair Genco requested. that at every second quarterly meeting of the year a plan review and update be scheduled. Vice Chair Genco commented at the last two meetings there seemed to be some confusion as to records retention, responsibilities, and different duties, and asked Mr. Palmquist to explain the typical duties of a custodial agent for a plan and what the fiduciary duties of that agent were that went with the custody of the actual assets; and to explain what typically would be the role of the secretary and what typically would be the role of a plan administrator. Mr. Palmquist confirmed the plan had recently changed custodian, and he was glad they had hired Salem Trust since they were • especially good with governmental pension plans. They officially had custody of all stocks, bonds, and anything else the pension fund owned. They provided statements to the BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES August 11, 2005 PAGE 5 town and to the board on a monthly, quarterly, and annual basis showing all revenue and expense during that period of time, they paid bills authorized for payment, and once there were retirees they would cut the checks to the retirees and providing their 1099's at yeaz end. Periodically, they would come to the boazd meetings to see if there were questions, and they were very important in the day-today functions. Mr. Welker noted the securities were held at Salem Trust under the plan name, registered to the Village of Tequesta, which was important if anything every happened to the assets; if the custodian were not an independent custodian, many times what would happen if they were affiliated with a brokerage firm it goes to the brokerage firm's depository transfer company and were registered under that brokerage firm's name. An example was Smith Barney, where everything was registered in their name. That was why it was important to have an independent custodian. Vice Chair Genco stated she begged to differ with Mr. Welker's definition based on what she had done for brokerage fires, but believed he was connect as to segregation of the assets, and whether it be Merrill. Lynch or Salem Trust, the assets must be segregated for the beneficiary's plan. Mr. Welker responded, but in aggregate they were lumped by security itself-the owner of that security would be Merrill Lynch, • but Merrill Lynch segregated it out to the individual. Vice Chair Genco stated it could be a nominee, but bottom line, the assets were still registered to the individual plan. Mr. Palmquist commented, if you went to Salem and asked them to open their vault to see your stock certificates, they would not bethere-it was all done electronically. Vice Chair Genco stated that was what Mr. Welker was talking about-they were still in a special account, which was something the government made certain of some years back, that the assets stayed set aside for the benefit of the plan participants. Tom Patemo, as a member of the General Pension Board, stated he had one question in reference to that regazding Rockwood hey were in a commingled fund and the assets were in Rockwood's name-their custodian, A. G. Edwards, did not have custody of the assets. Vice Chair Genco stated that was an omnibus account that Rockwood held and they were doing a unit valuation and assigning a unit value at the end of the month for that particular plan. Assets were commingled and they were investing once a month. Vice Chair Genco stated she bad a lot of questions about that. Mr. Paterno stated that Rockwood was investing the Public Safety funds once a month also. Vice Chair Genco commented that made the trustees nervous, and it had always been her understanding that pension assets had to be set aside and could not be in a commingled fund unless that commingled fund had exactly the same investment objectives as every other plan in that commingled fund. Mr. Pahnquist commented SunTrust for over 25 years had had most of their pension plans in commingled accounts and had operated successfully for a long time. Mr. Palmquist commented he could not speak to the technical details, what made it legal or not. Vice • Chair Genco commented she understood that was an investment company product. Finance Director Forsythe commented they were a trust, and in order to be custodian you BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFE'T'Y OFFICERS PENSION TRUST FUND MEETING MINUTES August ~i, 2005 PAGE 6 had to be a qualified depository or a trust company in the State of Florida, and Rockwood was neither. Mr. Palmquist responded there were a lot of independent money managers like Rockwood and like the former manager, who did not custody assets. Ms. Forsythe commented, at that time the fund had a custodian that was a trust company and therefore had been in compliance with State statutes, and did not have that now. Ms. Forsythe advised that she had recently learned that contributions were sitting in anon- interest bearing escrow account for up to six weeks at A. G. Edwards, and their investment arm did not know about it. Mr. Pahnquist stated that was totally u~le and the funds should at least be in a money market account. Ms. Maqueda explained that the first contribution of the month did not appear on the Rockwood statement as invested until the subsequent month, and the timing could be as much as six weeks. Ms. Forsythe reported when she spoke with the investment side of A. G. Edwards, they explained the contributions did not go to them, but went to a different arm of A. G. Edwards and sat in an escrow account until Rockwood advised them to invest it and at that time the funds were swept out. Mr. Palmquist stated there was no excuse for anon-interest bearing • escrow account and that absolutely must be taken care of, and in his opinion someone could already be in serious trouble. Vice Chair Genco stated that could apply to both plans, and she would like to see in writing confirming that had been corrected and the effective date. Mr. Welker advised he would take care of that. Pension Coordinator Carlisle advised that the Rockwood representative might be at the General Employees' pension meeting on Monday. Mr. Welker commented he would contact Mr. Holtgrieve to get him to that meeting. Vice Chair Genco commented that even with Public Safety this could be a problem and needed to be addressed. Vice Chair Genco commented she believed the bigger question was whether the funds were being held by a qualified institution, because on the 15"' of the month they cannot fmd out how much money they have; and she had never heard of a pension fund whether public or private, where you couldn't find out the market value of the underlying assets or what the assets were. They would get it at the end of the month. Finance Director Forsythe commented her department had been working on this for a very longtime, trying to resolve it, and the statements fell short. One could not see unrealized gains or losses, so the Village had no idea of performance. A statement of change in the fund was what was received, and because the amount of contributions was known, the Finance Departbment had been able to back that out contributions and expenses paid, and in that way kind of back into the change in the actual investment amount. Rockwood had continually stated they would work on that but had not resolved the problem. Ms Forsythe explained they • gave a unit value on the monthly statement, and the last time there had been a mistake. Ms. Maqueda had gone back six months and pulled out all contributions, and all expenses, BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MIrTLITES August ii, 2005 PAGE ~ and found a loss. Ms. Forsythe had questioned why no one told the Village there was a loss, because it was made to appeaz to be improving. A letter had then been received within a week stating that had been a mistake, that not enough unit value had been used. In the meantime, the Village had just been assured that Rockwood at the end of every month had a certified public accounting firm do an audit to make sure unit values were correct. Since she did not have the total number of stocks, or total stock value, there was no way the Village could verify. The mistake had been made back in May, and Rockwood had only given us 115 units when there should have been 121, and she did not know if they would have ever corrected this if the Village had not found a loss. She had asked for a cash account because expenses needed to be paid; they said they did not have that because they were only the investment side, and the account was not earning interest and was not in the name of the Village. Mr. Pahnquist advised that once the money left the Village and went into the account it was sacred money that no one could touch, and should not go into the escrow account; it should go into an account in the name of the General Employees' retirement plan for the • Village of Tequesta. Vice Chair Genco stated she would like to seethe trust document that Rockwood had for that account, and she would like legal counsel to write a letter that all of the assets were custodied in accordance with federal and state laws for qualified depository institutions, and would like that letter within the next 30 days. Vice Chair Genco requested that Pension Coordinator Cazlisle follow up to get the letter, and when the letter was received, it be distributed to all board members and all Village Council members, and to the auditors. The letter would be from Bogdahn Consulting. Vice Chair Genco clarified that she wanted a letter from Bogdahn Consulting's attorney stating the assets were held in a qualified public depository on behalf of the plan participants. Boazdmember Sabin expressed concern that it appeared the Public Safety pension still might have problems. Vice Chair Genco clarified that pension fund did not use A. G. Edwards. Mr. Palmquist advised the Public Safety money was sent to Salem Trust, and Ms. Forsythe verified that the contributions were immediately placed into a money market account. Boazdmember Sabin asked what the issue was for Public Safety, to which Ms. Forsythe responded that once Salem Trust became custodian, everything had been fine, and the only thing to consider was that Salem Trust did not want to pay ordinary operating expenses and would charge $15 a check; they were happy to do payouts and tax forms for retirement. Ms. Forsythe noted if the boazd approved, an account could be opened at • Independent Community Bank. Boazdmember Sabin stated he wanted to be cleaz for the Public Safety record, since there had been a lot of discussion about the General BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES August il, 2005 PAGE 8 Employees' pension, that the Public Safety board was comfortable with their custodial situation other than possibly check writing issues and costs for that. Vice Chair Genco commented Public Safety was okay now; she had not realized this had happened, and there had been a period of about 30 days before Salem took custody--evidently after Salem Trust took custody of their assets everything was straightened out. Vice Chair Genco stated she got nervous about the blackout period and whether that could have affected the qualified funds. So she still wanted that assurance. Mr. Welker commented that his firm would have that letter within 30 days, and Mr. Bogdahn would be coming for Monday's General Employees' pension meeting. Boazdmember Sabin asked that the minutes clearly reflect the issues that had been raised were not for the Public Safety fund. Ms. Carlisle noted the reason General Employees' boazdmembers had been invited was because Mr. Palmquist was present so that they could talk to him also. Vice Chair Genco commented at the last two minutes duties of a plan administrator had been discussed, and asked Mr. Palmquist what a plan administrator did. Mr. Palmquist responded that under State law, the same as in ERISA, the plan administrator was the • legal entity responsible for overseeing the plan. For this plan, the boazd of trustees was the plan administrator under State law; but the question here was people doing administrative things. There were a number of firms azound who were professional plan administrators--they would set up meetings, make sure agendas and minutes were taken caze of-whey would do as much as you wanted them to do. Some plans would keep all participant information independently of the city, some of them would calculate benefits for people as they retired instead of the actuary doing it, some of them provided employee benefit statements instead of the actuary doing it, and communicated with participants, taking care of the human resources element. Those were generally the duties that those firms performed. Mr. Palmquist advised it was not atypical for smaller plans like Tequesta's to have the Finance Department and Human Resources Department handle items for the pension fund. One of the applicants present advised that he used his chief accountant as plan administrator for the plan at the country club, which had three trustees and presently covered about 30 employees, from his experience he believed the plan was better served by an internal employee in the Finance department since they were in closer contact with the employees. Vice Chair Genco commented the plan administrator was doing administrative functions; they did not have a fichtciary duty to the plan, but did have a duty to perform whatever was appointed to them in a proper and correct fashion, and if they were to make a mistake, such as issuing a check to the wrong person they were responsible for that, but were not responsible for the policy making, review of the • investment management, or any of those functions, which Mr. Pahnquist confirmed . BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES August ii, 2005 PAGE 9 Vice Chair Genco commented she believed that would provide a little relief for the Finance Department, who would probably wind up handling a great deal of this on behalf of the board, Vice Chair Genco stated that the boazd of trustees was responsible for implementation of the policy, review of the investment manager, and making sure that the assets were accounted for. Finance Director Forsythe commented that right now when a new employee came on, or when an employee left, they went through Human Resources, who handled all of the paperwork. Figures were provided from Payroll. Ms. Maqueda did all the reconciliations and reseazch into the financial end of it. Ms. Forsythe explained that what the board did not have was an employee to whom they could assign other duties. Vice Chair Genco asked if the board would consider directing the Finance Department to look for software to help them manage the bookkeeping process, and they could bring that information back to the next meeting for boazd approval to purchase the software. Ms. Forsythe confirmed that the present accounting program could extract that now, but that • program was for the entire Village, and they had nothing that only tracked the pension information. Boazdmember Sabin recommended that they find a comparable municipality and find out what software they used. Mr. Neilson indicated he was not sure if West Palm Beach had such a program. Vice Chair Genco commented she thought they outsourced that. Vice Chair Genco noted the amount of contributions had increased and asked if Mr. Palmquist had done an actuarial evaluation when the firefighters increased their contribution, and she thought that had impacted the bottom line. Mr. Palmquist responded that the increased benefits caused more money to have to be put into the plan. The police department had enough State revenue available to meet the additional cost, but the firefighters State revenue was not enough to cover the whole benefit package and they had to put 1.1% of payroll in so there would be no effect on the Village. Vice Chair Genco asked if Mr. Pahnquist was using a 3-year rolling period on the investments; he responded that he was using 5 years. Mr. Pahnquist noted the rolling forwazd would start that going forward this October. Vice Chair Genco asked if when assets were transferred to another custodian if they booked the securities at their market value at the end of business that day. Mr. Palmquist commented that typically happened, but he had seen where historical value was used. Ms. Forsythe commented the historical value must be kept in order to determine unrealized gains and losses. Vice Chair Genco asked if the asset was transferred out on the 15~ and • received and settled on the 16'x, the date of control determined the beginning value for the BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES August ii, 2005 PAGE io investment advisor. Mr. Palmquist responded that a new manager would be responsible for the value on the date they took it over, and Ms. Forsythe commented that Rockwood had liquidated everything and bought their own investments, so there was nothing to worry about from a prior money manager. Ms. Forsythe advised the liquidation had helped the fund; the historic cost would be all attributed to Rockwood's purchases. Mr. Welker advised they took information from historical statements going 5 years back but could easily fix that and start from day one with Rockwood, but since Finance wanted to see everything they could put a marker from the date of the Rockwood purchase forward. Vice Chair Genco commented she thought all the money had been accounted for, but the way Rockwood was reporting did not allow the Village to evaluate their performance. She wanted to know what happened from the day Rockwood started. managing the assets. Ms. Forsythe advised they were tracking every individual investrnent. They had traced each individual equity from the time it came from Wachovia to when it came over. The transition to Salem had been very smooth. Discussion ensued. Ms. Forsythe reported that an extra $19,000+ would be needed for contributions, which was to be on the Village Council agenda, because the actuarial report had been received after yeaz end 2004 and the • report had been started and stopped. If it had been done eazlier, more money would have been taken out in 2004. Mr. Palmquist advised they would be sending their annual data request right around October 1 ~` and the quicker they got the information back, the quicker they could calculate the assumptions, so that this would not happen again. It was clarified that there was nothing the board should be doing about this, and Vice Chair Genco announced that in the future these things would be on a calendar. Mr. Palmquist advised the state revenue was posted on the state's website, but the check would not be received until next week. This yeaz's 185 revenue for police of $65,700 was a decrease, which was unusual, and the firefighters revenue had increased-last year it had been $56,536 and this year $63,412.. Supplemental firefighter revenue would be known after October 1. Last yeaz's supplemental had been $12,596. Police had a lot of unused revenue held in reserve and fire hazdly had any, but would have the supplemental after October 1. Vice Chair Genco thanked Mr. Palmquist for coming to the meeting. b) PRESENTATION BY MONITOR Mike Welker, Bogdahn Consulting, noted this plan did not have the same issues as the General Employees' pension plan, and reported that the value as of 3/31/05 was $2.5 million. Mr. Welker advised they got statements from Salem Trust and reconciled with what the manager was saying, and monitored the manager and how they were doing • according to an index. They looked for Rockwood to perform better than the index after fees. Mr. Welker reviewed his report and reported good returns in July in equities. Mr. BOARD OF TRUSTEES • T'EQUFSTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES August ii, 2005 PAGE ~~ Welker explained that Rockwood was an opportunistic manager and went with what was doing well. Rockwood was up 7.1% for the year, and the index was up only 1.5%. The total portfolio was up 5.15% during the month of July, when the fund had been fully invested with Rockwood. Mr. Welker reported the total portfolio was up 1.95% over a 9- month period-the first quarter this yeaz had really hurt, and the last quarter of last year when the fund had been with Northstar had been bad. Mr. Palmquist noted the December quarter had been really good for most managers, but not for Northstar, and the Village would have to make up the difference if returns did not come up to 8%. Mr. Welker asked if a letter had been received from his firm for comnnission recapture, to which the response was no. Vice Chair Genco noted everything went to the attorney and should go to the Village. Mr. Welker responded he would change that. Mr. Welker explained his company's policy to recapture brokerage trading commissions, which they were going to do, to benefit the plan, and the letter would be sent to Ms. Carlisle. c) PRESENTATION BY INVESTMENT MANAGER (postponed to November meeting) • Mr. Welker commented Rockwood had done very well and also that they did well in a down mazket to preserve capital. Boazdmember Sabin commented there was a balance of $9,000 in Wachovia. Vice Chair Genco commented that should have been included in the sweep instruction, and that should be transferred. Discussion ensued. Ms. Maqueda explained that a contribution had been made in the interim during the transfers, that the same thing had happened in the General Employees' pension and they used it to pay bills and they directed her to make a check for the balance. Ms. Maqueda commented if the board decided to open a checking account, she could use that to open an account. Vice Chair Genco asked Mr. Palmquist if the amount of policy limits for fiduciary insurance should be increased each year as the fund grew, and it was now $2 million in coverage. Mr. Palmquist responded that was plenty-large plans did not have more than that, and that was more than adequate. Vice Chair Genco commented the presentation by the investment manager would be on the next agenda. XI. UNFINISHED BUSINESS a) CONSIDERATION OF APPROVAL OF INVOICE ITEM PRESENTED AT 5/10/OS MEETING FROM GABRIEL, ROEDER SMITH & COMPANY - $550 FOR PREPARATION OF PAGE 6a FOR INCLUSION IN THE 2004 ANNUAL • STATE REPORT BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES August ii, 2005 PAGE 12 Pension Coordinator Gwen Cazlisle explained that the boazd had questioned this chazge. In years 2002 and 2003, the boazd was changed $550 for this sepazate form that went to the State-this statement was separate from the actuarial report and the boazd did pay it in the last two years. Ms. Cazlisle noted she felt it should be paid again for last yeaz's 2004 report. Vice Chair Genco asked if this was keeping track of the 175 and 185 funds. Mr. Palmquist responded yes, and since the law changed in 1999, this separate report was required for inclusion in the annual state report. MOTION: Boardmember Sabin made a motion to approve payment of $550 to Gabriel, Roeder & Smith for preparation of page 6a for inclusion in the 2004 annual state report. Boardmember Giblin seconded the motion, which carried by unanimous 4-0 vote. b) REQUEST TO TABLE DISCUSSION OF PLAN ADMINISTRATOR - COMMITTEE TO MEET FOLLOWING APPOINTMENT OF A NEW CHAIR OF THE BOARD • Pension Coordinator Gwen Carlisle requested this item be tabled until the boazd had a new Chair, explaining that the committee, consisting of herself, the Finance Director, and Chair, had not met because there was no Chair. Vice Chair Genco suggested that when this was brought back, if the software program had been investigated, that report be made at the same time, and that some of these duties be coordinated with Human Resources, and provide a complete overview. Ms. Cazlisle requested that the Interim Chair meet with the committee to work out who would be doing what, so this could be discussed at the next board meeting. Vice Chair Genco agreed. c) DISCUSSION OF 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 Ms. Cazlisle noted since it had not been known whether Boardmember Gibiin could be present, Attorney Bonni Jensen had advised she could discuss this at the next meeting. Boazdmember Giblin commented this would involve Jupiter Inlet Colony. Vice Chair Genco commented if funds were not akeady being collected for Jupiter Inlet Colony, a resolution should be presented at the next meeting ready for adoption. Mr. Palmquist commented this had not been permitted in the past there had been all kinds of • agreements between cities, but the city providing services did aot get the benefit of the 175 and 185 revenue, and this law allowed that to occur now. If the Village was BOARD OF TRUSTEES TEQUFS'I'A PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES August ii, 2005 PAGE ~3 perfornung services for another municipality, they had to get that municipality to pass the enabling ordinance, and their first reaction would be oh, no, not another tax-but that tax would be collected whether or not they passed the ordinance. It was being collected now and used to fund the Depaztment of Insurance, but if they passed the ordinance that premium tax would come back to the pension fund to help fund benefits. Vice Chair Genco asked if the Village had to pass an ordinance. Mr. Palmquist responded he believed it would be only Jupiter Inlet Colony, but advised the boazd to consult Attorney Jensen. Pension Coordinator Cazlisle asked the boazd wanted Attorney Jensen to draft an ordinance. Vice Chair Genco stated yes, and she should address the issue they were not really paying for this-it was the money collected, and it would not change any cost to them, it would just redirect funds to the Village's pension plan rather than to the Department of Insurance. Finance Director Forsythe asked if this was done by zip code. Mr. Palmquist explained that the State was in the middle of changing how they determined what addresses were in what jurisdictions, and the way it had been done up until now, had not been very accurate. The new database would be the same used by Telecom, which was supposed to be very accurate, and the Village would be asking them • to take another municipality's addresses and put them under the Village's database, and they were supposed to go by street addresses rather than zip codes. MOTION: Boardmember Giblin made a motion to have Attorney Bonni Jensen draft a document to be passed by Jupiter Inlet Colony, which would redirect premiam taz funds for firefighter services to the Public Safety Officers' Pension Fund instead of the Department of Insurance. Boardmember Fleming seconded the motion, which carried by nnanimoas 4-0 vote. Consensus was that Boardmember Giblin would contact Attorney Jensen regazding this matter, and that Pension Coordinator Carlisle would work with him. d) PRESENTATION OF FY 2006 BUDGET FOR FEES AND EXPENSES Finance Director Forsythe confirmed that legal fees had been paid by pension funds. Ms. Forsythe advised that the boazd needed to decide what they wanted to spend for each item, so it could be filled in. Discussion ensued. Boardmember Sabin commented he wanted to have a budget because the board approved payments at each meeting without an overview of expectations, and he was interested in the bigger picture. Mr. Palmquist noted the actuazial report had an average of the last two years. It was suggested to use $50,000 and • to keep a quarter of that in the checking .account to pay quarterly bills. Pension Coordinator Carlisle noted the recording secretary charges would be increasing 3% . BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MIrTUTE,S August ii, 2005 PAGE 14 Pension Coordinating Boardmember Sabin commented there were currently no pension distributions, and suggesting only budgeting what was actually paid, so that the total could be lowered to $40,000. Following discussion, the budgeted items were investment services $24,000; insurance $3,400; legal $5,000; contract services 1,000; travel and per diem $1,500; seminars $1,500; professional services $6,200; for a total budget of $42,600. Boazdmember Sabin commented at the quarterly meetings the boazd could review to see how they were doing. Mr. Maqueda indicated she could provide a budget report at each meeting of what had been spent to date compazed to the budget. Mr. Welker advised that his film would be happy to come present an educational meeting which would help with costs for seminars, and explained that they and Attorney Jensen conducted 3-hour seminazs at FPTTA. Mr. Pahnquist commented the State sponsored a conference in October. Boazdmember Sabin recommended a new member to the conferences and a seminar would be good to bring the others up to date. Boazdmember Sabin thanked the Finance Department for their work. • e) CONSIDERATION OF OPENING A CHECIONG ACCOUNT AT INDEPENDENT COIVFVIUNITY BANK AND INFORMATION REGARDING SALEM TRUST FEES Accounting Manager Patrice Maqueda reported Salem Trust personnel had advised their intent was not to write periodic checks to pay expenses, only to do distributions and any retirement payments, which was included in their annual $3,000 fee. They would pay the expenses but would charge $15 per check. Ms. Maqueda recommended opening a checking account at Independent Community Bank with the $9,000 left in Wachovia, and when expenses were approved at each meeting, enough funds to cover them could be transferred to the checking account and keep the required minimum balance of $750. During ensuing discussion regazding Salem Trust, Mr. Pahnquist advised that their $15 chazge far each expense check would not be over the $3,000 minimum. Discussion ensued regarding whether to open a checking account. Mr. Welker commented Salem Trust should be writing the checks, that it sounded like the fund had not been charged yet for the checks they had written, and recommended that nothing be done about this. Vice Chair Genco commented this would be tabled and if needed, it could come back to the next meeting. Discussion ensued regazding closing the account at Wachovia and transferring the assets to Salem Trust. Vice Chair Genco recommended signing an automatic transfer form to sweep the balance, rather than writing a check. MOTION: • Boardmember Sabin made a motion to close the account at Wachovia and transfer the assets to Salem Trust. Mr. Giblin seconded the motion, which carried by BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES August ii, 2005 PAGE 15 unanimous 4-0 vote. XII. STANDING REPORTS a) Approval of new applicants for participation in Pension Plan -None b) Approval of Beneficiary Changes -None c) Request for withdrawal of contributions (employees terminating employment with Village of Tequesta) Name Date of Separation Total Amount Michael Knapp 6/14/05 $12,877.88 Joe Petrick 8/5/05 $1,367.01 MOTION: • Boardmember Sabin made a motion to approve the withdrawal of contributions for Michael Knapp of $12,877.88 and Joe Petrick of $1,367.01. Boardmember Fleming seconded the motion, which carried by unanimous 4-0 vote. d) Ratification of withdrawals made since the last meeting on 2 signature basis: None XIII. FINANCIAL REPORTS a) Statement of Accounts (April-June 2005) Finance Director Forsythe noted the account statements had not been reconciled to our books, and that would be done in the future. Vice Chair Crenco requested the Mazch statement for the Wachovia Securities account. b) Schedule of Investment Activities for the Quarter ended June 30, 2005 Consensus of the boazd was this report was unnecessary since the information was provided by the investment manager, and would not be needed on future agendas. XIV. PAYMENTS TO BE REVIEWED AND APPROVED • BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES August 11, 2005 PAGE i6 a) Business Services Connection - 5/10/05 meeting and minutes $ 165.20 b) Hanson, Perry & Jensen, P.A. $ 866.37 c) Bogdahn Consulting, LLC $ 2,000.00 d) Gabriel, Roeder, Smith & Company: Invoice No. 93914A $ 250.00 e) Rockwood Capital Advisors $2,625.76 f) Salem Trust Statement of Fees which will be charged to the accounts referenced • MOTION: Boardmember Giblin made a motion to approve the payments as requested. Boardmember Fleming seconded the motion, which carried by unanimous 4-0 vote. XV. NEW BUSINESS a) Consideration of Public Safety Board establishing their own Resolution Book Acting Chair Geraldine Genco requested separate minutes and resolution book for the pension fund so things could be found easier. Boazdmember Sabin asked what that would mean, to which Pension Coordinator Cazlisle responded, explaining that the Village Council had ordinances and resolutions that were permanent documents required by the State. The Public Safety Pension Boazd did not have an ordinance or resolution book of their own. The boazd would not be able to adopt ordinancesr-they would only have resolutions. Any resolution would be numbered and go into a resolution book for the Public Safety Pension, with a numbering system to identify such as PSO 1-05/06 (based on the year), and it would be a permanent document to go with the board. Vice Chair Genco stated if everyone was in agreement with that, no action needed to be taken. b) Renewal of Fiduciary Liability Coverage • Boazd member Sabina noted the asset value on the form in the packets was shown BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES August ii, 2005 PAGE ~~ at $2 million and the audit report showed it at $2.4 million. Vice Chair Genco responded she thought this was based on last fiscal yeaz's audited report, and asked Mr. Palmquist if the current mazket value of the assets should be used. Mr. Pahnquist responded we should use whatever the insurance company was asking for. Board member Sabin commented there was a document included that must be out of the Village's supplemental financials showing the assets as $2.8 million, which was different, and might be the total of both plans, but the total value of all assets was shown at $3 million on the insurance application. Vice Chair Genco stated she agreed the asset values were not correct and someone else should complete this form. Vice Chair Genco commented the form seemed to be asking for current market value and should be provided to them based on the last statement that was received. Ms. Carlisle pointed out this form was filled out two months ago, and was just now making it to the board. The Recording Secretary commented that Mr. Gallagher had said there was no problem with changing the figures, and he needed to know if the boazd still wanted to have insurance with the other plan or for each plan to have a separate policy; however, that would mean a • much higher premium. Vice Chair Genco commented that was why the boards had decided to do it as one policy, to benefit from a lower premium, and as long as it covered everyone, she was fine with doing that. Boazd member Sabin stated he would be more comfortable if the assets were stated at $2.4 million as the audit stated, so that if there were a claim for the Public Safety pension there would not be a problem. Mr. Palmquist commented he thought either amount could be used so long as you put the date with it. Finance Director Forsythe cautioned it might have been that much, and the total amount of all assets was shown as $3 million, so would that limit coverage to $3 million, because right now it was closer to being $3.1 million in both plans. Mr. Palmquist commented there were plans with $100 million in assets with fiduciary liability coverage of $2 million and he did not think the coverage had to be equal to the amount of the assets. Vice Chair Genco commented $3 million might be too much; Mr. Palmquist stated he thought it was too much. Vice Chair Genco commented the claim experience would never equal the full plan assets, which Mr. Palmquist verified. Vice Chair Genco asked if he would recommend keeping the $3 million or dropping that down. Mr. Palmquist stated he did not see why it couldn't be dropped down. Board member Sabin commented coverage limit was shown as $600,000 on the form. Vice Chair Genco stated she had been very confused by that and couldn't read the figure, and asked if current coverage was $2 million and $600,000 was being requested, which was confirmed. Discussion • ensued. Mr. Palmquist explained this insurance was for board decisions by BOARD OF TRUSTEES • TEQUFSTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES August il, 2005 PAGE ~8 trustees, and gave an example: if you had member of the plan apply for disability and you denied the claim and the person sued the boazd, this policy would pay the attorneys fees, etc., and this was really not to do with investment decisions because the boazd was paying others to make those decisions. If an investor did something unethical and the board wanted to sue them to recover, the policy would cover that also. Mr. Palmquist commented the General Employees finding out their funds were not in aninterest-bearing account until six weeks after they were sent for investment could be a fiduciary liability issue. The Village would make up any loss, but the taxpayers might want to sue. Boazd member Sabin commented it seemed $2 million was excessive. Vice Chair Genco commented if Mr. Gallagher had to get this form in by September 1 to get a renewal quote, he should get a quote on the old policy and one on the new proposed policy and bring that to the board. Response was that would not work because it had to be done before the boazd met again. MOTION: • Board member Sabin made a motion to have $600,000 coverage limit if there was a premium decrease of 50% of the new premium on the old policy, and if not, to stay with $2 miWon, and nett year it could be properly evaluated. Board member Giblin seconded the motion, which carried by unanimous 4-0 vote. Vice Chair Genco stated she would appreciate it if Finance Director Forsythe would look at the form before it went out. c} Consideration of sending a member of the board to FPPTA trustee school October 2-5 in St. Augustine Mr. Palmquist noted this trustee school was sponsored by FPPTA; the other one, which was also in October, was on 175 and 185, and sponsored by the Division of Retirement. Mr. Giblin advised he had information regarding the one sponsored by the Division of Retirement. Boardmember Sabin clarified there were two schools. Mr. Palmquist advised both were good, and police and fire representatives would be interested in the one sponsored by the Division of Retirement, which would be approximately October 24-26 in Orlando, for which there was no charge-just hotel, meals, and travel. FPPTA had two schools per year; the other had three per year. Boazdmember Giblin advised he would like to attend. Boazdmember Fleming commented he was sitting in for this meeting but would be leaving the department, so • would not attend. BOARD OF TRUSTEES TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND • MEETING MINUTES August ii, 2005 PAGE 19 MOTION: Boardmember Fleming made a motion to send Ray Giblin to the Division of Retirement school in October, to approve travel and per diem consistent with the travel policy adopted 6y the board. Boardmember Sabin seconded the motion, which carried by unanimous 4-0 vote. XVI. ANY OTHER MATTERS a) Information Items: 1) Fiduciary information and SEC report on same Vice Chair Genco announced that Attorney Jensen had sent out a consultant's questionnaire, and any questions needed to be addressed when either Bogdahn or Rockwood representatives were present. Mr. Welker commented the • questionnaire had a lot to do with pension consultants and conflicts of interest they might have. This was good news because consultants would have to disclose those to their clients. Bogdahn Associates had answered the questionnaire and sent a copy to Attorney Jensen, and would provide a copy for the boazd for their records, and the board had no worries with either firm. Vice Chair Genco noted she had attached a link to Attorney Jensen's a-mail for a government site which addressed other interesting azeas. Mr. Welker noted their website also addressed this. Boardmember Sabin commented this could be deferred to when Attorney Jensen was present, but it looked like the board should get a form from each consultant. Vice Chair Genco stated they were asked almost every question when they were interviewed. 2) Auditor's Report dated June 30, 2005 Pension Coordinator Carlisle reported the auditor had a conflict and could not attend today, but was to make a presentation at the November quarterly meeting. Finance Director Forsythe referred to the auditor's report, and advised the Finance Department actually prepazed the management discussion and analysis, financial statements and notes. The auditing firm reviewed it and audited and verified that the underlying transactions supported the report. Ms. Forsythe explained what the current soflwaze could handle. Mr. Palmquist requested a copy of this year's statement from the Finance • BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES August 11, 2005 PAGE 20 Department. 3) Report of Police Officers' 2004 Premium Tax. Distribution This item had been discussed earlier in the meeting. 4) Report of Firefighters' 2004 Premium Taz Distribution This item had been discussed earlier in the meeting. XVII. COMMUNICATIONS FROM CITIZENS There were no communications from citizens. XVIII. ADJOURNMENT • MOTION: Boardmember Giblin made a motion to adjourn. Boardmember Sabin seconded the motion, which carried by unanimous 4-0 vote. The meeting was therefore adjourned at 10:58 a.m. Respectfully submitted, ~~~~~- Betty Laur Recording Secretary ~J TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND SPECIAL BOARD OF TRUSTEES MEETING SEPTEMBER 19, 2005 I. CALL TO ORDER AND ROLL CALL The Tequesta General Employees' Pension Trust Fund Board of Trustees held a special meeting in the Emergency Operations Center (EOC) of the Tequesta Public Safety Facility, 357 Tequesta Drive, Tequesta, Florida, on September 19, 2005. The meeting was called to order at 8:30 a.m. A roll call was taken by Betty Laur, Recording Secretary. Boardmembers in attendance at the meeting were: Secretary and Acting Chair Tom Paterno, Board member Bob Garlo, Board member Koch, and Board member Mangum. Also in attendance were Pension Coordinator Gwen Carlisle, Attorney Bonni Jensen, Risk Manager Dan Gallagher, Finance Director Joann Forsythe, and Accounting Manager Patrice Monaco. II. APPROVAL OF AGENDA MOTION: Board member Garlo made a motion to approve the agenda as submitted. Board member Koch seconded the motion, which carried by unanimous 4-0 vote. III. WELCOME NEW BOARDMEMBER ARCHIE C. MANGUM, JR. APPOINTEDBY VILLAGE COUNCIL ON 9/7/05 Acting Chair Paterno introduced Mr. Mangum and thanked him for his help. Mr. Mangum indicated he was happy to join the board and looked forward to working, hoping to make a contribution. IV. APPOINTMENT OF CHAIR AND SECRETARY FOR COMING YEAR Board member Koch nominated Board member Mangum, however, Mr. Mangum • preferred not to jump in too quick since he was not yet familiar with the plan. Board BOARD OF TRUSTEES • TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND SPECIAL MEETING MINUTES September 19, 2005 PAGE 2 member Koch nominated Board member Paterno, however, Mr. Paterno indicated he could not do it-- he had made a promise to his family. MOTION: Board member Koch nominated Board member Garlo as Chair; Board member Mangum seconded the motion. Motion carried by unanimous 4-0 vote. Attorney Jensen explained that the duties of the secretary were to sign the minutes and to be responsible for second signature on many things for certification purposes. MOTION: Board member Paterno nominated Board member Mangum as secretary. Board member Koch seconded the motion, which carried by unanimous 4-0 vote. V. APPROVAL OF MINUTES • MOTION: Board member Paterno made a motion to approve the minutes of the August 15, 2005 regular meeting. Board member Koch seconded the motion, which carried by unanimous 4-0 vote. VI. UNFINISHED BUSINESS Fiduciary Liability Insurance Renewal Dan Gallagher, Risk Manager, confirmed that everyone had received the explanation of ERISA. Mr. Gallagher advised that the insurance companies he had contacted indicated to go with full coverage on fiduciary insurance, it would have to come from the excess pool of coverage since it would exceed $2 million, and there would be an annual premium of $20,000 to $25,000, and he should have that in writing this week. If the board wanted to do what had been done in prior years, to have one policy cover both General Employees and Public Safety Officers pension boards, $2 million coverage would cost approximately $4,000. The premium last year had been $3,987, pro-rated between General Employees and Public Safety, based on the amount of assets in each plan. An alternative would be for each plan to have separate policies, and the minimum coverage was $1 million coverage. Mr. Gallagher advised the board could have a separate policy, a joint policy with Public Safety, or go into the excess • pool. Mr. Gallagher asked for direction from the board so that he could finalize this BOARD OF TRUSTEES • TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND SPECIAL MEETING MINUTES September i9, 2005 PAGE 3 matter. Secretary Mangum asked if this was a part of the city government's coverage, to which Mr. Gallagher responded it was this board only. Board member Paterno commented it was his understanding this was the only board in the city that could be sued individually. Attorney Jensen advised that officers and directors coverage excluded fiduciary relationships. Secretary Mangum commented he had had experience where the board was covered, and a special rider covered the pension trustees. Mr. Gallagher explained the rider we had was just general liability explained the coverages there would be under employee benefit liability coverage. Secretary Mangum asked the advantage of having a separate policy, to which Mr. Gallagher responded it had been a savings to have the policy together; the cost for separate policies would have been close to $5,000. He recalled that this board's share had been close to $600. Board member Paterno commented the policy could be $2 million jointly, or separate policies, but for him to be on this board he thought the • funds must insure the trustees because if there was a lawsuit the trustees needed to be protected. All of the trustees were volunteers, and they must make sure the assets were covered. Mr. Gallagher commented the board had ahands-off position, having given responsibility to the investment manager, and asked if the investment manager had the initial liability. Attorney Jensen advised that if there was a lawsuit the pension board would be first in line. There was a contract with the monitor, and there would be contracts today with the custodian and the investment manager; however, the buck would stop with this board. Attorney Jensen advised that having this coverage was for two reasons-one, to provide defense coverage so that did not eat up the fund assets, and two, the municipality was responsible to provide defense coverage, so this insurance would be actually be helping the municipality as well as providing protection for the trustees. Finance Director Forsythe asked if this coverage could be added as a rider on insurance carried by the Village Council. Mr. Gallagher indicated it was not available as a rider and would have to be a separate policy. Chair Garlo commented this had been discussed at the last meeting. Board member Paterno recalled the discussion had been about having less coverage-20% of the fund; however, $1 million was the minimum and you would pay the same for $200,000 as $1 million because that was the minimum, so you might as well get the $1 million coverage. Mr. Gallagher reported that last year Palm Beach had gone with full coverage at a cost of $20,000, and they were not going to do that this year. The • current amount in the fund was $525,000. Board member Paterno commented that this BOARD OF TRUSTEES • TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND SPECIAL MEETING MINUTES September 19, 2005 PAGE 4 fund now had a different manager than Public Safety, and was reducing exposure by being more diversified. Mr. Gallagher reported the premium would be approximately $4,000 for $2 million coverage and around $1,500 if a separate policy for $1 million. Secretary Mangum commented he thought $1 million was adequate at this particular time. Mr. Gallagher commented he would get a figure on $1 million coverage, but needed to know if the board wanted separate or a joint policy, and October 1 was the deadline and he wanted to get a rider. Secretary Mangum indicated he preferred to have a separate policy. Board member Koch asked the attorney's opinion. Attorney Jensen stated she recommended that the board have fiduciary liability insurance, but whether they had a separate policy or a joint policy with Public Safety for cost savings was a business decision. Attorney Jensen advised that from past experience, the board had wanted to go their own way, and this might be another way of going their own way, and not having to make • decisions on what the other board had done. Mr. Gallagher noted prior boards had wanted to go individually, but it came up that they could save money by going together. Board member Paterno explained for the benefit of Secretary Mangum that the boards had previously been one, but the law had changed and the funds had to be split. The decision had been made to piggyback on the other board in order to save money. Now this fund was growing, and Board member Paterno stated he would back the motion either way. Chair Garlo indicated if the board got a $1 million policy covering fiduciary liability, he would like to see the policy as soon as possible to see if defense coverage was included. Board member Paterno commented, get an individual $1 million policy assuming the premium would be around $1,500 and defense coverage had to be included. Attorney Jensen advised the defense coverage could be inside or outside the $1 million limit. Chair Garlo commented outside would be preferred. Mr. Gallagher was asked to get a quote on the coverage. Mr. Gallagher indicated he had not gotten a quote on $1 million but would get that today. MOTION: Board member Paterno made a motion to obtain an individual fiduciary liability • policy of $1 million, with inside or outside defense coverage, with outside defense BOARD OF TRUSTEES • TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND SPECIAL MEETING MINUTES September ~9, 2005 PAGE 5 coverage preferred, so long as the premium was $1,500 with a leeway of 20%, and for Mr. Gallagher to take care of it. Board member Koch seconded the motion, which carried by unanimous 4-0 vote. Mr. Gallagher stated he would get the quote that day. VII. NEW BUSINESS (7) Consideration of Approval of Custodial Agreement and Fee Schedule with Salem Trust Company Attorney Bonni Jensen reviewed responsibilities in the custodial agreement, and Exhibit A, the proposed fees, which had been provided in the packets. Attorney Jensen advised that the board should also be aware that Salem Trust provided a money market account for the cash in the fund's account, for which there was a fee, and Salem Trust received up to 25 basis points of that fee for providing a money market account. Dana would tell them • which of the 4 available money market accounts to choose. Salem Trust would maintain a $15 million fidelity bond and $5 million errors and admissions insurance. The agreement could be modified only by written agreement signed by the Chairman and Secretary. Salem Trust would provide online access to the custodial accounts only for viewing and printing. Ms. Forsythe indicated she would call to find out if that was available now. Attorney Jensen indicated termination could take place with 30 days notice by either party, and reviewed Exhibit B, the signature authorization, noting the board must tell Salem Trust the number of signatures required. Ms. Forsythe advised that Dana was agreeable to working with Salem Trust. Board member Paterno asked Attorney Jensen to explain the last paragraph on page 4 of the agreement "The Custodian shall not be responsible for any action ornon-action taken in accordance with written instructions or notice received and may rely upon and shall be protected in acting upon any written order from the trustees or authorized agent or any other notice, request, consent, certificate, or other instrument reasonably believed by the Custodian to be genuine and to have been properly executed hereunder. " Attorney Jensen explained that the custodian would not be responsible for any action on inaction they took at the board's direction, and any information the board gave them must be accurate. Board member Paterno commented it would not affect inaction if the board told them to do something and they did not do it; only if the board told them to do something and it was incorrect or the board did not tell them to do something. Attorney Jensen gave • as an example if they always sent proxy voting material and then did not do it, and the BOARD OF TRUSTEES • TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND SPECIAL MEETING MINUTES September i9, 2005 PAGE 6 board had relied on the fact they had done it in the past, then the board could pursue them legally unless they said, you're right, we should have done it. Board member Paterno commented that paragraph seemed very open to interpretation. Attorney Jensen indicated it was fairly common. Secretary Mangum expressed his opinion that the paragraph was pretty specific and referred solely to any written instructions from anyone. If he wrote them instructions that were wrong, then they were not responsible. Board member Paterno indicated his concern was that if they were supposed to do something and the board did not send them written instructions to do it, and something happened, they could say they had not been supposed to do it. Discussion ensued. Attorney Jensen advised this was .less open-ended than one would think-it was really attempting to be specific in regard to written instructions or notice received, and any action or inaction iri accordance with those particular instructions. They were trying to protect themselves from the circumstance that trustees changed or information changed and they were not made aware of it. Board member Paterno stated he was fine with that. Board member Paterno commented it was up to the board who would have access to the • online information. Discussion ensued. It was noted that the online information would not be particularly valuable to the participants-it would basically be a bank statement. It would be helpful to Finance to let them know if a check had been cashed, if there had been buys and sells, if a retiree had been paid out if his check had gone through, etc. Consensus was that the Finance Department under the direction of the Finance Director, Dana, and Joe Bogdahn would have access and that Director Forsythe would coordinate registration with Salem Trust. Board member Paterno asked if there was any reason to change the number of signatures required; it was currently two. Attorney Jensen advised that there should be at least two and she believed three would be unwieldy. MOTION: Secretary Mangum made a motion to approve the custodial agreement and fee schedule with Salem Trust Company as presented. Board member Paterno seconded the motion, which carried by unanimous 4-0 vote. (8) Consideration of Approval of Investment Manager Agreement with Dana Investment Advisors, Inc. Attorney Jensen reviewed the investment manager agreement and the fee schedule on • Exhibit A which had been provided in the packets. Attached were Dana's forms and also BOARD OF TRUSTEES • TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND SPECIAL MEETING MINUTES September 19, 2005 PAGE ~ a copy of the investment policy guidelines which told Dana what they could do with the fund's investments, and a copy of the pension plan document provision dealing with investment guidelines. Attorney Jensen advised that Dana would have absolute discretion to invest so long as they complied with the investment policy guidelines, and to place orders with brokers and dealers. The boazd could express a preference for them to place transactions with a certain broker, but this boazd had not done that to this point. The manager had the responsibility to vote proxies; since the boazd did not have a policy on that, the proxy policy from Dana was being attached. Under this agreement and language that had been added by Dana, the manager was authorized to retain the services of a proxy voting agent to assist the manager in researching, monitoring, and voting proxy statements. Due to the nature of class actions; however, they were not taking responsibility of making sure the board's class actions were filed. A quarterly report would be provided on the assets and it would be presented by a representative on a quarterly basis. Dana would maintain a $500,000 fidelity bond and $5 million errors and omissions insurance. Trustees were not liable for acts or omissions of the manager. The agreement could only be amended by an amendment signed by the Trustees; and could be • terminated by the trustees with 30 days written notice to the manager or by the manager with 90 days written notice to the trustees. For the benefit of new boazd member Mangum, Chair Gazlo explained that some time ago the board had sought to change investment companies for several reasons and had heard presentations, and everything had been facilitated by the monitor, Joe Bogdahn. There had been a split vote by the board between this company and Rockwood, who offered a commingled fund. The board had gone with Rockwood but there had been lots of issues with that commingled fund which created problems for the Finance Department, which was why the change was being made to Dana Investment Advisors. Secretary Mangum asked if this was all fully documented in the minutes. Attorney Jensen advised there had been an analysis by the monitor and also in-person presentations by Dana, Rockwood, and a third company. Boazd member Paterno noted that had happened about a year ago, and approximately two months ago Joe Bogdahn had compared and evaluated the companies again for performance. Attorney Jensen advised that this board was not required to meet ERISA but had followed all the State requirements, and she believed had actually also fulfilled the ERISA requirements. Secretary Mangum commented he believed they paralleled, with which Attorney Jensen agreed. Board member Paterno questioned why the language on page 5 regarding the proxy voting agent was underlined. Attorney Jensen explained that was language added by Dana. Boazd member Paterno asked who was paying for the services of a proxy voting agent that • BOARD OF TRUSTEES • TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND SPECIAL MEETING MINUTES September 19, 2005 PAGE 8 Dana was authorized to retain. Attorney Jensen advised that would come from Dana. MOTION: Board member Paterno made a motion to terminate the contract with Rockwood Contravisory and approve Dana Investment Advisors, Inc. as the investment manager. Board member Koch seconded the motion, which carried by unanimous 4-0 vote. Attorney Jensen advised she would be the person who would be sure this was signed, and she would send out a letter out to Rockwood to cancel them as soon as she received both documents signed by Dana and Salem Trust and she knew they were ready to open an account. Procedure to be followed was discussed. The letter was to state that the money was going from Rockwood to Salem Trust and Attorney Jensen could send the letter to the Village so it could be signed by the trustees. Following a short break, the meeting reconvened at 9:42 a.m. • Attorne Jensen advised that each time they Y e was a new trustee, a new signature authorization would be needed for Salem Trust. (9) Consideration of establishing Minimum/Maximum amount of funds to keen in Checking Account at Independent Community Bank, with Authorization to Transfer Funds into Checking Account for the purpose of having sufficient funds to cover Employee Payouts, Approved Bills, and the minimum $750 needed to avoid Service Charges on the Account Accounting Manager Monaco advised that $26,916.78 needed to be transferred into the checking account to pay expenses approved at the last meeting plus the two payouts requested to be approved in the next agenda item. Ms. Monaco requested direction going forward, and advised the last direction had been to deposit the next two contributions into Independent Community Bank to pay distributions and bills approved at the last meeting. Those two contributions had covered the distributions, leaving only $381, so the bills still needed to be paid. Discussion ensued. Finance Director Forsythe advised that if all contributions were sent directly to the bank it would never be equal to the need and a monthly transfer from Salem Trust would still be needed, and it would be cleaner to have everything go to Salem Trust and then do one wire transfer for whatever was approved at the meeting. The cost of a wire transfer was $15. Ms. Forsythe advised that Salem Trust • did not like to write checks to pay bills and charged $15 per check; however, they only BOARD OF TRUSTEES • TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND SPECIAL MEETING MINUTES September 19, 2005 PAGE 9 charged $3.00 per check for repetitive checks such as payments to retirees. Ms. Monaco stated the amount of all expenses approved from the prior meeting was $9,231.59, and a transfer of $26,916.78 was needed to pay everything and keep the minimum of $750 to avoid a service charge. Chair Garlo stated the motion would be to maintain $750 in the checking account at Independent Community Bank and approve the Finance Department implementing a wire transfer as needed to pay all bills approved by the board. Board member Paterno did not want to leave it open-ended. Chair Garlo indicated the language could be funds necessary to pay approved expenses. Board member Paterno asked Secretary Mangum's opinion as to whether a number should be stated or if it should be left open-ended. Secretary Mangum commented the board should know the number and they had a number today of $26,916.78; he questioned how Finance would get money between meetings if the board only met quarterly. Finance Director Forsythe explained that if someone terminated they would have to wait until the next quarterly meeting for approval-there was nothing set in place that allowed any payout for anything else between meetings. Secretary Mangum was advised that it was the policy of this board that if someone terminated the day after the quarterly meeting they would have to wait 90 • days until the next quarterly meeting to have their payout approved. Board member Paterno advised that the other board had paid out to a General Employee by mistake, and this board had to reimburse them, and that was why that policy came about. Secretary Mangum asked if the funds could be rolled over; response was they could be rolled over or paid out. Secretary Mangum expressed surprise that people were only paid quarterly and asked if there were any credit problems by doing that. Chair Garlo responded there were unhappy employees if they had to wait 90 days and their money was not making any interest. Secretary Mangum commented he was also surprised that employees were required to put in 5% and their money earned no interest unless it was invested, and commented he was sure they were not happy about that. Board member Paterno commented the same thing happened when they did not fill out the forms to get their money. Secretary Mangum asked if after today Brittany Bouse could get her money; Board member Paterno responded it did not look that way. It was indicated this discussion was really for the next agenda item but it could be discussed now. Chair Garlo advised this had been discussed, and without an employee's signature on their pension payout, the board felt it difficult to approve the payout of a certain dollar amount. The two forms presented today had no signatures, and he had found out the reason was the figures had not been calculated by payroll. Chair Garlo was advised at the time those forms were placed in the packets the figures had not been calculated but they were now, and Ms. • Monaco had the new forms with her today. Chair Garlo commented there was probably BOARD OF TRUSTEES • TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND SPECIAL MEETING MINUTES September 19, 2005 PAGE io only a verbal that the employees wanted their money. Finance Director Forsythe suggested the forms be signed at the exit interview. Chair Garlo responded he never got them in time. Director Forsythe suggested withholding the final paycheck so they had to come in and sign everything to get the paycheck. Chair Garlo advised these numbers came in after the final paycheck. Ms. Forsythe responded they did not have to, that Finance could calculate that because they knew what people were earning. Chair Garlo commented they had never been able to get those figures within that period of time. Ms. Forsythe commented that Finance should be able to get all their time sheets from the Department Heads within a week and be able to calculate that. Chair Garlo said he had been told all along that it took another two weeks after the final paycheck to figure it out. Finance Director Forsythe asked if a contribution was taken out of their final paycheck, which was confirmed. Mr. Garlo noted that was why there was lag time and the employee was usually gone by that time, and they had to come back in to sign; which was okay except when, like now, they missed a board meeting. Board member Paterno commented the other problem was what if somebody wanted to do a roll over and they had been sent a check-then they could not roll it over-so the amount needed to be stated on the form that was to be rolled over or paid. Board member Paterno gave as an example JeffNewell was owed $14,000+, a large amount, and if a check was issued and he cashed it but then he wanted it rolled over, and he never signed the form, the board would be held liable. Ms. Monaco advised she wrote those checks and did not write a check until the employee had signed off. Board member Paterno asked how they would know he wanted a check. Ms. Forsythe responded on an exit interview even without knowing the amount, the employee could sign as to which they wanted and Finance could fill in the amount later; it should not matter what the amount was as much as what they wanted done with it. Chair Garlo commented that made perfect sense but he could not count the times an employee wanted to wait and think it over, talk to their wife or husband, talk to an investment person, and he did not always get the answer right away. If they did know, they could sign. Ms. Forsythe commented there were three choices-roll over, take the money, or leave it in, and if they signed to leave it in that was okay. Board member Paterno felt it should be presented that there were two choices, roll it over or take the money and be taxed 20%, and there was a board meeting coming up and it would not get approved until the form was signed. Chair Garlo advised the two people today anticipated getting their money. Board member Paterno expressed concern that it could be a mistake to write a check for the large amount for Mr. Newell because if it were his, he would want to roll it over. Chair Garlo stated all he had right now was asecond-hand verbal that Jeff wanted the money. • Ms. Forsythe commented if the goal was to move this forward, could the board just say BOARD OF TRUSTEES • TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND SPECIAL MEETING MINUTES September i9, 2005 PAGE ~i they approved this is the amount they have, and after, they come and sign which way they want to go with it, we will then only withdraw from Salem Trust the amount needed to pay the employee. Boazd member Paterno said that could be done today, but this had been discussed before and it should not be like this, and the fault needed to be corrected. Director Forsythe commented she believed a procedure could be set up to make this go more smoothly. Chair Gazlo stated, don't bring sepazation forms to the boazd without employee signatures. Ms. Forsythe noted there was no way this board knew how much these people had so the figures should not matter to the board, so just going on that could we just say these people have terminated and the boazd approves termination and payout of their amount. Boazd member Koch stated, but not without a signature. Board member Paterno stated he had no problem with that, but with a signature. Ms. Forsythe advised Finance would not pay out until this form was completed. Chair Gazlo commented, in which case, these could be tabled and brought back in November. Attorney Jensen advised other funds had employees fill out an application and sign it that was basically saying, I want my money, with no numbers on it. Then there was a process to • follow up and they could work that out with the Village and there wouldn't be spaces there with no numbers. Attorney Jensen advised she could send a form which the Village could make their own. Chair Garlo asked that Attorney Jensen fax the form. Ms. Forsythe felt it would be best signed at an exit interview, and if they didn't know what they wanted to do then, they could sign that they wanted to leave the money in the fund and then get it later. Board member Mangum asked why anyone would want to leave it in. Ms. Forsythe commented maybe no one was telling them their money was not earning any interest. Chair Gazlo commented when the form came to the boazd it needed to have a signature on it. Chair Garlo asked to return to item 9. MOTION: Board member Paterno made a motion that at every meeting the board authorize transfer of funds necessary to meet expenditures stated at the meeting and to maintain a $750 minimum balance in the checking account, and in practicality, the Finance Department would state the number that needed to be transferred. Secretary Mangum seconded the motion, which carried by unanimous 4-0 vote. (10) Approval of Withdrawal of Contributions Jeff Newell -terminated 8/26/06 and Brittany Bouse -terminated 8/29/05 Going back to item 10, Chair Garlo advised that all he had was asecond-hand verbal • indication these people wanted their money given to them, and he was not comfortable that BOARD OF TRUSTEES • TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND SPECIAL MEETING MINUTES September i9, 2005 PAGE 12 Mr. Newell would really want that large amount of money given to him; and therefore, asked if the board wanted to consider a motion to come back in November with signed forms. Board member Koch asked if a special meeting could be held; Board member Mangum asked if this could be done by telephone. Attorney Jensen advised that if a quorum was present in a public place, then one member could be on the phone. Board member Paterno commented he believed in procedures to make it work right and the breakdown had been in our system, and the City had not worked out details from the last time this was discussed three months ago. Chair Garlo felt it was a timing problem. Board member Mangum commented he hated to see any employee go away unhappy, and he could come for a special meeting anytime and saw no reason there could not be a special meeting with only one item, and asked what else was required other than a quorum of the board. Attorney Jensen advised a special meeting could be held with 24-hour notice and there were no other particular rules. Chair Garlo asked Ms. Forsythe to repeat her suggestion. Finance Director Forsythe suggested approving the termination and paying out, and then later the amount could be determined and the Finance Department could come up with the paperwork. The employee • would need to sign if they were in agreement or disagreement or write in the form that if they failed to come in when notified they would automatically remain in the pension trust. Board member Paterno commented they weren't coming in initially because they understood they needed a final number in order to come in. Ms. Forsythe responded that was why she thought it should happen at the exit interview and give them three choices-leave it in, take it out, or roll it over--and they had to pick one. Board member Koch suggested a motion to have a special meeting to finalize this matter this time. Ms. Forsythe clarified that the correct amounts were $16,588.99 for Jeff Newell and $1,096.20 for Brittany Bouse. MOTION: Board member Paterno made a motion to instruct staff to pay out or roll over distributions to Jeff Newell and Brittany Bouse only upon each employee signing, so a special meeting would not be needed. Board member Koch seconded the motion, which carried by unanimous 4-0 vote. XI. ANY OTHER MATTERS Board member Paterno indicated he felt the forms should be signed before coming to the board, because he could not understand why Mr. Newell would want to take that amount of money. Chair Garlo commented he believed there was a bigger question, that in the past there was a policy of doing payouts with two signatures, and now if someone resigned the day after the board's quarterly meeting, they had to wait three months. Board member • BOARD OF TRUSTEES • TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND SPECIAL MEETING MINUTES September 19, 2005 PAGE ~3 Mangum commented he thought the board could get over that by working with Jody on procedure so long as there was a signed document and a close estimate of the amount the board did not have to know the exact amount-they could authorize payout upon proper procedure and go about their business. Chair Garlo indicated that was the procedure now; the other board did not wait but paid out upon two signatures, and they ratified it at the first opportunity they had, and the person did not have to wait, they got paid right away. This boazd decided they would wait until they had a meeting and approve it before the check was cut. Board member Mangum stated he did not want anyone to wait three months, and suggested going back to ratification. Board member Paterno commented he was all for that but there had been problems with the City's part of the process and the procedures had not changed since there was a problem. Chair Gazlo commented the problem had been that a person got paid out of the wrong fund. Board member Paterno expressed concern that someone would get paid without a signature; Ms. Forsythe responded Finance would never do that. Board member Paterno commented they would never pay someone out of the wrong fund, either. Ms. Forsythe commented that was when they did not go through Finance; that had been the Public Safety Board and they had ratified it. Ms. Forsythe explained they • approved it at their meeting and Finance found out after the fact. Board member Paterno stated the procedure was the problem and had not been corrected. Ms. Forsythe recommended having Finance sign off and that the board not approve it until Finance had signed off. Pension Coordinator Carlisle asked if the board was saying not to put distributions on the agenda until there was a signed form; Chair Garlo stated yes, unless the board decided to pay in advance, if it was not signed it was not to go on the agenda. Board member Mangum agreed with that but asked to give it another shot, stating, if you had all the documentation, a signed form, cleared with Finance, the board could authorize Finance to make the transfer and write the check. The boazd should be able to set up a system that was right and depend on their people to carry it out. Board member Koch asked who was to set up that system. Chair Gazlo commented if Board member Mangum was saying the board had to authorize the disbursement then he was saying to wait for a board meeting; if you said the practice was Finance would pay it with two signatures and it would be ratified at the next boazd meeting then there would be no lag time. Ms. Forsythe commented this would go through Human Resources for all the forms and signatures, then it would come to Finance to review and be sure it was complete and then put in the figures. The figures did not have to be in when they signed it because they were signing whether they wanted to get the money or roll it over. Pension Coordinator Carlisle commented she would not sign without the figures being in; Chair Garlo commented that was the first thing they wanted to know-how much. Ms. Forsythe responded that was fine too, they could wait until the whole form was completed and then it could go to Finance, and that would allow it to be done between meetings. • BOARD OF TRUSTEES • TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND SPECIAL MEETING MINUTES September i9, 2005 PAGE ~4 MOTION: Board member Mangum made a motion to adopt a policy whereby the Finance Department upon accumulating all the required data and verifying it, are authorized to transfer the money, pay the check, and report at the next board meeting. Board member Paterno seconded the motion, which carried 3-1 with Board member Koch opposed, stating it was not working. Finance Director Forsythe commented the last time it didn't work it actually went before the Public Safety Board and did not work. It was clarified that both Mr. Newell and Ms. Bouse would be rolled over or paid under the new policy. It was also clarified that the two board signatures would be last, after all other signatures, to assure staff had complied with what the board asked for. Chair Garlo stated what had been accomplished here was that the boazd was no longer in an approving role. Attorney Jensen agreed with Ms. Forsythe regarding the numbers, that the boazd did not know what the numbers were and had to rely on the municipality. In her experience there were as many boards who approved it before it was • paid out as the other way. IX. ANY OTHER MATTERS Board member Paterno referred to the last meeting minutes on July 7, page 2, item 15, that Ms. Forsythe would contact Mr. Palmquist regarding an actuarial report, and the RFP that Attorney Jensen was to prepare. Recording Secretary Laur responded those items would be on the next quarterly meeting agenda-that the RFP would be on the agenda for the board's approval. Finance Director Forsythe verified the board wanted an actuarial report by Mr. Palmquist as of 9/30/05 and after that would go out for RFP. Discussion ensued regarding getting figures to Mr. Palmquist and his determination of the contribution amount. Board member Koch commented she would like to know if Mr. Garlo could not go to the trustees school since if he could not go she was to go. Board member Koch explained she had voted against the motion earlier because she did not want a continual problem. Board member Mangum stated he thought itwould behandled- on the other board on which he served the accounting department did the work and he reviewed it at the end of the month and had not caught an error in three years, noting there were problems there also, but different than here. X. COMMUNICATIONS FROM CITIZENS • BOARD OF TRUSTEES • TEQUESTA GENERAL EMPLOYEES' PENSION TRUST FUND SPECIAL MEETING MINUTES September i9, 2005 PAGE 15 There were no comments from the public. XI. ADJOURNMENT Board member Koch made a motion to adjourn, seconded by Boardmember Paterno, and unanimously approved. Therefore, the meeting was adjourned at 10:34 a.m. Respectfully submitted, Betty Laur Recording Secretary • ATTEST: Archie C. Mangum, Jr., Secretary •