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HomeMy WebLinkAboutMinutes_Pension Public Safety_08/11/2005 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 Boazd of Trustees held a regulaz 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 Boazdmember 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 Cazlisle; Finance Director Joann Forsythe; and Accounting Manager Patrice Maqueda. II. APPROVAL OF AGENDA MOTION• Vice Chair Genco requested and made a motion 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 February 18, BOARD OF TRUSTEES TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES 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 6y 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 FLEMING AS NEW POLICE DEPARTMENT EMPLOYEE REPRESENTATIVE TO FILL VACANCY CREATED BY RESIGNATION OF BOARDMEMBER JOE PETRICK MOTION: Boardmember Sabin moved to accept new Police Department Representative Jason Fleming to fill the vacancy created by resignation of Joe Petrick. Acting Chair Genco seconded; motion carried unanimously 3-0. VIII. 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 MINUTES August ii, 2005 PAGE 3 --------------------------------------------------------------------------------- Pittman, and Ken Nielson. All were present at the meeting except Mr. Pittman, and answered questions from the board. 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 year. • IX. APPOINT INTERIM CHAIR AND INTERIM SECRETARY TO SERVE UNTIL THE NOVEMBER ELECTION Acting Chair Geraldine Genco passed the gavel to Steve Palmquist, explaining that the boazd 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. Palmquist advised that all the board had done today was make a recommendation to Village Council for an appointment to the board, and only the fifth member chosen by the boazd was ratified by the Village Council. Mr. Palmquist advised that the boazd therefore might want to wait until there were officially five boazdmembers to appoint officers. Pension Coordinator Carlisle explained that the two Council appointees were Vice Chair Genco and the new applicant; the Fire representative was Boazdmember Giblin; the Police representative was Boardmember Fleming, and the fifth member was Boazdmember Sabin, who had recently been chosen fora 2-yeaz term. Mr. Palmquist 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. Boardmember Sabin commented that the Vice Chair served as Acting Chair, but the boazd did not have a Secretary. Councihnember 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 and the board voted 4-0 in favor. X. PRESENTATIONS a) PRESENTATION BY ACTUARY STEVE PALMQUIST, GABRIEL ROEDER & SMITH Vice Chair Genco announced that Steve Palmquist was present at her request and that she . had thought there would be members of the General Employees' Board present. Pension Coordinator Carlisle 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. Palmquist 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 12 months were given to comply with changes in the law, and asked if it was normal to review the plan once a year for needed changes and amendments, to which Mr. Palmquist responded he believed that would be a good idea, and hardly 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 ii, 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 year end. Periodically, they would come to the board meetings to see if there were questions, and they were very important in the day-to-day 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 firms, but believed he was correct 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 be there-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 Paterno, as a member of the General Pension Board, stated he had one question in reference to that regarding Rockwood-they were in a commingled fund and the assets were in Rockwood's name-their custodian, A. G. Edwazds, 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 particulaz plan. Assets were commingled and they were investing once a month. Vice Chair Genco stated she had 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. Palmquist commented SunTrust for over 25 yeazs 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 SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES August ii, 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 a non- interest bearing escrow account for up to six weeks at A. G. Edwards, and their investment arm did not know about it. Mr. Palmquist stated that was totally unacceptable 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 find 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 long time, 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 Department 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 MINUTES 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 appear 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. Palmquist 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 see the 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 Carlisle 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. Boardmember 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. Boardmember 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 board approved, an account could be opened at Independent Community Bank. Boardmember Sabin stated he wanted to be clear 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 ii, 2005 PAGE 8 Employees' pension, that the Public Safety boazd 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 cleazly 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 board of trustees was the plan administrator under State law; but the question here was people doing administrative things. There were a number of firms around who were professional plan administrators-they would set up meetings, make sure agendas and minutes were taken care of-they 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 fiduciary 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. Palmquist confirmed . BOARD OF TRUSTEES • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES August il, 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 boadd. Vice Chair Genco stated that the board 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 research 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 boadd would consider directing the Finance Department to look for softwaze to help them manage the bookkeeping process, and they could bring that information back to the next meeting for board approval to purchase the softwaze. 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 fmd 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. Palmquist was using a 3-year rolling period on the investments; he responded that he was using 5 years. Mr. Palmquist 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 mazket 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`}', 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 yeazs 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 investment. 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 earlier, more money would have been taken out in 2004. Mr. Palmquist advised they would be sending their annual data request right around October 1St 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 year'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 yeaz $63,412.. Supplemental firefighter revenue would be known after October 1. Last year's supplemental had been $12,596. Police had a lot of unused revenue held in reserve and fire hardly 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 • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES August ii, 2005 PAGE 11 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 year 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 commission 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 market to preserve capital. Boardmember 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 Carlisle explained that the board had questioned this chazge. In yeazs 2002 and 2003, the board was changed $550 for this sepazate form that went to the State this statement was separate from the actuarial report-and the board did pay it in the last two years. Ms. Carlisle noted she felt it should be paid again for last year'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 sepazate 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 board 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 softwaze 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. Carlisle 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. Carlisle noted since it had not been known whether Boazdmember Giblin could be present, Attorney Bonni Jensen had advised she could discuss this at the next meeting. Boardmember Giblin commented this would involve Jupiter Inlet Colony. Vice Chair Genco commented if funds were not already 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 not get the benefit of the 175 and 185 revenue, and this law allowed that to occur now. If the Village was BOARD OF TRUSTEES TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND ~ MEETING MINUTES August ii, 2005 PAGE ~3 --------------------------------------------------------------------------------- performing 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 Department 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 board to consult Attorney Jensen. Pension Coordinator Carlisle asked the board 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 premium tax 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 unanimous 4-0 vote. Consensus was that Boardmember Giblin would contact Attorney Jensen regarding 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 board 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 actuarial 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 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 Genco requested the March statement for the Wachovia Securities account. b) Schedule of Investment Activities for the Quarter ended June 30, 2005 Consensus of the board 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 ii, 2005 PAGE i6 a) Business Services Connection - 5/10/OS 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. Boardmember Sabin asked what that would mean, to which Pension Coordinator Carlisle responded, explaining that the Village Council had ordinances and resolutions that were permanent documents required by the State. The Public Safety Pension Board did not have an ordinance or resolution book of their own. The board would not be able to adopt ordinances 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 i Board 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 year's audited report, and asked Mr. Palmquist if the current market value of the assets should be used. Mr. Palmquist 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 board 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. Board 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 • TEQUESTA PUBLIC SAFETY OFFICERS PENSION TRUST FUND MEETING MINUTES August 11, 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 board, this policy would pay the attorneys fees, etc., and this was really not to do with investment decisions because the board 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. Board 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 board 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 million, and next 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. Boardmember Giblin advised he would like to attend. Boardmember 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 11, 2005 PAGE i9 --------------------------------------------------------------------------------- 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 by 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 board 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 areas. 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 prepared 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 software 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 Tax 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, ~~.C~ U Betty Laur Recording Secretary •