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04-29-2009 Police Pension Board of Trustees Minutes - Special Meeting April 29, 2009 Page I of5 CITY OF EDGEW A TER POLICE OFFICERS' PENSION BOARD OF TRUSTEES SPECIAL MEETING MINUTES Wednesday, April 29, 2009 CALL TO ORDER! ROLL CALLIDETERMINATION OF A QUORUM The Edgewater Police Officers' Pension Board held a special meeting on Wednesday, April 29, 2009 in the City Hall Conference Room at the City of Edgewater, Florida. Members Absent: Plan Attorney: Plan Administrator: Performance Consultant: City Staff: Ferd Heeb Gary Conroy Dan Blazi Lawrence Leaf Jeanne DelNigro H. Lee Dehner Sheila Hutcheson Mike Welker, The Bogdahn Group Phil Niebieski, Police Officer Diana Floyd, Police Officer Tracey Barlow, City Manager John McKinney, Finance Director Julie Christine, Personnel Department Members Present: Chairman Blazi called the meeting to order at II :03 a.m. Members indicated their presence; there was a quorum, with four members present. APPROVAL OF MINUTES - Quarterly Meeting, March 16, 2009 Member Heeb made a motion to approve the minutes of the March 16, 2009 quarterly meeting; Member Leaf seconded the motion, which passed unanimously, upon a roll call vote. REPORTS (ATTORNEY/CONSULTANTS) I. Brad Heinrichs, Foster & Foster - Mr. Heinrichs was not in attendance; the Administrator was directed to ask him to bring the information to the June 10, 2009 meeting on the following items: . Information/calculations related to termination of contract with Principal . Benefit improvements study - deferredfrom March 16,2009 meeting . Diana Floyd, Phil Niebieski, Brian Mallard benefit reviews 2. H. Lee Dehner, Plan Attorney Mr. Dehner advised that the legislative session may not get HB5 to the floor this year. The insurance tax-exempt options were included in the bill, this provision may be enacted by federal law. Next, he reported on Rule 60T, noting the input in the workshop meetings, and the Division of Retirement's review of the regulations. He noted that this review will take a while and the outcome will most likely be different from what Charles Slavin had proposed. The Attorney then reported to the Board on the recent severance from Principal by the Auburndale General Pension Plan, for which he had effected a settlement resulting in the plan receiving more Police Pension Board of Trustees Minutes - Special Meeting April 29, 2009 Page 2 of5 money back than the terms of the contract provided. This may have a positive effect on the Police Plan's termination when it occurs. He continued that approximately 90% of the Auburndale retirees signed a release so that their benefits would not be paid by Principal. He also stated that there is no need to have a benefit index for a public sector plan. The City will be around longer than Principal and the money savings could provide sufficient funds for an ad hoc COLA. Mr. Dehner said that Principal had used a fraudulent inducement to the Board to enter into an unconscionable contract and that City staff who had personal knowledge of the representations made by Principal (such as the City Manager, Personnel Director, and the Board's former recording secretary) should be present when the teleconference with Principal is scheduled. Principal doesn't like these issues being aired in public meetings and/or being in the press. Member Conroy asked if the Board might have a claim against the former Board attorney for his advice in this regard. Mr. Dehner said he would have to review what had occurred. Chairman Blazi asked the same question about action against Jack Ascherl for his role as the broker and Mr. Dehner also would have to review that as well. The Chairman also asked when the letters of release to the retirees should be sent, and the Attorney said this would not occur until an agreement is reached with Principal. At that point, the retirees would be contacted to attend a meeting, at which they would be provided information in order to make an informed decision. The action at this time is to obtain the information as to the representations made by Principal; Member Conroy stated that he had already sent the minutes in this regard to the Attorney. Mr. Dehner said that the fiduciary issue should reside with Principal. 3. Sheila Hutcheson, Plan Administrator The Administrator reported on the following items: . The FPPT A conference is scheduled for June 28 through July I, 2009 and members who plan to attend will need to make their hotel reservations as soon as possible. Several members will try to attend. . There has been a request to change the meeting time for quarterly meetings so that the Police Board meets at 1 :30 p.m., allowing the General Employees' Board to meet in the morning. The Board concurred to meet at 1 :30 p.m. for future quarterly meetings. . Annual Financial Disclosure Forms must be filed on or before July 1,2009. . A request for additional information by the IRS has been received regarding the VCP and qualification determination filings. The Board will be kept apprised of the status in this regard. The next item of discussion related to the Board's decision at the March 16, 2009 meeting to provide that future retirement calculations for service retirees not include the alternate option of reduced retirement amounts in exchange for refund of the retiree's member contribution (for compliance with the language of the Plan Document, but not consistent with the practice of Principal). Ms. Hutcheson asked the Board to reconsider this decision based on the fact that this option, clearly perceived as a benefit, is allowed by the Plan Document to terminated, vested members, conferring an enhanced benefit on terminated, vested employees to the detriment of service retirees. She recommended that the Board direct Principal to amend the plan language to conform to the past practice of providing the option to both terminated, vested employees and service retirees. She further asked the Board to have Principal amend the plan to eliminate the provision for refund of member contribution balance to a retiree who had elected a lifetime only option and died before the total amount of his/her member contribution being paid (with no benefit reduction). The plan is not valued in this manner and this Police Pension Board of Trustees Minutes - Special Meeting April 29, 2009 Page 3 of5 provision should be eliminated. Member Herb asked about the status of the recent plan restatement and Attorney Diner said it should be submitted to the City Council for adoption. Member Conroy made a motion to direct Principal to prepare an amendment to the Plan Document to conform the language to the past practice, with the elimination of the payout of member contribution to a retiree with lifetime only option if the retiree died before the total amount of member contribution had been paid; Member Leaf seconded the motion, which passed unanimously on a roll call vote. The change to the plan will be submitted, as addressed by the Attorney to Member Heeb, to the City Council. NEW BUSINESS I. Heart Act Operational Summary (Principal) - deferred from March 16, 2009 Meeting Attorney Dehner outlined the mandatory requirements of the Heart Act which specifies that if a plan member dies in military service, hislher survivor would receive retirement benefits. The optional part of the Act relates to credited service and Mr. Dehner did not recommend that the Board include this provIsIon. Member Conroy made a motion to authorize execution of the Heart Act Operational Summary form from Principal without the optional service credit; Member Heeb seconded the motion, which passed unanimously on a roll call vote. 2. Ratification: refund to terminated, non-vested member Kevin Curran - $6,174.26 Member Heeb made a motion to ratify the refund to Mr. Curran; Member Conroy seconded the motion, which passed unanimously, upon a roll call vote. PROCESSED DISBURSEMENTSIRETURN OF CONTRIBUTIONS and DEPOSITS - deferred from March 16, 2009 meeting DISBURSEMENTS 1. Christiansen & Dehner, professional legal fees, December 31, 2008 - $1329.31; January 3 I, 2009 - $580.00 2. Sheila Hutcheson, plan administration fees, December, 2008 & January, February, 2009 - $2700.00 ($900/month); postage/mileage expense - $47.94 3. The Bogdahn Group, performance consultant fees, 4th quarter, 2008 - $2500.00 4. FPPT A membership dues, 2009 - $600.00 5. American Express (credit card statement) - $340.69; $898.75; $570.35 6. IRS qualification filing fee - $1000.00 7. Phil Niebieski, Commencement of DROP as of January I, 2009 Goint and 100% survivor option) DEPOSITS None Member Heeb made a motion to approve the processed disbursements/return of contributions and deposits; Member Leaf seconded the motion, which passed unanimously, upon a roll call vote. Police Pension Board of Trustees Minutes - Special Meeting April 29, 2009 Page 4 of5 STAFF REPORTS, DISCUSSION, and ACTIONITRUSTEES' REPORTS, DISCUSSION and ACTION Member Heeb reported that he will be on the Board for another two-year term, based on his recent reappointment by the City Council. Member Conroy asked the Attorney if the Plan can reimburse members' cost for mailing the Financial Disclosure Forms by certified mail and the Attorney said he would check and let the Administrator know. Alternatively, Member Conroy said he could hand deliver the completed forms to the Supervisor of Elections Office in DeLand. He continued by advising that he would like to attend the FPPT A conference in June, stating that this is a beneficial training process and a good investment. Member Conroy made a motion to authorize attendance by any Board member able to attend; Member Leaf seconded the motion. Under discussion, Member Heeb said it is his opinion that, at this time, the Board should only attend training that is cost-free. Member Conroy noted that the economy/market will improve and the Board still has to meet its education requirements. The motion passed with three affirmfltive votes and Member Heeb voting no. Member Conroy discussed the flow of mail to the Pension Board from City Hall, noting that there is a problem in timely receipt of mail. He suggested a post office box for Board items with the Chairman and the Secretary to have a key. Member Conroy made a motion to authorize securing a post office box for six months at a cost of $48.00; Member Leaf seconded the motion, which passed unanimously on a roll call vote. Member Conroy will advise the Administrator of the post office box number after he obtains it and Ms. Hutcheson will notify Trish Shoemaker, Division of Retirement. The Board asked about the status of the staffs work on the Police Annual Report; Julie Christine, Personnel Department, reported that it is underway and she is almost finished and she will then be training someone in Finance in this regard. Ms. Hutcheson will contact Ms. Shoemaker to let her know the status of the Report. The next item of discussion was regarding the benefit improvements study. Member Conroy said he would survey members about their interest in a higher member contribution to fund future service at a multiplier of 3.25%. He will contact the Actuary to see if the amount of the member contribution increase would be minimal and will discuss this further at the June 10, 2009 meeting. Member Conroy then asked if the Board would be interested in a subscription to the Wall Street Journal at a cost of $299/year; this would provide a subscription for all trustees (corporate account) for the Monday through Saturday editions. Member Conroy made a motion to secure a one-year corporate subscription; Member Leaf seconded the motion, which passed unanimously on a roll call vote. Member Conroy will order the subscription. Chairman Blazi noted that at the last meeting, the Board had discussed asking Principal to invest on a 60/40 basis in stockslbonds. Mr. Welker advised that Principal will invest according to their guidelines, not pursuant to the Board's direction. He recommended against taking action in this regard at this time, since the Board will soon be preparing to negotiate the contract termination with Principal. Principal's failure to allocate the investments in this manner will be more evidence of their non-performance. Police Pension Board of Trustees Minutes - Special Meeting April 29, 2009 Page 5 of5 Chairman Blazi mentioned the upcoming seminar by the City Attorney for City advisory boards' members. This will be held on May 19 and Board members were asked to let the Administrator or the City Clerk know if they are able to attend. REQUESTS FROM THE PUBLICIEMPLOYEES PRESENT - None. ADJOURNMENT Member Leaf made a motion to adjourn the meeting; Member Heeb seconded the motion, which passed unanimously. The meeting was adjourned at 12:40 p.m. Respectfully Submitted: Approved: ~~~ Sheila Hutcheson Plan Administrator --. '~~ DanBI . Chairman