Loading...
06-10-2009 Police Pension Board of Trustees Minutes - Quarterly Meeting June 10,2009 Page 1 of4 CITY OF EDGEWATER POLICE OFFICERS' PENSION BOARD OF TRUSTEES QUARTERLY MEETING MINUTES Wednesday, June 10, 2009 CALL TO ORDER! ROLL CALL/DETERMINATION OF A QUORUM The Edgewater Police Officers' Pension Board held its quarterly meeting on Wednesday, June 10, 2009 in the City Hall Conference Room at the City of Edgewater, Florida. Members Present: Ferd Heeb Gary Conroy Dan Blazi Lawrence Leaf Jeanne DelNigro H. Lee Dehner Sheila Hutcheson Brad Heinrichs, Foster & Foster Mike Welker, The Bogdahn Group Allen Smith, Principal (by telephone) Donna Looney, Personnel Director Members Absent: Plan Attorney: Plan Administrator: Plan Actuary Consultants: Principal: City Staff: Secretary Conroy called the meeting to order at I :44 p.m. Members indicated their presence; there was a quorum, with three members present at the beginning of the meeting. Chairman Blazi arrived at 1:53 p.m. APPROVAL OF MINUTES - Special Meeting, April 29, 2009 Member Heeb made a motion to approve the minutes of the April 29, 2009 special meeting; Member Leaf seconded the motion, which passed unanimously, upon a roll call vote. NEW BUSINESS 1. Consideration/Approval of Summary Plan Description from Principal 2. Principal contract amendment (November 2008) for approval/execution (deferred from March 16, 2009 meeting) Due to the unavailability of Ms. Tonya Niday at the Prinicpal office, the Administrator suggested that both items of New Business be deferred (as the General Employees' Board had done at its meeting earlier). Attorney Dehner notified Allen Smith at Principal, by telephone, and asked both him and Ms. Niday to be available to discuss these items at the next quarterly meeting on September 14, 2009. REPORTS (ATTORNEY/CONSULTANTS) The Bogdahn Group, Performance Consultant - Quarterly report - March 31, 2009 Mr. Welker opened with a review of the asset allocation and then discussed the performance. The fund was negative 5.41 % for the quarter and negative 18.96% for the fiscal year to date (both net of fees). On the fixed income investments, the return was negative 13.7% for one year, which he said is another reason to separate from Principal (bond investments should preserve capital in down markets). Police Pension Board of Trustees Minutes - Quarterly Meeting June 10, 2009 Page 2 of4 He then reviewed the risk/returns ratio and up market/down market capture ratios, noting that these statistics with Principal have not been acceptable. Next, Mr. Welker discussed the process for the separation from Principal and that he will be proceeding with soliciting proposals for custodial services and investment managers. Member Heeb said that he is seeing that the economy will be moving into an inflationary period and also said that Principal knows that the plan will be terminated; Mr. Welker said that he will be moving forward with his actions while the actual termination process is underway. Attorney Dehner then outlined the steps that will be taken to sever the contract from Principal, noting that it would be a three-month to six-month process. Member Conroy had been in attendance at the presentation by Principal of the benefit index and he is the one who signed the documents. The Attorney requested that Member Conroy make notes of the chronology of events so that he can set up a telephone meeting with Principal. Along with Mr. Dehner, Actuary Brad Heinrichs, Personnel Director Donna Looney, Administrator Sheila Hutcheson, and Member Conroy will need to be present. At this meeting, Member Conroy will relate specifics of what Principal represented to the City and Plan members. Attorney Dehner stated that he also has told Principal that he will report them to the Insurance Commissioner in both Iowa and Florida. Brad Heinrichs will discuss that Principal was not acting in the best interest of the plan/client. During this period there would also be a meeting with the retirees covered under the benefit index. Principal wants the discussion to be at a non-public meeting, so Member Conroy will attend as the one Board member at the telephone conference with Principal. Foster & Foster, Actuary Information/calculations related to termination of contract with Principal Mr. Heinrichs reviewed the calculation in his letter to the Board dated June 9, 2009 and discussed the $800,000 differential between his calculation and Principal's numbers. Benefit improvements study - deferredfrom March 16, 2009 meeting The Actuary reviewed the options on the spreadsheet of alternatives and the respective costs. Member Conroy will distribute the study to the members for their input and report back to the Board. Mr. Heinrichs said that most Police plans have a member contribution of about 7%. Member Conroy asked about the excess State monies and was advised that the frozen amount is what the City can use to offset its costs. Discussion continued as to the 1999 benefit improvement and the method by which it would be paid. The Actuary suggested a review of the 1999 impact statement that accompanied the benefit improvement and said that he would check with Trish Shoemaker, Division of Retirement, in this regard. Chairman Blazi thought the 1999 improvement would be funded by State monies until the liability was paid off, noting that the improvement costs $160,000 per year. The Attorney said that if the membership didn't vote on the use of State monies, then the City would have to fund the benefit. It was stated that the membership did vote on the benefit improvement, but it was not clear if the members voted specifically on the use of the state monies. The Chairman then asked about members increasing their contribution to help offset the City's expense, but the Statute says that a member contribution increase generally must be associated with a benefit improvement. The member contribution amount could be greater than what was actually required and that would help the City in considering wage increases. H. Lee Dehner, Plan Attorney Senate Bill 538 was signed by the Governor last week and becomes effective on July 1, 2009, including the following provisions: Police Pension Board of Trustees Minutes - Quarterly Meeting June 10,2009 Page 3 of4 . Buy back changes - now allows purchase of out-of-state service as a Police Officer; . Increase in limitation of investments in foreign securities (increased from 10% to 25% {at market} ); . Option of up to four-year terms for Board members; . Assignment of retiree insurance premium payments (pre-tax treatment for premiums) has been expanded to allow it for premiums to another carrier other than direct to the City for its insurance program; and . Requirement that the portfolio divest any stocks in Iran, Sudan, or Darfur. (A list will be published periodically and The Bogdahn Group will track this. The divestiture must be completed by September, 20 I 0). He continued by reporting that the Rule 60T changes are being delayed and the final rules will be much different than those proposed by former Actuary Charles Slavin. Mr. Dehner concluded with a reminder that the annual Financial Disclosure Forms must be filed by July I. Sheila Hutcheson, Plan Administrator . Update on IRS filings and ratification of amendments filed with response to IRS questions on the qualification submittal Ms. Hutcheson advised the Board that due to the very short time frame for response to the request for additional information by the IRS, it had been necessary for the Chairman to sign two plan amendments, which she asked the Board to ratify. The Attorney suggested that the disclaimer placed by Principal at the end of the amendments be lined through and initialed by the Chairman. Member Heeb made a motion to ratify the two plan amendments, annotated as recommended by the Attorney; Member Leaf seconded the motion, which passed unanimously, upon a roll call vote. . Schedule pension boards' joint workshop meeting - The Administrator will coordinate this with the other Boards. . Submittal of plan restatement (approved by the Board on December II, 2008)/amendments to City Council for adoption by reference The Administrator had met with the City Manager and Personnel Director before the meeting to discuss the need to submit the pension plan document to the City Council for adoption by reference. It was the Board's consensus to proceed and the Administrator will work with the City in this regard. The Administrator also discussed the draft amendment from Principal, which had been requested by the Board, regarding the alternate retirement benefit calculations for service retirees as well as terminated vested members to allow the refund of member contributions with reduced retirement benefits for each optional form and to eliminate the provision for refund of member contribution to a retiree who selected lifetime option and dies before the total amount of the contribution has been paid. It was the consensus of the Board for the Administrator to proceed once a retroactive effective date was specified (Principal had used June I, 2009 as the effective date, which would not even address Phil Niebieski's pending issue). . Renewal of pension fiduciary liability insurance (July 16, 2009) through the Florida League of Cities; the renewal premium is the same as last year's premium: $2,744.17 (including waiver of recourse premium paid separately by the City). The Administrator advised that she would proceed Police Pension Board of Trustees Minutes - Quarterly Meeting June 10, 2009 Page 4 of 4 with renewal. · The Administrator said that she would contact Board members by email to ascertain the best date(s) in late July to schedule a special meeting with Mike Welker to discuss custodial banking and investment management services/providers. OLD BUSINESS - None PROCESSED DISBURSEMENTS/RETURN OF CONTRIBUTIONS and DEPOSITS · DISBURSEMENTS 1. Christiansen & Dehner, professional legal fees, February 28, 2009 - $638.00; $1332.87; $1661.20 2. Sheila Hutcheson, plan administration fees, March - May, 2009 - $2700.00 ($900/month); postage/mileage expense - $24.27 3. The Bogdahn Group, performance consultant fees, 1 sl quarter, 2008 _ $2500.00 4. Foster & Foster, actuarial services fees, March 13, April 27, 2009 - $16863.00; $625.00 5. American Express (credit card statement) - $412.00; $1978.00 6. FPPTA per diem/mileage expenses - Dan Blazi: $307.20; Gary Conroy: $308.85; Lawrence Leaf: $307.75 · DEPOSITS - None Member Conroy 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. STAFF REPORTS, DISCUSSION, and ACTIONffRUSTEES' REPORTS, DISCUSSION and ACTION Member Conroy had brought the 2008 Annual Report for signature by the Chairman and Secretary and will review it at the next meeting so that the Board can then approve it. He suggested that the Board authorize Foster & Foster (F&F) to prepare future Annual Reports. Member Conroy made a motion to authorize F&F to prepare future Annual Reports; Member Heeb seconded the motion, which passed unanimously, upon a roll call vote. REQUESTS FROM THE PUBLICIEMPLOYEES PRESENT _ None. ADJOURNMENT Member Conroy made a motion to adjourn the meeting; Member Heeb seconded the motion, which passed unanimously. The meeting was adjourned at 3:45 p.m. Respectfully Submitted: Approved: ~~ Sheila Hutcheson Plan Administrator ~~ Dan BI . Chairman