09-14-2009
General Employees' Pension Board of Trustees
Minutes - Regular Meeting
September 14, 2009
Page I of5
CITY OF EDGEW A TER
GENERAL EMPLOYEES' PENSION BOARD
Regular Meeting
MINUTES
Monday, September 14,2009
CALL TO ORDER! ROLL CALLIDETERMINATION OF A QUORUM
The Edgewater General Employees' Pension Board held its quarterly (regular) meeting on Monday,
September 14, 2009 in the City Hall Conference Room at the City of Edgewater, Florida.
Members Present:
Gigi Bennington
John Brackin
Brenda Dewees
Tyna Hilton
Bobby Laramore
Jonathan McKinney
Tim Sopko
None
H. Lee Dehner
Sheila Hutcheson
Mike Welker, The Bogdahn Group
Allen Smith, Principal (by telephone)
Russ Anthofer, Principal (by telephone)
Tonya Niday (by telephone)
Julie Christine, Personnel Department
Tracey Barlow, City Manager
Members Absent:
Plan Attorney:
Board Administrator:
Consultants:
Principal:
City Staff:
Vice-Chairman Dewees called the meeting to order at 10:55 a.m. Members indicated their presence;
there was a quorum, with all members present.
ELECTION OF OFFICERS
Member Hilton made a motion to nominate Member Bennington as Chairman; Member Sopko seconded
the motion, which passed unanimously.
Chairman Bennington then asked for nominations for Vice-Chairman and Secretary.
Member Laramore made a motion to nominate Member Dewees as Vice-Chairman; Member Sopko
seconded the motion, which passed unanimously.
Member Laramore made a motion to nominate Member Hilton as Secretary; Member Sopko seconded the
motion, which passed unanimously.
APPROVAL OF MINUTES - Special Meeting: July 29, 2009; Quarterly Meeting: June 10,2009
Member Dewees made a motion to approve the minutes of the July 29 and June J 0, 2009 meetings;
Member Hilton seconded the motion, which passed unanimously.
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Minutes - Regular Meeting
September 14, 2009
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NEW BUSINESS
Consideration/Approval of Summary Plan Description (SPD) from Principal
Ms. Tonya Niday reviewed the changes included in the SPD, as follows:
. The previous age requirements were removed;
. New language was added regarding employee contributions;
. New section was added on elective contributions and "law limits" was moved to its own section
(to include 2009 limits). It used to be under a section titled "Adjustments"; and the meaning of
elective contribution included new wording;
. Pay year definition has changed to reflect the rolling twelve months' compensation basis
approved by the Board;
. Early retirement had a new sentence added for additional clarification;
. Language was added to reflect Amendment #2 to the 1997 Plan Document, dealing with members
who continued to work after taking retirement benefits;
. Added requirement of five years' service for eligibility for disability;
. Changed wording on small amounts being more than $1000 but less than $5000;
. Added the IRA option; and
. Added the 75% joint and survivor retirement option.
Attorney Dehner advised Ms. Niday that the Board is in the process of having the pension plan
documents adopted by ordinance. The amendments that have been approved since the October 1, 2008
restatement would need to be added to the SPD. Mr. Dehner also asked about the tax updates, etc., being
added as Principal prepares the updated SPD. Ms. Niday said that she would update the SPD since the
ordinance will just reflect the documents/amendments already prepared by Principal.
Principal contract amendment (November 2008) for approval/execution (deferred from March 16,
2009 and June 10,2009 meetings)
Attorney Dehner opened by noting that this contract is already being used by Principal and the
investments specified are underway. Mr. Dehner and Performance Consultant Mike Welker asked why
the Board would need to sign to authorize actions that Principal is already taking. Mr. Welker had advised
the Board not to sign the contract without having more information for him to review than what has been
provided. Mr. Anthofer, Principal, provided some information and said that, essentially, Principal makes
the decisions as to the most appropriate accounts for investments as part of their duties. Mr. Welker
asked why the Board would need to sign the contract, given Principal's position in this regard that they
make the investment decisions unilaterally. Chairman Bennington asked how Principal could initiate the
new investments without the Board's contract approval/signature and Principal said that is what they have
been hired for. The Chairman then echoed Mr. Welker's statement that the Board need not sign since
Principal had proceeded without approval anyway. She said approval now would just to be protect
Principal. Attorney Dehner said the concern is that the Board should not sign off on the management
decisions of Principal. It is the Board's position that since Principal has the authority to make the
investment decisions, this contract does not require the Board's signature. Mr. Dehner reminded
Principal that the plan monies need to be invested in investments allowed by State, Federal, and local law.
Principal then said that they may have to remove new investments listed in the contract. The Board's
Attorney stated that the Board is not going to join with Principal in the investment decisions, as the Board
is not qualified to make investment decisions on their own. Principal advised that if the Board doesn't
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Minutes - Regular Meeting
September 14, 2009
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sign the contract, they will use the prior agreement and will make adjustments to the current investments
based on the prior contract; i.e., they will rebalance and reallocate based on the previous agreement. The
prior contract was signed in 1996 by the then City Manager and Jack Ascherl; there was also a contract
signed in 2005 by then City Manager Ken Hooper. Mike Welker asked if Principal is ensuring that the
investments are in compliance with State laws. The Principal representatives did not seem to understand
the statutory limitations to which Mr. Welker referred. Attorney Dehner stated that Principal needs to
divest in a manner to ensure no loss to the fund. If there is a loss, the fund will need to be made whole.
Principal asked about Mike Welker's role, which was addressed by Attorney Dehner. Principal stated
that they will make changes and will report back to the Board next quarter. Mr. Dehner again cautioned
that Principal must not do anything to damage the fund, especially if they have breached an agreement by
proceeding to initiate investments thinking that the Board would subsequently sign off on the agreement.
He reiterated that whatever action is taken by Principal should be in the best interest of plan, should not
involve any financial detriment to the Plan, and should be done in a prudent manner.
Principal's response on investment direction by the Board
There was no discussion with Principal on this. The Plan Administrator had provided the Board
Principal's email message in this regard, which said that Principal would no longer be a named fiduciary
to the Plan if investment direction was given by the Board.
OLD BUSINESS - None.
REPORTS (ATTORNEY/CONSULTANTS)
The Bogdahn Group, Performance Consultant - Quarterly report - June 30, 2009
Mr. Welker stated that he had reviewed the quarterly performance at the July 29, 2009 special meeting, so
he commented only on the historical underperformance of Principal, as documented in the June 30, 2009
report.
H. Lee Dehner, Plan Attorney
Mr. Dehner discussed again the process of separation from Principal, noting the information that will be
needed: the initial agreement with Principal, changes to the agreement, and any relevant minutes of
meetings with Principal. He also said that it will be important for him to review the documents and to be
apprised of the personal recollections of staff as to Principal's representations regarding the benefit index
and their failure to advise of the onerous contract termination provisions. The Administrator will work
with Personnel Director Donna Looney in this regard.
It will also be necessary to obtain releases from retirees to release Principal from any liability for their
future retirement payments and then to get thar money back from Principal. There will be a meeting with
retirees to review the information related to the releases so that as many releases as possible can be
obtained. At that point, there will be the conference call with Principal and their Attorney to terminate the
Plan.
The Attorney's report continued with an update on the amendments (Rule 60T) that had been proposed by
former State Actuary Charles Slavin, noting that the amendments are on the "back burner" at this time
and that it is expected that the new proposals will be much different and better. Mr. Dehner concluded by
reporting that the Federal legislation which provides up to $3000/year pre-tax retiree insurance premiums
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Minutes - Regular Meeting
September 14, 2009
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for public safety retirees (normal and disability retirees) now has a proposal to extend it to all public
retirees, to remove the administrative burdens, and to index the $3000/year.
Sheila Hutcheson, Plan Administrator
Update on IRS filings submitted July 8, 2009 and August 27, 2009 in response to IRS questions
The Administrator reported that the July 8 and August 27 responses were filed since the June 10, 2009
meeting in order to ensure timeliness. There has been another request for information dated September 2,
2009, in which the IRS questions the authority of the Board officers to sign documents on behalf of the
Plan. The letter seems to state that the Mayor would be recognized by the IRS as an authorized signer;
alternatively, some proof must be submitted of the authority of the Vice-Chairman to sign. Principal has
indicated that, with the Board's concurrence, the simplest way to deal with this issue is to have the Mayor
sign the documents. The Board concurred.
Ms. Hutcheson had asked Principal, during the telephone conference earlier in the meeting, what
mechanism would be needed to allow Principal to discuss the filings with the IRS; Ms. Niday said she
would check on this and would let the Administrator know.
Status Report: Submittal of plan restatement/amendments to City Council for adoption by
reference
The City Manager stated he would submit the October 1, 2008 Plan Document and recent amendments to
the City Council for adoption by ordinance. He anticipated that the review of the documents and
preparation of the ordinance would take about eight weeks. The Plan Administrator was asked to ensure
that the Personnel Director has all of the documents.
FPPTA Trustees' School in Bonita Springs (10/4-10/7/09)
The Administrator advised Board members to contact the Finance Department to arrange payments if
attending the School and that the forms for registration and lodging are available on the FPPT A website.
Pension Fiduciary Insurance Renewal - $3,516.82 (same as last year's premium). Ms. Hutcheson
reported that she will advise Florida League of Cities to renew the policy for the plan year October I,
2009 through September 30, 20 10. The City will pay the $175.00 premium for waiver of recourse
endorsement.
Service Agreement - Principal
The Administrator recommended that Attorney Dehner review the updated (July, 2009) Service
Agreement before it is approved for execution by the Board. She had provided a copy of the Agreement
to him and Ms. Niday had been asked to send the prior Service Agreement, if available. This item will be
on the next agenda.
PROCESSED DISBURSEMENTS/RETURN OF CONTRIBUTIONSIDEPOSITS
DISBURSEMENTS
1. Sheila Hutcheson, plan administration fees (June - August, 2009) - $2700.00
($900/month); postage/mileage expense - $0.44
2. Christiansen & Dehner, professional legal fees, $116.00; $1311.84; $116.00
General Employees' Pension Board of Trustees
Minutes - Regular Meeting _
September 14, 2009
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3. The Bogdahn Group, performance consultant fees, 2nd quarter, 2009 - $2500.00
4. Principal, invoice for preparation of plan amendment (deducted from account) -
$500.00
DEPOSITS
None
Member McKinney made a motion to approve the disbursements/return of contributions and deposits;
Member Dewees seconded the motion, which passed unanimously.
TRUSTEES', STAFF, EMPLOYEES', and PUBLIC REPORTS, DISCUSSION and ACTION
Mr. Welker requested ajoint special meeting in October to discuss an Investment Policy Statement (IPS)
and to review information on investment managers. He will coordinate with the Plan Administrator for
scheduling.
ADJOURNMENT
Member Hilton made a motion to adjourn the meeting; Member Sopko seconded the motion, which
passed unanimously. The Chairman adjourned the meeting at 12:55 p.m.
Respectfully Submitted:
Approved:
Sheila Hutcheson, Plan Administrator