05-10-2010
General Employees' Pension Board of Trustees
Minutes - Special Meeting
May 10,2010
Page I of2
CITY OF EDGEWATER
GENERAL EMPLOYEES' PENSION BOARD OF TRUSTEES SPECIAL MEETING
MINUTES
Monday, May 10,2010
CALL TO ORDER! ROLL CALL/DETERMINA TION OF A QUORUM
The Edgewater General Employees' Pension Board held a special meeting on Monday, May 10, 20 I 0
in the City Hall Conference Room at the City of Edgewater, Florida.
Members Present:
Gigi Bennington
John Brackin
Bobby Laramore
Tyna Hilton
Tim Sopko
Jonathan McKinney
Brenda Dewees
Brad Heinrichs, Foster & Foster
Sheila Hutcheson
Julie Christine, Personnel Department
Tracey Barlow, City Manager
Dan Blazi, Police Department
Gary Conroy, Police Department
Members Absent:
Plan Actuary:
Board Administrator:
City Staff:
The special meeting of the General Employees' Board of Trustees was called to order at 10:02 a.m.
There was a quorum with six members present.
NEW BUSINESS
Presentation: October 1,2009 Actuarial Valuation - Foster & Foster
Brad Heinrichs, Actuary, distributed the Valuations to the Board and opened with a discussion of the
funding requirements, which increased 10+%, due to negative investment returns. The four-year
returns (smoothed) were also negative. There was no turnover in the last year, which also adversely
affects funding costs. He noted that the funding is expressed as a percentage of payroll, as now
required by the Division of Retirement. Since the payroll decreased, the cost expressed as a
percentage was greater than if the total payroll had increased as expected (but the associated dollar
cost would be less). Mr. Heinrichs continued by discussing the market and actuarial value of assets;
the market value is over 20% lower than the actuarial value of the assets. Since the Division of
Retirement requires that the actuarial value can't be either 20% higher or lower than the market value,
this ratio also adversely affected funding (2.1 % of the 10.7% increased funding cost). The increased
dollar funding cost for the year ending September 30, 20 II will be approximately $125,000. The fund
has a lot of unrecognized investment losses, which will continue to result in increased funding
requirements. On a positive note (from a funding standpoint), the salary increases in the last year were
less than expected, which helped the funding cost.
Next, he pointed out other items of note: that the market value of assets had decreased in the past year,
while the liabilities have stayed flat or increased slightly, which is the opposite of the desired result.
Another loss was the payout resulting from the claim by retiree Elizabeth McBride. The Actuary also
pointed out that the $ISmillion present value of the liabilities represents all the costs required to totally
General Employees' Pension Board of Trustees
Minutes - Special Meeting
May 10, 2010
Page 2 of2
payout the benefits earned to this point and due in the future; most plans are not fully funded to this
extent. This plan's current funding percentage is 79.4%, which is about average when compared to
other public plans in the State. City Manager Barlow asked about the increase in the number of
beneficiaries and was told this was related to a death of a retiree with a beneficiary or survivor benefit.
Member McKinney made a motion to approve the 2009 Valuation; Member Laramore seconded the
motion, which passed unanimously.
STAFF REPORTS, DISCUSSION, AND ACTIONffRUSTEES' REPORTS, DISCUSSION,
AND ACTIONIREQUESTS FROM THE PUBLICIEMPLOYEES PRESENT
The Board and consultants discussed the continued impact of the plan remaining with Principal, with
relation to the sub-par investment returns as a result of Principal's asset allocation (heavily in fixed
income). Mr. Heinrichs reported that another plan he works with is in the same position and suggested
that if the plans worked together in their effort to separate from Principal, it might save money and
create greater concern to Principal (an inducement to settle).
Discussion continued regarding separation from Principal now and how soon the plan would recoup
the monies this would cost. Principal would keep all assets they determine to be needed to purchase
annuities for the retirees under the benefit index, and the remainder of the assets would then be
refunded. Because Principal would keep more money than needed for the purchase of the annuities,
the City's pension costs would increase dramatically. The Chairman recommended a joint special
meeting with the Police Board to discuss immediate options; the meeting could be scheduled on June 7
at 9:30 a.m. before the already scheduled quarterly meeting on that date, which would ensure that the
Attorney, Actuary, and Consultant would be present.
The Plan Administrator reported that another request from the IRS dated April 22, 20 I 0 had been
responded to for the determination of qualification and the Yoluntary Compliance Program (YCP).
On the YCP, a form was sent to have the Mayor execute two copies, with the statement that one copy
would be returned upon execution by the IRS, which sounds as though this part of the filings will soon
be successfully completed.
ADJOURNMENT
Member Hilton made a motion for adjournment, which was seconded by Member Brackin; the motion
passed unanimously. The meeting was adjourned at 11 :00 a.m.
Respectfully Submitted:
Approved:
~
Sheila Hutcheson
Plan Administrator
~/~~.
Glgl Bennmgton, ChaIrman
General Employees' Pension Board