Loading...
06-07-2010 General Employees' Pension Board of Trustees Minutes - Regular Meeting June 7. 2010 Page I of4 CITY OF EDGEWATER GENERAL EMPLOYEES' PENSION BOARD Regular Meeting MINUTES Monday, June 7, 2010 CALL TO ORDER! ROLL CALL/DETERMINA TION OF A QUORUM The Edgewater General Employees' Pension Board held its quarterly (regular) meeting on Monday, June 7,20 lOin the City Hall Conference Room at the City of Edgewater, Florida. Members Present: Brenda Dewees Tyna Hilton Bobby Laramore Jonathan McKinney Tim Sopko John Brackin Gigi Bennington H. Lee Dehner Sheila Hutcheson Mike Welker, Jack Evatt, The Bogdahn Group Brad Heinrichs, Foster & Foster Donna Looney, Personnel Director Julie Christine, Personnel Department Members Absent: Plan Attorney: Board Administrator: Consultants: Plan Actuary: City Staff: Vice-Chairman Dewees called the meeting to order at 11 :00 a.m. Members indicated their presence; there was a quorum, with four members present at the beginning of the meeting. Member McKinney arrived at II :02 a.m. APPROVAL OF MINUTES - March 15, 20 I 0 Quarterly Meeting; May 10, 20 I 0 Special Meeting Member Hilton made a motion to approve the minutes of the March 15, 2010 Quarterly Meeting and the May 10, 2010 Special Meeting; Member Sopko seconded the motion, which passed unanimously. NEW BUSINESS I . Discussion on actuarial services - Principal service agreement This item was included on the agenda at the request of Member Dewees after the last quarterly meeting. The discussion had been that Principal didn't lower their costs when the Board engaged Foster & Foster, and whether or not Principal should continue to provide any actuarial services. It was the recommendation of both Foster & Foster and the Administrator that there should be only one set of actuarial reports and that should be by the firm retained by the Board. Additionally, at the time that the Board retained Foster & Foster, Principal was notified that actuarial services would no longer be expected from Principal. 2. Principal Supplemental Services Agreement - preparation of 1 099-Misc. forms The Administrator reported that the City Finance Director had advised that the City's auditors said that General Employees' Pension Board of Trustees Minutes - Regular Meeting June 7. 2010 Page 2 of4 consultants to the Pension Plans should be issued 1099-Misc. forms by Principal. When Principal was contacted in this regard, they sent a service agreement for consideration/execution. The agreement specifies that the cost would be $175.00/hour. It was noted that the consultants do not require this document for their tax filing. The consensus of the Board was to decline to engage this service by Principal. OLD BUSINESS Member Hilton asked about the status of Attorney Dehner's demand letter to Principal for reimbursement of the costs associated with the claim filed by retiree Elizabeth McBride. Mr. Dehner said that Principal's response was that they will not honor the request and that the Board's alternative would be to file suit. Member Dewees asked what should be done; the Attorney said he has a similar situation in New Smyrna Beach and he is conferring with local attorneys on that case, and will also ask the attorneys' opinion with respect to this issue. REPORTS (ATTORNEY/CONSULTANTS) I. Foster & Foster. Actuary Brad Heinrichs, Actuary, had no separate report. 2. The Bogdahn Group, Performance Consultant . Quarterly report - March 31, 2010 Mike Welker opened by discussing the international indices and U.S. indices, as shown in the quarterly performance report, and said that smaller cap investments performed better for the past year. He also noted the bonds' returns, stating that junk bonds performed best for the past year and the past quarter. Since the end of March, this trend has been reversed, with higher quality investments performing better than those of lower quality. The fund assets were $12,118,329 as of March 31,2010, an increase from the assets of $11,695,148 on December 31, 2009. Mr. Welker stated that Principal has never changed the stocks/bonds allocation in the five+ years he has worked with the plan, maintaining over 50% in bonds, instead of increasing the exposure to stocks. The return for the quarter was 4.43% (net and gross, since it cannot be determined what Principal's fees are), outperforming the index. The fiscal year-to-date return was 7.0]% and the one-year return was 33.86%. Over the long term (three years, five years, and back to 2000), Principal has consistently underperformed. This underperformance is as a result of the majority allocation of the assets to fixed income investments, in which Principal has underperformed the benchmark. Mr. Welker concluded by noting that a significant portion of the bonds invested in by Principal are sub-grade bonds, which is in violation of Florida Statutes, Chapter 112, and recommended that Attorney Dehner comment on this in the telephone conference scheduled at 4:00 p.m. between the Police and General Boards (and their consultants/attorneys) and Principal. 3. H. Lee Dehner, Plan Attorney · Consideration of fee increase ($325/hour for legal services; $162.50/hour travel time) as of July 1,20]0, with 4% annual increase each year, beginning July 1,20]1 Mr. Dehner reported that the firm's fees had not increased since April 2007, and that the automatic annual increase had been requested by some Boards. The fee structure will apply to all the firm's clients. The General Employees' Pension Board of Trustees Minutes - Regular Meeting June 7, 2010 Page 3 of4 Board, in its discussion, commended Mr. Dehner and noted that his continued services are necessary to the Board in its actions with respect to the Principal contract and to the plan once it is separated from Principal. Member Hilton made a motion to approve the fee schedule of$325/hour for legal services; $I62.50/hour travel time as of July 1, 2010, with a 4% annual increase each year, beginning July 1, 2011 and to authorize execution of the contract amendment by the Chairman and Secretary; Member Laramore seconded the motion, which passed unanimously. With respect to the many Florida pension bills that were filed during the recent legislative session, Attorney Dehner advised that none of the proposals that could have affected this plan passed. The worst proposal that would have affected this plan was the bill which would have reduced the maximum pension benefit and included a provision that compensation for benefit purposes would have been calculated on base pay, rather than on compensation as defined in the local law plan. Next, Mr. Dehner discussed the federal bill, HELP -2, on which he has previously reported. There is some good news in that the proposed bill would expand the $3000 pre-tax treatment of retiree insurance premiums (currently only for public safety retirees) to all public plan retirees (those that retire at normal retirement or upon disability); would allow premiums to be remitted direct to insurance companies; and would index the $3000 so that it would increase periodically. This bill may be passed by the end of 20 10. The Attorney next advised the Board that the IRS had said they would have surveys out by the end of2009, but they are not yet out. The Board needs to be sure to advise Mr. Dehner right away if a survey is received as it is mandatory and has a time frame for response. The report concluded with a reminder that Financial Disclosure forms must be filed by July 1,2010; the Board members were all aware of this. 4. Sheila Hutcheson, Plan Administrator · Preparation of terminated vested statements by Foster & Foster ($1 SO/statement) The Administrator advised that most plans obtain a statement of future benefits for terminated vested members at the time of separation from the City. The charge by Foster & Foster is $1 SO/statement. The statements ensure that the member knows that hislher future benefit is in accordance -with the plan provisions at the time of separation. It was the Board's consensus to have Foster & Foster provide the terminated vested statements as discussed. PROCESSED DISBURSEMENTS/RETURN OF CONTRIBUTIONSIDEPOSITS DISBURSEMENTS ]. Sheila Hutcheson, plan administration fees - $3,300.00 ($11 OO/month); postage/mileage expense - $11.30 2. Christiansen & Dehner, professional legal fees - $232.70, $2,100.71 3. The Bogdahn Group, performance consultant fees, 1st quarter, 2010 - $3625.00 4. Foster & Foster, professional services - $16,065.00 5. Joe Manzi, commencement of retirement as of April 1,20 I 0 - retiree's lifetime with 66 &2/3% survivor option, with refund of member contribution 6. Curtis Oelrich (terminated, vested employee) - commencement of early retirement as of May 1,2010 retiree's lifetime option 7. Tyna Lynn Hilton, commencement of retirement as of February 1,2010 - retiree's lifetime with 100% survivor option, with refund of member contribution General Employees' Pension Board of Trustees Minutes - Regular Meeting June 7,2010 Page4of4 DEPOSITS None Member Sopko made a motion to approve the processed disbursements/return of contributions and deposits; Member Laramore seconded the motion, which passed unanimously. TRUSTEES', STAFF, EMPLOYEES', and PUBLIC REPORTS, DISCUSSION and ACTION None. ADJOURNMENT Member Hilton made a motion to adjourn the meeting; Member Laramore seconded the motion, which passed unanimously. The Chairman adjourned the meeting at 12:00 p.m. Respectfully Submitted: Approved: ~~-- Sheila Hutcheson, Plan Administrator