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06-07-2010 Police Pension Board of Trustees Minutes - Quarterly Meeting June 7, 2010 Page I of 4 CITY OF EDGEWATER POLICE OFFICERS' PENSION BOARD OF TRUSTEES QUARTERLY MEETING MINUTES Monday, June 7,2010 CALL TO ORDER! ROLL CALLIDETERMINATION OF A QUORUM The Edgewater Police Officers' Pension Board held its quarterly meeting on Monday, June 7, 2010 in the City Hall Conference Room at the City of Edgewater, Florida. Members Present: Dan Blazi Ferd Heeb Gary Conroy Lawrence Leaf Kevin Seymour H. Lee Dehner Sheila Hutcheson Mike Welker, Jack Evatt, The Bogdahn Group Brad Heinrichs, Foster & Foster Donna Looney, Personnel Director Julie Christine, Personnel Department Tracey Barlow, City Manager Members Absent: Plan Attorney: Plan Administrator: Consultants: City Staff: Chairman Blazi called the meeting to order at I :29 p.m. The Administrator called roll and there was a quorum with four members present. APPROVAL OF MINUTES - March 15, 2010 Quarterly Meeting and May 10, 2010 Special Meeting Member Heeb made a motion to approve the minutes of the March 15, 2010 quarterly meeting and May 10, 2010 special meeting; Member Leaf seconded the motion, which passed unanimously on a roll call vote. NEW BUSINESS Principal Supplemental Service Agreement - preparation of 1099-Misc. forms The Administrator reported that the City Finance Director had advised that the City's auditors said that 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. Member Heeb made a motion to decline having the services provided by Principal as outlined in the Service Agreement; Member Leaf seconded the motion, which passed unanimously on a roll call vote. OLD BUSINESS - None. REPORTS (ATTORNEY/CONSULTANTS) I. The Bogdahn Group, Performance Consultant Police Pension Board of Trustees Minutes - Quarterly Meeting June 7. 2010 Page 2 of 4 · Quarterly report - March 3 I, 20 10 Mike Welker opened by discussing 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 $7,076,867 as of March 3 I, 2010, an increase from the assets of $6,878,164 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 exposure to stocks. The return for the quarter was 3.83% (net and gross, since it cannot be determined what Principal's fees are), outperforming the index. The fiscal year-to-date return was 6.95% and the one-year return was 29.89%. Over the long term (three years, five years, and back to 2000), Principal has consistently underperformed. This is attributed to the allocation of the majority of the assets in fixed income investments; additionally, Principal has underperformed the benchmark for the fixed income segment (where most of the fund is invested). 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 185, 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. 2. H. Lee Dehner, Plan Attorney · Consideration of fee increase ($325/hour for legal services; $1 62.50/hour travel time) as of July 1,2010, with 4% annual increase each year, beginning July 1,2011 Mr. Dehner reported that the firm's fees had not increased in over three years and that the automatic annual increase had been requested by some Boards. The fee structure will apply to all the firm's clients. Member Heeb made a motion to approve the fee schedule of $325/hour for legal services; $162.50/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 Conroy seconded the motion, which passed unanimously on a roll call vote. At Member Heeb's request (since he had not been in attendance at the joint meeting earlier in the day), Attorney Dehner summarized the discussion that had occurred at that meeting. 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 from only normal retirement and disability public safety retirees to all public plan retirees; 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. Mr. Dehner concluded his report with a reminder that Financial Disclosure forms have to filed by July 1,20 J 0 and all the Board members were aware of this. Police Pension Board of Trustees Minutes - Quarterly Meeting June 7, 2010 Page 3 of 4 3. Sheila Hutcheson, Plan Administrator · Preparation of terminated vested statements by Foster & Foster ($150/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 $] 50/statement. The statements ensure that the member knows that hislher future benefit is in accordance with the plan provisions at the time of separation. Member Heeb made a motion to authorize the Administrator to request the preparation of terminated vested statements by Foster & Foster at a cost of$150/statement; Member Leafseconded the motion, which passed unanimously on a roll call vote. City Manager Barlow asked about the on-line calculator; this service is provided by Foster & Foster at a cost to the Plan. No action was taken in this regard. · Pension fiduciary insurance (as of July 16,20]0) - Florida League of Cities renewal or through City's insurance The Administrator reported that the renewal through the Florida League would be at the same premium as last year's premium: $2,744.17. The annual premium through PRIA (via the City's insurance program) would be $2,358.35 annually guaranteed for three years (through July] 6, 20] 3). ]t is recommended that the Board approve the insurance program with PRIA. Member Conroy made a motion to award the pension fiduciary liability insurance for the Board to PRlA at an annual premium of $2,358.35, which is guaranteed for three years; Member Leaf seconded the motion, which passed unanimously on a roll call vote. · Member Blazi was re-e]ected to a new term as an elected trustee until June 5, 2012 4. Foster & Foster. Actuary Actuary Brad Heinrichs had no separate report. PROCESSED DISBURSEMENTSIRETURN OF CONTRIBUTIONS and DEPOSITS · DISBURSEMENTS I. Christiansen & Dehner, professional legal fees - $232.70, $2,390.71 2. Sheila Hutcheson, plan administration fees - $3,300.00 ($] ,1 OO/month); postage/mileage expense - $14.46 3. The Bogdahn Group, performance consultant fees, 151 quarter, 20 I 0 - $3625.00 4. Foster & Foster, professional services - $16,021.00 5. American Express (credit card statement) - $1,244.58, $2.72, $445.49 6. Dan Blazi, per diem ($244.00) and mileage ($257.06) for FPPTA conference (6/27-6/30/10) - $501.06 · DEPOSITS None Police Pension Board of Trustees Minutes - Quarterly Meeting June 7, 2010 Page 4 of 4 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; REQUESTS FROM THE PUBLICIEMPLOYEES PRESENT Member Conroy summarized for Member Heeb's benefit information on the public relations firm that he had discussed at the joint meeting earlier in the day. He said that if the Board decided to retain the firm, it would be part of the overall strategy of the Boards' approach with Principal and would be subject to Attorney Dehner's approval, in order to avoid any cause of action by Principal against the Boards. There was also mention ofa magazine by FPPTA showing information available on FPPTA's website. Member Conroy also reported that he had talked to the Finance Director in Jonesboro, Arkansas (with regard to their contract issues with Principal) and was told that their tactic, at this point, is to write a letter to Principal asking why Principal will not treat them like Auburndale and Haines City. Member Heeb asked about Member Seymour's attendance and Mr. Barlow will check with him to see if he wishes to continue to serve. ADJOURNMENT Member Heeb made a motion for adjournment, which was seconded by Member Leaf; the motion passed unanimously. The meeting was adjourned at 2:45 p.m. Respectfully Submitted: Approved: Sheila Hutcheson Plan Administrator ~7L ~