03-19-2012 General Employees' Pension Board of Trustees
Minutes - Regular Meeting
March 19, 2012
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CITY OF EDGEWATER
GENERAL EMPLOYEES' PENSION BOARD
Regular Meeting
MINUTES
Monday, March 19, 2012
CALL TO ORDER/ ROLL CALL/DETERMINATION OF A QUORUM
The Edgewater General Employees' Pension Board held its quarterly (regular) meeting on Monday,
March 19, 2012 in the City Hall Conference Room at the City of Edgewater, Florida.
Members Present: Bobby Laramore
Tim Sopko
John McKinney
John Brackin
Brenda Dewees
Members Absent: Tyna Hilton
Gigi Bennington
Plan Attorney: H. Lee Dehner
Board Administrator: Sheila Hutcheson
Consultant: Jack Evatt, The Bogdahn Group
Plan Actuary: Doug Lozen, Foster & Foster
Vice - Chairman Dewees called the meeting to order at 11:04 a.m.; there was a quorum, with four members
present at the beginning of the meeting. Member Laramore arrived at 11:32 a.m.
APPROVAL OF MINUTES - Quarterly Meeting - December 12, 2011
Member McKinney made a motion to approve the minutes of the December 12, 2011 quarterly meeting;
Member Sopko seconded the motion, which passed unanimously.
NEW BUSINESS /OLD BUSINESS - None.
REPORTS (ATTORNEY /CONSULTANTS)
Doug Lozen, Foster& Foster (F &F), Actuary
Presentation: October 1, 2011 Actuarial Valuation
Mr. Lozen presented the 2011 valuation on IPad's he issued to the Board. He stated that for the year
ending September 30, 2012, the City's funding requirement is 52.3 %. Member McKinney said the City
will use the prepaid contribution of $155,694 to help fund the $530,000 cost for FY11 /12. The cost was
about $450,000 for the year ending September 30, 2011; for the year ending September 30, 2013, the
City's cost will be 72.8% (about $750,000). The poor investment return for 2011 attributes to this big
increase in the percentage of payroll cost. The investment loss in the past year has been about $1.3million.
Additionally, the pensionable payroll has decreased. The 2011 market value of assets is $11,351,366, and
the total present value of accrued benefits in $15,471,509. The plan's funded ratio 73 %, which is the
General Employees' Pension Board of Trustees
Minutes - Regular Meeting
March 19, 2012
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comparison/ratio of the market value of assets to the present value of accrued benefits. A funded ratio of
80% is the desired point. As of today, the funded ratio would be in the low 80% range, which is very
good. The City's cost in a closed plan is high when expressed as a percentage of payroll, because the
payroll base declines as members retire. Mr. Lozen is asking the State to recognize this with closed plans,
and allow the cost for closed plans to be shown as a dollar amount rather than a percentage. He then
reviewed the four -year smoothing of returns, noting that the $3.2million loss from 2008 will drop off next
year, which should result in a positive four -year average.
Member McKinney made a motion to approve the 2011 Valuation; Member Sopko seconded the motion,
which passed unanimously.
Declaration of returns
The Attorney explained the statutory requirement that the Board declare the expected returns based on
advice from its investment consultants in conjunction with the valuation. In this regard, Jack Evatt,
Performance Consultant with The Bogdahn Group, was asked to provide his recommendation, which was
that it is reasonable that the 7.5% actuarial assumption will be reached in the next year, over the next
several years, and over the long term.
The Board discussed the historical returns with Jack Evatt and the impact of lowering the assumed rate of
return.
Member McKinney made a motion to accept the consultant's recommendation for the declaration of
returns: that the 7. 5% actuarial assumption will be reached in the next year, over the next several years,
and over the long term thereafter; Member Laramore seconded the motion, which passed unanimously.
The Administrator said she had the letter in this regard for execution and distribution to the State Division
of Retirement, City Manager, and Actuary.
Jack Evatt, The Bogdahn Group, Performance Consultant
Quarterly Report - December 31, 2011
Jack Evatt opened by discussing the market environment for the fourth quarter, as outlined in the report
he distributed to the Board. He reported that the fund had $12,069,673 as of December 31, 2011,
compared to $11,509,109 as of September 30, 2011. At the end of February, the fund continued to grow
to $12.7million. The return for the quarter was 6.275% (net and gross, since it cannot be determined what
Principal's fees are), out - performing the index. He then discussed the asset allocation used by Principal
and the number of managers used, commenting on the performance of the various sectors.
Discussion: investment options with Principal; rebalancing of assets
Mr. Evatt distributed information on current investments and recommended investment options with
Principal, as follows:
General Employees' Pension Board of Trustees
Minutes - Regular Meeting
March 19. 2012
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Asset Allocation Changes
Asset Class Current Weight Proposed Tar:et Proposed Weight
Domestic Equity 44.6% 45.0% 45.0%
International Equity 9.0% 15.0% 15.0%
Domestic Fixed Income 42.3% 35.0% 35.9%
Real Estate 4.1% 5.0% 4.1%
Contribution Changes
Asset Class Current Weight Proposed Weight
Domestic Equity 31.6% 45.0%
International Equity 8.4% 15.0%
Domestic Fixed Income 60.0% 40.0%
Real Estate 0.0% 0.0%
He discussed both the reallocation of the current fund and the allocation of future contributions. The
change in some of the investments should result in positive performance in relation to the benchmarks, by
reducing the fixed income exposure and increasing the equity investments. Member Dewees clarified that
there are two directions to Principal: one direction is for the allocation of the current funds and the other
is for the investment of future contributions. She also asked about the international equity investments
and whether or not this has stabilized. Mr. Evatt pointed out that the allocation is for a long -term
investment strategy, not just looking at the current environment. The Bogdahn Group recommends a
60 %/40% allocation in stocks and fixed income investments, respectively.
Member McKinney made a motion to rebalance the portfolio in accordance with the recommendations
from The Bogdahn Group dated March 19, 2012; Member Brackin seconded the motion, which passed
unanimously.
H. Lee Dehner, Plan Attorney
Legislative update
Mr. Dehner advised that the legislative session adjourned March 9, 2012 and there was no pension
legislation that would affect our Plan.
Status Report - Issues with Principal
Attorney Dehner summarized relevant information for the Board regarding the issues with Principal and
the status of settlement negotiations in this regard. He will keep the Board apprised of the status of
negotiations.
Sheila Hutcheson, Plan Administrator
• Linda Moore
Ms. Hutcheson said she had been notified by Principal that retiree Linda Moore's benefit had been
stopped quite a while ago when several of her benefit checks were never cashed and she could not be
reached. The Administrator discussed this with Personnel Director Donna Looney who said she would
try to get in contact with Ms. Moore through a relative who works for the City. Member Dewees said Ms.
General Employees' Pension Board of Trustees
Minutes - Regular Meeting
March 19, 2012
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Moore's brother works for her and she will ask him to contact Ms. Moore to see if her benefits can be
reinstated. Member Dewees asked if Ms. Moore would receive the past benefit payments that had been
suspended and the Administrator said she should receive retroactive payments. The Plan Administrator
said she would also check to determine if Ms. Moore's benefit is under the benefit index or direct
funding.
• Tax withholding on after -tax member refunds in conjunction with retirement
The Administrator reported that Principal continues its inconsistency in withholding tax from refunds of
member contributions to retirees who elect the refund with a correspondingly lower monthly retirement
benefit. This is reported for the Board's information. We do not recommend that the Board specify a
position, as we are not tax professionals. It may be appropriate when the plan is separated from Principal
to eliminate this option and have a PLOP instead, which does not involve the tax issues.
RAFTIFICIATION OF PROCESSED DISBURSEMENTS/RETURN OF CONTRIBUTIONS,
DISBURSEMENTS, and DEPOSITS
DISBURSEMENTS
1. Sheila Hutcheson, plan administration fees - $4,500.00 ($1500 /month); mileage
expense - $11.10
2. Christiansen & Dehner, professional legal fees, $1,058.16, $270.40
3. The Bogdahn Group, performance consultant fees, 4 quarter, 2012 - $3,625.00
4. FPPTA membership renewal for 2012 - $600.00
5. Charles Winn, commencement of normal retirement as of Dec. 1, 2011 - retiree's
lifetime with 100% survivor option, with member contribution refund
6. Christi Moeller, commencement of early retirement as of Feb. 1, 2012 - retiree's
lifetime with 100% survivor option, with member contribution refund
7. Karen Rickelman (terminated, vested membet), commencement of late retirement as
of Feb. 1, 2012 - retiree's lifetime with first 180 payments guaranteed
8. Principal, GASB 40 statement - $150.00 (deducted from assets)
9. Foster & Foster, actuarial services - $20,319.00
DEPOSITS - None
Member McKinney 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
Member McKinney asked if the authorization for release of the Annual Valuation to the Finance Director
applies to future years. The Board agreed that the Valuation could be provided to him each year for
budget preparation in advance of Board approval.
ADJOURNMENT - There was no further business and the meeting was adjourned at 12:41 p.m.
Respectfully Submitted: Approved:
Adalet
Sheila Hutcheson, Plan Administrator • • ' ' - . • . : on, Chairman
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