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09-11-1997 - Special . \. '-" ..""" Edgewater Firefighters' Pension Fund Special Meeting Thursday, September 11, 1997 6:36 p.m. Call to Order: The Special Meeting of the Firefighters Pension Board was called to order Thursday, September 11, 1997 by Secretary Richards at 6:36 p.m. in the Fire Administration Office. Members present were: Bill Vola, Fred Munoz, Gary Butt, Jill Landreville, and Secretary Patricia Richards. Also present were Mr. John Garrett from Foster and Foster Actuarial Service, and Lisa R. Miller, Recording Secretary. Minutes: The Minutes from the July 30, 1997 Regular Meeting were submitted for approval. Mr. Vola moved to approve the minutes as submitted. Mr. Butt seconded. Motion CARRIED 5 to O. Presentation: Mr. Garrett from Foster and Foster had not arrived at this time. The Board decided to take care of the other business before the Board until his arrival. Old Business: There was discussion regarding the State monies being withheld until the Pension Fund comes into compliance. Ms. Richards stated she spoke to Mr. Slavin and they needed to go back and have the Actuarial Report from 1996 redone with a realistic assumption, not the 8% one that was used. He also said if someone goes out on a permanent disability and they are making so much on permanent disability and then reach retirement age, the Board could not lower what they were going to get. He said there was nothing in the ordinance that would stipulate that. Ms. Richards stated Mr. Slavin stated we needed to get a statement from Foster and Foster saying that we either don't have anyone on disability and if we do have anybody on disability that they are figuring it out that their pension is going to be a the higher rate. She added these were the things that were holding up the State money. Ms. Richards noted the IRS things that were listed in Mr. Slavin's letter should be referred to Mr. Sugarman to be addressed in the ordinance. She stated Mr. Slavin said the IRS could come back on the Board if they do no meet these standards and as far as the tax qualified, under item number 2 of Mr. Slavin's letter, he will be sending a letter to all of the Pension Boards telling them they are not meeting this standard and all pension board members will have to sign off on this letter and send it back to him. She added this would mean the Board was taking personal responsibility for not meeting the IRS standards. Mr. Munoz stated if they lost their tax qualified standing then the money the City puts in for the firefighters would be taxable. Ms. Richards stated item number 3 covers denied benefits. She added the process is set forth in the Summary Plan Description and since the Summary Plan Description is not a legal document is has to be in the ordinance for them to be in compliance. Ms. Landreville moved to get Foster and Foster to write a letter to amend the plan document to comply with ADA and refigure the 1996 actuarial valuation with a realistic assumption. Mr. Vola seconded. Motion CARRIED 5 to O. Mr. Munoz moved to have Mr. Sugarman do the item numbers 2,3,4 and IRS issues that Mr. Slavin has brought up and suggest Ordinance language amendments including a review of denied benefits and authorize Mr. Sugarman to contact Charles Slavin as necessary for any clarification. Mr. Vola seconded. Motion CARRIED 5 to O. New Business: Mr. Vola requested the subject of the checkbook be tabled until after discussion with Mr. Garrett from Foster and Foster. The next item on the agenda was the election of the Chairman. Mr. Vola moved to nominate Mr. Butt as Chairman. Motion died for a lack of a second. Ms. Landreville moved to nominate Mr. Vola as the new Chairman. Mr. Munoz seconded. Mr. Butt moved the nominations be closed. Mr. Munoz seconded. Motion CARRIED 5 to O. Mr. Munoz discussed GASB 25 and stated Foster and Foster needed to be informed that actuarial information and pension plan data done for the Board needed to meet that format to be in compliance with government accounting compliance board regulations. Mr. Vola moved to ask Foster and Foster to be in compliance with GASB 25 when they turn in actuarial information. Mr. Munoz seconded. Motion CARRIED 5 to O. Ms. Landreville brought up an idea that was presented to her by some of the firefighters in the membership called a DROP Plan that extended the retirement time and it was discussed. It was noted this was becoming a hot issue so it should be coming up at some of the pension schools in the near future where it can be investigated. There was discussion regarding the age of retirement and the benefits that would be received upon retirement. The Board called a recess at 7: 15 p.m. The meeting was called to Order at 7:35 p.m. 1 . . "- """"" Firefighter Pension Fund Regular Meeting 09/11/97 Page 2 Presentation: Mr. John Garrett from Foster and Foster stated he was here to discuss the way the plan was heading. He added it was getting a little more complicated than a plan this size would usually be and it could be simplified. There was discussion regarding the status of the pension fund's investment managers. Mr. Garrett stated studies have been done that show a plan that is less than $10,000,000 should be in commingled funds also known as an institutional mutual fund. He stated there is only one company that handles funds of this size and that is Sun Trust who charges 75 basis points for management and custody. It was noted Smith Barney was going to charge a flat one percent (100 basis points). He added that there were two providers: Barnett and Sun Trust. Barnett has been bought out by Nation's Bank and they are not recommending them because they are pulling out of the business of custody for any municipal clients in the State and other providers did not meet the Chapter 175 requirements. He stated the returns for the funds they monitor of their clients who use this fund are typically in the top 1/3 of the scale which Foster & Foster uses to measure their performance. Mr. Garrett stated as inefficient as going with three managers with Smith Barney is, it is preferable to going with one of the large insurance companies like Principal Mutual, Travelers, or AEfNA. He added it is not even visible what you are paying for the services you are getting and you don't know what market value is with these companies. It was questioned if a company like Sun Trust would handle everything if someone went out on disability, paying retirees, checking account, w-2's, etc. Mr. Garrett stated the are very familiar with how to do this. There was discussion regarding having a checkbook and it was noted with Sun Trust you did not have to have one, just two members signing and authorization. There was discussion regarding asset allocation. It was noted if the Board went with a new company they would need to provide the new company with a copy of the investment policy guidelines. There was discussion regarding current contracts with Smith Barney and contracts that were being reviewed by Mr. Sugarman that have not been signed yet. Mr. Garrett was informed of the Board's actions regarding the State monies and what needed to be done to meet Mr. Slavin's requirements that had been discussed before his arrival. It was noted that a letter had been sent from Mr. Mulfinger's office to Mr. Slavin that addressed the assumption rate. Mr. Garrett stated they didn't want to do the 1996 actuarial valuation again if they didn't have to, to wait and see what the letter did, they didn't want to change that assumption, otherwise it would drive the cost up. Mr. Garrett stated he didn't come there to get anyone fired, but he believed there was a simpler way to do this. There was discussion regarding having a presentation from Sun Trust. Mr. Garrett stated he would check to see if there was a minimum account fee. Mr. Butt moved to have Sun Trust come and give a presentation to the Board and have Chairman Vola contact Mr. Sugarman to tell him to stop working on the contracts with Smith Barney. Mr. Vola seconded. Motion CARRIED 5 to O. There was discussion with Mr. Garrett regarding the DROP plan discussed earlier. There was discussion regarding GASB. There being no more business to come before the Board at this time, Mr. Butt moved to adjourn. Mr. Landreville seconded. Meeting adjourned at 8:40 p.m. Minutes respectfully submitted. Lisa R. Miller Recording Secretary. 2