03-16-2015 CITY OF EDGEWATER GENERAL EMPLOYEES' PENSION
BOARD QUARTERLY MEETING MINUTES
City Hall Council Chambers
Monday, March 16, 2015 at 11 :OOAM
TRUSTEES PRESENT: Chris Mathewson
Brenda Dewees
Tyna Hilton
TRUSTEES ABSENT: None
OTHERS PRESENT: H. Lee Dehner, Board Attorney
Doug Lozen, Board Actuary
Ferrell Jenne, Plan Administrator
Jack Evatt, Investment Consultant
Mark Rhein, Salem Trust Company
Brian Bizzell, Salem Trust Company
Tracey Barlow, City Manager
Julie Christine, HR Department
Donna Nichols, City Secretary
John McKinney, Finance Director
1. Call to Order Brenda Dewees called the meeting to order at 11:04 AM.
2. Roll Call -As reflected above.
3. Public Comments— None.
4. Approval of Minutes
The minutes from the December 15, 2014 quarterly meeting were approved upon motion
by Tina Hilton and seconded by Chris Mathewson, motion carried 3-0.
5. New Business
a. Discussion of Senate Bill 1128.
i. Effective date.
1.The effective date appears to be the date of the collective
bargaining agreement since it is later than July 1, 2011. For
accrual time, collective bargaining agreement date is September
30, 2013.
1. Tracey Barlow commented that the collective bargaining
agreement is silent on this issue. A letter was drafted
because this issue affected two (2) members who were
retiring and having benefit calculations done.
2. Lee Dehner stated that this needs to be incorporated
into the plan document and he will use the letter to draft
the ordinance.
ii. Replenishment.
1.Discussion if hours can be replenished or not.
1. Lee Dehner commented that the Division allows for
replenishment and most plans he works with allow for
replenishment.
2. Tracey Barlow commented that there was not a
replenishment due to correspondence he had with the
Division of Retirement.
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3. Tyna Hilton stated that she doesn't want to take a benefit
away from the members and feels that the Plan should
provide for replenishment.
4. Tracy Barlow stated he can have Finance run a report
on the cost to allow replenishment.
5. Tyna Hilton stated she would like Finance to run the
analysis.
6. Chris Mathewson stated he would like to see
replenishment allowed.
7. Tracey Barlow commented that he can check if past
members would be affected should replenishment be
allowed.
8. Tracey would like to compare a snapshot of all three (3)
plans since City Counsel likes to keep plan provisions
similar between all plans.
The Board voted to allow replenishment, and have Lee Dehner draft the ordinance for the
first readinq upon motion by Tyna Hilton and second by Brenda Dewees, motion carried 3-
0.
b. Discussion of letters from Julie Christine and Donna Nichols requesting
reinstatement into the General Employees Defined Benefit Pension Plan.
i. Brenda Dewees asked if this request is allowed. Lee Dehner stated that
it is permissible.
ii. Tyna Hilton asked if this opens up the option to everyone. Lee Dehner
stated that this option would have to be given to all members in a similar
position.
iii. Tracey Barlow stated that there are the only two (2) members in this
scenario.
iv. Tyna Hilton asked who pays for the impact statement. Lee Dehner
advised the Board that the member should pay the fee for the actuarial
impact statement. Doug Lozen commented that if you can go directly to
the impact statement, the fee is $1,000. If a cost study is done and then
the impact statement, the fee will be $2,000. Lee Dehner stated his fee
will be $800 - $1,000 to amend the ordinance. Julie Christine and Donna
Nichols agree to pay the fees incurred by the actuary and attorney.
V. Tyna Hilton advised Julie and Donna that it's not a guarantee this will be
approved.
vi. Doug Lozen requested direction from the Board on the two (2) options
for calculation.
1.Cost credit savings depending on contribution amount.
1. In a defined benefit plan back to date of hire, rollover
member contributions, liability is not matched to the
rollover.
2.No impact.
1. Liability is matched up to rollover contributions.
Determine what amount of service the defined
contribution balance will buy back in the plan.
vii. Tyna Hilton commented she is having a hard time moving forward with
this request since this has not been an option for other employees.
viii. Julie Christine commented that she and Donna Nichols were influenced
by the finance director to go into the defined contribution plan, shortly
thereafter; new hires were automatically put into the defined contribution
plan with no choice for defined benefit plan.
ix. Tyna Hilton commented there were other employees who had to make
the same decision and they didn't get the option to change their mind
years down the road.
X. Julie Christine asked the Board to take into consideration the long work
history they have with the City.
xi. Donna Nichols agreed that she felt misguided and is fine with what the
Board decides.
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xii. Chris Mathewson stated this is a closed plan and he would have sought
financial direction from a professional regarding which plan was best. As
a union steward he thinks that it is a bad idea to allow reinstatement.
xiii. Julie Christine commented that there were only a handful of employees
who had to make the decision of choosing between defined benefit and
the defined contribution plan.
xiv. Brenda Dewees commented that while only two (2) employees working
for the City have had an issue with this, there may be others who are no
longer working for the City and are in the same situation. Brenda asks if
this would open up the option to them as well. Lee Dehner stated it
could.
xv. Doug Lozen commented that there would/will always be a future cost if
they were allowed to enroll in the defined benefit plan. Current plan
provisions would be locked and the actuary will determine their date of
hire based on the current plan benefit contributions. It would be $1,250 to
run options (1) and (2) previously discussed.
xvi. Brenda Dewees stated Julie and Donna should make the decision on
what information they want since they're paying the fee. Julie and Donna
agree to split the fee of$1,250 to run both options.
xvii. Lee Dehner commented this is a unique situation and the Board may
hear from others that want the same opportunity.
xviii. Tracey Barlow commented that Donna Looney indicated these were the
only two (2) employees in this same situation.
The Board approved to table the discussion of reinstatement until a full board is in place
and present upon motion by Tyna Hilton and second by Chris Mathewson, motion carried
3-0.
c. Discussion of the two (2) council appointed trustee positions.
i. Ferrell Jenne informed the Board that no applications have been
submitted.
ii. Tracey Barlow stated he would reach out to Council for help in finding
applicants.
iii. Lee Dehner advised the Board that they can recruit applicants as long as
they do not discuss issues outside a public board meeting.
d. Discussion of Salem Trust fee proposal.
i. Jack Evatt presented a fee proposal evaluation of Salem Trust and other
custodians. He briefly discussed each custodian, their services, and
associated fees.
ii. Jack stated that the list contains providers their current clients are using
and are happy with. He asks the Board to take into consideration their
level of satisfaction with the service they've been receiving from Salem
Trust.
iii. Jack's recommendation is to consider Salem Trust and Regions Bank.
iv. John McKinney stated there are no issues with Salem other than the
conversion problems previously experienced, and Salem worked with the
finance department to get them information during this time.
V. Jack Evatt commented that both Regions and Salem use the same
system so there will be consistency in the statements. Jack also
commented that there are cities that use different custodians for each of
their pension plans.
vi. Lee Dehner informed the Board that the fee for him to produce a new
contract would be approximately $700-$800.
vii. Jack Evatt reviewed the process for changing custodians. Both the
existing and new custodian coordinate the conversion with little
involvement from the Board. The process would take approximately
three (3) months or less.
viii. Lee Dehner commented that there is no termination fee.
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ix. Mark Rhein stated the contract goes back to 2010. Funding did not
happen until July 2013. He commented that Salem has a deep staff
presence in Florida. If a conversion occurs, retirees will receive two (2)
1099s, making tax preparation more complicated. Mark informed the
Board of their contract agreement which provides an automatic discount
if they are not satisfied with Salem's service.
X. Jack Evatt commented that Key Bank and Comerica are larger firms but
do not have the presence in Florida like Salem.
The Board voted to retain Salem Trust as their custodian upon motion by Chris
Mathewson and second by Tvna Hilton, motion carried 3-0.
xi. Mark Rhein stated they will give the Board a three (3) year fee guarantee
of$8,500.
6. Reports
a. Bogdahn Group, Performance Evaluator, Jack Evatt.
a. Quarterly Report as of December 31, 2014.
1. Net earnings for the quarter were 2.93%, outperforming the
policy benchmark of 2.48% by 0.45% points.
2. Since inception, the fund is at 4.80%, underperforming the policy
benchmark of 5.65% by -0.85% points.
3. Jack Evatt commented the domestic equity portfolio did well, but
fixed income managers got caught in over-weighted corporate
bonds.
4. Jack stated it was an overall good quarter.
5. The Board had no questions.
b. Change of internal control memo.
1. Joe Bogdahn sold the majority of his shares to Mike Welker. No
change in operations, moving from a family owned business to
an employee owned company. SEC requires that Bogdahn
notifies the Board via consent form.
2. Lee Dehner stated that he reviewed the memo and has no
issues with the Board executing the document.
The Board approved the execution of the Bogdahn consent form upon motion by Tvna
Hilton and second by Chris Mathewson, motion carried 3-0.
b. Foster and Foster, Board Actuary, Doug Lozen.
a. Presentation of the October 1, 2014 Actuarial Valuation Report.
1. The contribution amounts of the October 1, 2014 report are
applicable for plan/fiscal year ended September 30, 2016.
2. The Plan experienced a gain, meaning all actuarial assumptions
were exceeded in total. The primary sources of favorable
experience included an investment return of 11.0%, exceeding
the 7.5% assumption, and lower than expected increases in
salaries.
3. The total required contribution reduced from $734,663 down to
$667,550.
4. The balance due from the City reduced from $719,882 down to
$657,825.
5. There are prior investment gains that haven't been realized yet
due to the four (4) year asset smoothing. Unfunded liability is
decreasing at a good rate.
6. Doug commented that the Plan's funded ratio increased from
65% to 72% on the new GASB basis with the October 1, 2014
valuation. This explains the decrease in the City's funding
obligation.
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The Board voted to approve the October 1, 2014 Valuation Report as presented, upon
motion made by Tvna Hilton and second by Chris Mathewson, motion carried 3-0.
The Board voted the declaration of returns for the Plan shall be 7.5%, based on the
recommendation of their consultant, for the next year, the next several years, and the
long-term thereafter net of investment related expenses, upon motion made by Tvna Hilton
and second by Chris Mathewson, motion carried 3-0.
c. Christiansen and Dehner, Board Attorney, Lee Dehner.
a. Legislative Update.
1. Lee Dehner discussed current bills that will be considered at the
spring legislative session.
a. Senate Bill 534, the State will only post calculations on
their website that are required by the statute. Mr.
Dehner reminded the Board that they can post additional
calculations on the City's website which must be done
within 60 days of valuation approval.
b. Senate Bill 242, if passed, would require all local law
plans to use the same mortality table as the FRS. The
FRS table is more conservative than the current table
being used.
c. Senate Bill 224 pertains to public records notification
when doing contracts with vendors.
7. Disbursements
Disbursements were approved as stated on the agenda upon motion made by Tvna Hilton
and second by Chris Mathewson, carried 3-0.
8. Staff Reports, Discussion, and Action
a. The Board directs Ferrell Jenne to reach out to Mr. Robert Graham
regarding overpayment. An interest rate of 7.5% should be assessed if a
payment plan is not set up.
b. The Board directs Ferrell Jenne to handle the Polizzi and Bosse
retirement processing by sending all salary requests to Donna Looney
and all benefit calculations to members. Donna should be copied on the
benefit calculations in case these members have any questions.
9. Adjournment The meeting adjourned at 1:10pm.
10. Next Meetinq June 15, 2015 at 11:OOAM.
Respectfully submitted by: Approved by:
Name: Ferrell Jenne Name:
Title: Plan Administrator Title:
Date Approved By the Pension Board:
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