06-15-2015 CITY OF EDGEWATER FIREFIGHTERS' PENSION BOARD
QUARTERLY MEETING MINUTES
City Hall Council Chambers
Monday June 15, 2015, at 5:OOPM
TRUSTEES PRESENT: Dominick Fede
Justin Nickels
Scott Hopkins
Gary Butt
TRUSTEES ABSENT: None
OTHERS PRESENT: Ferrell Jenne, Plan Administrator
Ken Harrison, Plan Attorney
David Kelly, Investment Manager
Donna Looney, Personnel Director
John Thinnes, Investment Consultant
1. Call to Order Dominick Fede called the meeting to order at 4:59PM
2. Roll Call As reflected above.
3. Public Comments None.
4. Approval of Minutes
The minutes from the March 23 2015 quarterly meeting were approved upon motion by
Justin Nickels and second by Gary Butt motion carried 4-0.
5. New Business
a. Discussion of financing option for prior service time bought back.
i. Ken Harrison verified that some Florida plans have the option to buy
back time and finance the cost instead of paying for time in one lump
sum.
ii. The 457 account can be used to pay for the cost of the buyback. Ken
Harrison stated that changes like these go through the collective
bargaining unit.
iii. The board asked Ken Harrison to provide examples of other plans with
the buyback financing option. Ken stated he will provide this information
to the board prior to the next meeting.
b. Discussion of IRS DROP limitations.
i. Ken Harrison stated this goes up every year by CPI. If your DROP
balance exceeds the IRC (415 limit), the benefit cannot be paid. An
excess benefit plan can be adopted by the employer to alleviate this
issue.
ii. Ken Harrison briefly reviewed the January 2015 newsletter from his firm
regarding 415 limits to DROP accounts.
iii. Dominick Fede asked about benefit improvements since the plan is
adequately funded and performing well. Ken Harrison stated that
improvements need to be done through the collective bargaining unit.
Justin Nickels stated that the members are asking and they are just
trying to get some examples of what other Florida plans are doing. Ken
suggested a VEBA and stated that adding a COLA or increasing the
benefit multiplier is very costly, whereas, a VEBA is employee funded.
c. Discussion of Supplemental Retirement Benefit Distribution to DROP participant.
i. Ken Harrison presented a letter dated, April 10, 2015. Ken stated that a
member can take a distribution of the share account when entering the
DROP.
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d. Update on IRS Determination Letter.
i. Ken Harrison presented a letter dated, May 20, 2015, and stated that the
Chairman needs to sign the agreement so his firm can proceed with the
determination letter. Ken stated his firm has begun pulling information
and anticipates it should be filed by the next quarterly meeting.
6. Old Business — None.
7. Reports
a. Sugarman &Susskind, Ken Harrison, Board Attorney.
i. Legislative Update.
1. Senate Bill 172 passed and puts pressure on the union and
employer to work out the allocation of state money. If it goes to
impasse, 50% will go to the plan and 50% will go to the City.
Ken Harrison stated there is a complicated set of requirements
that will direct how the money should be allocated if no
agreement is made.
b. Bowen, Hanes, & Company, David Kelly, Investment Manager.
i. Performance Update as of June 11, 2015.
1. David Kelly gave a brief market overview.
2. David Kelly reviewed holdings and reported that stocks were
performing well.
3. Fiscal year-to-date (9/30/14—6/11/15) the total portfolio had
returns of 8.5%.
4. Market Value of assets was approximately 9.8M on 9/30/14, and
ended around 10.7M on 6/11/15.
5. David Kelly reviewed fixed income portfolio history and stated
that he believes this portfolio is going to start performing better.
c. The Bogdahn Group, John Thinnes, Performance Monitor.
i. Quarterly Report as of March 31, 2015.
1. John Thinnes briefly reviewed the market environment for the
first quarter, noting that investment returns were positive and all
allocations were within ranges of the IPS so there is no need for
rebalancing.
2. There were two notable trends in US domestic equities in the
first quarter of 2015. First, mid to small cap companies
outperformed large cap stocks due largely to the strengthening
US dollar. Secondly, growth stocks outperformed value stocks
throughout the large cap spectrum with large cap value stocks
finishing the quarter in negative territory.
3. Net earnings for the quarter were 3.43%, outperforming the
policy benchmark of 2.16% by 1.27% points.
4. Fiscal year-to-date net earnings were 5.84%, outperforming the
policy benchmark of 4.86%, by 0.98%.
5. Since inception the fund is at 5.50%, underperforming the policy
benchmark of 6.62% by-1.12% points.
6. John Thinnes reviewed the fixed income portfolio and stated that
he can bring in more aggressive managers but believes the way
Bowen, Hanes, & Co. is managing the fixed income portfolio is
working, even though it's a more conservative approach.
7. The board had no questions.
ii. Discussion of the revised Investment Policy Statement(IPS).
1. The IPS has been updated to include international exposure as
discussed at the prior meeting.
2. Ken Harrison stated that he reviewed the IPS and it meets all
statutory requirements. The IPS will take effect 31 days after the
board executes and files with the appropriate parties.
The board voted to approve the revised Investment Policy Statement as presented upon
motion made by Scott Hopkins and second by Justin Nickels, motion carried 4-0.
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8. Disbursements
Disbursements were approved as presented on the agenda upon motion made by Scott
Hopkins and second by Gary Butt, motion carried 4-0.
9. Staff Reports, Discussion, and Action
a. Ferrell Jenne reminded the board to get their Form 1 filed with the State no later
than July 1, 2015, to avoid fines.
b. Ferrell Jenne informed the board that Scott Hopkin's term expired May 6, 2015.
Scott commented that he would like to serve another term. Ferrell informed the
board she will let the City Clerk know so it can be put on the next Council
agenda.
c. Ferrell Jenne explained that the City binds the three pension plans for fiduciary
liability insurance. The current policy is set to expire in October 2015.
The board voted to approve the City petting quotes and binding a fiduciary liability policy,
upon motion made by Justin Nickels and second by Gary Butt, motion carried 4-0.
10. Adjournment—The meeting adjourned at 6:15PM.
11. Next Meetinq Monday, September 14, 2015 at 5:OOPM
sp ctfull s b fitted by: Approved by:
errell enne, P n dministrator Dominick Fede, Chairman
i 'b
Date Approved By the Pension Board:
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