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09-14-2015 CITY OF EDGEWATER POLICE OFFICERS' PENSION BOARD QUARTERLY MEETING MINUTES City Hall Council Chambers Monday September 14, 2015 at 1:30PM TRUSTEES PRESENT: John Tarr David Arcieri Lawrence Leaf Larry Brinson TRUSTEES ABSENT: James Morey OTHERS PRESENT: Ken Harrison, Board Attorney Ferrell Jenne, Plan Administrator Jack Evatt, Investment Consultant John McKinney, Finance Director Donna Looney, Personnel Director 1. Call to Order John Tarr called the meeting to order at 1:30PM. 2. Roll Call -As reflected above. 3. Public Comment.- None. 4. Approval of Minutes The minutes from the July 29 2015 quarterly meeting were approved upon motion by David Arcieri and second by Larry Brinson, motion carried 4-0. The minutes from the September 3, 2015 special meeting were approved upon motion by David Arcieri and second by Lawrence Leaf, motion carried 4-0. 5. New Business a. Sugarman & Susskind contract. i. The board formally approved the contract for Sugarman & Susskind to provide legal services. Ken Harrison thanked the board. Ferrell Jenne stated the contract had been executed and the original was given to Mr. Harrison. b. Discussion of the City's Human Resource Department being copied on Board documents and correspondence. i. John McKinney stated that Donna Looney had approached him and asked if HR could be copied on documents approved or discussed by the board. ii. John Tarr commented this was brought up in the past and the decision was made that if a City employee wanted information they could show up at the board meetings or look at the posted agenda rather than adding an additional step of copying documents. iii. Ken Harrison asked what documentation the City would be looking for that wasn't made available at the meeting. John McKinney provided the example of a member calling Ferrell Jenne to initiate retirement, the City also needs to be informed. Ferrell Jenne 1 stated that when a member begins the retirement process, she sends a request to the City for salary information, therefore, informing them of the change in member status. iv. John McKinney stated that in the past when they asked for documents, they were told the board would need to approve the sharing of the information, whether it be the annual report, insurance, etc. v. Ken Harrison commented that the board could make a motion to allow the sharing of information between meetings. The board voted to authorize the Chairman to approve documentation transmittal to the City on a case by case basis upon motion by David Arcieri and second by John Tarr, motion carried 4-0. c. Discussion of Plan Administrator's attendance at every meeting. i. John Tarr initiated discussion on the need to have the plan administrator attend each meeting. Ken Harrison stated the contractual relationship suggests the administrator will attend each meeting. Ken recommended the board have the administrator at each meeting to take minutes and serve as the liaison. ii. David Arcieri asked for clarification of the out of pocket travel expenses billed to the plan, and stated he thought the contract included all fees. Ferrell Jenne explained that travel expenses are not included in the fees per the contract and all out of pocket travel fees incurred are shared among all three Edgewater Plans; Police, Fire, and General, as well as any other clients she visits on the same trip. iii. Ken Harrison commented the plan had an unusual contract since the valuation report was included in the administration fee. David Arcieri stated that when they were accepting bids for plan administration, Foster & Foster stated they would handle TPA services for free. John McKinney explained that at one time Foster & Foster's valuation report fees were different for each of the Edgewater plans, so Brad Heinrichs agreed to make the costs consistent among all three boards and include TPA services. Ferrell Jenne confirmed the fee structure and further explained to the board that any additional actuarial services other than the valuation report were billed separately by Foster & Foster. iv. The board agreed to continue having the plan administrator attend each meeting. d. Discussion of holding a special plan restatement meeting. i. David Arcieri commented there were numerous amendments, not one clean document. David stated the plan document also contained items that never went before Council. Ken Harrison stated he would work on a plan restatement and review all the documents David Arcieri provided. Ken indicated if there were no problems with the documents a draft plan restatement will be ready at the next quarterly meeting. ii. David Arcieri requested that a special meeting be held so the trustees could review all the amendments and give Ken Harrison direction on what should be included in the plan restatement. Note: Donna Looney arrived at the meeting at 1:55pm. 2 iii. The board discussed possible dates for the special meeting and tentatively decided on September 23, 2015, at 1:OOpm. Ferrell Jenne was directed to confirm that Chambers would be available, and was asked to handle the agenda as well as posting the meeting notice, but her attendance was not needed. 6. Old Business a. Discussion of Supplemental Benefit Cost Study. i. John Tarr commented that the City was trying to save money and thought it would be difficult to ask them to fund an additional 2.0% of payroll for the supplemental benefit. The board voted to table the discussion of a supplemental benefit until the next collective bargaining negotiations upon motion by Larry Brinson and second by David Arcieri, motion carried 4-0. 7. Reports a. The Bogdahn Group, Jack Evatt, Investment Consultant. i. Quarterly report as of June 30, 2015. 1. Jack Evatt reported that investment returns during the second quarter were flat to barely positive for equity and negative for fixed income. Jack briefly reviewed the market environment and how each manager performed. 2. Total market value of the fund was approximately $8.5M. 3. Net earnings for the quarter were -0.69%, underperforming the policy benchmark of-0.48% by -0.21%. 4. Fiscal-year-to-date net earnings were 5.53%, outperforming the benchmark of 4.09% by 1.44%. 5. Since inception (10/1/2000) net earnings were 4.82%, underperforming the benchmark of 4.87% by 0.05%. 6. Jack Evatt discussed four year smoothing and stated the low returns for 2010-2011 will drop off giving the portfolio a boost. 7. Ken Harrison asked Jack Evatt to review the compliance checklist and informed the board the checklist ensures that the fund is in compliance with the IPS. 8. Jack Evatt reviewed the history of the total plan return performance and stated he didn't have control over the asset allocation until after the plan terminated The Principal Group. 9. Ken Harrison asked about rebalancing. Jack Evatt stated the plan had broad restrictions and no rebalancing was needed. Jack Evatt commented that once the plan restatement was done he would recommend tightening investment restrictions. b. Sugarman & Susskind, Ken Harrison, Board Attorney. i. Legislative Update. 1. Senate Bill 172 deals with the allocation of excess State monies. Per statutory provision an attempt should be made to reach an agreement of allocations between the sponsor and plan. If there is no agreement, 50% will go to the City and 50% to the pension fund, which is required to go into a supplemental account for each member. The share plan needs to be amended into the Ordinance by October 1, 2015 or the expiration of the CBA agreement. A budget 3 must also be in place. David Arcieri commented they were currently in negotiations and the current CBA expires October 1, 2015. It was David's belief the City used all State monies in the past. Ken Harrison stated language had to be included in the CBA indicating mutual agreement of how the State money will be allocated. 2. The board discussed the proposed budget for FY 2015- 2016 which was done in conjunction with Senate Bill 172. Ferrell Jenne briefly reviewed each expenditure type and how the budget amounts were derived. The board directed Ferrell Jenne to add an expenditure line for the IRS determination letter and increase the amounts for the IME physician fees to $4,000, school/travel/dues to $5,000, and miscellaneous to $5,500. The board voted to approve the proposed budget for FY 2015-2016 as amended upon motion by Larry Brinson and second by David Arcieri, motion carried 4-0. 3. Senate Bill 242 mandates all local law plans must utilize the FRS mortality tables for actuarial calculations effective January 1, 2016. The new mortality table will be incorporated into the October 1, 2016 valuation report and since this table is more conservative it will most likely have a funding impact on the plan. ii. Ken Harrison discussed the IRS Determination Letter and recommended the board get a Determination Letter done this cycle. The board has until January to do this. iii. The board reviewed and discussed the disability applications prepared by Ken Harrison. 1. David Arcieri asked who verifies the information on the disability application. Ken Harrison stated the board could hire a private investigator but they should first start with workers compensation information and an independent medical examination can also be done. Ken briefly reviewed the disability process with the board. The board voted to accept the disability application with changes mentioned by Ferrell Jenne upon motion by David Arcieri and second by Lawrence Leaf, motion carried 4-0. The board voted to have Sugarman & Susskind start the IRS Determination Letter process as presented upon motion by David Arcieri and second by Lawrence Leaf, motion carried 4-0. 8. Consent Agenda The consent agenda was approved as presented upon motion by Larry Brinson and second by Lawrence Leaf, motion carried 4-0. 9. Staff Reports, Discussion, and Action a. Fiduciary Liability Insurance Policy. i. Ferrell Jenne presented the fiduciary liability policy to the board for review. 4 The board voted to bind the fiduciary liability policy as presented upon motion by David Arcieri and second by Larry Brinson, motion carried 4-0. b. 2016 Meeting dates. i. Ferrell Jenne presented the board with the proposed 2016 meeting dates. March 14th, June 13th, September 19th, and December 12th The board voted to approve the 2016 meeting dates as presented upon motion by Larry Brinson and second by Lawrence Leaf, motion carried 4-0. c. Educational opportunities. i. Ferrell Jenne informed the board that the Division of Retirement was holding their 45th Annual Police Officers' and Firefighters' conference in November. John Tarr expressed an interest in attending. d. Update on Annual Report. i. Ferrell Jenne informed the board that the report was approved by the State on June 16, 2015. Ferrell briefly reviewed the historical State Monies amounts and informed the board that this year's allocation is approximately $2,300 more than last year's. 10. Adjournment The meeting adjourned at 3:20PM. 11. Next Meeting September 23, 2015 at 1:OOPM. spectfulI submitted by: Approved,by-> err II Jen e, Plan Administrator Joh arr, Chairman Date Approved By the Pension Board: �,,f- b ILA, 5