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HomeMy WebLinkAbout2017 02 15 Consent 300 Unapproved Minutes from the November 17, 2016 Regular Meeting BOARD OF TRUSTEES AGENDA ITEM Informational ITEM 300 Consent X Public Hearings Regular February 15, 2017 Regular Meeting REQUEST: The Office of the City Clerk Is Requesting The Board of Trustees Consider And Approve The Thursday, November 17, 2016 (Rescheduled From Tuesday, November 8, 2016) Board Of Trustees Regular Meeting Minutes. ATTACHMENT(S): A. Unapproved Copy Of The Thursday, November 17, 2016 Board Of Trustees Regular Meeting Minutes (8 Pages) ûÈÈÛÙÔÏ×ÎÈû CITY OF WINTER SPRINGS,FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING--NOVEMBER 17,2016 (RESCHEDULED FROM NOVEMBER 8,2016) PAGE 2 OF 8 PUBLIC INPUT Chairperson Mundo opened "public Input". Ms. Kelly palagia, CPA, management A Budget Analyst, Finance and Administrative Services Department: discussed her time employed at the City and highlighted the dedicated efforts of the Board of Trustees that she had Witnessed. .. s, Bala `a added, "I just wanted to come in tonight and commend you folks for your service and for your sacrifices on behalf of myself and all the employees and retirees in this pension Plan." Additional brief comments. Chairperson Mundo thanked Ms. Balagia for her kind Words. Chairperson Mundo closed "Public Input„ CONSENT AGENDA CONSENT 300. Office Of The City Clerk The Office of the City Clerk Is Requesting The Board of Trustees Consider An Approve The Tuesday,August 9,2 l6 Board Of'Trustees Regular Meeting Minutes. "I MAKE MOTION THAT ACCEPTING A MEETING'S ." MOTION BY CHAIRPERSON LT SECONDED Y BOARD MEMBER TI" E. DISCUSSION. BOARD MEMBER ® AYE CHAIRPERSON t AY BOARD MEMBER S Q AYE VICE-CHAIRPERSON PA a AYE MOTION A PUBLIC HEARINGS AGENDA PUBLIC HEARINGS 400® Not Use CITY OF WINTER SPRINGS,FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING-NOVEMBER 17,2016 (RESCHEDULED FROM NOVEMBER 8,2016) � FACIE 3 OF 8 REGULAR AGENDA REGULAR 500. Finance And Administration Services Department The Finance And Administrative Services Department Is Requesting That The Board f Trustees Receive From The Bogdahn Group The Fourth Quarter Investment Return Report And To Enter Into Discussion. Mfr. Lave Vest, Senior Consultant, The Bog Jahn Group, 4901 Vineland Road, Suite 600, Orlando, Florida: expressed his pleasure with the results of the last quarter and noted, "A lot of it due to the hard work that the Board's been doing." Before beginning his presentation of the Fourth Quarter Investment Return Report, Mr. West addressed an administrative update regarding The Bogdahn Group. Mr. West indicated that The Bogdahn Croup would be undergoing a re branding process in the near future. Comments followed regarding the ownership structure and the purpose of the rebranding. Next, Mr. Nest discussed changes post-election and how it related to the portfolio. On Page 18, Mr. West noted that the fund for the fiscal year was up 14.75% net of all of the City's investment management fees and discussed related three (3), five (5), and ten (14) year numbers. Further cornments on peer group rankings d asset allocation ensued. Mr. West continued to highlight points within the Fourth Quarter Investment Return Report and spoke of domestic and international equity allocation, bond funds, the effects of rapid appreciation, actuarial impact, applied smoothing methods, additional asset locations and their related bench marks, and cash flows. Board Member David Withee inquired as to how many people were drawing a Pension. Mr. Larry Wilson, A.S.A., Senior Consultant and Actuary, Gabriel, Roeder & Smith Company (CRS,), One fast llroward Boulevard, Suite SOS, Fort Lauderdale, Florida: indicated, "As of about 14/41/[20]15, we had ninety-three ( 3) people drawing Pensions." Continuing, Mr. West pointed out some useful information on Page 24 and remarked about the related charts and trends. Mr. West also referenced the fee structure outlined on Page 43. CITY OF WINTER SPRINGS,FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING-NOVEMBER 17,2016 Ir 11;;Ir (RESCHEDULED FROM NOVEMBER 8,2016) PAGE 4 OF 8 AGENDA NOTE: THE FOLLOWING AGENDA ITEM WAS DISCUSSED NEXT,FOLLOWED BY THE REST OF THE AGENDA. -.'-B`� REGULAR AGENDA Niel", REGULAR 4® Finance And Administration Services Department The Finance And Administrative Services Department Is Requesting That The Board Of Trustees Receive Information From The Bogdahn Group And Discuss -Global on Investment Strategies. Referencing the Templeton Global and Fund, Mr. West stated, "I'd like to recommend that we hang on to this strategy and revisit what has transpired post-election when we take the wrap up — for the quarter we're currently in. Now remembering that Templeton Global Bond Fund was put in place because we wanted a diversifying agent here, we wanted a bond manager or a bond strategy, if you will, that was not impacted by changes in interest rates, in the event at some time that interest rates happen to go back up." Further, Mr. West commented on the hand's insensitivity to interest rates and recapped the last quarter referring to bond prices, total returns, interest rates, and currency. Mr. West noted, "So, combined with interest rates going up, no sensitivity in this fund, and a resumption of dollar strength, this fund has almost retraced, giving a positive return in October and November, the underperformance to the benchmark that happened during a period in the cycle where - it was not favorable for that strategy on a relative basis." Comments followed. Chairperson Mundo noted that the fund was publicly traded and inquired what progress it has made since the National Election. Mr. West indicated, "The returns have been well north of four percent (4%) positive and noted that number was from October/November, not particularly November 8, 2016. Mr. West then spoke of interest rates and the strength of the dollar. On a related note, Mr. Mundo asked, "What is the economic scenario under which this fun d out performs its benchmark. And then the other question being is, 'What is the benchmark in terms of its expectations'?" Mr. West replied, "In a rising rate environment, this fund will outperform number one, in the secondary factor..." Chairperson Mundo asked, "...Will it outperform in an absolute sense or it just goes down less..." Mr. West continued, "...it will outperform absolute. So, the absolute return can potentially be positive whereas in a rising interest rate, the absolute return for the benchmark which is the— Citigroup World Government and Index, that benchmark will be potentially negative in a rising interest rate environment." CITY OF WINTER SPRINGS,FLORIDA MINUTES BOARD OF TRUSTEES 1=77'-) REGULAR MEETING-NOVEMBER 17,2016 (RESCHEDULED FROM NOVEMBER 8,2016) PAGE 5 OF 8 Much discussion followed on the behavior of the Templeton Global Bond Fund in regards to a coupon advantage, the strength of the dollar, interest rates, and the United =__4 States economy. Mr. West noted, "So, we could be turning the page — could be into the environment that's constructive for this fund which is why it was put in there in the first place." Board Member Withee commented on the strength of the dollar and pointed out, "So, if this thrives in a strong dollar enviromnent, I may be not connecting the dots here as to by it underperforms so badly, year-to-date." Chairperson Mundo remarked briefly on the fund's poor history. Mr. West responded, "The issue is it hasn't been a straight line. Appreciation, right? We had two (2) quarters in particular where the dollar was hit pretty badly." Mr. West then referenced Pages 34 and 35 and commented her touching on various exposures; discussion ensued on the fund's performance and behavior and various other investments, Mr. West offered various alternatives and stated, "The other alternative which is becoming increasingly and potentially attractive is actually the TIPS (Treasury Inflation Protected Securities) Portfolio, right? Because the TIPS (Treasury Inflation Protected Securities) adjusts with the CPI (Consumer Price Index) so as inflation goes up, your effective coupon, you know, gets adjusted upward to the resulting impact on the price of the bond is really muted." Much discussion ensued on bonds, TIPS (Treasury Inflation Protected Securities), stability from U.S. Treasuries, hedge funds and their associated fees, a Global Tactical Asset Allocation(GTAA) Strategy, liquidity issues, and Blackfinck Funds. Chairperson Mundo mentioned the Senior Loan Fund. Mr. West stated, "That is a private equity we can only — make a capital commitment when they're out raising money. So, that particular fund was closed when we went into it." Further comments followed on the timing of certain funds availability. Much discussion followed on the selection of an alternative investment and Mr. West noted, "I would be recommending a slow conversion into the standard benchmark TIPS (Treasury Inflation Protected Securities) Portfolio.", Further discussion followed on post- election economics,monetary and fiscal policies, and corporate tax reform. Referring to Mr. West's recommendation, Board Member Withee inquired, "Would the recommendation be to move all of it in there? Or just split it between two (2) strategies?" Mr. West explained, "The recommendation would be to move it all, and that would move our halfway in TIPS (Treasury Inflation Protected Securities)—up to our target weight in TIPS (Treasury Inflation Protected Securities)." Brief discussion followed and Chairperson Mundo expressed his agreement to increase TIPS (Treasury Inflation Protected Securities). CITY OF WINTER SPRINGS,FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING-NOVEMBER 17,2016 7 (RESCHEDULED FROM NOVEMBER 8,2016) PAGE 6 OF 8 "I AM GOING TO MAKE A MOTION THAT WE SELL TEMPLETON AND THAT WE TAKE THE PROCEEDS AND PUT T INTO TINS (TREASURY INFLATION T SECURITIES)." MOTION BY CHAIRPERSON SECONDED BY BOARD MEMBER IT E. DISCUSSION. °x VOTE: VICE-CHAIRPERSON PARIS: AYE BOARD E E T Em AY BOARD E E S SA® AYE CHAIRPERSON N : AYE MOTION CARRIED. Discussion followed on Crescent Direct Lending related capital flow. . West outlined the procedure related to the transfer of nds from the Templeton Global Bond Fund to'TIT'S (Treasury Inflation Protected Securities). Board Member Withee left the Meeting at 6.-55 pm. REGULAR 501. Finance And Administration Services Department The Finance And Administrative Services Department Is Requesting That The Board f Trustees Receive From a riel, Roeder, Smith & Company The 2015 Actuarial Valuation Report And To Enter Into Discussion. Mr. Larry Wilson, A.,S.A., ,Senior Consultant and Actuary, Gabriel, Roeder & Smith Company (GRS), One .East .froward boulevard, Suite 505, Fort Lauderdale, Florida; gave a brief overview of Gabriel, Roeder & Smith Company and noted their offices around the country. Continuing, Mr. Wilson introduced the 2015 Actuarial Valuation Report and discussed various costs, contributions, funding requirements, the vested benefit security ratio, actuarial gains, smoothed investment returns and values of assets, and Government .Accounting Standards. Mr. Nilson noted, "So, again measured on a market value basis, for accounting purposes 9/30/[20']15, we're seventy-three point four two percent (73.42%) funded." Brief comments. Mr. Nilson addressed accounting standards and continued to review the 2015 Actuarial Valuation Report and noted its compliance with the requirements and intent of Dart VII, Chapter 112,Florida,Statutes. "I MAKE A MOTION WE ACCEPT THE DEFINED EE FIT PLAN ACTUARIAL VALUA'T N AS OF OCTOBER [201]15.11 MOTION BY CHAIRPERSON UN m SECONDED E- AI N PARIS. DISCUSSION. CITY OF WINTER SPRINGS,FLORIDA MINUTES BOARD CIE TRUSTEES REGULAR MEETING-NOVEMBER 17,2016 (RESCHEDULED FROM NOVEMBER 8,2016) PAGE 7 OF 8 °{ VOTE:BOARD MEMBER SOSA: AYE 7 VICE-CHAIRPERSON . AYE CHAIRPERSON . AYE MOTION Additional remarks related to mortality rates in relation to values utilized by the Florida Retirement System followed. REGULAR Finance And Administration Services Department The Finance And Administrative Services Department Is Requesting That The Board Trustees Receive From Gabriel, Roeder, Smith & Company The 2015 Compliance Report Per Chapter 112.664, Florida Statutes, And To Enter Into Discussion. Mr. Wilson presented the Agenda Item and gave an overview of requirements dictated by Florida Statutes in reference to the 2015 Compliance Report. Furthermore, Mi. Wilson spoke of funding and statutory mortality assumptions based on six percent 6%) and ten percent (10%) investment rate of return assumptions. Mr. Wilson continued to discuss various financial figures found in the 2015 Compliance Report related to their status of funding. REGULAR Finance And Administration Services Department The Finance And Administrative Services Department Is Requesting That The Board Of Trustees Receive Information And Discuss Investment ate Of Return Assumptions. After presenting the Agenda Item, r. Wilson stated, "We Were asked to take a look at— investment return, at if we changed our return from eight percent (8%) to seven and three quarters ( .75%), everything else kept the same?' And then, at if We went to seven and a half percent (7.5%) assumed return'?" Mr. Wilson noted that many Pension Plans across the State of Florida are reducing their assumed rates of return. Comments followed on the Florida Retirement System, investment returns,mortality, and financial reports. CITY OF WINTER SPRINGS,FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING—NOVEMBER 17,2016 (RESCHEDULED FROM NOVEMBER 8,2016) PAGE 8 OF 8 600. REPORTS �7 %=­0 No Reports were given, PUBLIC INPUT Chairperson Micndo opened "Public Input". No one Spore. Chairperson Mundo closed "Public Input". ADJOURNMENT Chairperson Mundo adjourned the Regular Meeting at 7:37 p.m. RESPECTFULLY SUBMITTED: ANTONIA DELLA DONNA ASSISTANT TO THE CITY CLERK NOTE: These Minutes were Approved at the 2017 Board of Trustees Regular Meeting.