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HomeMy WebLinkAbout2017 12 05 Consent 300 Unapproved Minutes from the August 10, 2017 Regular Meeting BOARD OF TRUSTEES AGENDA ITEM Informational ITEM 300 Consent X Public Hearings Regular December 11, 2017 Regular Meeting REQUEST: The Office Of The City Clerk Is Requesting The Board Of Trustees Consider And Approve The Thursday, August 10, 2017 (Rescheduled From Tuesday, August 8, 2017) Board Of Trustees Regular Meeting Minutes. ATTACHMENT(S): A. Unapproved Copy Of The Thursday, August 10, 2017 (Rescheduled From Tuesday, August 8, 2017) Board Of Trustees Regular Meeting Minutes (7 Pages) t �s CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES H_ REGULAR MEETING AUGUST 10. 2017 (RESCHEDULED FROM AUGUST 8, 2017) CALL TO ORDER The Regular Meeting of Thursday. August 10, 2017 (Rescheduled from August 8. 2017) of the Board of Trustees was called to Order by Chairperson David Withee at 5:33 p.in. in the Commission Chambers of the Municipal Building (City Hall, 1126 East State Road 434, Winter Springs, Florida 32708). Roll Call: Chairperson David Withee, present Vice - Chairperson Robin Paris, present Board Member Stephen Krohn,., absent Board Member Cindy Sosa, present Assistant to the City Clerk Antonia Della Donna, present A moment of silence was held, followed by the Pledge of Allegiance. No changes to the Agenda were made. AWARDS AND PRESENTATIONS AWARDS AND PRESENTATIONS 100. Not Used INFORMATIONAL AGENDA I\ FORMATIONAL 200. Not Used PUBLIC INPUT Chairperson Withee opened "Public InInd ". No one spoke. C'haiq)erson Withee closed "Public: Input ". CITY OF WNTFR SPRINGS. FLORIDA MINUTES BOARD OF TRUSTEES REGULARNIEF.TING - Ali GUST 10.2017 (RESCHEDUI,E.D FROM AUGUST 3, 2017) PAGE2OF7 CONSENT AGENDA rf CONSENTm 300. Office Of The City Clerkq The Office of the City Clerk Is Requesting The Board of Trustees Consider And Approve The May 9, 2017 Board Of Trustees Regular Meeting Minutes.° R REFERRING TO THE APPROVAL OF THE TUESDAY, MAY 9, 2017 BOARD OF TRUSTEES REGULAR MEETING MINUTES, "SO MOVED." MOTION BY VICE- CHAIRPERSON PARIS. SECONDED BY CHAIRPERSON WITHEE. DISCUSSION. VOTE: VICE - CHAIRPERSON PARIS: AYE BOARD MEMBER SOSA: AYE CHAIRPERSON WITHEE: AYE MOTION CARRIED. PUBLIC HEARINGS AGENDA PUBLIC HEARINGS 400. Not Used REGULAR AGENDA REGULAR 500. Finance And Administration Services Department The Finance And Administrative Services Department Is Requesting That The Board Of Trustees Receive And Accept The 2016 Actuarial Valuation Report From Gabriel, Roeder, Smith & Company. , r. Lcnvrence F. Wilson, A.S.A., E.A., Senior Consultant and Actuary; Gabriel, Roeder Sinith Company (GRS), One East Broward Boulevard, Suite 505, Fort Lauderdale, Florida-- gave a brief description of the Actuarial Valuation Report and mentioned newly implemented state requirements. Continuing, Mr. Wilson stated, "Before we get into the detail, I was going to mention that the costs this year are down as a dollar amount: so, it's a lower minimum required contribution, and it's up slightly as a percent of pay." With further comments, Mr. Wilson also noted, "In fact, this year we had a gain from both investment return, that exceeded the assumptions, and from liabilities where the other assumptions were more conservative than the plan experience this year." CITY OF WENJER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGT.TI AR MEETING — AUGUST 10, ?917 (RESCHEDU,LED FROM AUGUST 8. 2017) PAGE 3 OF 7 Mr. Wilson commented on a minor assumption change, pre - retirement mortality rates. expected payroll, and related retirement plan costs. On Page 8, Mr. Wilson reviewed plan experience through each fiscal year and noted various data elements. On Page 13, Mr. Wilson referenced the actuarial gain and explained, "So, again, the experience of the plan versus the assumption — we had better experience to the tune of a billion five one seven eight fifty -five [dollars] ($1,517,855.00). So, we had that gain this yea -r,'° Continuing, Mr. Wilson referenced Page 44 and remarked further on actuarial gains impacted by recent compensation, terminations, and investment return experience. Ms. Kelly L. Adams, A.S.A., EA., Senior- Consultant and Actitary, Gabriel, Roeder & Smith ConrBcinv (G)?S), One East Brovhczr•d Bouleiard, Suite 505, Fort Lauder•dctle, Florida: referred to Page 11 and commented on distributions of contributions. On a related note, Ms. Adams stated, "You're in a positive cash flow position which just means you don't necessarily have to keep as liquid of assets to pay out the benefits because the contributions are coming in." Furthermore, Ms. Adams referenced Page 13 and reviewed smoothing methods used and its effects. Mr. Wilson remarked briefly on market returns and unrecognized investment losses. On Pale 16, Ms. Adams reviewed the accounting standards of the plan. Discussion followed. Ms. Adams then referred to Page 19 and commented on the sensitivity of the net pension liability to the discount rate assumptions. Mr. Wilson commented briefly on a compliance report required by the State of Florida. Discussion followed on life expectancy, Florida Retirement System measurement standards, funding costs, and unfunded liabilities. "I MOVE THAT WE ACCEPT THE REPORT, AS PRESENTED." MOTION BY VICE- CHAIRPERSON PARIS. SECONDED BY CHAIRPERSON WITHEE. DISCUSSION. VOTE: CHAIRPERSON WITHEE: AYE VICE- CHAIRPERSON PARIS: AYE BOARD MEMBER SOSA: AYE MOTION CARRIED. Comments followed on procedures related to State of Florida requirements. sr« CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING - AUGUST 10. 2017 (RESCHEDULED FROM AUGUST S. 2017) PAGE 4 OF 7 REGULAR 501. Finance And Administration Services Department The Finance And Administrative Services Department Is Requesting That The Board Of Trustees Receive Information Related To Investment Rate Of Return Assumptions And Enter Into A Discussion. Mr. Shawn Boyle, Director, Finance and Administrative Services Department commented briefly on past discussions related to investment rate of return assumptions and stated, ``We've been positioning the Pension, behind the scenes, to be able to tolerate — absorb, whatever word you want to apply — to lowering the rate of assumption." Mr. Boyle then remarked about general expectations for future returns and related risks. Continuing, Mr. Boyle explained, "I got notified by Larry [Wilson] at some point that our Pension is becoming — the rate of return, anyway — is becoming somewhat of an outlier in the world of actuarial sciences in this particular field. We now feel that we're in a position to take a look at that rate. We want to take an incremental approach to this. So, maybe what I'm recommending tonight is not the end, it's just a step toward that end. But I'd like to recommend that you make a recommendation to the Commission to begin to get us back and aligned with what the normal rate of assumption is in these type of Pension Plans." In addition, Mr. Boyle noted, "I'm recommending a quarter percent (0.25 %) reduction, from eight (8 %) to seven seventy -five [percent] (7.75 %)." Mr. Boyle then remarked about the associated costs to be absorbed by the City and the County and pointed out, "We've evaluated that internally; we don't think it's a- significant cost. I've done some interpolation — I'm confident that we can absorb it this year." Chairperson Withee praised Mr. Boyle for his efforts and research on the matter. Referring to Mr. Wilson. Chairperson Withee inquired, "Larry (Wilson), are you in agreement that the incremental approach is appropriate ?" Mr. Wilson replied, "I think Shawn (Boyle) presented it well; the rates have been going down." Expressing his agreement, Mr. Wilson also commented on asset allocation, long and short term horizons, and insurance rates. Mr. Wilson concluded, "So, yes, we think that's a step in the right direction." Further continents. Vice - Chairperson Robin Paris asked about the assumed rate of assumption utilized by the majority of Pension Plans. Mr. Wilson explained, "FRS (Florida- Retirement System) is seven point six percent (7.6 %), so they're kind of coming down." Mr. Wilson then commented on lowering basis points. M Ol" C'TTY OF 'WTNTFR SPRIX GS. FLORIDA MINUTES BOARD OF TRUSTEES RFGULAR NTFFTI \TG - AUGUST 10. _'017 (RFSCIIFDULED FRONT AUGUST 8, 2017) PA(.iE j OF 7 .w Mr. Dave blest, Senior Consultant, AndCo Consulting 4901 I %ineland Road, Suite 600. Orlando, Florida: replied to Vice - Chairperson Paris' inquiry and stated, "If I can add, most y r� of the systems that we're working with — are either in the process of reducing the ROR (rate of return) assumptions or have already reduced the ROR (rate of return) assumptions �a to something in the neighborhood of seven and a half (7.5 %)." Mr. West commented § further on related investment and strategic motivators to lower the rate of return assumptions. Further discussion. "I AM COMFORTABLE WITH MAKING A MOTION TO FORWARD YOUR RECOMMENDATION TO THE CITY COMMISSION FOR APPROVAL." MOTION BY CHAIRPERSON WITHEE. SECONDED BY BOARD MEMBER SOSA. DISCUSSION. ASSISTANT TO THE CITY CLERK DELLA DONNA STATED, "AND THAT'S JUST TO CONFIRM TO LOWERING IT TO SEVEN POINT SEVEN FIVE [PERCENT] (7,75 %), CORRECT ?" CHAIRPERSON WITHEE AGREED, "YES, THANK YOU." VOTE: CHAIRPERSON WITHEE: AYE VICE - CHAIRPERSON PARIS: AYE BOARD MEMBER SOSA: AYE MOTION CARRIED. REGULAR 502. Finance And Administration Services Department The Finance And Administrative Services Department Is Requesting That The Board Of Trustees Receive From AndCo Consulting The Third Quarter Investment Return Report And Enter Into A Discussion. Mr. West referred to the Quarter Investment Return Report and gave a brief overview of events over the quarter and the market's behavior. On Page 2, Mr. West reviewed quarter performance for domestic and international equity markets. Moving to Page 18, Mr. West commented on peer group rankings and reviewed one (1), three (3), and five (5) year data. Mr. West also mentioned market exposure, interest rates, asset allocation, Crescent Direct Lending Fund and their anticipated capital call, contributions, distributions, investment management fees. In addition,, Mr. West noted, "So, right around four and a half million dollars ($4,500.000.00) net of all the fees was earned that noes into the bucket here." CITY OF WINTER SPREN GS. F1,OR1DA MINUTES BOARD OF TRUSTEES REGULAR IN1EETING - AUGUST 10, 2017 (RESCHEDULED FR0MAUIGUST 3.'017) PAGE 6 ClE Mr. West commented further on asset allocation as described on Page 12. With further discussion, Mr. West suggested reviewing alternative investment strategies to see if any piqued the interest of new Board Members. Chairperson Withee commented on interest rates, the Federal Reserve, and TIPS (Treasury Inflation - Protected Securities). Continuing, Chairperson Withee asked, "If we do hold off on asset allocation discussions until the next Board meeting, a quarter from now, are you concerned — even though it's only a two percent (20 0), two and a quarter percent position in the overall portfolio — that that might be dead money at this point ?" In response, Mr. West replied, "We're viewing the 'TIPS (Treasury Inflation- Protected Securities) as a longer term allocation; the purpose in the portfolio is not so much to have `real asset' in the portfolio, but to have a US Treasury, high quality instrument in the portfolio." Continuing, Mr. West explained. "When the day comes, and we enter our next bear market which will happen, we just don't know when, right? And bear market for equities — when the system is stressed everyone runs to US (United States) Treasuries, so by having an allocation, albeit a small allocation, to US (United States) Treasury instruments, we have — that negative correlating asset in the portfolio." Further continents followed on asset allocation. Chairperson Withee expressed his agreement with Mr. West and wondered, "Are we better off sitting in a tenured treasury at a little over two (2) and two point two (2.2) than potentially having negative returns on the TIPS (Treasury Inflation - Protected Securities) ?" Chairperson Withee remarked on the timeline to the end of the fiscal year and noted, "It seems like if the decisions that have been made recently by the Federal Reserve continue to hold true. it is going to be more deflationary which means TIPS (Treasury Inflation - Protected Securities) will be more affected than just regular tenures or others." Mr. West cautioned the Board about forecasting interest rates and commented on maintaining minimum market exposure. Additional remarks followed on interest rates. Further discussion ensued on asset allocation, market forecasts, and investments strategies. 600. REPORTS No Reports were given. 61M V PUBLIC INPUT Chahj)erson Withee opened "Public Inp.ut " No one spoke. Chah7m•son T-Vithee closed -Pttblic Input ". ADJOURNMENT CITY OF �N-1\TERSPRJNGS. FLORIDA MINUTES BOARD OF TRUSTEES -:2z REGULAR NIF ETING — AU6UST 10. 2017 (RESCHED T T LED FROM AUGUST 8, 2-0 17) PAGE 7 OF 7 Chairperson Withee aqjoumed the Regular Meeting at 6:45 p.m. RESPECTFI-ILL I' SUBMITTED: ANTONIA DELL,4 DONNA AS,'U,U�41NTT TO THE CIT)'CLERK AND JESSICA WRIGHT ASSISTANT TO THE CITY CLERK NOTE: These Minutes were Approved at the , 2017 Board of Trustees Regular Meeting.