HomeMy WebLinkAbout1992 03 24 Board of Trustees Regular Minutes
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BOARD OF TRUSTEES MEETING
WINTER SPRINGS PENSION PLAN
The meeting was called to order at 7:00 P.M.
TRUSTEES:
Art Hoftmann, Present
Seyrrour Bennan, Present
John Ferring, Present
William Jacobs, Present
William Dickey, Absent
Ferring asked if there were any comments or additions to the ndnutes of the November
14, 1991, meeting. There were no comments or additions. Jacobs IOOVed to approve
the ndnutes of November 14, 1991. Seconded by Bennan. Vote: All aye. Motion
carried.
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General Information: __________ _________________________ _________
Ferring stated that he has been trying to put everything in it's proper perspective,
in relation to the Board's last discussions. He said that the meeting that was set
up between Bob Mead, Dick Rozansky, Frank Kurppenbacher, Harry Martin, and himself;
met on ___ at Mead's office and went through a lot of the questions that were
being asked regarding the Board of Trustees and what the position of the Board of
Trustees was. Basically in respect to #1 the indemnification of the Board of
~ Trustees and #2 the powers of the Board of Trustees and to what extend they are
suppose to be responsible. The Board has read all the letters that have care forth,
the first fram Mead, which was written to Rozansky with copies to the Board; in the
letter Mead indicates that basically he finds nothing overly wrong with the current
people with the way they were managing the fund although that was not his job to
make those comments. His job was to define the lind tations and the powers of the
Board of Trustees and what their scope and their charge is. He did that in quite
elaborate fashion and went on to indicate what he feels is a lack of ccmnunication
between the city and the Board of Trustees. He did also state that the cavalier
attitude of "we'll do it the way we want and don't bother us, we'll just let you
know what we're doing", is canpletely wrong. Then in response to Mead's letter,
Kruppenbacher had made comments regarding what he felt as the City Attorney should
have been addressed; and he addressed the indesmification, an audit - which we had
requested and the IOOnitoring of the funds and a new investment manager and overall
scope of what we are to be doing as Trustees.
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Ferring stated that between the combination of letters he thinks the Board can make
their own decision on that. He said that his opinion on the input on this is that
there is a need to go out and look for a new investment managers. We have sent the
letter to Ms. Joyce Case, indicating to her that the Board was looking for records
regarding administrative costs. We outlined the years that we were looking for and
that letter was sent in the beginning of March; it has been three weeks now and as
of yet we have had no response that they have received the ccmnunications.
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Board of Trustee Meeting
Winter Springs Pension Plan
March 24, 1992
Page 2
city Clerk Mary Norton stated that Ms. Case phoned her last week, and asked for a
list of the names and addresses of the Board of Trustees.
Jacobs stated that he thinks the Board is "jumping the gun" until, what he thought,
it was his understanding that the Board was going to do same communications with
Mead and Kruppenbacher and the League. We haven't done that with the exception of
writing a letter and demanding information. He said that Ferring, as Chairman, is
asking and wanting to go out for bids without giving the League an opportunity to
came here and defend themselves. Because the lack of communications is not what you
perceive it to be. If the City or this Board or the prior Board, doesn't request
information fram the League, then you can't sit there and point a finger at them and
say they are not doing their job. Have them came down here and explain what they
are doing, before we sit here and try and make a decision that we are going to go
out for bids for an investment manager.
Ferring said again he is not "jumping the gun", he has not even brought into the
discussion Jacobs individual efforts on his own, to go out an underrrane the work
that was being done by this Board of Trustees. He stated that Jacobs was mad to the
fact that a letter was sent to Case that he didn't particularly care for, and as far
as he (Ferring) is concerned that was a letter that was sent, and was worded by the
Attorney, and sent on the proper documentation. He said that he is not here to lay
down the Florida League of Cities, and as far as he is concerned they also will be
given a chance to came in and suhnit themselves to what we will be looking for as
far as samething in the future is concerned. Ferring also stated that he has no
problem with communicating with anybody, what he is saying that there are other
investment carpanies that are out there that have a right to came in and make a bid
to run the pension funds of this City; and he said that he sees no reason why we
cannot as a Board of Trustees do that and under the proposal that he is making is
that we do that and include the Florida League of Cities and they will have every
right to came in and make a presentation to us as any other carpany that may be
interested in carning on board with us.
Jacobs stated that Ferring is doing that under the assumption, in his op1n10n, that
there is a problem greater than appears to him. He said that he takes exception to
the letter to Case fram Rozansky, and he takes exception to the letter fram
Kruppenbacher; he stated that he doesn't think Kruppenbacher knows what he is
talking about. I don' think that it's in his (Kruppenbacher) position to write a
letter that he has a copy of; as far as going out for bids and looking for an
investment manager until we can sit down and meet with the League of Cities, he said
that he doesn't think that this Board should be going out and looking at changing an
investment manager where there is no indication, and keep in mind that we are doing
this for the benefit for the employees of the City of Winter Springs, in his opinion
that anything is wrong with the investment policy that League has and the investment
return. If we want to talk about looking at iI'f1?roving the benefits for the City,
that's another subject.
Hoffmann stated that frankly he can't define what the investment return is on this
pension plan, because it isn't well documented.
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Board of Trustees Meeting
Winter Springs Pension Plan
March 24, 1992
Page 3
Jacobs stated that Mr. Parr has nothing to do with? and it is also the Florida
League of Cities on the Board of Trustees has a investment analysis that has nothing
to do except go to meetings and rate the investment manager.
Jacobs stated that he takes exception to the statement by Ferring that this return
is 7 or less or 6% and that is an absolute lie.
Ferring stated that Jacobs made a statement that is referred to in the mdnutes that
he (Jacobs) thought that the fund made 20.4% last year, is that correct? Jacobs
said well it is in the mdnutes.
Ferring said let's go back and take a look at the returns of this particular fund.
#1 - on page 1 of 1, in the annual report, "the ftmd realized a net increase mdnus
contributions of 50 thousand dollars", that was a surplus of a net aroount of
increase in this fund fram 10-01-1990 - 10-01-1991, $50,150.00, that constitutes a
return of approximately 10% , there was a 3 1/2 percent adrrUnistrative expense that
r- was put into this particular fund during that period of time. Now if you are
telling me that this is the right way to conduct business, I'm telling you it is
not. I am going to put this up and I'm going to make a motion that we go ahead and
subrrdt a letter, a proposal, out to different management companies to see what is on
the outside and see what we can do as far as increasing the return of net asset
val ues to these funds.'
Berman stated that this doesn't mean that we absol utel y have to change what we have.
Jacobs said he wanted to make a statement to Ferring - these are your assumptions
and your figures, we had Parr here, we have the League and unti I we get the League
down here to explain and get a blackboard and bring somebody in here, to get it
through your head, that the figures are 12 or 13 percent fram year to date. I can't
see this Board going off on a "wild goose chase" based on the fact of your figur-es.
When it has been substantiated and confirmed by outsiders.
Ferring said, again Mr. Jacobs, I don't want to have to get into one on one
discussion with you on every issue that we are bringing up here. We had workshops
in this City and if you were part of them, you were there to see the figures that
were run-up by the Finance Director of this City and the return came in as we have
been indicated that the total return of an individual employee net asset is around
7% approximately less, over the period of time ---
Jacobs stated that he had no knowledge of that. Ferring stated that Jacobs should
get a little more knowledge. Jacobs stated that it is certainly not Rozansky's or
Norton's or Koch's or anyone that has been here since day one.
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Ferring stated that he would give Jacobs three examples here ----Jacobs
it van.es
frem where they entered the pension fund but it doesn't vary frem the ones that were
Board of Trustee Meeting
~ Winter Springs Pension Plan
March 24, 1992
Page 4
in there frem the beginning. Ferring aga~n stated that he would give
Jacobs three examples here, we took it frem three different cases; one happened to
be the City Manager right frem the beginning ---Jacobs stated that your
figures are incorrect---Ferring stated that he is not going to argue with him.
Hoffmann said he is not saying that there is not point in saying that you're
incorrect---Jacobs said that I know what----
Berman stated that we are having a personality conflict here, my feeling is that it
is not going to hurt at all, this doesn't mean that anything is cast in concrete, it
won't hurt to get written proposals and then possibly follow it up by in person
proposals frem various companies.
Jacobs stated that we are doing this based on Ferring say that the returns are less
than what they actually are, then we are wasting our time.
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Ferring said no---what I'm telling you is that I'm reading frem this book---Jacobs
said that you have made many statements, in public, in these meetings---and r'm
telling you that they are incorrect and all I'm asking is that if this Board of
Trustees goes out and looks for another investment manager based on, in my opinion,
your inaccurate portrayal of the plan and the returns---Ferring said that he is
following the recommendations of the City Attorney---Jacobs is wrong without
allowing the Florida League of Cities to came down here. .
Berman said we are not saying that they are not going to came---
Hoffmann said let's not just shut our minds off and say that this plan is the best
and let's not even----Jacobs said let's do this one step at a time--Hoffmann said
and ignore everybody else--Jacobs said that all he is saying is that let's do it one
step at a time, let's not travel down two different streets, let's first get the
League down here and let this Board came to an agreement to what it is the League
has done for the employees of the City of Winter Springs not based on what I say and
not based on Ferring says and if it has to take an outsider outside of Parr to
confinn or make Ferring believe that it is not 6 or 7 percent that it is 12 or 13
percent then that's what we should do but we should not go ahead and try to get an
investment manager based on his inaccurate figures, in my opinion. Ferring said
again, I am not giving inaccurate figures and I think you are out of order and I'm
going to make a IOOtion that once you have looked this over I would like to make a
IOOtion to have this sent out under the City of Winter Springs letterhead. Ferring
passed out a draft proposal that he put together for the Board to review, and he
feels that it is quite complete, it is going to go to not only to investment people
that have been contacting us but also the Florida League of Cities and they will
have every opportunity to came in here and give us their performance records, their
auditing records and everything else that was requested of them.
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Ferring said therefore, I am making this as a IOOtion - the proposal that the Board
just received to send this out under the City of Winter Springs letterhead. Ferring
said that he spoke to the City Manager on this and told him that he was drawing up
an RFP, and Rozansky said that it was ok, to give him a copy of it when it was
~. finished and we will look at it. There was one word in the proposal, that w~
discussed that could possibly be changed, where it says in the first par-agr-al:-,h
"...is considering seeking new management", we put considering seeking new
management we didn't say we are seeking new management. As such I am making this as
a motion and this way we will not only get the Florida League of Cities here but we
will get many other creditable investment managers that may be interested in giving
this fund a higher return than what is there at this particular point.
Jacobs said again you are doing it on the assumption that your figures are correct
and the League's are incorrect. Ferring said I am not going on my figures, I'm
doing it on the assumption that there are other investment managers in this universe
that can care in and out preform the funds that have been done so far in the last
eight years and that is what my assumption is and I think that I have every right to
assume that and I think I've got every right to take that responsibility of trying
to better the net asset value of this fund and if you are opposed based on the fact
I don't think that these figures are high enough---Jacobs asked what figures.
Ferring said the figures that have care down fram them themsel ves. Jacobs said from
the 13 percent. Ferring said that he didn't know where Jacobs was getting tIle 13%
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Hoffmann said for each individual. Jacobs said that you can't go to individual ___'
Ferring said of course. Jacobs said no you cannot, if you people don't understand
what, let me explain to you---Hoffmann said that if it was his pension fW1d I would
want to know how much I was making a year. Jacobs said to let him explain how it
works - Norton and everybody that was in it fram the beginning is in one class,
their return on their investment is going to be different than Don LeBI~1c's ~ld
different fram other people that join and it's going to be that way no matter what
plan we go into if we go into a defined contribution plan. Hoffmann asked what
determines the class. Jacobs stated that it depends when they get in. Hoffmarm
said what does that mean. Jacobs said in 1985 this plan started out and we haJ 6
employees and in 1986, 87, 88, 89, 90 and 91, and as the plan grew more people got
into the plan; let's say we got 100 as of 91 that are vested. The return will just
say it will go 10, 5, - 10, 5, 12, 15, 20, whatever percent you do, the ones that
were in ham the beginning when this thing averages out to 12% that's what
they are getting. The ones that got in on a bad year, and there are going to be bad
years, whether the League handles the investment or anybody else, if it is w1der
defined contribution. If scmebody gets in here their return may be 15% ~1d down
here their return may be 6% or 2%
Ferring said I think we understand wllat you are trying to say. Jacobs said that he
just wants everybody to know that you just can't take an individual and compare them
to Norton, you can't take LeBlanc and canpare against Norton.
Hoffmann said what we are looking at is an individual's amount contributed each year
and what the increase was for each year. We went back 3 years. Ferring stated that
we went back to the inception of the plan.
Ferring stated tllat we went with Roz~ky's as one example with LeBlanc's as anotller
example and Harry Martin as a third example, right fram the inception to a middle to
even a lesser time. Those were the three figures that were brought in and they were
all proven out to be at below what you are indicating at this particular point Mr.
Jacobs.
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Jacobs said tllat is his whole point, and he said that he takes exception to that
tllat you are not qualified to make tilat decision nor am I. I'm not qualified to do
that and I don't think you are either.
Board of Trustees Meeting
~ Winter Springs Pension Plan
March 24, 1992
Page 6
Ferring stated that Jacobs can protest, and you can certainly make it a matter of
record whatever your thoughts are,
Hoffmann said regardless of which way the fund is doing, whether it is doing better
or less shouldn't we try to find out how much better or less.
Jacobs said that he does not have a problem with that, he has a problem with the
presumption that what's going on is incorrect or not adequate. He said that he has
a very serious problem with that.
Be~l stated that the Board has a responsibility to get the best---Jacobs said that
he doesn't have a problem with that either, I am not opposed to going out ~ld
looking...Be~ said respmlsibility to the employees of. this City, if we are going
status quo, if we are saying Florida League of Cities that is it, let's not do
anything, let's not rock the boat, then we are not exercising our responsibility.
Jacobs said that he agreed, that he does not have a problan with that, he said he
does have a problem with Ferring with the figures that he is going around either'
.~ telling this Board or employees that are inaccurate. I have a very serious problan
with that.
Ferring said let me tell you something Mr. Jacobs, you are making a serious
allegation of what I am going around telling erli>loyees and everything else, and I
don't know where you are getting that infonnation from, what I'm going on is the
infonnation that was done in a public workshop, not what was done in the side or
back roam, everything was done in the wide open public workshop for everybody to
have their own ccmnents regarding what was being done. It was brought before the
City Cammdssion three examples and each one of them was discussed in depth, it was
then decided that the Comnission was looking for a new way to go and that's why they
decided to came in with a new Board of Trustees to bring in same fresh views. fuld
as far as I'm concerned I am trying to bring a fresh view in this thing and by
bringing in more people to give us their aspects of what they feel they can do for
this fund, makes it that much more enriching for the employees of this City.
Jacobs said that it is not in the best interest of any pension fund to arbitrarily
in my opinion, switch investment managers when they are not doing a bad job.
Ferring said who said we were going to switch, you are defending your own rights,
because you have been chai~ of that fund and I haven't found one record that you
have had of all the years that you were chai~ of this particular fllild, let's not
get involved in that stuff, because I don't want to get into personalities. Because
if I have to start demanding records fram you, there is going to be a major' probl ern.
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Hoffmann said let's get back to the basics here, we are just saying let's ask people
to give us their ideas as investment managers and see what they can do.
Be~ stated we may find out that we have the best that we can get.
Hoffmarm said that frankly he has difficultly understanding the League's report.
Board of Trustee Meeting
r Winter Springs Pension Plan
March 24, 1992
Page 7
Jacobs said that is what he has been asking, he said that he thought that Ferring
was going to contact the League and they were going to came down. It was brought
forth in these rrdnutes.
Hoffmarm said that they will came down when we send a copy of this to them.
Jacobs said that back in April of last year when Parr was before this Board at a
workshop, Mr. Mead suggested that it rrdght be a idea to get the people that ale
actually adrrdnistrating this plan here to talk to the Board to answer questions.
That has not been done.
Ferring said that it will be done. Jacobs asked why isn't it done before you go out
for bids Mr. Ferring. Hoffmann stated that we are going to cover the whole spectrwn
not just the League, let's get that in our heads. Ferring said that we are covering
the whole spectrwn and I think that was the intention and I am not going to butt
heads with you, I have put a lot of work into this thing, a lot of time and I'm
~ trying to do the best thing I can find in my rrdnd as to please everybody. Let me,
give you another example, the Comrrdssion last night, regarding increasing tl.e
contributions to the employees, I will go over later, but one of the things that
came up fairly recently in this City was a vote by the Police DepartIrent, on whether
or not they wanted to go union. The overwhelrrdng feed back that was caming back
that there was a new Board of Trustees that have been appointed to the City of
Winter Springs, and they have felt great opposition that their belefits over the
long run as employees of this City is going to be greatly enhanced. That had a
great bearing whether you believe it or not on the way the vote came down resoundly
against going union.
Jacobs said that this should be going to the City Comrrdssion because I have
mentioned this when I was Ccmnissioner to Rozansky to look at increasing the
contributions fram the City. Whether or not the fund is making 6% or 12% or 15% the
contribution fram the City is only 4% The benefits can greatly be increased to the
employees by increasing the contributions.
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Ferring said that he thinks that the Board can address that on another level. Right
now I would----Jacobs said but as far as the return, you will see that first of all
it is not going to be to the benefits to these employees to look around and to
change investment managers fram time to time---Ferring said that is----Jacobs asked
if you agree on that. Hoffmann stated no,----Ferring asked agree on what. Jacobs
said to keep changing investment managers. Ferring said that we have never chang~l
invesbment managers, so how can you say we keep changing investment managers when we
never done that, why are you defending Florida League of Cities----Jacobs asked why
go out for bids. Ferring said because we want to get a more---Jacobs stated that
all you are going to do is get promises. Ferring said hey listen Bill, r've been
invol ved in pension systems a lot longer than you have and I'll tell one thing it's
always been an option of the Board of Trustees to go out and see what's on the
outside of the investment managers that you have. Jacobs said well you can go out
Board of Trustees Meeting
~ Winter Springs Pension Plan
March 24, 1992
Page 8
but all you are going to get is a prarrase. Ferring said that is your position, but
either you produce or you don't stay here that's the way it is when you have a
responsible Board of Trustees---Jacobs said that you don't do that with a p~nsion
fund and if this Board is going to sit here and keep switching investing managers---
Ferring said I tell you don't---Berman said that maybe we are paying too much in
adrrUnistrative costs--Ferring said you better believe it, 17,000 almost 18,000
dollars last year on a fifty thousand dollar return.
Hoffmann said for example Bill, one thing I noticed they charged the City, which is
against the fund, thirty dollars per employee for managing each individual aCcowlt.
Now that is as much as you would pay for your own IRA. Jacobs said that is why we
need the League down here to talk, had they been contacted back in April, I don't
think John and I would be having the discussion we are having right now.
Ferring again the purpose of this letter is to contact the League.
Berman also said that in April it wasn't the present Board of Trustees. He also
~ asked Fen-ing if he had any ideas as to what type of organizations we intend to send
out the proposal. Ferring stated that we will send out RFP's to investment
management funds, in fact there are people that have been contacting us and I have
definitely told them to not be considered until we meet as a Board of Trustees. We
have received a bid fram the Investment Counselors of Florida, that got over 52
million dollars/60 million dollars undercover investments in the State of Florida
and mostly all with municipal systems. I told them that we will not consider it
because #1 it was only one proposal which it is currently in the City Manager's
office, I wouldn't even take it out of City Hall and Mary can bear witness to that,
she gave it to me at the meeting and I turned it over to Rozansky.
Berman asked if we will be going outside of the State. Ferring stated that there is
a directory of investment managers, and it is not hard to find people who ale
willing to make proposals to us and I think if we look at this RFP objectively,
there is nothing there that the Florida League of Cities cannot also be related to,
there is a lot of questions in here that are pertin61t to what we'~e charged with,
and I see no reason in the world that it cannot be done at this particular point.
Hoffmann asked Jacobs how many Cities are involved with Florida League of Cities
Pension Fund. Jacobs stated 20 or 30. Hoffmann then stated that there are roughly
400 Cities in Florida, and not all have pension funds. Jacobs stated that it wasn't
set up to take over the investments of the Orlando's and the Tampa's and Mi~ni's, it
was set up to offer Cities that were very small that had no pension fund to get into
a pension fund and take advantage of a group rate as same as what we do with our
health insurance with the Florida League of Cities and our liability ~ld all our
risk insurance through the League of Cities, and it is done through a fund and it
enables the Cities to get in at a cost less than wl1at they would pay on the outside.
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Ferring stated that he also went through the records and just received them horn
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Martin on a break down which they have been getting every month. They get a monthly
printout of a break down that shows what the previous balance is, what the
earnings/losses are, and what new payrnents are and what expenses are during the
course of the year. This is something that cames through the C&S __ B~1k which is
now Nations Bank. Tracking the last year's adrrrinistrative cost as I say we c~r~
close to 18,000 dollars which represents approximately 3 1/2% of what the funds
balance was at the beginning of the pension year. That is an exorbitant amount of
adrrJnistrative expenses, one of the main things I'm interested in is trying to see
what expenses we can keep down to an absolute minimum, and if you set':! tht':! CCNt::r
letter, I think it's quite clear what we are looking for is that we are looking for
something that they can corne in and make their "pitch" to us, give us a LetteL idea,
a better flavor of what's on the outside and also meet with the Florida League of
Cities, see what they have to say, see what they can bring to us and the!l we can
based on those considerations, make a more educated determination. But, without
going out and hearing from what the outside world has, outside the Florida League of
Cities, we're going to be land-locked in and we'll never be able to see and I think
personally we're shirking our responsibilities.
Hoffmann stated that he feels that we should take a look at what is around including
the League. Berman said that he feels that we have had enough discussion on this.
Ferring said that the motion has been made and seconded by Bel~. Vote: 3 ayes ~ld
1 nay. Discussion. Jacobs stated that for the record he would like to state that
his reason is not that we don't ever go out for bid, is that I would much prefer to
have this Board meet with the League of Cities first and then go out for Li~.
Ferring stated that he (jacobs) should have thought about that going back a few
years ago when he was in the chair. Jacobs stated that there wasn't a problan and
he said that he doesn't believe there is a problan now, and said that he also state~
that for the record.
Ferring stated that that being concluded, there was SOIre other iteros he wanted to
bring up. He said that we were able to get the money purchase pension plan reports
from 10-1-90 to 9-30-91. Just going through it, naturally it is a tirr~ weighted
situation, but he said he just happened to grasp the first couple employees near the
top of the list, and said it was ~zing SOIre of the figm-es that he came up with.
He said that he put three scenarios together, first name that c~ne up was D.
Alamina, who has been enployed by the City since 1989, and since 1989 he has got a
total net gain, outside of the contributions that the City has made in his fund, of
$127.00, that is just one over a two year basis. Jacobs asked how did Fening come
up with that. Ferring said that his contributions to the fund for two years W~Le
$1,562.00, Jacobs said he would state just once more for the record JOfU1 that you
are going under the assumption and it's incorrect, you just can't pick one
individual out and---Ferring said he didn't just pick one out it was just the top
name, Hoffmann stated that they just picked the first one. Jacobs stated without
having the League down here and explain everything. Ferring said, listen this is
for educational purposes--Jacobs said that is why he is trying to get the League
down here, to educate you Mr. Chait-mm. Ferring stated that the League will be down
here Mr. X-Chairman and they will be notified to come in here and explain theil
performances and if they want to continue as the investment managers of this Ci L;.' .
Another thing we have over here is this master trust agreement, are you f~liaL
with that Mr. Jacobs, your signature is allover it, isn't it--Jacobs said yes.
Ferring said isn't it, isn't your signature allover this master trust agreement--
Jacobs I was the Cr~il~n--Ferring said you better believe it, you have given the
Florida League of Cities complete unbias power--Jacobs stated absolutely--
Ferring said and again---Jacobs stated that was the whole purpose of it--Ferring
stated and again, it was the pttrpose of it, and you stayed on as Chail~ and one of
those trustee spots over there didn't you; were you invol ved as one of the tt'll;Sb:c:J
of that Florida League Board of Trustees Meeting
.~ Winter Springs Pension Plan
March 24, 1992
Page 10
Fund---Jacobs said, I was the Chairman, and that is why I signed the trust
agreement--Ferring yah, yah, so you keep going on recol'd and I am trying to--Jacobs
said that he is not with them anymore--Ferring and I'm trying to put up
scenarios to show different case loads. Jacobs stated that Ferring was distorting--
Ferring said that he is not distorting, how can you distort figures--Jacobs stated
by what you are doing, I just got through explaining to you how that happens--
Ferring said I know what a time weighted individual is, I'm giving you a one year
plan, a two year plan, a five year plan and a ten year plan, okay, I'm not jl~t
going on a one year plan. Alright look, there is no sense beating a dead hOl:se on
this, lets go into another section.
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Hoffmann said just look at Alimina's looking at the back section, his total balance
before 91 was $751.00, he has been working two years, 4% of his salal"y---FelTL,-j
stated that there has been two contdbutions made on his behal f up unti 1 September
of this year, one was for $751.24 ~1d the other one was for $831.34, his cur lent
prior balance at this time shows a retul~ of a total $1,709.00, now deduct $1,582.00
fram that you have $127.00, that is a two year case. There is a one year case
where the guy has absolutely zero and then there is a ten year case and a
five year case----Jacobs stated that is why the League should be down here and
explain whether or not that they are only showing the increase after the first year
contribution and they haven't shown it after the second--Ferring said that when we
send out invitations they will come.
Jacobs said that we should do that ahead,---because this Chairroan ~s under tho:
impression tllat these employees are not getting----Bel~n stated that we had our
first meeting in November and here it is almost the end of March what is it going to
be a year before we finally detelTIUne whether we are going to stay with the Florida
League----HofDmann stated even if the League was here and gave us ~1 excellent
report, I would still want to see what the other people can do. Jacobs stated that
he is not opposed to that..? on the basis that the League is not prefolTIUng.
Ferring stated that at the meeting last night, it was indicated fram the Camrrdssion
that they are looking to increase the percentage of contributions on the City's pad
for the pension fund. Now, going through the pl~1 documents---Hoffmann asked what
was contributed last year 168,000? Fening stated 117,000 he thought, basically the
Board should have all received a copy this, which gives the ineligibility of every
individual member that works for the City of Winter Springs. If you will look
towards the back of the pages, you will see what I feel is a very great inequity,
because of the way the current plan is written up, whereby lnembers/en~loyees can not
even get started in this plan until they have 18 sometimes more than that befoL~
they can come into the plan, because they have to have a year and then Hait lmtil
the next plan date opening is before they can come into the fund. So in same cases
~ it is 18-19 months that they are in the employ of this City and they have not got
one nickel contributed towards their particular fund. That is something that can be
changed under the tax refoDn act of 1986, also under the tax refOl1m act of 1986, ~1d
the:ce is a letter here from Mr. Bead that was dated last year and in this particular
Board of Trustees Meeting
~ Winter Springs Pension Plan
March 24, 1992
Page 11
case, and I side with the Florida League of Cities on that, that every year ttcj
request a legal opinion from Mr. Mead regarding the ffiTIount of forfeitures that have
to be either taken and kept in the fund or returned back to the City as pdl.-t vf tl!e
next years contribution. One of the letters Mead has wdtten, which the Board has
copies of, he indicates that when the plan was going to be l-edrafted in 1992, cud
this is 1992, we are in March already, that this particular inequity could be
changed. "When the plan is redrafted next year to comply with the tax reform act of
1986 we may change the allocation provisions subject of course to the apPloval of
the City's Board of Tl-ustees, to provide for crediting of fodeitmes le.
the remaining participants, that would of course eliminate the issue of l-etml1 of
forfeitures in future years", if you look over the course of yeal:S on tt.o::
return of forfeitures that the City has enjoyed at the employees t::XPd1St.::
or the terminated employees expense you'll see ther-e is cl ose to ow:: hundl.-ed
thous~1d dollars overall, ~1d to lne that is quite a large sun of money. This could
have beE:n redraftE:d a lot quicker, .1 think we have to look into the pall cf
redrafting this pension plan, there are inequities that I think that C~1 cor-l:ectcd
in the employee behalf. Thet:e are also areas which if indeed the City is
considering increasing the contributions on their behalf, to the City and the pla.1
is going to be redrafted, it can be redrafted in a way legally that the enploYt::e
himself can contribute a portion to his own pension plan.
~
Jacobs stated that that was discussed last time, there seems to be a pwblem with
that, he stated that in fact he brought that up and can't remember whether Mead said
we couldn't do it or---Ferring stated that at one tirr~ you couldn't do it---Jacobs
said because some employees may want to throw in an extra 2,3 or 4% but there seens
to be some road block in there or some glitch with paper work or whatever, as to
what it is.
Ferring said that was true at one given point, but since the tax refonm act of 1986
a lot of things have changed, and I think Mead is aware of it---Jacobs said that we
discussed this last year, he should be aware of the reform of 86---Ferring said that
he is not really thrilled with Mead's performance so far---Jacobs stated that he is
not convinced that that was nothing more than an acmunistrative decision fran
Rozansky, I don't know, 1 don't remember, but I do remember bringing it up and if
you have minutes of that meeting you may want to take a look at it---Fen.:ing stated
that unfortunately there isn't any nunutes for any pension meetings, and that's w11at
we have a very difficult----Hoffmann said that he r-ecalls where ther-e is variabl(;
amounts contributed like the en~loyee can contribute sanething there ale limits as
to how much an employee can contribute and usually they can say if the ffiuount Gf
contributions fram the upper echelon , like a 401 K.
Jacobs said that? done for the City on an ~mual basis maybe that is what " .lnaybe
the City has to thJ:ow it in to some type of money market account up until theil:
arlilual contribution, if that is the case, I don't see no problen.
~
Ferring stated that there can be a defined by law, I maybe wrong, and again this is
is what we need legal guidance on, and 1 personally I invite anyone to talk to
Attorneys that they may know of that would give them sorr.l'2: pro bono advise In n:::l'ect
Board of Trustees Meeting
I"""" Winter Springs Pension Plan
March 24, 1992
Page 12
,."......
"".....,
to these particular plans. I think that it can be a defined plan and it can be a
defined amount that the employee would have to contribute in conjunction of \-ihat the
City contributes, it can be done on a 75% a 25% basis, it can be done on a 66 2/3 to
a 33 1/3% basis, it can be done that way; its just has to be drafted properly in
confoi~nce with ARISA, and it can be done. This way if we use an arbitrarily
figure, just say the City decided to increase the contributions 2%, and it gOtS to
6% and the employee at the same time will be allowed to contribute 3% of his gross
earnings, that would be a total amount of 9% going into an employee's pension fund
and it would be a great difference, a market difference over his professional career
in the City of Winter Springs. I think it is something that we can look at and I
invite all of the Board, if you have any input on this thing. BeDTan asked what the
Federal Government does--where the Federal Government contributes "X" nurnbd" of
perc8nt to an ernploYl'2:e's pension and then an employee contributes "X" numLel. of
percent. Ferring stated that under ARISA you can do that, and yes, large
municipalities have that all the time, it is a defined contributioll
eT~loyee/employer benefit plan where both parties contribute to the plill1. Thctt's
what lnakes the plan ITDre stable and more worthwhile for the professional. Berrrun
asked if it was mandatory for the employee to contribute. Ferring stated yes, it is
corning into the plan, it is a prerequisite that you have to select. Jacobs statlod
that you can come in at 1% then on the anniversary you can change it to 290 or---
Ferring said that there are variables wr~t wants to be done here, what should b~
done here, it to keep the contribution percentage at an even level, thd"eL~'
eliminating a lot of cr"azy paper work, if an errployee is putting in a hal f percent
or one percent, two percent etc. it can get confusing. Hoffn~ill said you havti:: to
describe the steps. Berman said that as long as it doesn't cost the City any ext~Q
money, I think it is something that we really ought to seriously considti::l: giving tLc
eT~loyees the option of contributing an added percentage, in other words they elect
a percentage, I forget now of whether in the commercial world, whether it is on Wi
annual basis that you can ch~lge the percentage or what it is, now let's not g~t
invol ved though because like in sorne 401K plans in a coomercial world seni aI1.nuall y
or annually you can change the distribution of your contribution, I don't think we
ought to get involved it that. Fening said absolutely not, I think tht:: 401K and I
think the City right now has a 401K in effect for some of the employees. JacoLs
stated that they have an option, they don't call it that but that's what it is.
Ferring said that he thinks it is a way that we should consider it. BerTIan statt::d
that if he was an employee of the City, he would contribute to his pension fili1J.
Discussion. Jacobs stated that the City has a deferred c~ plan h'here an €:fIlplcIYt..:,:
can contribute to and upon leaving can draw all the monies out not like the 40B\, he
said it is basically the same, he may be mistaken. Berman stated th.:..t when L<-,
retired he had the same, an employee contribution and a 401K, he n~ntioned a 10 year"
forward averaging or pay taxes. He said that the Board should consider in offering
the employees an option to contribute up to "X" number percent in addition
to what the City is contributing. Ferring said this is part of his reasoning is,
going out to bring in these different investment management companies because they
have specialists in everyone of these investment ccmpanies that can glve .'iC')(
direction as to case law and to what actually confilTIs with the ARISA plans and even
"......,
the Florida
unfortunately,
Winter Springs
March 24, 1992
Page 13
Statutes. I think we went
and I Board of Trustees Meeting
Pension Plan
through
an
exercise
in
futility
agree with Mr. Jacobs on this particular situation as far as attorneys are
concerned, I ~ very dismayed when I went through the bills of Mr. Mead, probaLly a
Vf::;ry good attorney, he happens to be very pricey also. I Wffit down and loob:;d, you
have never had the pleasure of meeting him, I met him once for a short lneeting, to
try and get these questions answered and you have the result of that meeting L.
front of you. One meeting we had with him in his office which lasted approxirrutely
a little less than an hour, and him drafting up the letter in response to the
questions that were asked, plus telephone conferences, office exp~lses, and so on,
corr~uter research, the total amount of money spent by us with Mr. Mead in the last
year was $3,238.52, and this is all just to ascertain what the duties are of the
Board of Trustees and a little discussion on forfeiture luonies.
Ferring said what he would like to do if possible, is to bring on board a plan
Attorney that is not going to, that would be willing to give us some pro Luna wod\:,
that would be in the spirit that we are doing right here. It is possible to get an
Attorney that would work for a flat rate as opposed as being on all. hour clock. I
mentioned that to Rozansky and he didn't believe the cost Mead had charged.
~
Berman asked if the Board's legal problems that complicated. Ferring stated no,
that is why I'm saying that if you bring in the right people they can draft up a
pension plan for you that confolTIS with ARISA and then all you need an Attorney for
is to go over the legality of it to see if it is proper legally. But it can be
drafted and it's fairly simple today as compared to the way the plan documents were
dl-awn up originally on the fund. You have pages of the plan document here, and it's
a lot more simpler today then the way they have them.
"......,
Hoffmann asked who in the Florida League pension fund will address ? Ferring
said he was going to send it to Joyce Case, because that's the only contact that he
is aware of. Jacobs said that is the right one to contact. Hoffmann asked if we
should be putting it, we don't say what--Ferring said you are welcome to suhnit to
any of the lists that I'm going to build up, if you have other investment ffial1age~1t
firms you want to contribute to send out the RFP's fine, let's by all fileallS do this
on a cooperative basis, I'm going to draw from a list that I know are credible
lists, but if anybody else on the Board of Trustees has an investment managE:lT,ent
fillm they would like to came in and explain their position, we are here. Everybody
wants you, believe me they do, there are firms that has 600 lnillion dollal.."s tbrOll0h
out the country and they know how much we have in our fund and they want to come on
board with us, and what they sold me is that their adrrdnistrative fees aLe just 65
basis points. Ferring said do you know what 65% basis points are compared
to 3 1/2 % --Jacobs stated we are not paying 3 1/2 %---Ferring said just take a look
at the figures fram last year--Jacobs said that you are ITlisguided in those figures
to John--Ferdng, well maybe so, they can explain that to us when they came in, if
I'm ITlisguided they can explain it, what you don't see Bill is the fact that there
are a couple of people that getting monies in this fund, there is the Florida League
of Cities, there's Atlantic Capitol Management, and there is C & S SOlV~lt Bank,
there's three different entities that are receiving expense funds from this City, so
it's just not the Florida League of Cities, so the figures are here, I didn't Board
of Trustees Meeting
~ Winter Springs Pension Plan
March 24, 1992
Page 14
r
manufacture these figures, the 18,000 dollars that they charged us last Yca~ for
expenses, I didn't manufacture them they are here. Bel~un stated that wher~as if
you are dealing with, you know for example I'm not sure if they are involved in this
type of thing, Morgan Guarantee Bank, you are only dealing with one, it's not 11orga~
using an investrrent firm and Morgan using another bank it's Morgan and thei r
err~loyees. Ferring stated that a lot of the work is being done in-house, for this
fund, a lot of the paper work is being done in-house, I had gotten a statement fr~n
Mary Wilson to Harry Martin, in the subject of pension plan, and what her input ill1d
what she does as far as workup on the pension funds, and she has eight different
items listed as far as request iran Finance Department a list all erc~l oyees employed
during the plan year ,social security number, names and hours worked, ill1d total
compensation salary. Prepare a list of all participants eligible for a City
contribution, list consists of social security numbel:, etc. Once the list is
canpleted and the totals calculated the amount that the City will contribute to tl.;;
employees is figured 4% of total. Prepare a list of all ineligible fOL
contributions until the next plan year, consists of social security number, LirtL
date, hire date, total hours worked, etc. Prepare a list of other ineligib10
employees during the plan year and etc. Ferring stated that this goes right on dowli
the line, that is just Mary Wilson; she does all this and when she finisht:::s it on,-,0
all the above information is completed she forwards the lists to the Florida Le~gue
of Cities, Joyce Case.
Fening said so they don't do this basic work. Jacobs said well they can't do that.
Ferring said he understands that, then Harry Martin on his end he also has to do the
calculations in order to give to Mary Wilson. So a lot of work is being done in-
house. Jacobs said it has to be, so what is your point. Ferring stated his point
is that there are ways to abbreviate a lot of the stuff that is being done because
it is repetitive. Jacobs said that sounds like a management problem not a Board of
Trustees problem. Ferring said that is exactly right. Jacobs said what Jorrrl just
read off is what we have to do no matter where we're at, you are not going to short
cut that. Ferring said you have to prepare a list, but doesn't mean---? it'.:.;
repetitive. These are things we can go into.
Bel~an wanted to know if there will be a date we want the proposal. Discussion.
Ferring said he has no problem with that. The Board decided 60 days. Ferring said
that will give us time to set up presentations, he also stated that he would likE: t.o
see Florida League of Cities be the first one in here, and hopefully they will be.
Bel!nan said another thing to bear in rrdnd is let's not spread to far apart thE:
interviewing of each. The answer fram Hoffmann and Ferring was no. ferring said
that we will set up an agenda and the only thing on the agenda will be intel:vieHh"Si
the companies. He said he will make sure that everything that comes in the Board
r will receive copies of and have ample time to go through their proposals befo:re liE:
meet. Discussion on the time between the different companies interviews. Ferring
stated that he will try to schedule the interviews on a two meeting basis such as
r"
three on week and three the next week, depending on how many responses we ~ece1ve.
Board of Trustees Meeting
Wiuter Springs Pension Plan
March 24, 1992
Page 15
Hoffmann stated that also, we have the Tri-County League of Cities, excluding
Orlando, we can request infonnation on what pension plans they have, just to get an
idea of what others are doing. Fening stated that he will go to work on th.:..L
imT~diately and will send the Board an exact list of everybody we are sending it out
proposals, I will ask some of our sister Cities also.
Jacobs stated that he didn't see anything here for their fees. Hofnnann stated it
is in the back. Ferring said on page 4, we said please include scl.edule of fee~.
Jacobs asked if the letter asks for past five/ten year perfoDmance. Hoffmar41 stated
that is in there. Ferring said on page 4, I think it fairly well covers \~hat we a::.:,
going to be looking for and what we should enlighten ourselves with. IIofflnaful said
well let's take a look at what's on the market and at the same time we are getting
the Florida League in.
-
Ferring said there are also other changes have come about with the tax refotln act,
it is very interesting to go through that, the vesting procedures have changed
drastically, it use to be 10 years before you are 100% vested that is gone dO~1 50%,
I think it's gone down in same municipalities to five years for full vestm~lt wid
whereby an employee even during his probationary period of one year, gets credit
into his fund and if in the event he does not "cut the mustard" during that peL-iod
of time he forfeits that money. But once he passes his probationary period of tilne
that money becomes part of the vestment. There are so many things that can be done
that we have to look at. Hoffmann said that the opportunity to pa::ticipate 1n a
plan should start after 6 months probationary period not a year and a half. .
Ferring stated when he was looking at the present plan there are some employees that
will not participate in the plan until October 1st of this year, yet they have been
working for the City well over a year already. Jacobs stated that there is a reason
for that, it is nice to do everything but we can't do everything, if there is a
turnover the cost of taking the people off the plan and on the plan and what to do
with the funds. Ferring stated that all can be put into the plan. Jacobs said _that
is part of the C~ssion/rranagement decision as when they enter the plan. Ferring
said there should be no reason why in teday's times that an employee who corr~s to
work for this City does not get cl:edit hem the day he starts employment in thi;s
City. Jacobs said well he does get credit---Ferring said he does not---Jacobs said
he has to be here then he is eligible, you mean you want his contribution to sta~t-
Ferring said yes after his probationary period his contribution should be credited
to his account. Discussion.
Berman said these are all things we consider in rev1s1ng the plan and subrrUt to the
C~ssion. Jacobs said that the C~ssion has to decide because it has a definite
budget effect. He said if you start making contributions illld then put the
contributions into the fund itself, where the City in the past has been enjoying
~ those lnonies, that's a budget concern. Ferring said sure it is, and the City has to
consider that, but at lease we can put it forward to them and see what their
thoughts are on it. Ferring stated that if someone retires now they can go on foed
starr~s. Jacobs said it wasn't meant to be that--Ferring said well if it wasn't
meant Board of Trustees Meeting
~ Winter Springs Pension Plan
March 24, 1992
Page 16
to be, it is in the dark ages because any professional that corr~s to work for a
municipality and gives 20-30 years to the City deserves to get sane kind of a reward
not just to go out and get an "attaboy" and a couple of bucks. Jacobs said that ::.s
long as the City can afford it he doesn't have a problem with it. FeLring said that
he doesn't see where it will bankrupt the city, if you will look at the infomation
that I gave out and if you look at it and see if someone retires tornOLTOii if th",y
have money to live on.
Ferring said that any professional going to work looks at the future, I thiru( it can
be done without bankrupting the City. Jacobs said what causes the City's probl~n ~~
defining the benefit progrmns and a chain reaction causes the State problem.
Ferring asked if there was anything else that the Board feels should go into the
RFP. Bennan asked about emendation. Ferdng said he is waiting for something hom
the City Manager regarding that because Kruppenbacher has put it into the hands of
the City Manager the responsibility and that he will notify us, he is pretty SU~e
that we would be indemnified, but if not he is suppose to be looking into the course
of what indeunification would cost for the Board of Trustees and as soon as he gets
the report on that he will relay it to the Board.
",.....,
r--
Jacobs asked if we are just going to sent this to the League, your contact wit the
League John. Ferring stated that he has a difficult time making contact with the
League on his own, he is not sure if he has the authorization to do that. Jacobs
said that he thought that at the last meeting, that was what you were going to do--
Ferdng said through the City Manager I was doing all of this, and I was :-lot doing
this as an individual, I had to work everything through the City Manager -- BenTG~
said that was made last meeting--Ferring said the City Charter calls for us to
oversee the plan and make the decisions, the execution of the plan goes to the City
Manager and the Mayor, and that's the way it goes, I can't do anything about that.
Jacobs said that hell you were down in Mead's office with Kruppenbacher, all I'm
trying to say is let's get the League down here. ferring said we will get the
League down here as soon as we send them out this letter we will ask them to Le the
first person to came in and answer questions. Jacobs said that they should cuue
down here and have a separate meeting with this Board to explain--Fening asked if
Jacobs wanted to go off the record--Jacobs said no I want to stay on the record,
they should cane down here and explain what it is you have a p1'oblem Hith--Fening
said well Bill you seem to have more contact with this League than I do, you think
by this time with all the things that you have been doing intervening with all tli~se
areas, that you would have contacted them and said to get in touch \Jith tLe
Chairman, he's going off on the deep end someplace, There's nobody that has tried to
get in touch with me. Jacobs stated that he would be more than happy if FerLing
war!ts him to call up the League and ask them to corr~ down here--Ferring said no, I
don't want you to--Jacobs said ok, well that's what I'm asking--Ferring ~aid that
the City Manager should do that and he has been advised to do that, I mean the
letters speak for theTselves, we are waiting for information, when the infol~ation
is forthc~ng and we get same response fram the Florida League, we will open up the
communications, we are waiting for the auditing of the figures that we asked fOL,
when we get those figures, we will all see them as will the Conmission, MayOl: and
the City Manager. Then we will open our discussirn1S fram that point, at least we'll
r have scmething in front of us to talk about. Hoffmann said that this should s1!<:::(;d
up the thing, if Dick has been sitting on that, and not been calling the League---
Ferring said that he wasn't sure of that.
Ferring asked if there was anything else to be discussed. There was no other
discussior..
The meeting adjourned at 8:20 P.M.
Respectfully Suhnitted,
Mary T. Norton
City Clerk
~
~
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BOARD OF TRUSTEES MEETING
WINTER SPRINGS PENSION PLAN
MARCH 24, 1992
The Board of Trustees Meeting was called to order by Chairman John Ferring at 7:00
p.m., March 24, 1992.
Roll Call:
John Ferring, Chairman, present
Art Hoffmann, present
Seymour Berman, present
William Jacobs, present
William Dickey, absent
Motion was made by Jacobs, seconded by Berman to approve the minutes of November 14,
1991. Vote: all aye; motion carried.
Chairman Ferring gave a report on the meeting with Attorney Bob Mead, Attorney
Kruppenbacher, City Manager Richard Rozansky and Finance Director Harry Martin and
himself. The item of indemnification of the Board of Trustees and the powers of
the Board of Trustees were discussed.
Chairman Ferring said in his opinion there is a need to go out and look for new
investment managers. Mr. Jacobs objected saying it was his understanding the Board
was going to do some communicating with Attorneys Mead and Kruppenbacher and the
Florida League. He asked that the Florida League be asked to come here and explain
what they have been doing.
-
Chairman Ferring passed out a draft proposal that he put together for the Board to
review. He said this is going to go to investment people and also the Florida League
of Cities and they will have an opportunity to come in here and give their performance
records.
Motion was made by Ferring that the proposal that the Board just received be sent out
under the City of Winter Springs letterhead. Seconded by Berman. Vote: 3 ayes and 1
nay. Discussion. Jacobs stated that for the record he would like to state that his
reason is not that we do not ever go out for bid, it is that he would much prefer to have
this Board meet with the League of Cities first and then go out for bids. Mr. Ferring
said Mr. Jacobs should have thought about that when he was Chairman. Mr. Jacobs stated
there wasn't any problem and he said that he doesn't believe there is a problem now.
Discussion followed on the Money Purchase Pension Plan Reports from 10-1-90 to 9-30-91.
Chairman Ferring stated at the last Commission Meeting the Commission is looking to
increase the percentage of contributions on the City's part for the pension fund.
Chairman Ferring talked about some inequities in the current plan regarding the amount
of time before an employee has money contributed into his account. Also discussed
was forfeitures and the redrafting of the plan to allow employee's to contribute to
their plan.
-
Board of Trustees Meeting
,_ Winter Springs Pension Plan
March 24, 1992
Page 2
Chairman Ferring said we will get the League down here as soon as we send out this
letter and we will ask them to be the first ones to come in and answer questions.
Mr. Jacobs said that they should come down here and have a separate meeting with
this Board to explain whatever the problem is.
The meeting was adjourned at 8:20 p. m.
Respectfully submitted,
Mary T. Norton,
City Clerk
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