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HomeMy WebLinkAbout1992 06 29 Board of Trustees Regular Minutes ~ BOARD OF TRUSTEES MEETING WINTER SPRINGS PENSION PLAN JUNE 29, 1992 The Board of Trustees Meeting was called to order by Chairman John Ferring at 7:00 p.m. Present: City Manager Richard Rozansky City Attorney Frank Kruppenbacher Chairman John Ferring William Dickey Art Hoffmann William Jacobs Seymour Berman Chairman Ferring summarized that at the last meeting the Board decided to send out a management data questionnaire asking for requests for proposals. An Ad was also placed in the newspaper saying we were going out for proposals. The City has received 20 proposals. The Florida League of Cities did not respond. The deadline was June 4th and one late entry was received from PEBSCO. Mr. Ferring said as soon as the deadline came he sent a memo to the Trustees telling them the proposals were in and to come and review them in the next three weeks and he would call a meeting for the last week in June. Mr. Ferring said he gave the plan out to a legal firm, Foley & Lardner, as was discussed at the last meeting, to see whether or not the Plan was in compliance. They gave us their report back which was given to the City Attorney. .~ Mr. Ferring said the forfeiture money is going back to the City. He said it should be held in the account and it should be used to the benefit of the balance of the employees in the Plan. This has been changed since 1989. Mr. Dickey said this can be done, it does not have to be done. Mr. Ferring said at one point in time you could not do this, but after 1986 it became optional. Mr. Jacobs said first of all there are two plans that we have. The City has basically hired the Florida Municipal Pension Fund to act in behalf of the City of Winter Springs to do the investments, and Mr. Ferring may have been misleading you when he said we are not in compliance. First of all it is an option some of the things we have been talking about. As far as I'm concerned Florida League of Cities is in compliance with ERISA, and the other governing body that takes care of the City's Pension Trust Fund. There are options that the City has and he said he is willing to look at those, but he asked that we not make statements that people are not in compliance. Attorney Kruppenbacher entered the meeting. ~ Mr. Dickey said he has been overwhelmed and amazed with the documentation over this Pension Plan. He said his perception is this City has a pension plan and it was put i~to place in accordance with the laws and regulations of the City and the State of Florida and it has been going along for a certain number of years. He said it would appear that if there is something wrong with the plan, that it would be the admini- strator to say we have got this plan and we are not happy with it. We would like someone either the Board or if the Board delegates it to some citizens' committee to look at what we have and try to find out what is there and why they are unhappy about it and if there are other companies that can offer a better product, a better service, etc. How I see it is here we are as a committee and we are the ones trying to tell the City Council and Manager that this is a good plan, or a bad plan. I question that ~ Board of Trustees Meeting, June 29, 1992 Page 2 that is what we are supposed to do. As the Attorney, maybe you can tell us what we are supposed to be doing. Mr. Ferring said there is a City Charter that says there shall be a Board of Trustees. The Board of Trustees is the governing body of the City Pension Plan. The City Manager and Mayor are the executors of the Plan, they do not determine the policy of the Plan. Mr. Ferring said when discussions were held before the City Commission, all kinds of questions arose as to the performance of the Fund. A lot of employees are unhappy with the performance of the Fund over the period of time it has been in force. Mr. Dickey asked if this has all been documented and Mr. Ferring said no, we do not have letters from the people, but that it is a matter of City record. Mr. Ferring said when you volunteer as a trustee of the Pension Plan you have a fiduciary responsibility. Mr. Dickey said he is not sure that we have a fiduciary responsibility as we are not managing any of the money. Attorney Kruppenbacher explained that issues arose whether or not the FLC was administer- ing the plan properly. He said he opined as the City Attorney that this Board had a fiduciary obligation to assure that the Pension Plan was legal and that you were applying a prudent standard in terms of the City was assuring a reasonable man looked at it. A decision was made to go out for proposals to assure that you, in my opinion, are exercising your fiduciary responsibility to evaluate the current plan and decide whether you want to stay, not stay and/or we want a consultant to advise us. .~ Attorney Kruppenbacher said it is not normal to have this kind of controversy surrounding a pension plan. The only way to clinch it is to go through the painful process of either saying the plan is fine and as long as the lawyer says its legal we are done; or we have looked at the proposals and we feel this group here can do a far better job than FLC. He said the air of discontent was compounded by the League of Cities handling of their communication with the City. Attorney Kruppenbacher said at this point we will assure that whatever you do is legal. We are taking steps to ascertain our ability to assure we can get insurance but the City has taken the policy decision that absent insurance it will indemnify each of you for any claims providing you did not intentionally steal money. Mr. Ferring explained the intent was to see whether or not we could get firms to come in and perform better for the fund. It was decided to go out for proposals and then when we received the proposals we would review them. . Then we would cull it down to 6 firms and discuss with them what they would do to enhance the Pension Fund. Mr. Dickey said we sent out a proposal and we asked for companies to submit information, and who is to say any of us are even qualified to ask the appropriate questions. Mr. Jacobs said the Chairman had them all prepared when he came to the meeting and they voted on them. Mr. Ferring said the Data Base Questionnaire was based on prior experience that he has had working on previous funds. .- - Board of Trustees Meeting, June 29, 1992 Page 3 Mr. Jacobs said he thinks the Board has two avenues. One, which is our plan, how we want to change it if it needs to be changed; what to do with the excess investments and forfeitures, whether to leave it in the plan or return it to the City, and the other one is that we have not identified that we have a problem. Mr. Jacobs said the Chairman has identified a problem, and the facts that he has given are totally misleading. Mr. Jacobs said once we identify what the actual charge is, what the return is, then you can look at whether or not to go out for bid. He said that was what he wanted to, was to identify where if any things can be improved. Mr. Jacobs said the Chairman has pointed fingers at the League and accused them of things and he had recommended at the first meeting to get the League here, but nobody seems to want to do that. Mr. Ferring said what we are doing, going out and looking for proposals to enhance the Pension Fund for the employees of this City is common practice. Mr. Jacobs said as former Chairman of the Florida Municipal Pension Plan, there is not one City that has dropped out of that Fund for any reason. Manager Rozansky said we ought to invite the League here as one of the six firms to be interviewed. Mr. Ferring said we did say that they would be the first ones in and the reason why we sent them the questionnaire was because we could not find in the records of this City the information that was in that Data Base Questionnaire. ~ Attorney Kruppenbacher asked if the Board feels capable of making the evaluation or should a pension consultant do that for the Board. Mr. Jacobs said he is not sure its "broke", nor has the fact been brought forth to this Board as to the actual return and the actual charges of the League. If this Board does not have that, how can they compare to these 20 proposals as to whether or not we are doing better or worse? What is in the records is the actual returns. We had it analyzed last year. Attorney Kruppenbacher said why not have the League come down for your next meeting and take the League through all the questions. Mr. Berman said he finds nothing wrong with having the League come but only if we have in hand a proposal like the other 20 proposals. Mr. Ferring said there is a twofold thing the Board has to atldress, not only the Florida League but the Plan itself. There are inequities that we feel can be improved by amending the plan to change the forfeiture rule and amending the plan to look at the vesting period, and the period of time it takes an employee to become a member of the plan. Mr. Dickey stated he sees it as two separate issues; are the people who are managing the money for us doing a good job and providing the kind of return and service we want, and are we happy with the way the plan is structured and do we think it could be restructured and made better. ~ ~ Board of Trustees Meeting, June 29, 1992 Page 4 Manager Rozansky said he believes the Trustees should administer the plan as best as they can, but he does not think the Trustees should change the Plan. He said that is the responsibility of the Commission. Attorney Kruppenbacher said the ultimate power of the Plan lies with the City Commission. Everyday monitoring of the Plan and is it working right, and making sure that the Plan they have adopted is being administered properly, the fiduciary oversight is the Board of Trustees. Mr. Ferring said as far as changing investment managers he thinks that responsibility lies with the Board of Trustees. As far as changing the Plan, we make recommendations to the City Commission and the City Commission would make the decision. Mr. Dickey asked Mr. Ferring if his interpretation is that the Board of Trustees could move the investment portion of this Plan from one company to another without the City Commission having anything to do with it. Mr. Ferring answered yes. Mr. Dickey said he finds that hard to believe. Attorney Kruppenbacher said the Board of Trustees makes a decision, they recommend to the Commission, and the Commission makes the final decision. Manager Rozansky explained that we were the first City to join the Florida League of Cities Pension Plan, and we signed an agreement that they were going to administer the Plan for us and report back to the Commission. That is why no one was really that active. ,~ Mr. Hoffmann suggested we have the Florida League of Cities at our next meeting with whatever personnel they need so we can review the Plan. Upon consensus of the Board, Mr. Ferring said he would contact Joyce Case to invite her to the next meeting and ask her about the Data Base Questionnaire, and have one filled out. Attorney Kruppenbacher said he doesn't know if anyone has contacted Attorney Mead to update the Plan. He said at the next meeting after the League has given their reports, he said he would give a status report regarding the Legal on the Plan and then this Board can evaluate what they want to do. Mr. Hoffmann said his recommendation is to have the League in, get their questions and in the meantime get extra copies of these proposals so the Board can review them. Have the Attorney evaluate the Plan then discuss the options as well as the requirements. Mr. Jacobs said until the Finance Director can give him the information or we get a professional accountant or professional analyst to determine what the actual charges are that we are paying the League and what the rate of return is, he thinks it is a waste of time. He said he thinks this Board should compare what return the City has received from the League and what the actual charges are and what are we paying. Mr. Jacobs said he thinks he knows what we are paying and what the actual charges are and until we can get an expert to sit down and put it in black and white and say this is the return the City has been getting, he does not want to review the proposals because he does not know what we are comparing. - ~ ,- ~- Board of Trustees Meeting, June 29, 1992 Page 5 Mr. Dickey said he would like to have the League come in and make a presentation and tell him what they do for other cities and how big they are and how they are managing these funds; what their track record is and what they are providing. He said once he hears that then he will be able to make a decision as to whether or not he wants to review the proposals. Attorney Kruppenbacher recommended the League be invited to come here and be very specific as to what the Board wants to ask the League and then confirm it in a letter. Meeting was adjourned at 9:15 p. m. Respectfully submitted, Mary T. Norton, City Clerk