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Home My WebLink About1996 07 30 Board of Trustees Regular Minutes MINUTES BOARD OF TRUSTEES JULY 30,1996 -- REGULAR MEETING 1. Call to Order Chairperson Hoffmann called the meeting to order at 7:30 p.m. in the conference room, Municipal Building. 2. Roll Call Jim Ryan, absent Art Hoffmann, Chairperson, present Si Berman, present Brian Fricke, absent Ralph Bowman, present The Chair also announced that SunTrust representatives, Brian Ballew and Diane Garcia, and City Attorney Tom Lang were present. 3. Approval of April 23. 1996 Ree:ular Meetine: Minutes Chairperson asked if there were any questions or comments regarding the minutes. Motion: Approve the minutes as read. Motion by Berman. Second by Bowman. Vote: All ayes. Motion passed. 4. Ouarterlv Review of Trust Finances with Brian Ballew of STI Capital Manae:ement Ballew distributed portfolios and a document titled S & P 500:Relative Performance by Sector. He explained which sectors did well and poor, then reviewed the yield curve. Ballew presented the portfolio. He stated that the markets were strong through June 30, 1996. Bonds were still a little weak, but the stock market kept going up. It was a positive quarter because of the slight overweight on the equity side. The Cash Flow Report for the quarter and nine months was discussed. Chairperson Hoffmann asked Ballew to clarify the low amount in "Interest and Dividends". Ballew explained that in this common trust fund the interest that the bonds kick doesn't get reinvested into new shares of the common trust fund, it just inflates the value of current shares, so it doesn't post as interest and dividends. Cash flow comes from these bonds, but the way it really gets reflected in this common trust fund bond portfolio is a lot like the stocks owned where they go up in price, but mayor may not be sold. Chairperson Hoffmann added, it shows in the report the average income from bonds. Ballew said that the far right statement will give a yield, and that is Board of Trustees, Pension July 30, 1996 Regular Meeting Page 2 of 4 basically what that investment is yielding; it's just that it doesn't flow through the reconciliation in the portfolio. Chairperson Hoffmann said the chart he put together shows increase from income. He also asked how the interest income gets in there at all. Garcia said probably a little money market interest. Ballew said that money comes in, and he can only invest in the common trust funds twice a month so there is always a little bit of money sitting in there until it is invested. Chairperson Hoffinann asked Ballew ifhe recommended any changes to the percentage mix. Ballew said that he doesn't have any changes to recommend for the city's plan now. He added, the city may want to start talking about asset classes. Right now the city does not have exposure to mid cap or international stocks. Chairperson Hoffmann said that any change would have to be something that would maintain the balance and immunity of major fluctuation. Ballew said that he would bring in any materials that the city requests. Ballew said there are probably 8,000 stocks out; the city owns about 100 in growth products and about 80 in value products. The Gross Domestic number comes out Thursday, and the Employment number comes out Friday; both figures will have a lot to do with rates. Chairperson Hoffmann asked if there was an average PE for the City's plan. Ballew eXplained that if the growth and value were added together then divided by two that would give the average PE for the equity portfolio. Ballew recapped the high grade equity income section of the portfolio. Discussion of how SunTrust researches companies. Chairperson Hoffinann asked what the trading costs are percentage wise to the asset value of the different funds. Ballew said, cheap-something like 2 cents a share. He then asked what the turnover, asset wise, was for the quarter. Ballew said that both of the equity funds that the city is in has annually 100-120% turnover. The Chair asked ifSunTrust looks back and sees what would have happened if they hadn't traded at all. Ballew said they had charts that showed specifically that, and how much value was added by actively trading the portfolio. Discussion of new purchases within the quarter. Garcia said she received a copy of the eight amendment to the planned document. Chairperson Hoffinann asked if costs have been calculated. Garcia said it came out to be 20 or 30 dollar increase. She said they are waiting on information from the city to complete the 3/31/96 process. She also Board of Trustees, Pension July 30, 1996 Regular Meeting Page 3 of 4 explained that when the amendment goes into effect in October that SunTrust will need report of which portions go to employer and employee. Something needs to be sent with the employee money that tells who's money it is and how much per person. The six month allocation report will have separate line items for Employer and Employee contributions. The employee's certificate will have a breakdown of employer and employee money. 5. Attornev Lam! presentine: Proposed Revisions of the Pension Plan Attorney Lang distributed copies of the eight amendment to the pension plan. He suggested approving the amendment; any changes can be made until October 1, 1996. The plan goes into effect October 1, 1996. Chairperson Hoffinann asked if an employee terminates for any reason, then his contribution is 100% vested? Attorney Lang said yes, there is no forfeiture of employees contribution. Attorney Lang stated that this amendment replaces six percent contribution of the employer with seven percent, and adding one percent of employee contribution which is a total of eight percent. If the Commission votes to go to ten percent the following year, then 3.01 would change to eight percent and 3.03 would change to two percent. Chairperson Hoffinann asked what the first paragraph of page 3 indicated. Attorney Lang stated that if the contributions that are required of them (employer) are not made, then they will make them up. The employer has no obligation for employee contributions that are not made, unless it is through the negligence of the employer that they are not made. Attorney Lang stated that 6.02(c) refers to retirement. The employee has to give notice to whether it will be rolled over or taken out. If the employee rolls it over, then it is not subject to tax. There is a thirty day period in which to roll it over once it is taken out. Attorney Lang added, Section 4.02(a) indicates that a cap still applies. Discussion of the retirement plan survey developed by the General Services Department. Berman wanted to know if anyone asked employee's for their opinions regarding the pension plan change. Chairperson Hoffmann said he thought only unofficially. Motion: Approval of Eight Amendment for the Commission to consider. Motion by Berman. Second by Bowman. Vote: Hoffmann, aye; Berman, aye; Bowman, aye. Motion carried. Board of Trustees, Pension July 30, 1996 Regular Meeting Page 4 of 4 6. Unfinished Business No comments. 7. New Business The Chair announced that Berman has given his resignation because he will be moving out of the city before the next meeting. Berman thanked everyone for making his services as a trustee pleasurable. Attorney Lang suggested that a resolution thanking Berman would be appropriate. Chairperson Hoffmann said that he was still welcome to the Employee Picnic in October. The Chair also announced that by city code if a member misses more than two consecutive meetings in a year, then the member automatically loses the position. Brian Fricke has missed three consecutive meetings, so it needs to be reported to the Commission for the August 12th meeting along with Berman's replacement. 8. Adiournment The meeting adjourned at 8:40 p.m. Minutes submitted by: Martha Jenkins, Deputy City Clerk City of Winter Springs, Florida