Loading...
HomeMy WebLinkAbout2010 02 23 Board Of Trustees Special Meeting Minutes CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING FEBRUARY 23, 2010 CALL TO ORDER The Special Meeting of Tuesday, February 23, 2010 of the Board of Trustees was called to Order by Chairperson Maria Fair at 6:43 p.m. in the Commission Chambers of the Municipal Building (City Hall, 1126 East State Road 434, Winter Springs, Florida 32708). Roll Call: Chairperson Maria Fair, present Vice Chairman Ben McMahan, present Board Member Vernon Rozelle, Jr., absent Board Member Max Swaim, present Board Member Barbara Watkins, present A moment of silence was followed by the Pledge of Allegiance led by Chairperson Fair. Next, Chairperson Fair asked if there were any Agenda changes and there were none noted. PUBLIC INPUT No one spoke. REGULAR AGENDA REGULAR 600. Office Of The City Manager Presentation From Bogdahn Consulting, LLC Of The Completed Investment Review Report For The Quarter Ended December 31, 2009. Mr. Dave West, Bogdahn Consulting, LLC, 4901 Vineland Road, Suite 600, Orlando, Florida: directed the Board's attention to Page 16 of the "Winter Springs General Employees General Plan and Trust" Report and commented on "Comparative Performance Trailing Returns ". CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - FEBRUARY 23, 2010 PAGE 2 OF 10 Board Member Barbara Watkins inquired, "When you say one (1) year is that Calendar Year or Fiscal Year ?" Mr. West replied, "That would be Calendar Year. So, every time we report, we'll advance one (1) quarter and it will be a one (1) year look back." Board Member Max Swaim asked about the significance of the column labeled, "Since Inception." Mr. West explained, "The Inception date numbers there, we are going back as far as we have data available — the continuation of the life of the Plan." With further review, Mr. West explained Dalton, Greiner, Hartman Maher & Company (DGHM) had a number one (1) ranking in the first quarter. Mr. West also noted, "Galliard (Capital Management) is restricted and limited to investment Grade Bonds" and added, "The lower the quality the Bond, particularly in sub - investment grade, the return was expedientially higher. So the point I want to make here, Galliard (Capital Management) has achieved phenomenal returns for you and ranks very well in a peer group." Discussion ensued regarding the American Stable Value Fund and Vice Chairman Ben McMahan asked, "Have you and your team started to think any differently about where an entry point might be for Funds like this, or do we still want to take it quarter by quarter for awhile and see how things go ?" Mr. West responded, "The Bogdahn Group is still recommending a hold pattern. But, it's moving up in importance and at some point I would expect in the not too distant future, we would be coming out with a recommendation to consider committing additional capital." Mr. West promised, "I will absolutely be communicating any change in position in a timely manner so we can act on that or have the option of working on that recommendation." Lastly, the term "All Public Plan -Total Fund Median" located in the Winter Springs General Employees General Plan and Trust" Report was clarified. REGULAR 601. Office Of The City Manager Discussion Of Policy /Procedures For Rebalancing Actions. Mr. West referred to a Memorandum dated February 18, 2010 which was provided to the Board at their request and summarized, "A suggested change or amendment to the proposed Policies and Procedures." Mr. West described, "In summary form would give the Investment Consultant limited and I emphasize limited — authority to basically, number one (1), we are going to be making rebalancing recommendations to the Board; as we currently are. Number two (2), should the Board choose to act on those rebalancing recommendations, we are then proposing to authorize the consultant to know to go directly to all of the pre— established Vendors and direct the asset flow — between the pre— established Managers." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - FEBRUARY 23, 2010 PAGE 3 OF 10 Next, Mr. West addressed the communication process; implementation completion related to a timely manner consistent with the liquidity confines of the Plan Investments and clarified the term "Vendors" for this Board. Draft letters to Fifth Third Bank and Galliard Capital Management were reviewed and noted "Accepted" by the Custodian and Vendor. Mr. West then stated, "In the event we hire a new Manager, we cannot under this authorization; we have no authorization to direct a rebalancing to that new Manager until they have been pre- Approved and the Custodian has that Approval, that wire authority." Chairperson Fair inquired, "It was my understanding that Galliard (Capital Management) required a liquidation authorization form ?" Mr. West remarked, "That was a one (1) request that came from their office in January. They have not required that before and they sent that email thinking it was a change in procedure, so we accepted that. But, at the end of the day, they did not need it," and added, "They ended up accepting as they have in the past, the direction in the form that it was sent out." Chairperson Fair commented, "So we are not going to have a problem in the future ?" Mr. West replied, "No." Following, discussion took place regarding lack of communication between the Bogdahn Group and Galliard Capital Management. Next, Chairperson Fair asked, "What date did the asset rebalance actually take place ?" Mr. West answered, "The actual rebalancing actually took place the month end — January [2010] — it occurred — over the end of January [2010], first business day of February [2010]." Chairperson Fair then requested, "How often do you get performance numbers from the Money Mangers ?" Mr. West responded, "We would be compounding monthly investment performance." Chairperson Fair continued, "What I would like for you to do between now and the next Meeting is, I would like for us to get the performance numbers from each Money Manager from November 30 [2009] to January 31 [2010]. I want to know what effect there was on this Plan." In addition, Chairperson Fair suggested, "Those were two (2) months that we can determine what effect it had on the Plan assets, being positive or negative. So, can you bring us back that information ?" Mr. West replied, "We can." There were no objections from the Board regarding this request. Next, the Winter Springs Pension Plan in relation to other Pension Plans was discussed. Chairperson Fair then inquired, "Have all the net contributions been sitting in cash? What does Fifth Third (Bank) do with the money when they get a contribution? Have they required a standard letter before? Kevin (Smith), have you been calling Fifth Third (Bank) and saying `Hey, we are sending you contributions. By the way would you invest the money ?' Where has this money been going ?" CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING FEBRUARY 23, 2010 PAGE 4 OF 10 Mr. West referred to a decision made by the Board of Trustees in July 2009 and mentioned, "There is a standard letter in place for Fifth Third (Bank). So they were allocating excess dollars — or net available dollars from the R &D (Receipt and Disbursement Account)." It was noted that the Memorandum reviewed earlier, does not address that there was a standard letter in place with the Bank. Chairperson Fair reiterated, "Between now and the next time we meet, what I would like to know is from the time money comes out of the employees paycheck and from the time the money comes from the `City coffers', how long does it take for the money to be sent and invested by the Manager ?" Mr. West provided the Board with the following statement, "Basically from the communication dated July 31 [2009] there is a standing order to Fifth Third (Bank) to complete rebalancing direction and basically direction is as follows: allocation of future net contributions, the R &D (Receipt and Disbursement) Accounts should be re- directed to the Equity Accounts as follows: we have thirty -eight percent (38 %) going to Dalton (Greiner, Hartman Maher & Company), thirty -eight percent (38 %) going to Lateef (Investment Management, LP) and twenty -four percent (24 %) being wired to Voyeuger Asset Management (now known as RBC Global Asset Management [U.S.], Inc.) and this is to be done on — a net available cash at the end of each quarter." Chairperson Fair expressed, "We have money coming out of an employee's paycheck and it is sitting in some cash Account until the end of the quarter before it is invested? This is really how it is working? Because that is really unacceptable." Vice Chairperson McMahan commented, "Is that standard operating procedures for these types of Pension Funds ?" Mr. West replied, "It would be for Funds that have low net cash surplus." Discussion regarding the Plan and contributions were discussed further. The Board voiced their suggestions on receiving a Statement depicting the Funds distributed and allocated. Mr. Kevin L. Smith, City Manager remarked, "I have a new Finance Director coming on board next month — there will be Pension Income Statements added to the Quarterly Financial Report that goes to the Commission, which would make it very easy to get the same information to this Board." The Board referred back to the "Winter Springs General Employees General Plan and Trust" and then discussed Page 15 entitled "Financial Reconciliation ". Tape 1 /Side B Further discussion ensued regarding the money only being invested quarterly and Chairperson Fair posed the question, "Is there any reason why the money can't be invested monthly ?" CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - FEBRUARY 23, 2010 PAGE 5 OF 10 Mr. West advised, "We can certainly make a changing order to do that. I want to review to make sure there weren't any outsized cash flows mid —quarter for whatever reason that would prevent us from doing that," and added, "We would be happy to put together a revised standing order that directs the Custodian — that directs Fifth Third (Bank) on a monthly basis to invest net cash proceeds, pro rata per the Investment Policy Statement targets, exempting, unless there is a change, exempting real estate, the allocation to real estate, which I believe is our standing order. And that allocation by default will go to the Bond Account, the Galliard Core Bond Account." Next, the Board discussed minimum banking requirements. Chairperson Fair suggested to the Board, "How about we ask Dave (West) to take this back to the Bogdahn Group and to come up with a recommendation that would work that would accomplish the goal with getting the money invested in a more timely fashion." Mr. West addressed the Members, "I could provide that solution right now. That would be to — revise the standing order for Fifth Third (Bank) to invest monthly net cash proceeds per the policy targets, exempting real estate and allocating the real estate portion to the (Galliard) Core fixed income portion. By making that declaration, now we have to go back and find out what is the net cash flow. Go through the exercise. We can provide the data, but you'll have effectively communicated a direction. We can follow through on that direction, come up with that number and get it implemented, get the letter written, get that implemented and then we can go over that at the next Regular Meeting. We can get it done." Views of other Plans in relation to the Winter Springs Pension Plan were discussed next. Mr. West recommended that, "We put that letter together — by generic direction of the Board to invest net proceeds as described — find out exactly what that number is. We get it revised, updated and until we have the Actuarial review and we revisit the liability to see if anything has changed, we can have that for standing order until we have that Meeting." Manager Smith asked Mr. West for clarification and stated, "You are saying that any time money comes in that exceeds that threshold, they will contact your office for investment direction. Is that different than doing it every month ?" Mr. West responded, "No, this would be if there were any — outsized contributions, we need to be alerted, any contributions that are beyond the normal monthly or quarterly contribution amount." "I MAKE A MOTION THAT WE REVISE THE STANDING ORDER INSTEAD OF QUARTERLY, IT IS DONE MONTHLY." MOTION BY BOARD MEMBER WATKINS. SECONDED BY BOARD MEMBER SWAIM. DISCUSSION. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING - FEBRUARY 23, 2010 PAGE 6 OF 10 VOTE: BOARD MEMBER SWAIM: AYE BOARD MEMBER WATKINS: AYE CHAIRPERSON FAIR: AYE VICE CHAIRMAN McMAHAN: AYE MOTION CARRIED. Chairperson Fair suggested to the Board, "I think we would also need a Motion for the purpose of creating a standing letter for extraordinary contributions for the Bogdahn Group to be alerted because that would be separate standing letter." Mr. West noted, "Our recommendation would be include that language in a single standing letter." VICE CHAIRMAN McMAHAN MOTIONED THAT "EXTRAORDINARY CONTRIBUTIONS" BE INCLUDED IN THE STANDING LETTER. CHAIRPERSON FAIR ADDED THAT THE BOGDAHN GROUP'S RECOMMENDATION OF THE "EXTRAORDINARY CONTRIBUTIONS" SHOULD BE INCLUDED IN THE LETTER PRESENTED TO THE BOARD OF TRUSTEES AT THE NEXT MEETING. SECONDED BY BOARD MEMBER SWAIM. DISCUSSION. VOTE: BOARD MEMBER WATKINS: AYE CHAIRPERSON FAIR: AYE VICE CHAIRMAN McMAHAN: AYE BOARD MEMBER SWAIM: AYE MOTION CARRIED. The Board Members further discussed the Memorandum provided by the Bogdahn Group. Changes to the language relating to "withdraws" were recommended by Manager Smith which included, "Where it says `withdraw and transfer request', what about `withdrawals for the purpose of transfer request ?" No objections to this language change were voiced. Mr. West stated, "I will Amend the letter and re—run by with the expectation that this will work," and added, "If that terminology does not work — with the Compliance department, perhaps then, maybe as a back —up, it might be appropriate for the Bogdahn Group and for Kevin (Smith) and I to make it work out an alternative language." Chairperson Fair asked, "Anybody have any aversion to that ?" The Members were in agreement to this decision. Mr. West indicated that the Custodian letter would be modified as well. Chairperson Fair inquired, "Once you Amend that, each Manager would receive this standing letter ?" Mr. West replied, "Correct." CITY OF WINTER SPRINGS, FLORIDA M INUTES BOARD OF TRUSTEES SPECIAL MEETING FEBRUARY 23, 2010 PAGE 7 OF 10 Chairperson Fair asked the Members, "Has everybody read the Memorandum? Everybody feel comfortable with that? I need a Motion to accept the recommendation from the Bogdahn Group to utilize this standing operating procedure." Manager Smith suggested, "With changes discussed on the standing letter." Chairperson Fair commented, "Yes." "I SO MOVE." MOTION BY VICE CHAIRMAN McMAHAN. SECONDED BY BOARD MEMBER SWAIM. DISCUSSION. VOTE: CHAIRPERSON FAIR: AYE BOARD MEMBER SWAIM: AYE VICE CHAIRMAN McMAHAN: AYE BOARD MEMBER WATKINS: AYE MOTION CARRIED. With further comments, Mr. West indicated he would contact the Office of the City Manager and copy Chairperson Fair with any correspondence relating to the revised standing letters. REGULAR 602. Office Of The City Manager Discussion Of Presentation /Format Of "Pension- Related Expenditures" Agenda Item(s). In relation to the January 26, 2010 Meeting, Manager Smith commented, "I understand that there were some comments from the dais regarding the presentation of the Pension Agenda Item, the Expenses Item. The challenge that we have here, and I think this may relate to (Agenda Item) `603', — by the time the quarter ends and then — almost thirty (30) days later when you all meet, we do not typically have all the invoices from the Investment Managers." Discussion ensued on trying to accommodate the Board's expectations of receiving a complete expenditures list and a completed Report from the Bogdahn Group. REGULAR 603. Office Of The City Manager Discussion Of Changing The Board Of Trustees Meeting Schedule. Manager Smith reviewed the reasons that the Board had suggested a change in the Meeting dates and noted, "There are no conflicts with the second Tuesday; if you all want to move from January to February, from April to May." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING -- FEBRUARY 23, 2010 PAGE 8 OF 10 Discussion ensued on the Meeting changes. Following, a 5:30 p.m. start time was suggested. "SO MOTIONED." MOTION BY BOARD MEMBER SWAIM. SECONDED BY VICE CHAIRMAN McMAHAN. DISCUSSION. CHAIRPERSON FAIR REITERATED, "WE HAVE A MOTION FROM MAX SWAIM AND SECOND FROM BEN McMAHAN TO CHANGE OUR MEETINGS TO THE SECOND TUESDAY AT 5:30 (P.M.)." VOTE: VICE CHAIRMAN McMAHAN: AYE BOARD MEMBER SWAIM: AYE CHAIRPERSON FAIR: AYE BOARD MEMBER WATKINS: AYE MOTION CARRIED. The Board confirmed that the next Regular Meeting would be May 11, 2010. In other business, Chairperson Fair referred to a copy of the letter from the City Attorney and asked, "How did that go with Retirement Plan Specialists (Inc.) ?" Manager Smith indicated that in regards to not receiving information from Retirement Plan Specialists Inc. that, "It is affecting the ability to get our CAFR (Comprehensive Annual Financial Report) out in a timely manner. It is affecting the ability for me to get the Actuaries on board with doing the study of our Pension Plan; to help me balance a Budget or address how I should balance the Budget in the coming year." Manager Smith then mentioned that, "A lot of the information that Larry's (Wilson) received — and I am using Larry's (Wilson) words here — it creates more questions. There are inconsistencies in the data." Continuing, Manager Smith remarked, "I have had some concerns about the way the Plan has been Administered by the — Actuary, that were not consistent with what I have experienced in the past," and added, "A lot of the Plan Administration duties were handled by the Actuary." Manager Smith then mentioned, "It came to my attention this past week that thirty —one (31) former employees of the City of Winter Springs have not received their payouts." Continuing, Manager Smith informed the Board, "I have asked our Actuary, our current Actuary, to assist in these payouts, which he is going to do; however, he is going to charge us. My position is, although I don't like to spend money, I need to get these thirty —one (31) people taken care of. We are talking about a hundred and fifty dollars ($150.00) per employee times thirty —one (31) employees. So I wanted to make the Board aware of that." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING — FEBRUARY 23, 2010 PAGE 9 OF 10 Vice Chairman McMahan asked, "If we do not have the records of what was supposed to have occurred, how do you know that even the thirty —one (31) number is correct ?" Manager Smith replied, "Based on the information we do have, we have — a good portion of it," and continued by specifying, "It appears though, when you look at the list of the information that we do have, those employees, beyond thirty —one (31), probably, based on their tenure of service at the City, will have a present value of their accumulative benefit that is greater than thirty —five hundred (dollars) ($3,500.00). That is just a — guess so to speak; so the number could be a little higher. I don't think the standard deviation is more than ten (10). Could be forty (40)." Manager Smith added, "I am going to have Larry (Wilson) re- calculate every one of them." The process of the way the employee's distribution checks should have been handled was discussed next. Vice Chairman McMahan posed the question, "When will that standard operating procedure be in place ?" Manager Smith noted that there was a new Finance Department Director being hired soon. Next, Vice Chairman McMahan asked, "And we will see that once it is completed, correct ?" Manager Smith said, "Sure." Manager Smith mentioned that he was working with the City Attorney in regards to the Pension related issues. Chairperson Fair inquired, "Isn't their regulatory body over Pension Actuaries that we could file a report with ?" Manager Smith responded, "My immediate concern is to make sure we get the data so we can get the CAFR (Comprehensive Annual Financial Report) completed, so I can get the Actuarial Report completed, so I can do next year's Actuarial Report in a timely manner and then I can get a study done on the — ongoing viability of our Pension Plan." Further discussion ensued on the time sensitive matters regarding the Comprehensive Annual Financial Report (CAFR). Chairperson Fair asked, "Is there anything that we can do to assist you in this endeavor to get this Report done ?" Manager Smith replied, "Not to my knowledge." Chairperson Fair then communicated, "If there is something that we would need to act upon, between now and — our next Meeting, that would require a Special Meeting, please notify us." Manager Smith stated, "Yes." Discussion. Tape 2/ Side A Vice Chairman McMahan commented to Manager Smith and Mr. West, "I am concerned that we may not be looking at everything we should be looking at to make sure we have crossed all the is and dotted all the i's; that we are taking care of this Pension Plan the way that really guarantees, that in the future that we are not going to have setbacks because we did not think to put something in place. So I just ask both of you to come to our Regular Meeting in May — if there are any other areas you guys need to start thinking about, this, or look at this, I for one, would appreciate — if there is nothing, then that is great." No objections were voiced. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES SPECIAL MEETING — FEBRUARY 23, 2010 PAGE 10 OF 10 Discussion with regards to 401K Plans and Fidelity Bonds ensued. Chairperson Fair suggested that Larry Wilson with Gabriel, Roeder, Smith & Company (GRS) be asked, "Does the City need a Fidelity Bond for this Plan ?" Finally, the history of the Plan Adoption was discussed and how the Board could understand the operation of the Plan in greater detail. ADJOURNMENT Chairperson Fair adjourned the Special Meeting at 8:23 p.m. RESPECTFULLY SUBMITTED: GAYIOUTANT ASSISTANT TO THE CITY CLERK • • • NOTE: These Minutes were approved at the May 26, 2010 Board of Trustees Regular Meeting.