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HomeMy WebLinkAbout2010 08 10 Board of Trustees Regular Meeting Minutes CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING AUGUST 10, 2010 CALL TO ORDER The Regular Meeting of Tuesday, August 10, 2010, of the Board of Trustees was called to Order by Chairperson Maria Fair at 5:30 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., arrived at 5:37 p.m. 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. ❖ ❖ AGENDA NOTE: THE FOLLOWING AGENDA ITEMS WERE DISCUSSED IN THE ORDER DOCUMENTED. •❖ INFORMATIONAL AGENDA INFORM& I IONAI, 101. Finance And Administrative Services Department Providing A Summary Of The Pension Income Statements. Mr. Shawn Boyle, Director, Finance and Administrative Services Department, presented this Agenda Item and stated the Fees were basically the same with the exception of the Actuarial Invoice. Mr. Boyle added, "The reason why it was so high primarily was the poor transition from one (1) company to another. Second — it was a full eighty -two hundred dollars ($8,200.00) for the Actuarial Report for [20]'08 and he also charged us for the Actuarial Report for [20]'09 which we anticipate will probably be in within the next three (3) weeks." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF THE S EES REGULAR MEETING - AUGUST 10, 2010 PAGE 2 OF 10 INFORMATIONAL 100. Office Of The City Manager And Finance And Administrative Services Department Providing A Summary Of Pension - Related Expenditures For The Third Quarter For Fiscal Year 2010. Mr. Boyle provided a brief summary regarding this Agenda Item. City Manager Kevin L. Smith remarked, "We have endeavored over the last year and a half to do more financial Reporting and better financial Reporting with the Commission; have the same pledge to this Board. We ask that you take a really close look at the information we are providing and if you have any suggestions for things you would like to see to help you in your decision making, we are here to help you out." Chairperson Fair commented, That was very helpful. Thank you very much for doing that." Next, Chairperson Fair remarked, "I think changing the date (of the Regular Meetings) was very good for us to do that." CONSENT AGENDA CONSENT 200. Office Of The City Clerk Requesting Approval Of The May 26, 2010 (Rescheduled From May 11, 2010) Board Of Trustees Regular Meeting Minutes. "I MAKE A MOTION THAT WE APPROVE THE (MAY 26, 2010 [RESCHEDULED FROM MAY 11, 20101) MINUTES." MOTION BY BOARD MEMBER WATKINS. SECONDED BY VICE CHAIRMAN MCMAHAN. DISCUSSION. VOTE: VICE CHAIRMAN McMAHAN: AYE CHAIRPERSON FAIR: AYE BOARD MEMBER WATKINS: AYE BOARD MEMBER SWAIM: AYE MOTION CARRIED. CITY OF WIN "1 ER SPRINGS. FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING- AUGUST 10. 2010 PAGE 3 OF 10 CONSENT 201. Office Of The City Clerk Requesting Approval Of The July 28, 2010 Board Of Trustees Special Meeting Minutes. "MOTION TO APPROVE" (JULY 28, 2010 MINUTES). MOTION BY BOARD MEMBER SWAIN. SECONDED BY BOARD MEMBER WATKINS. DISCUSSION. VOTE: BOARD MEMBER WATKINS: AYE VICE CHAIRMAN McMAHAN: AYE BOARD MEMBER SWAIM: AYE CHAIRPERSON FAIR: AYE MOTION CARRIED. AWARDS AND PRESENTATIONS AWARDS AND PRESENTATIONS 300. Not Used. 400. REPORTS No Reports were given. PUBLIC INPUT No one spoke. PUBLIC HEARINGS AGENDA PUBLIC IIFARINGS 500. Not Used. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF I RCS I LES REGULAR MEETING- AUGUST 10, 2010 PAGE4OF 10 REGULAR AGENDA REGI LAR 600. Finance And Administrative Services Department Approval Of The 2008 Pension Actuarial Report Created By Gabriel, Roeder, Smith & Company (GRS). Mr. Boyle pointed out to the Board a slight modification on page 9 of the Gabriel, Roeder, Smith & Company (GRS) "City Of Winter Springs Defined Benefit Plan Actuarial Valuation As Of October 1, 2008" Report and stated, "Basically we went back in and looked at some of the assumptions that they were using and we modified one (1) assumption in their queue and that the assumption of salary increases each year."' Continuing, Mr. Boyle remarked, If you look at the funding requirements for the City only, not the employee and City, but just the City only, it went from twenty -two point three (22.3) from the draft, down to twenty -one point seven (21.7). That is the only significant change in this entire Report and we're just asking tonight that you accept this as the official 2008 Actuarial Report for the Pension of Winter Springs." Chairperson Fair asked, "What assumption are you now using ?" Mr. Boyle replied, "It's more on the magnitude of five percent (5 %)." Discussion. Board Member Vernon Rozelle, Jr. arrived at 5:3 7 p.m. Chairperson Fair then noted, "Basically, what we need is a Motion from this Board to Approve the 2008 Actuarial Report. Do I have anybody that would like to make a Motion ?" "I WOULD LIKE TO MAKE A MOTION TO APPROVE." MOTION BY BOARD MEMBER SWAIM. SECONDED BY BOARD MEMBER McMAHAN. DISCUSSION. VOTE: BOARD MEMBER SWAIM: AYE CHAIRPERSON FAIR: AYE BOARD MEMBER WATKINS: AYE BOARD MEMBER ROZELLE: AYE VICE CHAIRMAN McMAHAN: AYE MOTION CARRIED. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING - AUGUST 10, 2010 PAGE 5 OF 10 Next, Manager Smith commented on the Actuarial Fees and stated, This is going to require some additional funding in the current year. We will be going to the Commission requesting that additional funding prior to September 30 [2010] in order to meet that deadline and complete the full funding per Statutes of the Plan. I just want to advise the Board that we would be taking that item to the Commission to ensure the plan is properly funded." Discussion ensued on the estimated funding amount and impending forecasted amounts. Further discussion. Chairperson Fair inquired, "Will Larry (Wilson) be here next time to present the...'" Manager Smith responded, "...Yes he will." Chairperson Fair then stated, ``Let's make sure that we get that on the Agenda. That we actually talk about that and we bring up the study and kind of a time schedule for that to happen. Even if it means that we have a Special Meeting." REGULAR 601. Finance And Administrative Services Department Providing An Update Of The Rebalancing And Intercontinental Real Estate Corporation Fund Manager. Mr. Jack L. Evatt, 11 Consultant, The Bogdahn Group, 4901 Vineland Road, Suite 600, Orlando, Florida: introduced himself for the Record. Discussion ensued. Next, Mr. Boyle spoke on Agenda Item "601" and noted, "We took that to the Commission last night and they Approved it unanimously under Consent." REGI LAR 602. Finance And Administrative Services Department Requesting Review Of The Pension Investment Policy Statement And Proposed Amendment. Mr. Boyle explained the rebalancing process and mentioned the Office of the City Attorney is reviewing the Contract prior to execution and then said, "We have authorized — Bogdahn (Group) to move out of the Bond Fund, if they recommend that at this point, to hold cash until we can move into Intercontinental (Real Estate Corporation) as a Real Estate...." Chairperson Fair asked, "...Jack (Evatt), what is the current yield on the Bond Portfolio, the Galliard (Capital Management) Portfolio ?" CITY OF WIN I FR SPRINGS, FLORIDA MINUTES BO 1121) OF'IRUSTEES REGULAR MEETING — AUGUST 10, 2010 PAGE 6 OF 10 Mr. Evatt distributed The Bogdahn Group's Report entitled, "Winter Springs General Employees General Plan and Trust 2 Quarter 2010 ". Mr. Evatt then explained "I think it was Dave's (West) desire to not try to time the market, not try to get out now and just — of something else happening. I think the reality is; and I will touch on some of it in the Report, that it's very difficult to predict the direction of interest rates and I think that would be the major driving factor behind the Bond Market is you would see conceivably interest rates rising. Warren Buffet came out and made some comments about that, but there are a lot of opinions about the future of the Bond Market and the future of the economy. But it's really up to the Board." Discussion ensued on the current yield and Chairperson Fair commented, "Based on it being a Core Fixed Income, that is probably between three, three and a half (percent) [3, 3'/2 %], would be somewhere right in there. And so, that's probably why Dave (West) would be making the recommendation not to go to cash because if you take the difference in what you are going to yield in cash which would probably be somewhere around zero point two five (percent) [0.25 %] on a good day versus the three, three and a half (percent) [3, 31/2%]. They are probably getting in a thirty (30) day yield. It probably would be better to leave it in that Portfolio." Mr. Evatt noted, The yield is three point zero one (percent) [3.01%]. Discussion. Mr. Boyle commented, "It is not the recommendation of the City to move..." Chairperson Fair noted, "...I understand, you want to have the money ready when they call it...." Mr. Boyle continued, "....We're just removing ourselves as a stumbling block while we are getting the Contract Approved." Further details regarding the Portfolio were discussed and the time frame of the City Attorney approving the Contract. Chairperson Fair stated, "1 do think it was appropriate — to let (The) Bogdahn (Group) know that we would certainly want to be advised if something should change, please let us know." Manager Smith added, "At the point and time when the transaction is effected, I know (The) Bogdahn (Group) will advise me via email and will advise the Board." C11Y OF WINTER SPRINGS_ FLORIDA MIND IES BOARD OF I RUSTELS REGULAR MEET ING - AUGUST 10, 2010 PAGE 7 OF 10 Chairperson Fair then said to Mr. Evatt, "Just let Dave (West) know that if for some reason there is something that you know your group foresees since you are our Advisor, to let us know, should you feel that we need to act any differently then other than staying in the Galliard, until such time the money has been allocated and the Contracts have been Approved." Mr. Evatt replied, We certainly will." "I WILL MOVE THAT WE - MOVE OUR INDEX MEASURE FROM NACRIEF (NATIONAL COUNCIL OF REAL ESTATE INVESTMENT FIDUCIARIES) TO THE ODCE (OPEN -END DIVERSIFIED CORE EQUITY) INDEX AS — SOON AS POSSIBLE." MOTION BY BOARD MEMBER ROZELLE. BOARD MEMBER ROZELLE THEN STATED, "SO, THE MOTION NEEDS TO SAY — I WITHDRAW MY PREVIOUS MOTION AND I WILL MAKE A NEW MOTION THAT WE APPROVE THE MOVEMENT FROM THE NACRIEF (NATIONAL COUNCIL OF REAL ESTATE INVESTMENT FIDUCIARIES) INDEX TO THE ODCE (OPEN -END DIVERSIFIED CORE EQUITY) INDEX FOR THE INVESTMENT POLICY FOR THE CITY OF WINTER SPRINGS." CHAIRPERSON FAIR THEN ADDED, "THE PROBLEM WITH THAT IS THAT THERE ARE SOME OTHER AMENDMENTS IN THERE." MANAGER SMITH SUGGESTED, "I WOULD RESPECTFULLY REQUEST A MOTION THAT THE BOARD CONSIDERS ADOPTING THE CHANGES TO THE POLICY AS SUBMITTED BY THE BOGDAHN GROUP." BOARD MEMBER ROZELLE WITHDREW HIS MOTION. "I WOULD LIKE TO MAKE A MOTION THAT WE APPROVE THE RECOMMENDED AMENDMENT TO THE INVESTMENT POLICY STATEMENT BY THE BOGDAHN GROUP." MOTION BY CHAIRPERSON FAIR. SECONDED. DISCUSSION. VOTE: CHAIRPERSON FAIR: AYE BOARD MEMBER ROZELLE: AYE BOARD MEMBER SWAIM: AYE BOARD MEMBER WATKINS: AYE VICE CHAIRMAN McMAHAN: AYE MOTION CARRIED. • CI lY OF WIN"I l:R SPRINGS. FLORIDA MINUTLS BOARD OF TRUSTEES RFE1JI,AR MEETING ING - AUGUST 10, 2010 PAGE 8 OF 10 REGULAR 603. Finance And Administrative Services Department Presentation From Bogdahn Consulting, LLC Of The Investment Review Report For The Quarter Ending June 2010. Mr. Evatt presented this Agenda Item for Mr. Dave West and reviewed the charts located on the page entitled The Market Environment and noted, Not the best quarter to be in the equity markets, a lot of volatility and a lot of selling." Next, he directed the Boards attention to page 4, then to page 6 and also reviewed page 8 and 9 which related to interest rates in the Bond market. Mr. Evatt noted, "Once again, the higher the quality, the better the investment's return." Mr. Evart discussed yields. Continuing his review of the Report, Mr. Evatt pointed out the differences between different asset classes on page 12 and stated, "I know that with the Adoption of Intercontinental (Real Estate Corporation) as a new Manager and the funding of that, there will be some rebalancing that takes place as we go forward." Mr. Evatt then mentioned, "The overall Portfolio is still a million dollars ($1,000,0000.00) or roughly a million dollars ($1,000,0000.00) higher than it was at the beginning of the Fiscal Year." "Financial Reconciliation Fiscal Year to Date" was discussed next. Individual Managers comparison chart was next reviewed on page 19, "Comparative Performance Trailing Returns ". Mr. Evatt mentioned the Galliard TIPS Portfolio saying, "It looks like it's trailing and I asked Dave (West) about this and I think that there is some noise in these numbers and finding a benchmark that is appropriate for them, but also in getting the assets priced appropriately from the custody statement. So, it looks like they trailed some and you may want to have Dave (West) expand on that a little bit as we go forward. But, he did not seem to be very worried about that situation." Vice Chairman Ben McMahan inquired, "Just for our benefit, do you happen to know what the ODCE (Open -End Diversified Core Equity) Index would look like if it was compared today`?" Mr. Evatt responded, "I can get that for you. " Continuing, the "Comparative Performance Fiscal Year Returns " was reviewed and Mr. Evatt said, "The returns are positive, ninety -one (91) basis points or a little less than one percent (1 %). The overall Policy is to be basically flat, so you're definitely having a better period relative to the benchmark, but you have an eight percent (8 %) assumption and hope is by the end of the year you get to that eight percent (8 %) number." Mr. Evatt then referred to page 23 of the Report. Tape 1/Side 13 Discussion followed on the Galliard TIPS ranking from 2007 to the present. n. CITY OF WINTER SPRINGS. FLORIDA MIND "I'ES BO1RD OF TRUSTEES REGULAR MEETING - AUGUST 10, 2010 PAGE 9 OF 10 Board Member Rozelle inquired, "Anything that we need to be concerned about since — they have gone from seventeen (17) to ninety -three (93) ?" Mr. Evatt replied, "No. I mean certainly something that we'd pay attention to. It's not a trend that we would like to have to continue to see as we go forward. They're going to have a three (3) year number in October and we still have confidence in Galliard (Capital Management) as a Manager and so I don't think it's our stance to make recommendation at this point to do anything different than that. But do know that it's something that we do pay very close attention to and if that something that's not circuital it's certainly something that we'll be finding out through our due diligence process." Mr. Evatt then focused on pages 36 and 37 of the Report and stated, "Just to give you an idea of where you stand from an overall Fund Compliance standpoint, the equity fix and in the Managers as well, having `No's' doesn't require action. It's just an alert to you to say, `Listen, we're paying attention to this. This is something that it may need future action. It may correct itself over a period of time." Continuing, Mr. Evatt explained the "Compliance Checklist as of June 30, 2010" in detail and said, It doesn't mean that you are doing anything wrong, it just means that this has not been a great five (5) year period to have any type of measurement on." Mr. Evatt mentioned in closing, "We'd like to get Intercontinental (Real Estate Corporation) funded. But, we don't know when that will be. But other than that, there is nothing in the pipeline that I know of at this point." Chairperson Fair asked Manager Smith and Mr. Boyle, "The funding since you are going to take our recommendation to the Commission for accepting the 2008 Actuarial Report, when will you be doing that ?" Manager Smith responded, ``We have a Budget Workshop as you well know after this Meeting and I will be advising the Commission tonight about this issue. We will take the actual Agenda Item to them probably sometime in the September time frame for final Approval of the utilization of reserves, which will be the necessary funding mechanisms in that we didn't have this information when we prepared the Budget; but, by September 30 [2010] in order to comply with the Statutes." Chairperson Fair then inquired, "If it is all Approved, then I would assume the funding of that would take place by the end of our Fiscal plan year ?" Manager Smith replied, "Absolutely." Furthermore, Chairperson Fair stated, "If that funding takes place, that is going to effect the Report that we get next time because that is a sizeable amount that would be going in. So it is going to kind of skew the number a little bit — for performance numbers. Instead of using a time weighted number any, chance of doing dollar weighted numbers which takes into account withdrawals and additions and subtractions to the numbers ?" Mr. Evatt remarked, "Let me ask that question." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING — AUGUST 10, 2010 PAGE 10 OF 10 Chairperson Fair then said to Mr. Evatt, "It is not going to give us a proper comparison because it is going to look like a big confusion of money, so that is why I thought maybe for our next Meeting, if you would talk to Dave (West) about that." Mr. Evatt stated, "Absolutely." ADJOURNMENT Chairperson Fair adjourned the Regular Meeting at 6:29 p.m. RESPECTFULLY SUBMITTED: GAYLE COUTANT, ASSISTANT TO THE CITY CLERK AND ,4 A ( j,d41 AN L. BR WN PUTY CITY CLERK NOTE: These Minutes were approved at the November 9, 2010 Board of Trustees Regular Meeting.