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HomeMy WebLinkAbout2011 11 08 Board of Trustees Regular Meeting Minutes CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING NOVEMBER 8, 2011 CALL TO ORDER The Regular Meeting of Tuesday, November 8, 2011, 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 Board Member Frank M. Mundo, present Board Member Vernon Rozelle, Jr., present Board Member Max Swaim, present Board Member Barbara Watkins, present A moment of silence was held. The Pledge of Allegiance led by Chairperson Fair followed. Chairperson Fair introduced new Board Member Frank Mundo to those in attendance. INFORMATIONAL AGENDA INFORMATIONAL 100. Finance And Administrative Services Department Providing A Summary Of The Pension - Related Expenditures For The Third Quarter Of Fiscal Year 2011. Mr. Shawn Boyle, Director, Finance and Administrative Services Department introduced this Agenda Item and stated, "I provide each quarter a balance sheet and income statement. The difference between this and what The Bogdahn Group presents is theirs is on a Cash Basis, and mine is on an Accrual Basis." Continuing, Mr. Boyle commented, "The only thing I wanted to point out on the income statement — is that you can see that GRS (Gabriel Roeder Smith & Company) has not invoiced us yet. I do not know what their intentions are." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING - NOVEMBER 8, 2011 PAGE 2 OF 7 Board Member Barbara Watkins suggested, "Is it possible to get this worksheet with a total at the end or a Fiscal Year to date ?" Mr. Boyle replied, "I will make any amendments to it that you want." Mr. Boyle asked, "Would you like your totals Fiscal Year or Calendar ?" Board Member Watkins stated, "I think it would be better `Fiscal Year' because that is what we are actually on." Hearing no objections from the Board, Mr. Boyle stated, "It will be done." Chairperson Fair commented on the excessive Actuarial costs from Gabriel Roeder & Smith (Company) and recommended that, "At some point — we need to address that." Mr. Kevin Smith, City Manager noted, "I don't disagree." Further discussion ensued on Legal Fees expended on indirect expenses. Mr. Boyle commented that, "When I get the answer, I will communicate that to you." CONSENT AGENDA CONSENT 200. Office Of The City Clerk Requesting Approval Of The August 9, 2011 Board Of Trustees Regular Meeting Minutes. "I MAKE A MOTION TO APPROVE THE AUGUST 9, 2011 MINUTES." MOTION BY BOARD MEMBER WATKINS. SECONDED BY BOARD MEMBER ROZELLE. DISCUSSION. VOTE: BOARD MEMBER WATKINS: AYE BOARD MEMBER ROZELLE: AYE BOARD MEMBER SWAIM: AYE BOARD MEMBER MUNDO: AYE CHAIRPERSON FAIR: AYE MOTION CARRIED. AWARDS AND PRESENTATIONS AWARDS AND PRESENTATIONS 300. Not Used 400. REPORTS No Reports. • CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING - NOVEMBER 8, 2011 PAGE 3 OF 7 PUBLIC INPUT No one spoke. PUBLIC HEARINGS AGENDA PUBLIC HEARINGS 500. Not Used • ❖ AGENDA NOTE: THE FOLLOWING REGULAR AGENDA WAS DISCUSSED FIRST, FOLLOWED BY THE REST OF THE AGENDA, AS DOCUMENTED. ❖ ❖ REGULAR AGENDA REGULAR 602. Finance And Administrative Services Department RBC Global Asset Management — Update On Performance Of RBC GAM International Fund Mr. JP Farrar, Managing Director, Head of Consultant Relations, RBC Global Asset Management Inc., 222 West Adams Street, Suite 2280, Chicago, Illinois: as an Investment Manager for the Portfolio, Mr. Farrar commented, "When we first became a Manager for this Portfolio, we were known as Voyageur Asset Management (Inc.). You will notice that our name is RBC Global Asset Management (Inc.) and that was simply a brand change. We are still Voyageur (Asset Management Inc.) if you will, but we rebranded ourselves at the end of 2009." Mr. Farrar distributed a document entitled, `City of Winter Springs Pension Fund' and stated, All of the numbers that you will see are as of September 30, 2011 and our objective is to identify best values. We are a value Manager. This is an All Cap Portfolio." Mr. Farrar continued with his presentation and spoke about Portfolio Performance, Portfolio Transactions, Investments and strategy. Discussion. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING — NOVEMBER 8, 2011 PAGE 4 OF 7 REGULAR 600. Finance And Administrative Services Department Update On Pension Changes To The Defined Benefit Plan. Mr. Boyle introduced this Agenda Item and began by saying, "We started the process of evaluating the benefits that are paid out to employees about eighteen (18) months ago and there was a joint effort between the City Commission and the Board of Trustees to evaluate what those benefits were and to try to get them in line with what we thought was sustainable to keep the Plan sustainable, going forward. We passed the first Resolution which contained the bulk of the changes on Monday, the 24 of October (2011), so that Resolution is in place. Most of those changes were effective October 1 (2011). The only one that I can think of right now that was not was the contribution rate going from three percent (3 %) to five percent (5 %) for employees." Continuing, Mr. Boyle remarked, "All those changes in the first Resolution have been adopted by the Commission and we appreciate that. There will be another Resolution coming forward at the second Meeting in November (2011) with some clarifying language, but I assure you that we haven't made any changes to what you and the Commission had agreed to, but there are some clarifying definition language that will be coming forward at the end of this month." Tape 1 /Side B With further discussion on the Pension Plan changes and the liquidity requirements, Chairperson Fair inquired about Gabriel, Roeder Smith (& Company) and asked, "Please impress upon Larry Wilson that obviously, we are dealing with a number of issues and the retirement had a big impact on the liquidity and the Plan, and we absolutely have to have these numbers." Continuing, Chairperson Fair added, "Let him know that the Board has officially asked to please send us that because we are certainly concerned with Liquidity given the amount of retirees — so that really does affect the Plan in a pretty significant way." Mr. Boyle stated, "I will ask again." REGULAR 601. Finance And Administrative Services Department The Bogdahn Group Quarterly Investment Report Mr. Dave West, Bogdahn Consulting, LLC, 4901 Vineland Road, Suite 600, Orlando, Florida: presented this Agenda Item and commented, "We have been working and addressing the changing nature of the liability of the Plan." Continuing his presentation, Mr. West and reviewed the document entitled, "Winter Springs General Employees General Plan and Trust — 3` Quarter 2011" with the Board and then directed the Board's attention to page 20 explaining the "Comparative Performance Trailing Returns" related to various Funds. CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING - NOVEMBER 8, 2011 PAGE 5 OF 7 Further, Mr. West stated, "From an allocation standpoint and looking forward, as of November 4 (2011) assets are back up." Mr. West added, "We did fund the Templeton Global Bond strategy; the Investment Policy Statement was filed and that gave us, of course we have to wait thirty -one (31) days as a matter of Public Law before the Policy becomes valid which then made our earliest possible funding date to be November. The liquidation instructions were given to Galliard (Capital Management) to raise funds from Domestic Fixed Income at month end. We can only transact at the end of the month. The custodian purchased the Templeton Global Bond Fund shares as directed in early November." Continuing, Mr. West remarked, "Strategy standpoint, rebalancing, we have no changes to recommend to the Portfolio. We are committed and we believe you are well positioned, and the nature of the market during the September quarter was most unfortunate considering we have to take the snapshot at the end of September 30 (2011)." Discussion ensued on the foreign markets. Next, Mr. West remarked, "With regard to Fixed Income, our concern looking forward is the extreme over Valuation of U.S. Treasuries and we would look to the Bond Managers to minimize that through — practices which Galliard (Capital Management) is doing; unfortunately, that was costly for the quarter, but we think that is the appropriate long term strategy; so, we would look to minimize allocations to the Domestic Fixed Income. We have done that already by moving assets into Real Estate - by moving assets outside the U.S. (United States) diversifying yield curves with the Templeton Global Fund. We are comfortable with that strategy's exposure. We continue to recommend and advocate utilizing the various Bond strategies that we talked about when we were looking at selecting the Templeton Global Bond Fund." Continuing, Mr. West stated, "As far as Equities go, we are comfortable with both Managers that you have in place here. I think there is a real valuation opportunity numerically on the table, and if you look at the money flows out of Mutual Funds at least through August 31 (2011) — the amount of money that flew out of Mutual Funds during that month matched the amount of money that has gone in to Equity since the March (2011) low." Mr. West added, "We are committed to the allocation. We have not made any change to the allocations. We are committed to rebalancing. When we have extreme volatility at the end of the day, we don't anticipate the volatility going away, unfortunately any time soon." Chairperson Fair asked Mr. West, "I would really like if you can give us a breakdown of the Asset allocation of the Galliard (Capital Management) Core Fixed Income ?" Mr. West replied, "I don't have that one with me — but I can certainly get that." CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING — NOVEMBER 8, 2011 PAGE 6 OF 7 Next, Chairperson Fair commented, "How long has it been since we had Galliard (Capital Management) here to speak to the Board ?" Mr. West responded, "They would actually be up on the next cycle." Chairperson Fair stated, "I think it's probably timely to move them to the front of the list to see if we can get a representative from Galliard (Capital Management) here on the core Portfolio." Mr. West replied, "Absolutely." Discussion. Continuing, Mr. West noted, "We have come through a period where volatility has been very high, stock correlation has been very high — during those periods of time historically indexing has certainly been the preferred strategy. If you at all feel that we are going to be exiting that and moving to more normalized markets at some point, we would expect then that the environment for active management is going to become more conducive to seeing some positive attribution and would be a less favorable environment for indexing." Further comments. Referencing, Informational Agenda Item "100" entitled, "Quarter Ending September 30, 2011 Accrual Basis ", Board Member Vernon Rozelle asked, "Can we list the percentages of these Fees on this ?" Mr. Boyle stated, "Absolutely." Discussion continued on Fees. Board Member Watkins asked Mr. West, "You are saying that there is no need for any changes as far as the Manager's are concerned ?" Mr. West replied, "That is our recommendation." Next, Board Member Frank Mundo inquired, "I noticed in the Portfolio that we do not have any direct Commodity exposure." Chairperson Fair added, "Probably the biggest reason is that we do not have it includable in our Investment Policy Statement." Mr. West then added, "The Investment Policy Statement has evolved from a very limited — to a conservative allocation. We have had discussions. Our recommended approach to Commodities would be via a Fund of Fund Managed Futures." Tape 2 /Side A Continuing, Mr. West remarked, "We had discussed it, but historically the Board, if I may say so, the Board has chosen to take a very conservative, careful approach to the allocation." Following up, Chairperson Fair commented, "Part of the reason, it took four (4) years and lots of questions to our Consultant to get a Global Bond exposure and so what I think we as a Board have tended to fall upon, is the recommendation of our Manager, the Bogdahn Consulting Group; and so, we have kind of taken the approach as to why did we hire them, and we are paying them a substantial amount of money annually and then not take their advice ?" CITY OF WINTER SPRINGS, FLORIDA MINUTES BOARD OF TRUSTEES REGULAR MEETING — NOVEMBER 8, 2011 PAGE 7 OF 7 Mr. West remarked, "If you would like to have a session on Managed Futures, we would be more than happy to do that." Chairperson Fair stated "Point of Clarification" and added, "The Bogdahn Consulting Group is really a Consultant and what their role is, is to give us advice." Discussion ensued on the Investment Policy Statement. Mr. West commented, "The Policy can always be revised — and certainly should be reviewed as we have done periodically." Continuing, Mr. West stated, "The Policy is — open now. We did have a discussion on going into a sub investment grade and investment Bond products in conjunction with the Global Bond and it was the preferred approach to go with the high quality sovereign debt of the Templeton Global Bond — the Policy does have the latitude to go into the other vehicles. The short answer, I think the Policy is appropriate and can be amended easily where necessary if there are changes to be made." PUBLIC INPUT No one addressed the Board. ADJOURNMENT Chairperson Fair adjourned the Regular Meeting at 7:28 p.m. RESPECTFULLY SUBMITTED: JOAN L. BROWN, DEPUTY CITY CLERK AND AAA D • NNA WAD SSISTANT TO THE CITY CLERK NOTE: These Minutes were approved at the February 14, 2012 Board of Trustees Regular Meeting.