Absent: Ray Sutherland (Resident, Appointed by the Commission); Brian Damon (Resident, Appointed by the Commission).

Transcription

1 NORTH PORT MUNICIPAL POLICE OFFICERS' PENSION - LOCAL OPTION TRUST FUND REGULAR QUARTERLY MEETING MONDAY, DECEMBER 8, 2014 Present: Absent: Eric Sineath, Chair (Officer, Elected by Police Officer Members); Edward Fitzpatrick, Secretary (Officer, Elected by Police Officer Members); Howard Henriksen (Chosen by a majority of the other four Trustees); Doug Lozen, Foster & Foster: Tim Nash (The Bogdahn Group); Linda Runkle (The Resource Centers, LLC); Board Attorney Scott Christiansen; and Recording Secretary Hale. Ray Sutherland (Resident, Appointed by the Commission); Brian Damon (Resident, Appointed by the Commission). The North Port Municipal Police Officer' Pension - Local Option Trust Fund Regular Quarterly Meeting was called to order in the Conference Room 302 at 1:06 p.m.by Eric Sineath, Chair. The Pledge of Allegiance was led by the Board. 3. PUBLIC COMMENTS There was no public comment. 4. CERTIFICATION OF TRUSTEE ELECTION Plan Administrator Linda Runkle reported that in accordance with the Board approved procedures, the member opening was posted for Eric Sineath's seat, as the elected trustee member, and nominations were solicited. Mr. Sineath received two nominations and ran unopposed. Mr. Sineath is now certified to run another term of two years, effective through A motion to approve the results is in order. Edward Fitzpatrick moved that the North Port Police Officers' Pension Board of Trustees approve the election results of the election of Eric Sineath as the Trustee elected by a majority of the Police officers who are members of the system; seconded by Howard Henriksen. The motion carried unanimously. 5. APPROVAL OF MINUTES FOR MEETING HELD SEPTEMBER 8, 2014 Howard Henriksen moved to approve the minutes for the North Port Police Officers' Pension Fund Board of Trustees meeting of September 8, 2014 as presented, seconded by Edward Fitzpatrick. The motion carried unanimously. 6. ACTUARIAL VALUATION: DOUG LOZEN. FOSTER & FOSTER Doug Lozen, Actuary from Foster & Foster Actuaries and Consultants, distributed the Valuation Report as of October 1, Mr. Lozen reported that the Fund generated another actuarial gain this last year which reduced the cost of the Plan. This last year, the Plan also surpassed the investment assumption by.75%. Due to the lack of salary increases, which has been a state-wide trend for the past five years, and favorable investment returns, costs will continue to decrease. Page 7, was a report concerning Ordinance No , that provided for changes in certain benefit provisions for members hired after May 27, 2014 (the adoption date of the Ordinance), and pages explained how the changes will affect new members hired after that date. Page 13, showed a list of the Unfunded Liability as accrued in Fiscal Year Municipal Police Officers' Pension Trust Fund Page I of 5

2 It was reported that the Fund earned a credit of $1.2 million which increased the funded portion to 105%. The benchmark is 100% as determined by the State in the Financial Accounting Standards Board (FASB) report. Page 14, was a breakdown of the gains/losses regarding the unfunded liability. Page 22, showed that the Actuarial Asset Valuation generated a 8.46% rate of return on investment amortized over the last four years. Fiscal Year 2014 ended with 8.12%; 2013 ended with 13.52%; 2012 ended with 17.26%; and 2011 ended with -3.84%. This year the 2011 negative return will drop off and the average is expected to swing upward to about 11%. After a question, Mr. Lozen clarified that there is $127,000 available annually from the State money, which is sufficient on an annual basis to purchase something toward a life-time benefit. Attorney Christiansen explained in detail how it would work. Howard Henriksen moved that the North Port Police Officers' Pension Board of Trustees accept the Actuarial Valuation Report as of October 1, 2014 as presented, seconded by Edward Fitzpatrick. The motion carried unanimously. Following a brief discussion, there was a consensus to authorize Attorney Christiansen to request that the City of North Port make the appropriate changes in the Union Contracts pertaining to the Lieutenants' Union definition of salaries and the Rank and File Union definition of salaries 7. INVESTMENT MANAGER REPORT: WHV Tim Nash, from the Bogdahn Group, reported that representatives from WHV had a scheduling conflict and could not attend the meeting. However, the firm requested that the Board formally agree to lower the fee to manage the Portfolio assets from 1% to 85 basis points annually. It was also requested to remove the "most favored nations" language in the Agreement. Attorney Christiansen cautioned that although the language could be removed, later on they could offer someone else a better rate and not disclose that to the Board, and subsequently propose to increase fees again. He recommended inviting them to a meeting to explain why they want the change, prior to the Board's agreement. Mr. Nash will invite them to attend the next meeting but will learn their reasoning prior to the meeting. 8. INVESTMENT CONSULTANT REPORT: TIM NASH, BOGDAHN GROUP Tim Nash reported that the Market Environment, on page 2, showed that there was a dip in the market in September in small and midcap stocks, which were down 7.4% and 1.7% respectively. Lateef has 25% of the Fund's Portfolio and did not perform well the whole quarter. However, October was a much better month, and Lateef rebounded substantially by the end of the fiscal year. Page 12, the Asset Allocation, showed the quarter closed out at $29,850,794, having gained $4.9 million during the fiscal year. It was reported that the asset allocation remains in line with the target of 60% of investments. Page 15, showed the Financial Reconciliation totals for the year minus net transfers, contributions, distributions, management fees, income, and other expenses including depreciation. Page 16, showed those numbers in percentages for the last quarter, the fiscal year, 1, 3, and 5 year spans. The rate of return for fiscal year was 8.4%, placing the Fund in the middle of the pack compared to other public pension plans. While Lateef did well for the year with a 10.16% return, its benchmark gained 19.15%. GAMCO did well and gained 15.5% for the year, and WHV increased 10.5% compared to the index at 4.7%. The Fixed Income manager, Sawgrass, hit 2.5% for the year, and the Treasury Inflation-Protected Securities (TIPS) showed a meagre increase of.35%. Later on in the meeting, a change regarding TIPS will be presented. Global Bonds were a good addition to the Portfolio (taking funds from TIPS) and increased 6.33% for the year. Real Estate was another good investment (taking funds from Sawgrass) showing gains of 12.5% for the year. The annual return for the Plan was 9.69%. Municipal Police Officers' Pension Trust Fund Page 2 of 5

3 Mr. Nash distributed the booklet: Global Tactical Asset Allocation Fund Allocation and reported that from a review of the annual gains/losses of the TIPS Portfolio and because of news of the Federal Reserve increasing their balance sheet from $1 trillion to $4 trillion in assets, it was recommended to add some Global Tactical Asset Allocation funds to the mix of managers. These have an income objective derived from many asset classes. The managers to consider are all U.S. Mutual Funds and so are daily traded with daily liquidity and there is no cost or fee to enter or exit. The firms included B1ackRock, PIMCO, Principal, Westwood, and John Hancock and have been vetted by the research team at Bogdahn. Page 6, showed the fees charged by each fund and they ranged from 80 basis points (.8%) as a low, to 1.69% as a high. The BlackRock Multi-Asset Income Portfolio has two share classes (.8% and.6%) and the Police Pension is eligible for the lowest share class rate. Subsequent to a question, clarification was provided that a "share class" is basically the piece of their pie for which the Police Pension Portfolio is eligible based on the money available to invest. The Police Pension Fund would be allocating in excess of $2 million. Page 7 was a snapshot of the managers under consideration and divided each into the asset classes where the bulk of their funds are invested. BlackRock has '/z of its investments in fixed income. Page 9, shows that BlackRock and Westwood have the highest return rate over a five-year period. Edward Fitzpatrick moved that the North Port Police Officers' Pension Board of Trustees terminate the TIPS program management held by Sawgrass, and move assets and other assets that are required that would equal 5% of the total Portfolio, to BlackRock Multi Asset Income Portfolio; seconded by Howard Henriksen. The motion carried unanimously. 9. ATTORNEY REPORT: SCOTT CHRISTIANSEN Edward Fitzpatrick moved that based on the advice of the Investment Consultant, the Asset Allocation, and historic returns of the Market, and also incorporating expected returns, the Municipal Police Officers' Pension Board of Trustees expects to achieve an actuarial assumption rate of return of 7.75% this year and over the next several years, seconded by Howard Henriksen. The motion carried unanimously. Attorney Scott Christiansen provided an update: 1) no further correspondence has been received from the IRS regarding the Tax Determination Letter; 2) an annual fiscal year-end report to the Commission is being prepared (Pension Letter #2) and will be sent shortly. a. Consent to Conversion to Limited Partnership Regarding American Core Realty Attorney Christiansen reported that American Realty wants to change their firm's organizational structure from a limited liability to a limited partnership. The documents were reviewed by legal counsel and were found to be sound. This allows them to engage in foreign investors. Attorney Christiansen recommended Board approval of this change. Edward Fitzpatrick moved that the North Port Police Officers' Pension Board of Trustees approve American Realty's change from a limited liability company to a limited partnership and direct Chair Sineath to sign the consent for the conversion; seconded by Howard Henriksen. The motion carried unanimously. b Audit It was reported that the audit fee by Kerkering Barberrio proposed an increase of $500. Howard Henriksen moved that the North Port Police Officers' Pension Board of Trustees to approve the fee increase from Kerkering Barberio & Company as the Board's auditor, seconded by Edward Fitzpatrick; The motion carried unanimously. Municipal Police Officers' Pension Trust Fund Page 3 of 5

4 10. ADMINISTRATIVE REPORT: LINDA RUNKLE A. Disbursements Howard Henriksen moved that the Municipal Police Officers' Pension Board of Trustees approve the invoice disbursements of December 8, 2014, in the amount of $83, as presented, including a refund of pension contributions for Jeffrey Wilson, and retirement benefits for Alicia Graham (beneficiary to Scott Graham) as presented, seconded by Edward Fitzpatrick. The motion carried unanimously. B. Benefit Approvals Benefit Approvals were approved with Disbursements. Plan Administrator Linda Runkle distributed a list of conference and training opportunities and requested interested Board members to contact her. Additionally, it was reported that membership dues for the Board's Florida Public Pension Trustees Association (FPPTA) were renewed for OLD BUSINESS Following a concern, Ms. Runkle confirmed that the Fiduciary Liability Insurance was renewed with Hudson Insurance Company. A copy will be ed to Attorney Christiansen. 12. NEW BUSINESS Subsequent to a question regarding how the share plan is set up, Attorney Christiansen explained that it will be a side-by-side program with the defined benefit plan, so upon retirement, there will be a monthly payment from the defined benefits side; and a lump sum may be withdrawn and rolled over from the defined contribution or share plan side, much like what is done with a return of contributions or funds received from the Defined Retirement Option Plan (DROP). Typically, it is only for new employees and may only be accessed upon retirement. Use of these funds must be voted on by the active membership. 13. SCHEDULE NEXT MEETING MARCH AT 1:00 P.M. 14. ADJOURNMENT Edward Fitzpatrick moved to adjourn the North Port Municipal Police Officer' Pension - Local Option Trust Fund Regular Quarterly Meeting, seconded by Howard Henriksen. The motion carried unanimously. The Municipal Police Officers' Pension Trust Fund Board of Trustees Regular Quarterly Meeting adjourned at 2:29 p.m. Minutes approved this Vh day of March Municipal Police Officers' Pension Trust Fund Page 4 of 5

5 NORTH PORT POLICE OFFICERS' PENSIQN - LOCAL OPTION TRUST FUND DISBURSEMENTS bccomber 6, 2014 s BOGI]AHN CONSULTING (3{2014 invedmeni Consulting Foos) * PENSION RESOURCE CENTER, LLO (Septomber2U1l Acintini-Mra6vo F-(,,) e PENSION RI=URCE OENTEIR, l LG (0-.tobar2014AdininisiraC~va Fee) X3,#31 ~.i)f} $1,71:~~~ $1, a o a o a PENSION RESOURCE CENTER, LLC,NDvarnt%or 241 i Administrative Fee) SAWGRASS ASSET MANAGEMENT ( Investment Management Fees) SAWORASS ASSET MANAGEMENT (3Q2014 Invostmont Manapinent Fees TIPIS portfolio) WHV INVESTfy NT MANAGEMENT (3Q2014 Invo.,tman.t Managernent Fees) GAMCO ASSET MANAGEMENT ( Invegtrnent Management Fnetq) PUGWC RISK INSURANCE ASENCY (Fiduciarv Lsabrllly IiwuYance) CHRISTIANSEN & DEHNER (J ul y r,,al Foos) CHR15't'IAN$IEW & Dt5RNER (August 2)0!4 LQga! F0nr,) CHRISTIANSEN & DEWNER (September 20,14 Legel Fees) LATEEP INVES otent MANAGEMENT (20.2n 114 1nvastrnent Moragern ant tees) $1, $4, $ $ 3, $12, $x} V41, _UU 1',873.3 T $21, IN I_A'CEIcK INW-STI41ENT MANAMMINT (3Q2014 InvPabrrtrrs: Manig %mont Fos;;) FPPTA (Annual Membership Dares} TofA Disbu rso ments for ApprovaI,P21, $83, Municipal Police Officers' Pension Trust Fund Page 5 of 5

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