POL032117 CITY OF PORT ST. LUCIE MUNICIPAL POLICE OFFICERS' RETIREMENT TRUST FUND BOARD OF TRUSTEES MEETING MINUTES MARCH 21, 2017 A Regular Meeting of the BOARD OF TRUSTEES of the MUNICIPAL POLICE OFFICERS' RETIREMENT TRUST FUND was called to order by Chairman Vega on March 21, 2017, at 2:00 p.m., at the Port St. Lucie City Hall, Room 188, 121 SW Port St. Lucie Boulevard, Port St. Lucie, Florida. 1. CALL TO ORDER 2. ROLL CALL Members Present: Assistant Chief William B. Vega, Jr., Chairman Daniel Kleman, Trustee Sergeant Tara Pavlyshin, Secretary/Trustee Members Not Present: Others Present: Natalie Cabrera, Trustee Officer Paul Griffith, Trustee Lee Dehner, Plan Attorney, Christiansenand Dehner, P.A. Siera Feketa, Pension Plan Specialist Edwin M. Fry, Jr., Finance Director/Treasurer Grant McMurry, Investment Manager, Highland Capital Management Brad Rinsem, President, Salem Trust Co. Karen Russo, Vice President, Salem Trust Co. Sandra H. Steele, Plan Administrator (arrived at 2:05 p.m.) Dave West, Senior Consultant, AndCo Consulting Calleigh N. Myers, Secretary 3. PUBLIC COMMENTS No one signed up to speak under this Item. 4. ANNOUNCE THE NAME OF NEW POLICE OFFICERS HIRED SINCE THE REGULAR MEETING OF THE BOARD OF TRUSTEES ON DECEMBER 13, 2016- CHARLES DANIEL GREEN AND BUTEAU MORESTANT Chair Vega announced the names into the record. 5. ANNOUNCE THE NAME OF POLICE OFFICERS WHO HAVE RESIGNED AND/OR TERMINATED SINCE THE REGULAR MEETING OF THE BOARD OF TRUSTEES ON DECEMBER 13, 2016-NONE 1
6. ANNOUNCE THE NAME OF POLICE OFFICERS WHO HAVE RESIGNED, AND ARE ELIGIBLE TO RECEIVE A RETIREMENT AND/OR DEFERRED RETIREMENT BENEFIT, SINCE THE REGULAR MEETING OF THE BOARD OF TRUSTEES ON DECEMBER 13, 2016-NONE 7. ANNOUNCE THE NAME OF POLICE OFFICERS WHO HAVE REQUESTED A LEAVE OF ABSENCE (MAXIMUM OF 180 DAYS) SINCE THE REGULAR MEETING OF THE BOARD OF TRUSTEES ON DECEMBER 13, 2016-NONE 8. ANNOUNCE THE NAME OF POLICE OFFICERS WHO ARE CURRENTLY SERVING IN ACTIVE MILITARY SERVICE AND ARE NOT HAVING THEIR EMPLOYEE 9% CONTRIBUTION DEDUCTED FROM THEIR SALARY (CITY CONTINUES TO CONTRIBUTE ITS CONTRIBUTION)-NONE 9. ANNOUNCE THE NAME OF POLICE OFFICERS WHO ARE PRESENTLY VESTED AND INACTIVE, AWAITING DISTRIBUTION OF THEIR RETIREMENT BENEFIT UPON REACHING ELIGIBILITY-RUSSELL CULLUM, THOMAS EISERT (BENEFICIARY), JOSEPH GOLINO, LUIS PAGAN, HAMLET POLANCO AND FREDERICK ZIMMERMAN Chair Vega announced the names into the record. 10. ANNOUNCE THE NAME OF POLICE OFFICERS WHO HAVE BEEN IN THE DROP PLAN BUT HAVE RESIGNED PRIOR TO THE END OF THEIR DROP AGREEMENT, WILL RECEIVE A LUMP SUM DROP PAYMENT AND BEGIN TO COLLECT THEIR MONTHLY BENEFIT-NONE 11. REVIEW AND APPROVAL OF SALEM TRUST STATEMENTS FOR DECEMBER, 2016 AND JANUARY AND FEBRUARY, 2017-HOLD FOR AUDIT This item will be held for an audit. 12. APPROVAL OF THE MINUTES FROM THE DECEMBER 13, 2016 MEETING OF BOARD OF TRUSTEES Trustee Pavlyshin moved to approve Item 12. Trustee Kleman seconded the motion, which passed unanimously by voice vote. 2
13. OLD BUSINESS (Clerk's note: These items were heard after Item 14g), at the request of Chair Vega.) A. UPDATE ON SSAE NO. 16 REPORT FROM SALEM TRUST B. UPDATE ON ADDITONAL LIABILITY COVERAGE FOR PLAN ADMINISTRA TIVE STAFF 14. NEW BUSINESS A. UPDATE ON THE 2016 ANNUAL REPORT TO THE DIVISION OF RETIREMENT Ms. Steele informed the Board the report was submitted electronically, and an update will be provided at the June meeting. B. DISCUSSION AND APPROVAL OF THE TRAVEL EXPENSES RELATED TO THE FPPTA WINTER TRUSTEES SCHOOL IN ORLANDO, FLORIDA, FOR THE FOLLOWING INDIVIDUALS: CHAIRMAN BILL VEGA - $354.62 SECRETARY/TRUSTEE TARA PAVLYSHIN - $354.62 TRUSTEE DAN KLEMAN - $354.62 PENSION PLAN SPECIALIST SIERA FEKETA - $354.62 Trustee Pavlyshin moved to approve Item 14 b ). Trustee Kleman seconded the motion, which passed unanimously by voice vote. C. DISCUSSION AND APPROVAL OF INVOICES FROM THE FOLLOWING CONSULTANTS: ANDCO CONSUL TING, FORMERLY THE BOGDAHN GROUP, INVOICE #21476, QUARTER ENDING MARCH 31, 2017, IN THE AMOUNT OF $8,222.00 ASB CAPITAL MANAGEMENT, LLC, QUARTER ENDING DECEMBER 31, 2016, IN THE AMOUNT OF $9,731.68 CHRISTIANSEN & DEHNER, P.A., INVOICE #29918, IN THE AMOUNT OF $1,611.33, FOR VARIOUS PROFESSIONAL LEGAL SERVICES CITY OF PORT ST. LUCIE - INFECTIOUS DISEASE TESTING INVOICES DATED 01/23/2017 FOR OFFICER VALENTIN - $294.79 3
DATED 02/28/2017 FOR OFFICER MORESTANT - $294.79 DATED 03/02/2017 FOR OFFICER GREEN - $294.79 CITY OF PORT ST. LUCIE - PLAN ADMINISTRATION INVOICES DATED 01/03/2017 FOR DECEMBER 2016 - $4,500.00 DATED 02/01/2017 FOR JANUARY 2017 - $4,500.00 DATED 03/01/2017 FOR FEBRUARY 2017 - $4,500.00 DAVIDSON, JAMIESON & CRISTIN!, P.L., INVOICE #J25877, IN THE AMOUNT OF $2,600.00, FOR PREPARATION OF INTERIM COMPILED FINANCIAL STATEMENTS AND OUT-OF-POCKET COSTS FOR THE PERIOD ENDED SEPTEMBER 30, 2016 SALEM TRUST FEE ADVICE, FOR THE PERIOD OF OCTOBER 1, 2016 - DECEMBER 31, 2016, IN THE AMOUNT OF $6,038.00 SALEM TRUST FEE ADVICE, FOR OVERNIGHT MAIL CHARGES, IN THE AMOUNT OF $70.00 Trustee Kleman moved to approve Item 14 c). Trustee Pavlyshin seconded the motion, which passed unanimously by voice vote. D. DISCUSSION AND APPROVAL OF MONTHLY PAYMENTS TO THE PLAN CREDIT CARD AS FOLLOWS: DECEMBER, 2016 JANUARY, 2017 FEBRUARY, 2016 $4,362.60 $ 241.96 $ 304.35 Trustee Pavlyshin moved to approve Item 14 c). Trustee Kleman seconded the motion, which passed unanimously by voice vote. E. DISCUSSION AND APPROVAL OF THE FOLLOWING RETURNS OF CONTRIBUTIONS (BEFORE TAX) TO FORMER NON-VESTED PARTICIPANTS: JASON CAVANAUGH DONALD DEAN EVA MACIAS MATTHEW MCCALL MICHAEL ROBINSON KENNETH RODRIGUEZ NATHANIEL STUBLEY $1,664.64 $ 268.00 $2,115.48 $ 956.92 $ 435.73 $2,330.54 $ 639.46 4
Trustee Pavlyshin moved to approve Item 14 e). Trustee Kleman seconded the motion, which passed unanimously by voice vote. F. PRESENTATION OF INVESTMENT MANAGER'S QUARTERLY REPORT (HIGHLAND CAPITAL MANAGEMENT) Mr. McMurry gave the presentation and stated the bank stocks did well after the election. The interest rates will rise, which is critical to the banking section of the marketplace. Industrial is not benefiting as much as they used to, and energy did well. He referred to a chart, which showed the Value Index doing better than the Growth Index. The Value stocks were over 7%, and the Growth stocks were up 2%. He explained that the sectors have moved up together, and that created a problem for the Value Index. Value Managers tend to trim off the stocks that have done good, because they know there will be a better opportunity. The Fixed Income was up 32 basis points, and the Benchmark was up 13 basis points. He stated FRS had a return of 6. 79% for the last 5-years, and Berkley had a return of -2.5%. Mr. McMurry stated he felt confident with the return, and concluded his presentation. Trustee Pavlyshin moved to approve Item 14 f). Trustee Kleman seconded the motion, which passed unanimously by voice vote. G. PRESENTATION OF PERFORMANCE MONITOR'S QUARTERLY REPORT (ANDCO CONSULTING) - WILL INCLUDE REPORT FROM OTHER CONSULTANTS Mr. West gave the presentation and informed the Board the Bogdahn Group has changed to AndCo. In this Quarter, the International Equity was down, and the U.S. dollar was strong. The Merging Markets were impacted the worse, and were down 4.2%. Mr. West stated factors to consider are Barclays Market, pre-election Barclays Market, postelection Bull Market, and the huge sell off in the Bond Market. Bond Asset Class Returns were mixed for the 4 th quarter. The Broad Market Russell 3000 Index returned 4.2% for the quarter. The Small Cap Russell 2000 Index more than doubled their performance of other capitalization indexes, with a return of 8.8% for the quarter and a strong 21.3% for the trailing one-year period. Mr. West explained the year-over-year number was up 8.33%, and the quarter was up under 2%. The 3-year number is 4.7%, the 5-year is 8.75%, and the 7-year is 7.22%. The Total Fund Policy was up 1.2%, which outperformed for the quarter by.75%. The 3-year and 5-year is lagging from the policy. He presented the Total Fund (Net), Total Fund (Gross), Total Equity, and Total Domestic Equity for the Plan. The Total Domestic Equity included Highland Equity, SPDR S&P 500 ETF Trust, and Vanguard S&P Mid-Cap 400 Index (VSPMX). The Total International Equity includes Vanguard Developed Markets Index and WCM Focused International Growth. Vanguard was down 1.44% for the Quarter, and WCM Focused International Growth was down 6.95% for the Quarter. The Total Fixed Income included Highland Fixed Income, PIMCO Diversified Income Fund, and Vanguard TIPS (VAIPX). Mr. West stated there was a change to the PIMCO 5
Fund from two managers to one. They sold the Global Fund, and bought the Treasury Inflation-Protected Securities Fund. American Core Realty Fund came in 1.5%, and the ASB Allegiance Real Estate Fund was 0.78%. He presented the Cash Flow, which was $81,601,779. The Net transfers were $1,387,684 and Vanguard was $1,300,000. He stated $1.6 million of the NET fees, were earned from the Investment Portfolio. The Total Equity Allocation is 4.6% overweight of the S&P500 and the Highland Allocation is a littleunderweight. He suggested to maintain an overweight with the equities within the policy, but to keep their eye on the Equity Allocation. Mr. West informed the Board at the next meeting, he might have to make a recommendation to rebalance Equities back to the target, because they will be in violation of the outer bounds. 13. OLD BUSINESS (Clerk's note: This item was moved, at the request of Chair Vega.) A. UPDATE ON SSAE NO. 16 REPORT FROM SALEM TRUST Mr. Rinsem stated comparing 2015 SSA NO. 16 with 2016, nothing changed in the criteria. There was one instance where the information was put in the system incorrectly, but it was not signed off. As a result, the auditors went back an entire year of 3,000 transactions to confirm the rest were correct. He assured the Board their Operations Group is performing well, and as the President, there is nothing to be concerned about. Mr. Dehner suggested Mr. Rinsem contact Mr. Cristini directly, and Mr. Rinsem stated that he would be contacting him. Ms. Russo stated it is important to Salem Trust that they provide the highest quality of service. She created a report that reflects 5 primary components of tasks Salem Trust performs, which includes statement production, cash processing, income processing, trade settlement, and corporate actions. She explained each month, based on data used by their independent auditors and government regulators, the report objectively compares how Salem Trust performed in relation to self-imposed performance goals for essential services. Their objective is to deliver better service by analyzing how the average performance can be improved. They will send this report to Ms. Steele on a quarterly basis to provide to the Board. She stated if the Board feels that Salem Trust did not meet their expectations, Salem Trust will provide a discount on the quarterly fee. B. UPDATE ON ADDITONAL LIABILITY COVERAGE FOR PLAN ADMINISTRA TIVE STAFF (Clerk's note: This item was moved, at the request of Chair Vega.) Ms. Steele stated the Risk Management Director informed her, Ms. Feketa and herself were considered City Employees, and are covered by the Crime Policy. Ms. Steele went over the Policy information with the Board, and asked the Board for direction. Mr. Dehner responded the policy covered loss or theft investments, and is inexpensive. He stated he was comfortable where they are at, and Ms. Steele informed the Board she was going to 6
send Mr. Cristini this information. Ms. Steele asked whether or not she should hold off on pursuing additional insurance, to which Mr. Dehner responded she could get the premium for Fidelity Bond. Trustee Kleman stated the City coverage should be sufficient, to which the Finance Director agreed. Trustee Kleman inquired if Board Members were adequately covered by the policy, to which Ms. Steele replied the Risk Management Director stated in her email she did not know if the Trico Policy would apply to the Pension Board of Trustees. Mr. Dehner advised Ms. Steele to provide Mr. Cristini the information she has, and wait for his response. 15. ATTORNEY'S REPORT Mr. Dehner stated there were a few Legislative updates, which included increased unfunded state mandates, administrative expenses, and mandating the Board go to the FRS Mortality Table. He stated House Bill 143 and Senate Bill 158 are only applicable to firefighters, but can change and he will update the Board. He explained that the substance of Senate Bill 306 has been with the Board for many years, and it includes when a Trustee must sustain from a vote. He reminded the Board to file their Financial Disclosures. 16. PLAN ADMINISTRATOR'S REPORT Ms. Steele confirmed all participants for the Summer Conference, and informed the Board the hotel is reserved. She stated Mr. Lozen would be doing the Experience Study in July, and asked Mr. Dehner if he would like to attend, to which Mr. Dehner replied in the affirmative, but stated he did not want to hold things up. Ms. Steele informed the Board the next Trustee School is October 8 th - October 11 th, 2017, in Tampa. 17. OTHER BUSINESS There was nothing heard under this item. 18. ADJOURN 7