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Home My WebLink About09162014 PRB MinutesI Sebastian Police Pension Board Minutes September 16, 10:00 a.m. Sebastian City Council Chambers TYPE OF MEETING: Regular ATTENDEES: Board Members: Steve Marcinik, Chair Robert Zomok, Secretary Richard Snell EXCUSED: Bruce Hoffman CONSULTANTS: Grant McMurry, ICC Capital Mgmt. (Portfolio Manager) H. Lee Dehner, Attorney, Scott Owens (Morgan/Stanley) Rob Dombrower, ICC Management Ken Killgore, Administrative Services Director, City of Sebastian SUBJECT CALL TO ORDER 10:05 a.m. There being a quorum present, Steve Marcinik, called the meeting to order. SUBJECT APPROVAL OF MINUTES 10:05 a.m. Bob Zomok motioned the minutes of the Regular Meeting on June 17, 2014 Board Meeting be approved pending the inclusion of the report from Grant McMurry. Motioned seconded by Richard Snell and passed unanimously without change. Draft Minutes 9/16/2014 2 Public Comment None SUBJECT OLD BUSINESS Proposed Ordinance History Lee Dehner has completed the draft reflecting the changes discussed at the Special Meeting in January 2014, e.g., the "optional provisions" are removed. Bruce Hoffman raised a question about the effective date of changes and funding. Lee Dehner pointed out the Board uses a "projection methodology" determining funding. Therefore, the date on the Actuarial Impact Statement is 2015. Updated SPD The Summary Plan Description (SPD) was updated reflecting the current provisions. A future revision may be necessary due to IRS regulations or unforeseen, required changes. The Board approved the SPD effective June 14, 2014. Current The next step in this process is to forward the Revised Ordinance to Sebastian City Council for a first reading. The Board agreed that this should happen at a November, 2014 Council meeting. The Board will convene a Special Session (tentatively scheduled for October 14, 2014 at 10:00 AM in City Council Chambers.) The singular purpose of this meeting will be to conduct a "dress rehearsal" of the presentation of the Ordinance to Sebastian City Council. The primary changes to be presented include the more flexible investment provisions with the rationale for the changes and the decreased cost to the City immediately and over time. The Board, Lee Dehner, Scott Owens and Doug Lozen are asked to attend the Special Meeting. Ken Killgore will ask Doug to prepare an updated version of the Select Valuation Results as of October 1, 2013. Asset Allocation Strategy Draft Minutes 9/16/2014 The Board will revisit our Asset Allocation Strategy after the Ordinance is approved since the Ordinance broadens the Board's authority to increase asset classes. Scott Owens has prepared a Guide we will use for that discussion. Investment Policy Statement Review This item continues tabled pending Sebastian City Council approval of the revised Ordinance. SUBJECT APPOINTED BOARD MEMBER Approval of 5t" Board Member by City Council Bob Zomok moved to appoint Ken Killgore as the 5t" Board Member. Richard Snell seconded the motion and it passed unanimously. Ken will have this appointment placed on the City Council agenda as an information -only item. SUBJECT INVOICES Approval of Invoices Christiansen & Dehner $75.80 Morgan Stanley $3,375.00 Bob Zomok moved to direct payment of both invoices. Richard Snell seconded the motion and it passed unanimously. SUBJECT NEW BUSINESS Review of Investment Portfolio Scott Owens presented and discussed the Fund's Quarterly Performance Summary. He noted the economy continues in a positive direction. The 1St calendar quarter saw a slip in the indicators and the market due, primarily to weather. However, the second quarter has again shown positive results. The Total Portfolio gained $341,046.59 (net) for a total Draft Minutes 9/16/2014 .19 Fund value of $11,172,070.59 Fund Review Grant McMurry introduced Rob Dombrower who did a presentation of how ICC Management, via his team, analyzes the psychological aspects of the economy using, as primary determinants, fear and greed of investors. Market Review Sebastian Police Retirement Fund June quarter 2014 ICC Capital Management Grant McMurry from ICC was accompanied at the Board meeting by Robert Dombrower, one of the firm's equity portfolio managers. Rob and Grant both commented on the current market and Rob shared his feelings of what we might expect in the market going forward. Additionally, Rob provided a look into how he and the quantitative team go about managing the Sebastian Police portfolio. The three months ending June 301h shows another decent period for both the stock and bond markets with the stock market up about 4% and the bond market providing a 1.5% return. The period was marked by very little volume (which continues) as there does not seem to be much conviction on the part of market participants. This is reflected by volatility driven more directly by news regarding the feds expected moves than by any geopolitical issue — which in years past would most certainly impact the market. There seems to be an anticipation of pending stock market correction as it has been 35 months now since we have experienced a 10% or greater decline. (The average period between such declines has been 18 months.) Of course we are in September which has historically not been a good month for stocks. But, so far this month seems to be looking good. The fiscal year returns for the Plan through June 30 shows a positive 11.25% while the number through the end of August puts the return at 12.78%. Legal/Legislative Update Compliance with new GASB Rules Draft Minutes 9/16/2014 5 GASB 67 is effective October 1, 2014 and requires filing additional reports on all Pension Funds. Therefore, the costs to prepare these reports will be borne by the individual plans. Steve Marcinik made a motion to authorize our Actuaries to prepare the required GASB 67 report based on Plan liabilities as of October 1, 2013 and roll forward the asset values to September 30, 2014 at a cost of $1,250.00. Richard Snell seconded the motion and it passed unanimously. GASB 68 is effective October 1, 2015 and affects the City Accounts. SB 534 imposes filing and disclosure requirements on Defined Benefit Plans that will increase pension administrative costs by requiring additional reporting. The effective date is October 1, 2014. This is an unfunded State mandate. Therefore, the costs to prepare these reports will be borne by the individual plans. Steve Marcinik made a motion to authorize our Actuaries to prepare the appropriate compliance report that is to show the impact on the Plan if the Plan investments perform at a rate of 2% below the investment rate established in the Plan Assumptions. (Our Plan assumes a 7.75% growth rate.) Further, the Actuaries are to prepare a "balancing" report showing the positive impact of the Plan investments performing at a rate 2% above the "assumed" rate. The cost for these reports will be $3,000.00 for the required report and an additional $500.00 for the "balancing" report. The motion was seconded by Bob Zomok and passed unanimously. Lee Dehner reminded the Board that the State Education Conference for Board Members will be in Lake Buena Vista, November 17 — November 19, 2014. SUBJECT ACTION ITEMS ITEM RESPONSIBLE PERSON Coordinate the Special Board Meeting Ken Killgore Coordinate with Doug Lozen for the Ken Killgore Draft Minutes 9/16/2014 I Special report Place Appointed Board Member on Ken Killgore City Council Agenda Coordinate placing the new Ordinance Ken Killgore On City Council agenda for a First Reading in November, 2014. SUBJECT ADJOURNMENT 12:05 PM Having no further business for discussion, Chairman Steve Marcinik adjourned the meeting. Next regularly scheduled meeting is December 16, 2014, at 10:00 AM, in the Sebastian City Council Chambers. Lee Dehner noted that the Board Meetings in 2015 are: March 17 (only Irish need attend), June 16, September 15, and December 15. Respectfully submitted, Bob Zomok, Secretary Draft Minutes 9/16/2014