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HomeMy WebLinkAbout06-09-2022 Minutes w/AttachmentsCITY OF SEBASTIAN POLICE PENSION BOARD MINUTES OF REGULAR MEETING JUNE 9, 2022 Call to Order -- Chairman Tim Wood called the meeting to order at 5:00 p.m. II. Roll Call Present: Board Members: Ms. Ring Detective McDonough Captain Wood Mr. Reeves Mr. Puscher Also Present: Bonni Jensen, Klausner, Kaufman, Jensen & Levinson, Attorney for the Board of Trustees Ken Killgore, Plan Administrator Scott Owens, Graystone Consulting Andy Temming, Partner, Research Analyst, Renaissance Investment Management Barbara Brooke -Reese, MIS Manager Janet Graham, Technical Writer III. Vote to Excuse Absent Board Members Chairman Wood announced that there are no absent Board members. IV. ADDroval of Minutes: A. March 10, 2022, Regular Quarterly Meeting Mr. Puscher noted that his name is spelled incorrectly on Page 1. His name is listed as Pusch. It should be Puscher. A motion approving the Minutes of March 10, 2022 as corrected was made by Mr. Puscher, seconded by Detective McDonough, and approved unanimously via voice vote. B. March 24, 2022, Special Meeting POLICE PENSION BOARD PAGE 2 MINUTES OF REGULAR MEETING OF JUNE 9, 2022 A motion approving the Minutes of March 24, 2022 as presented was made by Mr. Puscher, seconded by Ms. Ring, and approved unanimously via voice vote. V. Old Business Approval of Payments: a. Highland Capital — October to December - Value, ADR $7,076.77 b. Highland Capital —October to December— Fixed Income 3,487.06 c. Boston Partners — October to December 6,338.01 d. Flera Capital — October to December 3,242.25 e. Renaissance — October to December 2,597.30 f. Polen Capital — October to December 2,771.59 g. Graystone Consulting — October to December 3,375.00 h. Foster & Foster — Actuarial Valuation and Other Reports 15,933.00 I. Klausner, Kaufmann, Jensen & Levinson-March/Apdi 5,806.25 j. City of Sebastian — Administrative Services January to March 6,000.00 k. City of Sebastian — Janet Graham 03-10-2022 meeting 108.00 I. Salem Trust — January to March 7,745.00 A motion approving the payments listed above was made by Mr. Puscher, seconded by Mr. Reeves, and approved unanimously via voice vote. Captain Wood suggested addressing the change in Salem Trust's agreement with the Pension Fund. Mr. Killgore stated that he has brought that Amendment to their Custodial Agreement based on prior discussions with the Board. They are changing their method where the Pension Fund pays an annual fee of 5.25 basis points based on the market value plus $4.50 for each trade. It is payable quarterly. Salem Trust guarantees the fee will not increase for at least two years unless there Is a substantial change in the assets, money managers, or transactions prior to April 241h. At that point, the fee will be reevaluated. Based on the change in fees, Salem suggested that the Pension Fund might actually be paying less; however, as the value of the Fund goes up, their fee would go up. So that is something to consider. Ms. Ring would still like to see if it can be done less expensively by another company who can do the same thing. There was an extended discussion among the Board members, Mr. Killgore, Ms. Jensen, and Mr. Owens where the various duties and responsibilities of the investment entities were explained. Mr. Owens suggested that, since the present fee schedule has only been In effect for a brief time, the Board wait until more time has passed in order to get a better feel for what the fees will be in the future. He suggested that POLICE PENSION BOARD PAGE 3 MINUTES OF REGULAR MEETING OF DECEMBER 14, 2021 an RFI (Request for Information) be sent out to various managers asking for an estimate of what they would charge for the same services. 2. Presentation by Renaissance Investment Management Mr. Andy Temming from Renaissance introduced himself and presented a lengthy review of Renaissance's performance in the international market. He reviewed his report and explained various pages (SEE ATTACHED). He explained several reasons for the underperformance of Renaissance. There were questions by the Board members regarding Renaissance's history which Mr. Temming answered, and he estimated that the future is looking more positive for the international markets. After Mr. Temming's presentation ended, there was discussion among the Board members as to what action they wished to take regarding Renaissance. Mr. Owens reviewed Renaissance's performance relative to other managers in the Pension Fund portfolio. He stated that he will initiate a search for a different manager and described how the process would work A motion recommending a search be conducted for another international manager was made by Mr. Puscher, seconded by Mr. Reeves, and approved unanimously via voice vote. 3. Schedule Forfeiture Review Hearing for William Grimmich At this time, Mr. Reeves recused himself from discussion of this item due to his relationship to one of the parties. Ms. Jensen informed Mr. Reeves of the form that he must fill out regarding his recusal. (AT THIS POINT MR. REEVES LEFT THE MEETING.) Ms. Jensen reviewed the history of this case and described how the next step in the process would happen. She described the statute that applies to this case. Detective McDonough asked Ms. Jensen If the length of time that this matter was not addressed would affect the situation. Ms. Jensen's opinion is that it would not affect the situation. It makes It an unusual circumstance. Detective McDonough asked how it can be found out whether this occurrence affects the outcome. Ms. Jensen presented the Board members with a record of a case that holds that the beneficiary receives pension benefits pursuant to the contract, and part of the contract is that the beneficiary does not commit a crime or that the beneficiary is not convicted of a specified offense. Since Mr. Grimmich did not fulfill his contract with the State of Florida, he violated Chapter 112, Section 3173 of Florida Statutes and is therefore subject to the forfeiture. Thus, there is no benefit to pass to the children because Mr. Grimmich was not entitled to a benefit at the time he died. Detective McDonough stated his understanding of this question, that being that during POLICE PENSION BOARD PAGE 4 MINUTES OF REGULAR MEETING OF DECEMBER 14, 2021 the last week of the beneficiary's service after 25 years, that one instance then nullifies everything he made for 25 years. Not only that, but he is deceased, and his children will not get that benefit. He asked if there is any case law where this question has come up where children are involved. Ms. Jensen stated that stealing from the employer does not have to be a felony; it can be a misdemeanor. Detective McDonough also asked, if the Board does not wish to have the Division of Administrative Hearings hear the case, what would be the alternative. Ms. Jensen said the hearing would be held before this Board, and this Board would be the finder of fact and would sit as the judge in that case. Captain Wood asked that, ultimately, Mr. Grimmich used his employment to commit the crime. Ms. Jensen stated that is correct. Detective McDonough asked if there has ever been a situation where, if this were similar, in that other case they did get the benefit. Ms. Jensen stated there is no reported case involving the forfeiture of a child. Detective McDonough asked if the representatives of the children are looking to receive full benefits. Ms. Jensen stated she has spoken with the trustee for Ireland. Ireland is over 18. Jack, the son, is a minor. Ms. Jensen spoke with his mother, and she Is not interested in going through the forfeiture proceeding. She would like to take the refund of contributions that has been offered to them in lieu of going through the forfeiture proceeding. However, Ireland wants to pursue the forfeiture case. The refund of contributions cannot be split, the proceeding will have to be pursued in order to resolve it. Detective McDonough asked, if Ireland goes through the proceeding and she loses, does she also lose that original benefit. Ms. Jensen stated that you are always entitled to the refund of the contributions that were put Into the fund. Ms. Jensen explained that today we are here to discuss the first step, which is saying the Board of Trustees has reason to believe that the benefit should be forfeited. The Board then would set up a hearing, which is an evidentiary hearing, and the Board members make the determination of whether the benefit should be forfeited. The Board can also contract with the Division of Administrative Hearings, ask them to do the factfinding, and they would issue the Board a recommended order which the Board would ultimately need to rule on, which would mean entering the order or enter some different finding to that particular recommended order. Ms. Ring asked why Ms. Jensen is recommending that the Board get its own lawyer. Ms. Jensen stated that she cannot both advise the Board as to the orders that they would enter in this particular case and also be an advocate before this Board to argue one way or the other about a particular case. Her role would be as the advisor to the neutral party, which the Board is. Ms. Ring asked if the Division of Administrative Hearings would charge the Board. Ms. Jensen said they would, and it will be an houdy rate. Ms. Jensen stated the Division of Administrative Hearings would hold the hearing, take in all the evidence, and the administrative law judge would Issue a recommended order. Then this POLICE PENSION BOARD PAGE 5 MINUTES OF REGULAR MEETING OF DECEMBER 14, 2021 Board would enter that order or find exceptions to the order and enter a different order. Mr. Puscher asked how that hearing would be handled as far as the location, etc. Ms. Jensen said this Board would likely not have to go to Tallahassee. Before COVID, she went to a workers' compensation office that was local, and the Administrative Law Judge appeared there electronically. Ms. Ring is in favor of having the Division of Administrative Hearings involved. Captain Wood stated his opinion is to allow the Division of Administrative Hearings take the information, review it, and provide the Board with their input on it. Captain Wood, Mr. Puscher, and Detective McDonough all stated that they were friends of Mr. Grimmich and going through the Division of Administrative Hearings would thus provide an unbiased overseer on this case. Ms. Jensen stated that the first step that this Board needs to do is to issue this Notice of Proposed Agency Action, to set it up with the reasoning that you believe there is reason to consider whether Mr. Grimmich's benefits should be forfeited. At that point, the hearing requirement arises. There being no further discussion, Captain Wood called for a motion. A motion issuing the Notice of Proposed Agency Action was made by Mr. Puscher, seconded by Ms. Ring, and approved unanimously via voice vote. A motion that this case be turned over to the Division of Administrative Hearings was made by Captain Wood, seconded by Mr. Puscher, and approved unanimously via voice vote. Ms. Jensen stated she will prepare a contract with the Division of Administrative Hearings, as there has to be a contract with them in order to hire the judge. Once she has the contract, she will provide them with all this Information, and they will set it up. In her experience, they try to do it as expeditiously as possible. Along those lines, she stated that the Board will have to consider retaining an attorney in this particular case. She recommended Paul Darajgati. He actually works with the FOP as outside counsel, and he is experienced In forfeitures. He charges $300.00 an hour. A motion accepting the recommendation of Mr. Darajgati as this Board's counsel in this matter was made by Mr. Puscher, seconded by Captain Wood, and approved unanimously via voice vote. (AT THIS POINT, MR. REEVES REENTERED THE MEETING.) POLICE PENSION BOARD PAGE 6 MINUTES OF REGULAR MEETING OF DECEMBER 14, 2021 VI. Old Business — None VII. New Business A. Report from Investment Manager Mr. Scott Owens introduced himself and described his position with Graystone Consulting, Tampa, who has been this Board's consultant since 2011. He reviewed the history of Graystone's involvement with the Pension Fund and went through his report (SEE ATTACHED). He described what Graystone's job is and how they are separate and distinct from all the other managers of the account. He reviewed and explained the volatility in the markets over the past year. There was discussion between Mr. Owens and the Board members, and he addressed their questions. Mr. Owens stated that he will implement a manager search and offered to provide any further Information that the Board wishes to have. B. Review and Approval of Summary Plan Description Ms. Jensen stated that it is proscribed by the State that the Summary Plan Description be updated every two years. This year there was not much to update. The names of the trustees were updated. The date on the front cover was updated. It is now up to date through Ordinance 21-02, which was the required minimum distribution implementing the secure act, which did not make many changes to this Pension Fund. She then called for a motion. A motion approving the Summary Plan Description as presented by Ms. Jensen was made by Mr. Puscher, seconded by Captain Wood, and approved unanimously via voice vote. Mr. Puscher asked if that Is to be sent out to all the members, and they need to acknowledge that they have received It. Ms. Jensen said yes, there needs to be a way to show that it has been delivered to all active employees. Vill. Leaal UDdates A. Statement of Financial Interest Form 1. Ms. Jensen reviewed the process for this item. There Is no fine assessed until September 131, but she recommended that everyone on the Board get that in ASAP. She believes that the Supervisor of Elections In this area will accept them via email. If anyone files it other than electronically, she asks that It be filed in a way that you can prove that you filed it. She also mentioned that the online filing system Is now being tested. Soon the Board members will be able to fill It out online and submit it. Captain Wood asked if anyone who Is not in compliance will be notified. Ms. Jensen said that usually they notify someone at POLICE PENSION BOARD PAGE 7 MINUTES OF REGULAR MEETING OF DECEMBER 14, 2021 the same time that they begin assessing fees or shortly thereafter. She will verify that prior to the August meeting. B. Required Minimum Distributions & Cryptocurrencies Guidance Ms. Jensen reviewed that she has sent out memos regarding what is happening at the federal level. The first memo is a follow-up to that increase in the required minimum distribution age to age 72. The IRS took a look at the Individuals who were affected by the required minimum distribution, in particular the survivor benefits. They then created a new regulation that changed the name to Eligible and Non -Eligible, which does not tell you what the groups are. What in the past was the non -spouse referred to people who could not stand in the shoes of the member, so they could not wait to take the distribution until the required minimum distribution age. Now, they have to, within five years of the death of the member, take their money out of the fund and spend it or pay taxes on it. They cannot tax -shelter it. The spouse can wait until the required minimum distribution age and then only have to take out what is required. They do not pay the taxes on that amount of money until they take the distribution. They took from the group of the non - spouse beneficiaries individuals who were dependent upon the retiree for support because they were unable to be gainfully employed for mental or physical reasons. So children or parents generally fit into that category. Moving them from the position where they had to take the money, pay the taxes on it, and then begin spending it to allow them to use a tax shelter and to have favorable tax treatment for their distributions. Mr. Reeves stated that he thought It had been 10 years from the death of the member to take their money out of the fund and, If there Is no designated beneficiary, then It is five years. Ms. Jensen said she would check on that. Ms. Jensen added that the House has considered a change to Secure Act 2.0, which would Increase the required minimum distribution age to age 75 by 2029. The last item in the memo is information from the Department of Labor. That department has Issued a notice to private sector pension plans indicating that they do not feel that cryptocurrency meets the prudence requirement for purposes of investment inside of defined benefit plans, inside of defined contribution plans, and inside of defined contribution plans at the brokerage window. The Department of Labor is not authoritative of this Board, but they are something that her firm looks to for trends. She is interested to see what the pension plans say as a result of this notice. The Department of Labor has indicated that they are going to go out and talk to the private sector pension plans about why they feel that cryptocurrency Is prudent. C. IRS Mileage Rate for 2022 and Signature Authorization Forth for Providers Ms. Jensen said the IRS Mileage Rate for travel for 2022 is now 58.5 cents per mile. She added that this may change after July 151 because of Inflation. POLICE PENSION BOARD PAGE 8 MINUTES OF REGULAR MEETING OF DECEMBER 14, 2021 D. Other Legal Matters Ms. Jensen described the memo on signature authorizations. She Is talking to clients about making sure that their signature authorizations are updated. They should make sure that annually they look at their signature authorizations so that they have the authority to fire managers If they need to. Since there have been a couple of times when new Board members have been installed, this Board probably should update the signature authorizations. IX. Board Member Reports and Comments — None X. Plan Administrator Reports and Comments A. Budget Report/Calendar of Board Activities/Other Administrative Matters Mr. Killgore stated that he is presenting to the Board the budget report showing what has been spent through last week. He also presented the Calendar of Activities, and through June everything has been needed has been fulfilled in that respect. He emphasized to the three Board members who have signed up for the FFPTA conference that they be very diligent when checking in at the hotel so that the correct $189.00 rate is being charged. He also reminded those Board members to be sure to get a copy of the City's tax-exempt form to lake with you. He does have a City travel form, and he will provide that form. He also keeps up with the City ordinance on mileage to track the IRS rate. XI. Next Scheduled Quarteriv Meeting: September 8.2022 XII. Adiourn There being no further business, Chairman Wood adjourned the meeting at 7:41 p.m. By: �;1 -715 tn/' •r Date: 9/�/Z FORM 8B MEMORANDUM OF VOTING CONFLICT FOR COUNTY, MUNICIPAL, AND OTHER LOCAL PUBLIC OFFICERS IAST NAME- IRaT RAME-MIDDLE NAME NAME OF SOAFM C(ril-, COMMISSION, AU1HORnY, OR COMMITTEE �EJ PAUL E. 5EbAi?7R/� P0LIa AFN 0l� �j0 Ab A E 4 THEa0PA0, UNCII.COMMISS]i RnY COMM 901 LN aRR��3Rb w1IICHISERVEISAUNITOF. CITY COUNTY I OCOUNTY OOMERLO AGENCY GAMT-VAL901A my, ISiANI«,. IDATE ON ICHVOTEOCCURRED P0.9rxxi R. 06- � zo%Z I D ELECTIVE a MPDINTNE WHO MUST FILE FORM 8B This forth Is for use by any person Serving at the county, city, or Other local level of government on an appointed or elected board, council, commission, authority, or committee - It applies to members of advisory and non -advisory bodies who are presented with a voting wnflict of Interest under Section 112.3143, Florida Statutes. Your rasporelbiiNes under Me law when faced with voting on a measure in which you have a conflict of interest will vary greatly depending on whether you hold an elective or appointive position. For this reason, please pay dose attention to Me instructions on this lorm before completing and filing the form. INSTRUCTIONS FOR COMPLIANCE WITH SECTION 112.3143, FLORIDA STATUTES A person holding elective or appointive county, municipal, or other local public office MUST ABSTAIN from voting on a measure which would Inure to his or her special private gain or loss. Each elected or appointed local officer also MUST ABSTAIN from knowingly voting on a measure which would Inure to the special gain or toss of a principal (other than a govemment agency) by whom he or she Is retained (including the parent. subsidiary, or sibling organization of a principal by which he or she Is retained); fo the special private gain or INS of a relative; or to the spedel private gain or loss of a business associate. Commissioners of community redevelopment agencies (CRAB) under Sec. 163.356 or 163.357. ES., and officers of independent special tax districts elected on a one -acre, one -vole basis are not prohibited from voting In that capacity. For purposes of this law, a 'relative' includes only the officer's father, mother, son, daughter, husband, wife, brother, sister, tamer -in-law, mother-in-law, son-in-law, and daughter -In-law. A "business associate' means any person or entry engaged In or carrying on a business enterprise will the officer as a partner, joint venturer, coowner of property, or corporate shareholder (where the shares of the corporation are not listed on any national or regional stock exchange). ELECTED OFFICERS: In addition to abstaining from vobng in the situations described above. you must disclose the conflict PRIOR TO THE VOTE BEING TAKEN by publicly sibling to the assembly the nature of your interest in the measure on which you are abstaining from voting; and WITHIN 15 DAYS AFTER THE VOTE OCCURS by completing and filing this form with the person responsible for recording the minutes of the meeting, who should incorporate the form In the minutes. APPOINTED OFFICERS: AlMoUgh you must abstain from voting in the situations described above, you are not prohibited by Section 112.3143 from otherwise participating in these matters. However, you must disclose the nature of the confild before making any attempt to influence the decision, whether orally or in writing and whether made by you or at your direction. IF YOU INTEND TO MAKE ANY ATTEMPT TO INFLUENCE THE DECISION PRIOR TO THE MEETING AT WHICH THE VOTE WILL BE TAKEN: • You must complete and file this form (before making any attempt to Influence the decision) with the pawn responsible for recording the minutes of the meeting, who will Incorporate the form In the minutes. (Continued on page 2) CE FORM M- EFF 11=13 PAGE 1 Mopid by mlerenm in Rule 34-7,010(1)(g, FAC. APPOINTED OFFICERS (continued) A copy of the form must be provided Immediately to the other members of the agency. • Theron must be read publicly at the nett meeting after the form is filed. IF YOU MAKE NO ATTEMPT TO INFLUENCE THE DECISION EXCEPT BY DISCUSSION AT THE MEETING: You must disclose orally the nature of your conflict in the measure before panicipagng. You must complete the form and file it within 15 days after the vote occurs with the person responsible for recording the minutes of the meeting, who must Incorporate the form in the minutes. Ampy of the form must be provided immediately to the other members of the agency, and the form must be read publicly at the nazi meeting after the farm Is filed. DISCLOSURE OF LOCAL OFFICER'S INTEREST p I. 1 H u L R O �E5 , hereby disclose that on ) An I—[. , 20 'ZZ (a) A measure name or will come before my agency which (check one or more) inured to my special private gain or lass; inured to the special gain or loss of my business associate, _ Inured to the special gain or loss of my relative. JX inured to the special gain or ides of 1 RE L•q nib G R I M M I f-N by whom I am retained: or Inured to the special gain or loss of ,which is his parent subsidiary, or sibling urgamzetion or subsidiary of a principal which has retained me. (b) The measure before my agency and the nature of my conflicting interest In the measure is as follows: (-Rnnp} A * AS 7'!�Nr.i.t/r i9/ bofl, SIdQJ 1� 0.� D��D 01�1+�Oti nl 5e {}i) . V If disclosure of specific Information would violate confidentiehty or privilege pursuant to law or rules governing attorneys, a public officer, who Is also an attorney, may comply with the disclosure requirements of this section by disclosing the nature of the Interest in such a way as to provide the public with notice of the Conflict. Data Filed Signature NOTICE: UNDER PROVISIONS OF FLORIDA STATUTES §112.317, A FAILURE TO MAKE ANY REOUIRED DISCLOSURE CONSTITUTES GROUNDS FOR AND MAY BE PUNISHED BY ONE OR MORE OF THE FOLLOWING: IMPEACHMENT, REMOVAL OR SUSPENSION FROM OFFICE OR EMPLOYMENT, DEMOTION, REDUCTION IN SALARY, REPRIMAND, OR A CIVIL PENALTY NOTTO EXCEED $10,000. CE FORM a6 - EFF. 112013 PAGE 2 Mooed by reference In ROIe 514.010(1)f0, FAC.