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HomeMy WebLinkAbout01-21-2025 MinutesCITY OF SEBASTIAN POLICE OFFICERS' RETIREMENT SYSTEM PENSION BOARD OF TRUSTEES QUARTERLY MEETING MINUTES Council Chambers,1225 Main Street, Sebastian, FL 32958 Tuesday, January 21, 2025, at 5:OOPM TRUSTEES PRESENT: Tim Wood Paul Reeves Ken McDonough Robert Allen David Puscher TRUSTEES ABSENT: None OTHERS PRESENT: Kandyce Moss, Foster & Foster Doug Lozen, Foster & Foster Bonni Jensen, Klausner, Kaufman, Jensen & Levinson TJ Loew, +Graystone Consulting 1. Call to Order - Kandyce Moss called the meeting to order at 5:OOPM and a quorum was determined. 2. Roll Call - Kandyce Moss called roll calf. 3. Public Comments - None. 4. Approval of Minutes a) October 16, 2024, quarterly meeting The Board voted to approve the October 16. 2024, auarterly meeting minutes as Presented, upon motion by David Puscher and second by Tim Wood: motion carried 4-0. 5. New Business a) Actual Plan expenses as of September 30, 2024 i. Kandyce Moss presented fiscal year 2024 expenses. The Board voted to aoprove Fiscal Year 2024 expenses as presented, upon motion by Ken McDonouah and second by David Puscher: motion moved 4-0. 6. Old Business -None. !Vote: Paul Reeves arrived at 5:04pm. 7. Reports (Attomev/Consultants) a) Foster & Foster, Doug Lozen, Board Actuary i. Actuarial Valuation Report as of October 1, 2024 1. Doug Lozen presented the October 1, 2024, Valuation. Doug commented this was a good investment year. 2. Doug Lozen referred the Board to look at the experience in the plan, as compared to assumptions. 3. Doug Lozen explained the use of a 4-year smoothing average. 4. Doug Lozen explained there was a loss due to large salary increases. This was common throughout the State, as Doug saw double digit salary increases due to recruiting and retention concerns. 5. Doug Lozen advised the Sebastain salary increases were 11 6. Doug Lozen advised the pension funding would be 18.8% of payroll for fiscal year end September 30, 2026. 7. Doug Lozen commented the city receives all the state money. The state money comes from tax on insurance premiums and is reimbursed to the trust fund. The state funds have been lowering the plan's liability. 8. Robert Allen asked about the summary report, commenting he would Jove to see three columns. Doug Lozen responded that the state mandates the report, but he was happy to add as supplemental information. 9. Doug Lozen commented the Funding Status was getting close to 90% mark, currently 88.6%. The Board voted to approve the October 1. 2024 actuarial valuation report as, presented, upon motion by Tim Wood and second by Robert Allen-, motion moved 5- 0. lo. Doug Lozen recommended the use of the assumption rate in place today, which was 7.10%. This rate could be changed in the future, if needed. The Board voted the declaration of returns for the Wan shall be 7.10% for the next vear, the next several veers, and the long term thereafter, upon motion by David Puscher and second by Tim Wood: motion carried 6-0. 11. Doug Lozen commented he would like to come back in September with an Experience Study. Doug explained it was normal practice to do conduct an experience study every 5 years. An experience study for the plan was completed in September 2019. Doug recommends doing an experience study and going over the assumptions to make sure they were in line. 12. Tim Wood advised they were working through a new union contract that should be completed by October 1, 2025, which salary was being discussed. Tim asked if the study could be pushed back to December to get through the union contract. Doug Lozen responded, yes, and asked Tim to keep him advised when the contract was approved. 13. Ken McDonough advised they were looking at step plan, so the first year may cause a large increase. 14. Doug Lozen advised he has helped out with projections with other agencies, and he could provide assistance. 15. The Board asked the cost of an experience study, Doug Lozen advised $13,000. 2 16. David Puscher asked if FRS would be updating the mortality rates. Doug Lozen advised they were looking at it, but nothing had been approved. Doug advised once there was a change, the plan had two years to implement it. b) Graystone Consulting, TJ Loew, Investment Consultant i. Quarterly report as of December 31, 2024 1. TJ Loew provided a market overview and commented there were still several unknowns post -election. 2. TJ Loew commented the Federal Reserve started to reduce interest rates but with inflation coming back, they may take back some of the rate cuts that were expected, and this could mean rates may be higher for longer. I TJ Loew review of Global Yield Differentials and US Treasury Yield Curves. 4. The market value of assets (MVA) as of December 31, 2024, was $25,234,000. TJ Loew commented the plan earned just over $2 million over the 1-year period. 5. TJ Loew advised the fund was slightly outside of the asset allocation targets and reviewed the current asset allocation. 6. The total fund gross returns for the quarter were -0.01%, slightly outperforming the benchmark of -0.55%. The 1-, 3-, 5-, 7- and 10- year gross returns were 10-89%, 3.15%, 7.76%, 7.38% and 7.32% compared to the benchmarks of 11.62%, 3.12%, 7.44%, 7.47% and 7.51% for the same respective periods. Since inception (02/01/2011), total fund gross returns were 7.54%, outperforming the benchmark of 8.12%. T TJ Loew advised there was $1.3 million in the cash account. Currently Bonds were earning more than cash. TJ advised to consider moving some cash into Fixed Income. 8. TJ Loew commented if they thought rates were going to continue to normalize, fixed income should do better than cash but if not, plan could do better in bonds. 9. Paul Reeves asked what if we kept everything as is and just move to the get to the target asset allocation. And then wait to see what the interest rates were going to do before they invest too much in bonds. 10. David Puscher asked how tariffs would affect the market. TJ Loew advised, if tariffs lead to higher inflation, then it was not good. In real estate, starting to see tailwinds, so rentals were stabilizing. ii. TJ Loew recommended a rebalance to get closer to the target asset allocation; take .5% from cash and move to Fixed Income Bonds. This would put the fund in compliance. The Board approved the recommendation of the investment consultant to move .5% from cash to fixed income bonds, upon motion by Paul Reeves and second by David' Puscher: motion carried 6-0. 12. Paul Reeves asked to keep some overweight in cash for the next couple months. 3 13. TJ Loew advised there was a fair amount in cash and when rates start to normalize, they would look at cash and continue to move to target. 14. TJ Loew reviewed fund performances. 15. TJ Loew advised they had removed the remaining funds out of Polen. 16. David Pusher asked what TJ foresaw in International growth. TJ Loew commented they have been underweight in international. TJ commented you do not want to take it down to 0% because there could be a change in the market; keep some money in the allocation. Currently the allocation is around 12%. 17. TJ commented on real estate, it was an asset class they would have to decide to hold or add to the investment in the future. 18. Paul Reeves asked if they were able to get a breakdown of the real estate holdings in the asset class. 19. TJ Loew commented on Lazard. Their focus is toll roads and infrastructure; they continue to earn income and were a lower risk manager. 20, TJ Loew advised there were changes made to the Investment Policy Statement (IPS) over the quarter and asked if the Board had any questions. The Board voted to approve the Investment Poficv Statement as presented, upon motion by Tim Wood and second by Paul Reeves: motion carried 6-0. c) Klausner, Kaufman, Jensen & Levinson, Bonni Jensen, Board Attorney i. New Contract Requirements 1. Bonni Jensen reviewed the contract requirements in Section 787.06(13) and Section 287.138. ii. New Withholding Requirements 1. Bonni Jensen reviewed the New Withholding requirements. If a plan member resides outside of the US, they must have withholdings on their pension check. iii. Revised Operating Rules & Procedures 1. Bonni Jensen revised the operating rules; made minor changes. Board asked to add provision on disability retirees. Change was also made to stop receiving disability affidavit form once the retiree reaches normal retirement age. The Board voted to approve the revised Operatinq Rules and Procedures, upon motion by David Puscher and second by Paul Reeves: motion moved 5-0. 2. Bonni Jensen advised the Summary Plan Description (SPD) was not in the packet and would be presented at next meeting. Once approved, the SPD would be distributed to all active and new members. 8. Consent Aqenda a) Payment ratification i. Warrant #15, #16, #17 4 b) New Invoices for payment approval i. None. c) Fund activity report for October 10, 2024 — January 14, 2025 The Board voted to approve the consent aaenda as presented. upon motion by Tim, Wood and second by Paul Reeves: motion carried 5-0. 9. Staff Reports. Discussion, and Action a. Foster and Foster, Kandyce Moss, Plan Administrator I. Quorums Email 1. Kandyce Moss advised the Board they will receive quorum requests from a new email of quorums@foster-foser.com. David Puscher asked why we need the quorum email at all. Kandyce advised that we need to make sure there will be a quorum for the meeting or else the meeting would have to be cancelled. Kandyce commented we did not want to find out when we arrive to the meeting that there is no quorum. ii. Educational opportunity i. Kandyce Moss advised the Board of the FPPTA conference that will be held June 22 25, 2025 at the Omni ChampionsGate in Orlando. 10.Trustee Reports. Discussion, and Action — None. 11.Adiournment — The meeting adjourned at 6:19PM. 12. Next Meetinq — Tuesday, April 15, 2025, at 5:00PM, Quarterly Meeting. Respectfully submitted by: Troy Jenne, Pfan Administrator Date Approved by the Pension Board: 5 Approved by:: Tim Wood, CKairman 4-15-2025