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Home My WebLink About03202012 PRBDRAFT i 3/26/12 DRAFT Sebastian Police Pension Board Minutes: March 20 2012, 10:00 a.m. TYPE OF MEETING: Regularly Scheduled Sebastian City Council Chambers ATTENDEES: Board Members: Greg Witt, Chairperson Harry Tanner Debra Krueger Steve Marcinik Robert Zomok, Secretary EXCUSED CONSULTANTS: Peter Goodridge, Wells Fargo Advisor Steve Stack, ICC Capital Mgmt. (Portfolio Manager) Lee Dehner, Attorney Al Minner, City Manager SUBJECT CALL TO ORDER 10:00 a.m. There being a quorum present, Greg Witt, called the meeting to order. SUBJECT APPROVAL OF MINUTES 10:05 a.m. Chairman Witt requested a motion to approve the minutes of the January 26, 2012. Motioned made by Harry Tanner and seconded by Debra Krueger. The motin passed unanimously. SUBJECT OLD BUSINESS 1 DRAFT 2 3/26/12 Review and execute by the Chairman, the Actuarial Impact Statement for Proposed Ordinance #12 -02. A motion was made by Debra Krueger and seconded by Bob Zomok to approve signing the Actuarial Impact Statement by Chairman Greg Witt. The motion passed. The Board also discussed reviewing the Actuarial Assumptions. Al Minner participated in this discussion. The Board agreed to review the Actuarial Assumptions as part of the process of interviewing and selecting an Actuarial firm. In addition, once the Actuarial firm is selected, we will need an experience study from the Actuary. (under Chapter organization, the assumptions are required to be the same. However, under Local Law organization, the Board has the option of altering the Assumptions. The Board agreed, along with City Manager Minner, that options should be explored to determine if a positive financial impact may be achieved. SUBJECT WELLS FARGO CONTRACT UPDATE 10:25 a.m. Peter Goodridge stated that the liability issue is still holding things up. Peter Goodridge said he has been trying to convince Wells Fargo lawyers that the standard Lee is seeking is in other contracts that Well Fargo has with other Florida municipalities. Lee said the way Wells Fargo wants the contract to read, Wells Fargo, will have less, rather than equal, fiduciary responsibilities. He said this is a significant issue. Further, Lee stated that Wells Fargo will not agree to the Standard of Care language the Board prefers and recommended that the Board not sign the contract in its current form. Bob Zomok made a motion to seek another consultant with a Request for Proposal to be drafted by Lee Dehner. Debra Krueger seconded the motion. The motion passed. NEW BUSINESS 2 DRAFT 3 3/26/12 SUBJECT ACTUARIAL RFP DISCUSSION We have received two responses to the REP to provide actuarial services. The two companies responding were Foster & Foster (our current actuary) and Gabriel Roeder Smith & Company (GRS). The Board agreed to have a special meeting on April 17, 2012 to have both firms present. The Board will convene at 10 AM. Lee Dehner arranged to have Foster & Foster do their presentation at 10:30 AM and Grs present at 11:30 AM. SUBJECT APPROVAL OF CHRISTIANSEN & DEHNER INVOICE Harry Tanner made a motion to approve payment of the invoice. The motion was seconded by Bob Zomok and was passed. SUBJECT TOTAL EXPECTED RATE OF ANNUAL RETURN REQUIREMENT The Total Expected Annual Rate of Return is part of the service supplied by the Actuary when the Annual Valuation is completed. Lee Dehner pointed out that this requirement contains a current year, nest several years, and a long range statement of the rate of return. Steve Marcinik made a motion that the Board has determined, based on the recommendation of the consultant, that the Total Expected Rate of Annual Return for the current year, each of the next several years, and long term thereafter be equal to 8 %. The motion was seconded by Debra Krueger and passed. Debra will report this motion to Tallahassee. In concert with this requirement, Peter Goodridge suggested that the Board consider adjusting the current asset allocation from the current 50% in equities and 50% in bonds to a higher allocation to equities. Steve Stack will investigate this suggest and make a recommendation to the Board. SUBJECT REQUEST EXCUSED ABSENCE FOR 06/12/2012 MEETING Debra Krueger requested an excused absence from the June 12, 2012 Board meeting. The request was approved. DRAFT 4 3/26/12 SUBJECT TRAINING OPPORTUNITIES Mini - conference for Trustees, Cocoa Beach 33rd Annual Police Officers Pension Trustees School SUBJECT WELLS FARGO ADVISORS REPORT. 11:15 a.m. Peter Goodridge gave his investment performance report for the period ending December 31, 2011. He provided a report dated March 12, 2012. The Fund had a total market value of $7,992,173 as of the end of the fourth quarter. The Fund had an investment return of 6.04% in the fourth quarter ending 12/31/2011. The Fund was allocated 48% in stocks, 41% in bonds, and 11 % in cash equivalents as of the end of the fourth quarter. In the fourth quarter, the comparable weighted index had a return of 6.11 %. The index for weighting used is 48% S &P 500,41% Barclay's aggregate bond, and 11% 91 day Tbills. In the fourth quarter, the Target Index (Policy) for the Fund had an investment return of 6.71 %. The Target Index (Policy) for the Fund per the new Statement of Investment Policy adopted 03/24/2011 is 50% S &P 500 stock index, 10% EAFE stock index, and 40% Barclay's Capital US Aggregate Bond Index. Except for four Bonds in the portfolio that currently do not meet the requirements of our investment policy, the Plan is in full compliance with written policies. SUBJECT PORTFOLIO MANAGERS INVESTMENT REVIEW REPORT Report on Sale of Downgraded Bonds. Steve Stack suggested that the Board consider approval of investment in the 4th level of investment grade bonds. This action will bring the Fund 0 DRAFT 5 3/26/12 back into compliance with its investment policy. Fund Review For the current quarter (ending 12/31/2011), the Starting Value of the Fund was $7, 528955. The ending value was $7, 993, 985 for a gain of $465, 030. The total return was 6.20 %. Steve Stack commented on the downgraded bonds. In and of themselves, they continue to be very acceptable investments. With the vagaries of the rating agencies at the moment, they have been downgraded. He also commented on the recommendation made by Peter Goodridge of increasing investment in equities. With the most recent Investment Policy, our equity investment position may go up to 70 %. He suggested moving to that level be accomplished on a conservative basis. He will review our equity posture with Grant McMurry and report to the Board. ATTORNEY MATTERS Lee Dehner said that most of his report had occurred within our previous discussions as noted above. He reminded the Board of their requirement to file Form 1 with the Supervisor of Elections by July 1, 2012. The Board had a brief discussion concerning the final draft of the proposed Ordinance. Lee and Debra will attempt to email it to all Board Members. ITEM SUBJECT ACTION ITEMS RESPONSIBLE PERSON Prepare RFP Lee Dehner Review Investments Steve Stack DRAFT 6 3/26/12 Send Final Draft of Ordinance Lee Dehner Send Board Motion to Tallahassee Debra Krueger SUBJECT ADJOURNMENT/NEXT MEETING 12:05 p.m. Having no further business for discussion, a motion to adjourn was made by Steve Marcinik and seconded by Debra Krueger. Chairman Greg Witt adjourned the meeting. A Special Meeting will be held on April 17, 2012 at 10:00 AM to hear presentations from the two actuarial firms Next regularly scheduled meeting is June 12, 2012, at 10:00 a.m. in the City Council Chambers. Respectfully submitted, Bob Zomok, Secretary 2