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Home My WebLink About03192013 PRB Minutes1 DRAFT Sebastian Police Pension Board Minutes March 19, 2013, 10:00 a.m. Sebastian City Council Chambers TYPE OF MEETING: Regularly Scheduled ATTENDEES: Board Members: Greg Witt, Chair Robert Zomok, Secretary Harry Tanner Debra Krueger Steve Marcinik EXCUSED: CONSULTANTS: Doug Lozen, Foster & Foster Scott Owens, Doug and Charles Mulfinger - Graystone Consulting. Grant McMurry, ICC Capital Mgmt. (Portfolio Manager) Lee Dehner, Attorney 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. Harry Tanner motioned the minutes of the December 11, 2012 Board Meeting, be approved. Motioned seconded by Bob Zomok and passed unanimously without change, for both meetings. 2 SUBJECT OLD BUSINESS The proposed cost of the “no cost” items to be added to the new Ordinance was discussed at length at the December 11, 2012 meeting. At that time, the Board had received a letter from our Actuarial firm - Foster & Foster - stating that there are no immediate costs to adding amendments to allow the purchase by the Police Officer of service for FMLA time, the purchase of prior police service, and prior military service. The reservations advanced by the City Manager, Al Minner, concerning these issues and their costs were discussed in detail. The Board determined that our course of action at this time is to send a letter to the City Manager. A motion was made by Bob Zomok and seconded by Steve Marcinik to have “a letter prepared by Attorney Dehner to the City Manager stating that we (the Board) have resolved his concerns about including the ‘no-cost’ items in the Ordinance by securing written documentation (letter included) from our Actuaries stating these changes are, in fact, at no immediate cost. There may be future costs but these would occur after the new collective bargaining agreement is in effect. The Sebastian Police Pension Board would like to resolve this matter in order to move the approval of the Ordinance forward. Does this satisfy your reservations? Do you have any additional questions?” The motion passed unanimously. The letter was sent to City Manager Minner and he was at this meeting. His concerns arose from three perspectives - the Board’s potential “interference” in collective bargaining via sending the updated Ordinance to Sebastian City Council with the “no cost“items included. Secondly, the City did not believe the numbers as presented by the actuaries. In his opinion, cost would be added via the purchase of past- service time and additional expenses for the DROP program. Thirdly, Adding in prior service would increase the cost to the plan. Doug Lozen responded that the State’s objection cannot be adequately defended. A DROP program must meet three (3) criteria - -The person must be eligible for normal retirement, a limit of 5 to 8 years participation in the DROP program is established, and the DROP must give a fixed interest option which is less than the actuarial assumption of 3 8% (6.5%). Our DROP portion of the Plan meets these criteria. Further, if the Police Officer left employment and started to draw actual retirement checks versus staying in the DROP program, the cost to the Plan is the same. Finally, the Police Officer wanting to “buy-back” past service is responsible for the entire cost of the “buy-back.” The Board also attempted to reassure Mr. Minner that we had no desire or intention to interfere in the collective bargaining process. However, he was reminded that the Board has, as a duty, to be a resource to the Police Officers. Further, there is a “overlap” area - the City Ordinance - which is within the Board’s purview. After City Manager Minner left the meeting, Doug Lozen offered several areas for the Board to consider. To determine the position of the Plan, three areas need to be considered: Census (who is in the Plan and Bank statements), The City Ordinance, and the last Plan Valuation (especially the plan assumptions). Given this data and considering what Sebastian City Council has already approved (the lowering of Police Officer contributions), the Plan cost to the City, when viewed over time, will be reduced. To demonstrate this fact, Doug stated he could demonstrate, in graph form, this reduction in cost to the City. Steve Marcinik moved that a graph be produced showing the impact of what Sebastian City Council has approved versus what would have occurred if the changes were not made. Debra Krueger seconded the motion. The motion passed unanimously. (This is a 20 to 30 year projection of the funding requirements Council has approved with the changes in Ordinance parts 12.02 and 12.09.) Updated Plan Summary Status - Attorney Dehner will revise the Summary Plan Description to update it for any ordinance changes and have copies at our next meeting. SUBJECT NEW BUSINESS The Board was asked to approve Foster & Foster invoice #4566 in the amount of $6,850.00. Bob Zomok moved to approve payment, Harry Tanner seconded the motion. The motion passed unanimously. 4 Doug Lozen, Foster & Foster, provided the Board with the “Valuation Results as of the 10/1/2012. The FASB Funded Ratio (money in the bank vs. value of promised benefits) was 107.90% This, in essence means, if the Plan were to terminate immediately, for every dollar of promised benefits, the Plan has $1.07 to cover those costs. Further the GASB Funded Ratio is 90.30% versus a required ratio of 80%. This means that if all promised benefits were projected to the retirement of all current Police officers, the Plan has 90.30% of those costs covered. Graystone Consulting representatives presented a draft of a re-stated Investment Policy for the Board’s consideration. The discussion of their proposed changes will be discussed at the June 18, 2013 meeting after the Board has had a chance to review the proposed changes. Graystone Consulting also presented an educational program on Asset Allocation including Alternatives. This basic knowledge will be used at the next meeting as the Board explores asset allocation in more depth to include specific fund managers for specific investment types. SUBJECT PORTFOLIO MANAGERS INVESTMENT REVIEW REPORT Grant McMurry presented his report showing the Market Value of Cash/Cash Equivalents is 4.0% of the Fund’s investments, Equity investments are at 50.6%, and Fixed investments are at 45.3%.The Fund has a 7.7% increase for the Fiscal Year to Date. SUBJECT ATTORNEY MATTERS In addition to the matters discussed above in reference to the City Manager’s response to the letter sent to him by Attorney Dehner, the following matters were brought to the Board’s attention: Lee is tracking HB 599 and companion bill SB 534 for impact on defined benefit plans and SB 458 which imposes restriction on the plans by the State. The conventional wisdom holds this should be controlled locally. Lee also reminded the Board that the required Form #1 is due prior to July 2013. 5 SUBJECT OTHER BUSINESS Debra reminded the Board members that the Education session required is being offered by the State May 20 - 22, 2013. SUBJECT ACTION ITEMS ITEM RESPONSIBLE PERSON Letter to State on Total Expected Debra Krueger Rate of Return and Asset Allocation this issue is to be discussed at the next meeting Report on the Sale of the (5) Grant McMurry - next meeting Down graded Bonds SUBJECT ADJOURNMENT 1:50 p.m. Having no further business for discussion, Chairman Greg Witt adjourned the meeting. Next regularly scheduled meeting is June 18, 2013, at 10:00 a.m. in the City Council Chambers. Respectfully submitted ____________________________________ Bob Zomok, Secretary