General Employees Pension Board

General Employees' Pension Board Regular, Quarterly Meeting April 25, 2019 - 8:30am The regular/ quarterly meeting of the City of Lake Wales General Employees' Pension Board was held April 25, 2019 in the City Administration Building/ City Manager's conference room beginning at 8:30a.m. Linda Kimbrough/ Trustee, conducted the meeting. Agenda Item 2: BOARD MEMBERS PRESENT: Commissioner Robin Gibson, Linda Kimbrough Sarah Kirkland/ James Slaton BOARD MEMBERS ABSENT: Violeta Salud CITY REP PRESENT: Carla Bibby/ Recording Secretary OTHER ATTENDEES: Sandra Davis/ Cifr/ of Lake Wales; Ryan Higgins/ Raymond James; Chris Rafool/ Raymond James; Todd Wishnia/ Highland Capital Management, LLC Agenda Item 3: COMMUNICATIONS AND PETITIONS: No comments from the public. Agenda Item 4: APPROVAL OF MINUTES: February 07, 2019 Regular Meeting Minutes Sarah Kirkland made a motion to approve the minutes of the February 07, 2019 regular meeting. James Slaton seconded the motion, VOTE: All HAYE", None "NAY" Motion passed/ 4/0 vote Agenda Item 5: NEW BUSINESS: Invoices Klausner/ Kaufman/ Jensen/ Levinson $1,206.00 Highland Capital Management $12/587.06 Foster &. Foster $4/323.00 Professional Indemnity Insurance $3/572.00 General Employees' Pension Board Minutes Regular Meeting April 25, 2019 James Slaton made a motion to approve the payment of invoices, Sarah Kirkland seconded the motion. VOTE: All "AYE"/ None "NAY" Motion passed/ 4/0 vote Comprehensive Annual Financial Report The auditors who prepared the City of Lake Wales Comprehensive Annual Financial Report will be at a future commission meeting to present the report. Ms. Kimbrough suggested to board members to review the information that pertains to the General Employees' Pension Fund and bring any questions to the future commission meeting, Sarah Kirkland made a motion to accept the audit. James Slaton seconded the motion. VOTE: AH "AYE"/ None "NAY" Motion passed/ 4/0 vote Agenda Item 6: KLAUSNER, KAUFMAN, JENSEN & LEVINSON: Adam Levinson, attended by phone, reviewed the memo regarding proposed House Biil 265. As of right now/ the bill is not moving forward but that can always change so the proposal should be monitored. One of the requirements is to make available on the City's website/ for the purpose of the public to view/ any information that the trustees would look at. This would include any materials or handouts that are distributed at meeting. This would require advance preparation because aii consultants' reports will have to be made available before the board meeting. This can also be a concern if the City's website does not have enough bandwidth, Mr. Levinson discussed the memo regarding the summary of the Division of Retirement's report to the legislature. The Division of Retirement does not have any recommendations/ which is why there are not many bills relating to government pensions this year. The average local retirement pension is $27/354 annually. This is a low amount because most pension plans do not have cost of living adjustments. Inflation is the biggest concern among retirees with a fixed income. Mr. Levinson recommended that the city encourage employees to contribute to 457 retirement accounts to help fight inflation. Investments were allocated as follows across the state: equities (59.61%), fixed income (23.28%), real estate (8.66%), and other/alternatives/cash (8.45%). According to the summary/ the most common investment assumption is currently 7.5%. The second most common investment assumption is 7.0%. The next memo reviewed was regarding tax treatment of duty-related disability 2 General Employees' Pension Board Minutes Regular Meeting April 25, 2019 pensions. Duty-related disability means the disability occurred due to the job, Duty-related disability pensions have a different tax status than a regular disability pension. Those receiving duty-related disability pensions need to speak with their tax advisors about their pension. The last memo reviewed was regarding changes in tax rules for alimony. Due to the Trump administration/ the recent tax changes/reforms have affected alimony and dividing marital estates or equitable distribution. Any employee going through a divorce starting in 2019 will need to consult a tax advisor. Next time the Summary Plan Description is updated/ Mr. Levinson recommends using the language found on page 2 of the memo. The East item Mr. Levinson reviewed was the release provided by Raymond James. Chris Rafool summarized why the release was being presented to the board. When initially trying to transfer the assets from Wells Fargo to Raymond James there were some issues with Wells Fargo not releasing the assets. While the assets were still at Wells Fargo/ Highland Capital was unable to access the account. Mr. Levinson was involved to help review the documents and emails that Wells Fargo was providing, As a result/ this incurred many legal fees. Mr. Rafool reviewed the invoice presented at the last board meeting and totaled the portion of what he believed to be result of transferring assets. He brought the expense to the compliance department of Raymond James to see about reimbursing the board. The compliance department agreed to the expense and provided the release as per their standard operating procedure. After the summary, Mr. Levinson obsen/ed the provided release document has Carla Bibby's name on it and that her name needs to be removed and the release signed by the chairperson of the board, A whereas clause should be added near the beginning of the release to summarize why the release is being issued. It was recommended that Raymond James redraft the release to save the board attorney's fees. Mr. Rafool agreed to have the release document redrafted and provide it for review before the next board meeting. Agenda Item 7: RAYMOND JAMES: Portfolio Performance Report Mr. Rafooi presented the Portfolio Performance Report for the first quarter of 2019, period ending March 31, 2019 as shown below: Summary of Investment Growth this Quarter: Beginning Market Value $10,281,670 Net Cash How -$281/066 Net Investment Change _J791.529 Ending Market Value $10,792,133 Net Money-Weighted Returns 7.72% 3 General Employees' Pension Board Minutes Regular Meeting April 25, 2019 Market Value on % of Mar 31,2019 Portfolio Cash & Cash Alternatives $184/285.62 1.71% Cash * $181/853.80 1.69% Cash Alternatives $2/431.82 0.02% Fixed Income $3,725,178.56 34.52% Equity $6/882,668.99 63.77% U.S, Equity $5/701/735.63 52.83% Non U.S. Equity $908/342.60 8.42% Real Estate $272/590.76 2.53% Alternative Investments $0.00 0.00% Allocation Strategies $0.00 0.00% Non-Classified $0.00 0.00% Total Portfolio $10,792,133.17 100% *$154/515.05 is held in cash and cash sweep products The plan had a return of 7.72% for the quarter/ which surpasses the target return rate of 7.50%, The one year return is 7.0% and the return since inception (June 1988) is 8.18%. The plan's top holding is SPDR S&P Dividend ETF at 6.46% of the portfolio. This is a diversified investment vehicle of 111 different stocks. Agenda Item 8: HIGHLAND CAPITAL MANAGEMENT: Todd Wishnia spoke about the fiscal quarter ending 03/31/19. The 4th quarter ending 2018 turned in the worst equity performance since 2008. The 1st quarter for 2019 was the best performing quarter since 2009. The S&P gained 13.6%, This gain did not recoup all of 2018's 4th quarter loss but it did gain back most. There is a slowdown in growth at home and abroad. Regardless, markets responded favorably to the Fed easing monetary policies. In early December/ the. Fed announced rate hikes for 2019 and the market went down. Near the end of December/ they announced a hold on rate hikes and the market shot back up. A recession is possible in the near future. The market has had a long mn. The yield curve for the past 3 years has rates that are higher than the 10-year rates. Historically/ whenever this has happened the market sees a recession. Agenda Item 9: OTHER NEW BUSINESS: Announcements The next meeting wili be held on Thursday/ July 25, 2019 at the City Administration Building in the City Manager's conference room at 08:30 a.m. General Employees' Pension Board Minutes Regular Meeting April 25, 2019 Kimbrough/ Vic^Qt^air^ ATTEST: ^A^t^^-v..^ Prepared by: Carmen Ortiz for the Board of Trustees