Pension Board

City of Lynn Haven General Employees’ Retirement System City of Lynn Haven Fire Department January 23, 2020 – Special Board Meeting The City of Lynn Haven General Employees’ Retirement System Board met in a Special meeting on January 23, 2020 at 8:00 a.m. The following Board members were present: Mr. Bernd Janke, Chairperson, Mrs. Kay Carter, Secretary, Mrs. Amanda Delonjay, Mr. Frank Hall and Mr. Steve Summers. Also present via conference call were Mr. Stu Kaufman with Klausner, Kaufman, Jensen & Levinson, Fund Attorney and Mr. Drew Ballard with Foster & Foster, Inc., Fund Actuary. Mrs. Lauren Boatwright, Trustmark National Bank, Fund Custodian and Pension Fund Support Coordinator was in attendance for audio recording purposes. Mr. Bernd Janke presided and called the meeting to order. _____________________________________________________________________________________________ Public Comments: Mr. Bernd Janke opened the meeting for any public comments. Mr. Mitchell Hood stated that according to the Funding Impact provided by Foster & Foster, Inc., it shows that the City Manger is the only employee that the updated vesting schedule of 5 Years would be impacting. Mr. Mitchell Hood advised that all employees under the General Pension Plan has had to put in 10 Years in order to be fully vested and he disagreed with the City Manager being able to be fully vested within 5 Years. Mr. Mitchell Hood advised that when the City Manager signed on that she agreed to the vesting of 10 Years. Mr. Dane Willis advised that if the City Manager can change the vesting to 5 Years then all employees should be able to be fully vested in 5 Years. Mr. Milton Hutto advised that if the City is going to change the vesting to 5 Years then it should be across the board for all employees since the Pension was set up for all general employees. Mr. Ron Lamarre advised that if the Fund changes to a 5 Year vesting for the City Manager it should change for all employees but also stated that if the vesting changed for all employees it would greatly impact the Pension Fund and stated that the change should not be made. _____________________________________________________________________________________________ Discussion and Possible Vote on Open Board Position Mr. Bernd Janke advised that the Board currently has an open position to which he instructed Trustmark National Bank to reach out to all the Board Trustees for any recommendations in order to fill the position. Mr. Bernd Janke advised that the open position is a Board elected position. Mr. Stu Kaufman confirmed that the open position is a Board elected position, does not require the person to be a resident of Lynn Haven and that the persons name would be submitted to the Commission to confirm the appointment. Mr. Bernd Janke advised that Trustmark National Bank received a recommendation for Mr. Steve Summers. Mr. Bernd Janke gave the floor to Mr. Steve Summers for a brief introduction. Mr. Steve Summers stated that he is a resident of Lynn Haven since 1991 and he currently works in the Banking industry and was personally recommended by Mr. Frank Hall. Mr. Bernd Janke questioned if Mr. Steve Summers has served on any other Boards to which Mr. Steve Summers answered that he has never served on a Board but is looking for in doing so. Mr. Frank Hall advised that he did recommend Mr. Steve Summers and has known him since high school, that he has worked with him in the banking industry and that Mr. Steve Summers is very analytical, intelligent and dependable. Mr. Bernd Janke advised that he as Chairperson cannot make a motion but that if any of the Trustees wanted to make a motion to elect Mr. Steve Summers to the Board or any other discussion. Mr. Frank Hall made the motion to elect Mr. Steve Summers to the open Board position. Mrs. Amanda Delonjay seconded the motion. There was no further discussion from the Board Trustees or public in attendance. There being no objections the motion carried. _____________________________________________________________________________________________ 1 | Page City Manager Employment Agreement Discussion Mr. Bernd Janke advised that the City Commission and the City Manager drafted the presented City Manager Agreement during the previous City Commission meeting on and that Section 10 of the agreement directly affects the Lynn Haven General Employees’ Retirement System as it would allow only the City Manager to be fully vested in 5 Years instead of the current 10 Year vesting schedule. Mr. Bernd Janke advised that under Rule 7 of the Operating Rules and Procedures for the Fund, the City has authority to make changes to the Fund but that under Rule 8, the Board of Trustees must discuss any changes and approve any changes prior to the Ordinance being approved by the City Commission. 2 | Page Mrs. Amanda Delonjay stated that under Eligibility for Plan Membership in the Summary Plan Description, there is an opt-out option for the City Manager and that if the City Manager does opt-out of the plan that they are compensated in another way. Mrs. Amanda Delonjay advised that all City employees are required to follow the Rules of the plan and that it is a condition of their employment and that the plan is currently set up to protect all past, present and future benefits and that no changes to the Plan can be completed without an Ordinance change. Mrs. Amanda Delonjay questioned if the Fund changes the vesting for one employee then it could open the Fund to be changed by other employees in the future. Mr. Frank Hall stated that in most retirement plans, there are no changes made just for one individual and that if there is a change to be made for executive employees, then a new supplemental plan is established for those individuals. Mrs. Kay Carter stated that she agreed with Mrs. Amanda Delonjay and that if the vesting is changed for one then it should be changed for all but stated that the change to the vesting would have a financial impact on the City and the Fund. Mrs. Amanda Delonjay advised that the Board has a fiduciary responsibility to all the retirees and employees and that the Rules state that the City Manager can opt-out and be compensated in another way and that previous City Managers have done so. Mr. Bernd Janke advised that he reached out to Foster & Foster, Inc. in order to obtain a Funding Impact Study for the Vesting Changes and turned the meeting over to Mr. Drew Ballard for him to present the Funding Impact Study. Mr. Drew Ballard presented the Funding Impact Study which made an addendum to the minutes. Mr. Drew Ballard advised that the Funding Impact Study was completed changing the vesting requirement from 10 Years to 5 Years for the City Manager only. Mr. Drew Ballard advised that the increase to the City’s Required Contribution is $7,070.00. The normal cost, which is the cost of each employee working an additional year, the assumption for the Study was that that City Manager would retire after obtaining 5 years of completed service. The normal cost impact is $5,500 of the $7,070 increase to the City’s Required Contribution. The change in the Unfunded Actuarial Liability is $13,134 or $1,500 per year and is amortized over a15 years period. Mrs. Amanda Delonjay questioned if the impact would be per year or for her lifetime to which Mr. Drew Ballard advised that that increase is based on her lifetime according to the mortality table and pay increases during her employment and that the increase would be amortized over a 15 years period. Mr. Drew Ballard advised that the impact study does not cover any future measurements that this change would cause. Mr. Drew Ballard advised that in order for the City to implement the changes, the City would need to contribute $7,070 more during this fiscal year to the Fund and $1,500 per year every year afterwards. Mr. Frank Hall asked Mr. Stu Kaufman if changing the vesting requirements for one employee is typical in the State of Florida to which Mr. Stu Kaufman advised that plans are not typically changed for specific employees and that other municipalities have created a separate plan for the senior staff, that according to the City Code, the plan does provide the City Manager an opt-out option within 60 days of employment or appointment to the City Managers role and that the Board of Trustees per the Operating Rules, the Board of Trustees are responsible for the Plan but that the City Commissions has the ultimate authority to make any changes per Ordinance. Mr. Stu Kaufman advised that the Board of Trustees could draft a recommendation to the City Commission and covered during the next Commission meeting. Mr. Steve Summers stated that he agreed with the other Board Trustees that the vesting should not be changed for one employee and that the Board Trustees follow legal recommendation to draft a letter to the Commission. Mr. Mitchell Hood questioned what the opt-out option supplement was for the previous City Manager to which Mrs. Amanda Delonjay advised that the previous City Manager opted-out of the General Employees’ Retirement plan and was given an additional pay of 6.25% per year. Mr. Mitchell Hood questioned the 60-day timeframe since the City Manager was previously the Interim City Manager. Mrs. Amanda Delonjay advised that the question would need to be answered by Legal. Mr. Stu Kaufman advised that the 60 days would be from the effective date of being appointed to full time City Manager. 3 | Page Mr. Bernd Janke advised that he reached out to current employees and asked for their option in changing the vesting and advised that most of the employees would want to change their benefits as well if the City changes the vesting for the City Manager. Mr. Frank Hall stated that making the change for the City Manager would not be beneficial to the plan and that if the changes are made for one employee, then the change should be enacted for all employees. Mr. Frank Hall advised that while the Board of Trustees could make a recommendation, the City Commission ultimately has the final decision on whether to enact the changes. Mr. Frank Hall advised that the City could create a separate plan for senior employees. Mr. Bernd Janke stated that with the help of legal counsel, he would draft a letter per the Board’s recommendation to the City Commission. Mr. Frank Hall and Mrs. Amanda Delonjay both advised that the City Commission could change the ordinance without the Boards recommendation. Mr. Bernd Janke advised that under Rule 8 of the Operating Rules and Procedures that no Ordinance affecting the pension plan could be passed by the City Commission without the Boards discussion and majority approval. Mr. Milton Hutto questioned if the City Commission has already approved the City Managers contract. Mr. Bernd Janke questioned Mr. Adam Albritton, the City Attorney, for counsel on the question to which Mr. Adam Albritton advised that the City would consider the changes but have not committed themselves to making any changes. Mr. Adam Albritton advised that if the pension board is against making the changes then the Board should draft the recommendation letter and present it to the City Commission. Mr. Adam Albritton advised that all other items such as compensation and length of contract was worded as ‘would do’ and that the change to the pension plan was worded as ‘considered’. Mr. Stu Kaufman agreed with Mr. Adam Albritton’s statement. Mr. Adam Albritton advised that no ordinance has been drafted and that there is no Ordinance changes on the upcoming City Commission meeting agenda which has been scheduled for next week. Mrs. Linda LuCante stated that as a current retiree she has a vested interest in the plan and pointed out that the City Manager has requested the vesting period be changed to a 5 year requirement and advised that all other employees have had to dedicate 10 Years to the City of Lynn Haven prior to being eligible to gain a pension benefit from the plan. Mrs. Linda LuCante advised that many corporations have transitioned from defined benefit plans into defined contribution plans and that municipalities are not corporations. Mrs. Linda LuCante advised that the State of Florida retirement plan has increased their overall vesting from 6 years to 8 years in 2011. Mrs. Linda LuCante advised that the Summary Plan Description that the employees receive, there is an opt-out for the City Manager and that over the past 33 years, all but one City Manager has opted-out of the plan and have received supplemental pay which was deposited by the employee into their own retirement plan. Mrs. Linda LuCante advised that the City Manager has approximately 2 years left before she is able to be fully vested under the plan and would then have no further incentive to stay employed. Mrs. Linda LuCante advised that if the plan is changed for the current City Manager to be fully vested in 5 years then every City Manager going forward would be fully vested in a 5 Year timeframe and it would bring further financial impacts on the plan. Mrs. Linda LuCante advised that the Board has a fiduciary responsibility to the plan to protect the benefits of all past, current and future city employees. Mrs. Linda LuCante questioned if the impact study accomplished with only Mrs. Vickie Gainer in mind or all future City Managers to come afterwards and if the Commission approves the change, then how will the monthly annuity be calculated, will the average of the 5 full years be used as it should be? Mrs. Linda LuCante advised that she appreciates the Board of Trustees for looking out for the Fund and thanked the Board of Trustees for allowing her the moment to speak. Mr. Frank Hall stated that he is not a City employee and that he believes the changes do not have anything to do with the City Manager as an individual but all the city employees and that if the change is not going to be made for all employees then the change should not be approved. Mr. Frank Hall made a motion for Mr. Bernd Janke along with legal counsel to draft a letter stating the Pension Plan Boards opposition in making the vesting change. Mrs. Kay Carter seconded the motion. Mr. Bernd Janke asked for any further discussion from the Board and the public to which Mrs. Tracy Johnson reiterated that there is an opt-out option for the City Manager and that they can be compensated in other ways and that the plan should not change the vesting for one individual. 4 | Page Mr. Milton Hutto stated that the Board should change the wording to ‘Strongly reject the change’. Mrs. Charlene Messer questioned if the Employment Contract in the meeting packet was the same employment contract presented by the Commission during the previous City Commission meeting to which Mr. Bernd Janke advised that he received the contract from the City Attorney and advised that Mrs. Charlene Messer would need to bring that question to the Commission. Mr. Adam Albritton advised that the Employment contract presented during the Board meeting was missing pages to which Mrs. Lauren Boatwright advised that there was a printing issue. Mrs. Charlene Messer stated that her question was not the printing issue but was who added the language under Section 10 and if it was added before or after the meeting. Mr. Adam Albritton advised that Mr. Aldridge was in charged of negotiations and drafting the agreement. Mrs. Charlene Messer advised that the City Commission has been stating that they are being transparent, but the language was not added until the morning of the meeting. Mr. Frank Hall amended his motion since the Board represents the people and the people are in Strong opposition of the change. Mrs. Kay Carter amended her seconding of the motion. Mr. Stu Kaufman advised that he would draft the letter, after receiving any additional language from the Board Trustees separately as to not violate the Sunshine Law. There being no objections to the motion, the motion carried. _____________________________________________________________________________________________ Adjournment The next scheduled Board meeting is March 5, 2020 at 7:30 AM at the Lynn Haven Fire Department. There being no further business to come before the Board, the Special Board meeting was adjourned at 8:52 AM. ________________________________ ________________________________ Chairperson Secretary 5 | Page