Pension Board of Trustees

City of Wilton Manors General Employee & Police Pension Board of Trustees Minutes- March 4 2014 I. Call to Order Chairperson Clanton called the meeting of the Wilton Manors Pension Board of Trustees to order at 5:30 p.m. II. Roll Call Roll Call: Barbara Bihus, Michael O'Connor Richard Foss, Shawn Chadwick & Chairperson Clanton. Others Present: John Small, Joan Wall, Janna Hamilton, David Griffin, Deneen Bingham & Clement Johns Ill. Comments from the Public Any member of the Public may speak on any issue for (3) minutes. IV. Consent Agenda Chairperson Clanton asked for a motion to approve the consent agenda and also asked if anyone wanted any item pulled from the Consent Agenda for further discussion and if not she would like a motion to approve the Consent Agenda. 1st Foss 2"d O'Connor Approved Unanimously V. Other Business 1. Goldstein Schechter Koch - September 30, 2013 Audit Clement Johns was present to go over the preliminary draft of the financial statement with the Board. • Page 1 Independent Auditors Report- nothing was found wrong with the financial statements, no major issues - clean or unqualified opinion. • Page 8 Combined Statement of Plan Assets (Police & General) Total Assets $24,448,412- Total Liabilities $1,390,504- Net Assets $23,057,908- a net increase of $1,232,310 • Funded Ratio of the Plan- 61.5% • Fire Assets $1,187,847 • Schedule of Investment Expenses- 2013 $140,851 - 2012 $119,006 • Schedule of Administrative Expenses- 2013$76,262 - 2012$92,300 • Total additions 2013$3,772,335 - 2012 $4,913,658 • Total deductions $2,540,025- Net increase $1,232,310 • Beginning of the year $21,825,598 • End of year $23,057,908 • Annual contribution $1,606,783 • Clement said there were no changes to the makeup of the Plan. Page 1 of6 ·- City of Wilton Manors Pension Board of Trustees Minutes- March 4. 2014 Page 2 of6 Clement said he got full cooperation from all the managers, administrative secretary, Joan Wall, bookkeeper and from the City to complete the audit. Clement said the representation letter states all of that and he will need Chairperson Clanton to sign this representation letter. Attorney Levinson said the Board would need to approve the Audit and the authorization to have Chairperson Clanton sign the representation letter. Chairperson Clanton asked for a motion to approve the Financial Statement (draft). Motion 1st Trustee Chadwick 2"d Trustee O'Connor Approved Unanimously Chairperson Clanton asked for a motion authorizing her to sign the Representation Letter from the auditor after legal counsel reviews the letter first.· Motion 1st Trustee Chadwick 2"d Trustee O'Connor Approved Unanimously Attorney Levinson said he had something for the next meeting his expectation is that Theora will be at the next meeting the June meeting one of the things he thinks she will talk about is Actuarial information (page 15 of audit) • Funded Ratio- isn't where we want it to be • Return Assumptions- We are showing our return assumption at 7.5%, Attorney Levinson asked if we lowered it during the year. Chairperson Clanton said we lowered it from 8% to 7.5%, this was lowered the last time Theora was here. • Attorney Levinson directed the Board to page 20 of the audit which shows the funded ratio of the Plan it went from 64.9% to 61.5% perhaps if we did lower it last year; when you lower the investment return assumption you're making the liabilities more expensive and that means the City has to put in more money so the funded ratio will go up faster. That might explain why we went down from 64.9% to 61.5%, because we lowered to the investment return assumption. • Chairperson Clanton said she met with the Finance Director, Assistant Finance Director, Theora and Jeff Am rose. Chairperson Clanton said that Theora did state that this is the last year of the 5 year smoothing that includes the great recession and that next year she is certain that because that is gone we will look ever so much better quickly. • Attorney Levinson said he is hearing this with a lot of other plans smooth out the bad years, we will be sitting on investment gains which come in which will offset and lower the contribution. Actuaries are encouraging all boards to think about lowering their investment return assumption, because we are losing the bad years and we have these built in gains, it was 18% two years ago and a 10% return this year. That is going give us some power to work with if you want to continue lowering, but there is no emergency making any big changes right now. This is something Theora is going to want to talk to the Board about our investment return as a closed plan at our next meeting. City of Wilton Manors Pension Board of Trustees Minutes- March 4. 2014 Page 3 of6 • Chairperson Clanton said the Board will have to think about and get some information from Theora about would it be better for us to lower our assumption or to shorten our years again, being a closed plan with so few active people. 2. Southeastern Advisory Services Fourth Quarter- December 31, 2013 John Small was present to go over the 4th quarter performance with the Board. • The 4th quarter was terrific • S&P 500 Index 10.5% for the%, 32.4% 1 year, 16.2% 3 year • EAFE Index 5. 7% for the %, 22.8% 1 year, 8.2% 3 year • Barclay -0.1% for the %, -2.0% 1 year, 3.3% year • T-Bill were flat for the quarter, 1 year and 3 year • CPI -0.5% for the % , 1.5% 1 year, 2.1% 3 year • All managers had a positive return Portfolio Growth • Good quarter $1,765,848 gain- $28,440,531 for the quarter ending 12/31113 Performance Comparison Total Fund Analysis 4th quarter was up 6.9%f4th - 1 year 17.3%/38th- 3 year 8.8%f75th -5 year 12.4%/49th Equity Analysis 4th Quarter • Buckhead Capital good numbers 8.9%/62"d versus 10.0%/34th • Garcia Hamilton Equity 10.9%/34th versus 10.4%/47th • Vanguard Mid Cap good numbers 8.6%/52"d versus 8.4%/60th • Ivy Global Natural Resources lagged a little 7.1o/of74th versus 8.2%/381h • Harding Loevner Inti good quarter 4.6%/60th • Wentworth, Hauser & Violich good quarter 6.9%/24th • Garcia Hamilton-Fixed Income very good quarter 1.1%/3n:l versus O.Oo/o/69th Allocation of Assets for the Quarter Ending December 31, 2013 • Equity 56.9% • International 12.0% • Fixed Income 21.9% • Cash 9.2% Objectives and Policy Review • The total rate of return should equal or exceed the Consumer Price Index plus 5% over a rolling three-year period. Achieved 12.4% City of Wilton Manors Pension Board of Trustees Minutes- March 4. 2014 Page4 of6 Each security class to exceed the appropriate selected unmanaged market index over a three year period • Buckhead Capital - Not Achieved 12.8% • Davis Hamilton Jackson - Equity - Not Achieved 13.2% • Davis Hamilton Jackson- Fixed Income- Achieved 4.3% • Vanguard Mid Cap - Not Achieved 15.4% • Ivy Mid Cap Growth - N/A • Wentworth Hauser & Violich - Not Achieved 4.5% • Harding Leever Inti - N/A Asset Allocation within range Actual- Quarter Ending 12/31/13 Equity 68.9% Fixed Income 21.9% Cash 9.2% • Money from the City was kept in cash for payout they anticipated, that worked out well. • Good quarter • Good position to be in equities • No violations of policy Attorney Levinson asked how thing were working out with Regions Bank. John Small, Chairperson Clanton and Joan Wall all said there service is very good and they receive the data very quickly. The personnel seems to be top notch and it is great working with Mindy Johnson and Dave Smeltzer and there has been no problems. Trustee Foss said it is nice to see our assets have grown considerably too. 3. Buckhead Capital Management 4th quarter December 31, 2013 Deneen Bingham and David Griffin were present to go over the 4th quarter performance with the Board. Deneen Bingham said: • Have been with our Fund for 10 years • The way they manage our money, they look for good high quality companies that have good strong cash flow, good management teams and that is what they continue to do. • They have lagged the market a little bit which is kind of expected when lower quality higher risk stocks outperform. They have had some good absolute returns and are happy with that. Dave Griffin went over the 4th quarter performance • They are a higher quality manager • Annualized Yield 2.5% • As of 12/31/12 $6,264,732 • Best Stocks in Portfolio - General Electric, Pfizer, Lockheed Martin, Conoco Phillips, US Bancorp Del, AT&T Inc., Chevron Corp, Blackrock Inc., T JX Companies Inc., Pepsi Co. Citv of Wilton Manors Pension Board of Trustees Minutes- March 4. 2014 Page 5 of6 • GE & Lockheed were big returners and they had a big impact in the returns and attribution of the returns in the portfolio. • Worst Stocks in Portfolio - Annaly Capital Management, Cisco Systems, Atwood Oceanic, Agilent Technologies, Exelon Corp., Ppl Corp., Republic Services Inc., Southern Company, National Oilwell, IBM • Sector Diversification- Financials 23.4% Portfolio vs 29.8% Benchmark Information Technology 6.5% Portfolio vs 9.0% Benchmark • The structure of the portfolio has not changed Trustee Foss asked what our annual basis was now, and David said it was about in the 18% range. Trustee Foss said it was nice to have a good quarter. 4. Garcia Hamilton & Associates 4th Quarter December 31, 2013 Janna Hamilton was present to go over the 4th quarter performance and thanked the Board for their business and said that they have had our Equity business for almost 14 years. Equities • Great quarter for the market • The higher quality stocks did better in the quarter but it is still a market that is being dominated by the risker stocks. • Good quarter 10.9% for the quarter and 28.1% 1 year number • Since inception May 1, 2000, we still annualized 2% per year better against that benchmark. • As of December 31st, the Financials sector represented the largest overweight in the portfolio followed by Industrials. Health Care, Telecommunications and Information Technology were the most underweighted sectors in the portfolio. • They have a very diversified portfolio • For calendar year 2013, the S&P 500 delivered a total return of 32.4%, the Index's Best annual performance since 1997. • Been a big Fed driven market for the last 5 years • Equities Portfolio Value as of 12/31/13 - $7,457,022.59 What Worked: CVS Caremark, Affiliated Managers Group and Walt Disney What Did Not: Cisco System, W.W. Grainger and Whole Foods Market Top Ten Holdings Apple, Affiliated Managers, Disney (Walt), Qualcomm, Coca-Cola, Roper Industries, Google, Goldman Sachs Group, Home Depot, Blackrock Fixed Income Janna said they have had our Fixed Income almost 10 years. • Fixedlncomeasof12/31/13- $6,311,157.92 • Good quarter 1.1 %, one year 0. 7%, 3 year 4.4% • Portfolio Characteristics - Corporate sector 43% - Mortgages 46% - Agencies 9% Treasuries 1% - Cash 1% Citv of Wilton Manors Pension Board of Trustees Minutes - March 4. 2014 Page 6 of6 VI. Attorney Report Attorney Levinson said things are quite and nothing to report. VII. Reports from Board Members • Joan Wall is working on the State Report • Chairperson Clanton said she had a policy committee meeting along with Trustee Chadwick and Bookkeeper Joan Wall met to discuss a simple warrant procedure to pay bills. All invoices will be paid through the warrant system which is to be signed by two signees; either Chairperson Clanton, Trustee Chadwick or Joan Wall and then scanned along with the invoice and forwarded to Regions Bank for payment. This warrant system will also have to be followed by the Fire Pension because it is money coming out of our funds. • Chairperson Clanton said that Joan Wall gave her a name of someone who designs web-sites and she would like to call them and find out how much it would cost to have our own web-site. We are required according to State Law to have the financial statements and valuations on a web-site for everyone to see. We can then have e-mail addresses for everybody through this web-site which would eliminate some of the issues we are having with information flow. It would also be nice to have a memorial page like Ft. Lauderdale has for their retirees. Chairperson Clanton said if there was objection she would like to contact this person and get some kind of cost estimates going and time estimates. Trustee Chadwick asked if this web-site allow retirees to go in and get into their account. Chairperson Clanton said no that would be through Regions not us. Chairperson Clanton said she would like to talk to a company to come in to do some scanning of records for us. Chairperson said she wants to get a little more efficient on saving/scanning of State Reports and other important documents so that in the future things will be easily accessible to anyone new to the Board. There was no objection by the Board for Chairperson Clanton to follow up on the items above that she discussed with the Board. VIII. Participants Section None IX. Adjournment Trustee Foss made a motion to adjourn the meeting, seconded by Trustee O'Connor. Respectfully submitted, k~@f/J;;6 u~:;:~~oekstra Recording Secretary