Pension Board of Trustees

City of Wilton Manors General Employee & Police Pension Board of Trustees Minutes September 6, 2016 I. Call To Order Chairperson Clanton called the meeting of the Wilton Manors Pension Board of Trustees to order at 5:35p.m. II. Roll Call Barbara Bihus, Richard Foss, Joshua Kroon and Chairperson Clanton. Trustee Chadwick arrived after roll call. Others Present: Melissa Moskovitz, John Small, Joan Wall and Bob Mays, Finance Director Robert Klausner, Attorney and Anna Klausner Parish, Attorney Ill. Comments from the Public None 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. 151 Foss 2"d Bihus Approved Unanimously Receive and File: Warrant 2016-018 • Trustees Per Diem for FPPTA Conference $ 736.00 Warrant 2016-019 • Hoekstra - Recording/Secretarial Services & Supplies $ 370.00 Warrant 2016-020 • American Express Aprillnv. $2,275.00 Warrant 2016-021 • WHV Investments - Final Fee Invoice $4,301.00 • Snow Capital Mgmt.- Final Invoice $5,827.00 • GRS Invoice #422481 $7,000.00 Warrant 2016-022 • Judith Hoekstra Mileage Reimbursement FPPTA Conf. $ 216.00 • Joshua Kroon Mileage Reimbursement $ 66.00 Warrant 2016-023 • National Notary Association - Renewal Clanton $ 126.00 Page 1 of 7 City of Wilton Manors GE & Police Pension Board of Trustees Minutes Page 2 of 7 September 6. 2016 Warrant 2016-024 • Gabriel Roeder Smith -lnv. #423482 $4,250.00 • Southeastern Advisory Services - Quarterly Fee $4,433.51 • Klausner Kaufman Jensen & Levinson June 29, 2016 lnv. $ 250.00 Warrant 2016-025 • American Express June lnv. $3,374.13 Warrant 2016-026 • Garcia Hamilton & Associates lnv. #26923 $4,250.83 • Professional Indemnity - Renewal Policy Fiduciary Ins. $7,433.00 Warrant 2016-027 • Garcia Hamilton & Associates lnv. #27306 $6,812.34 Warrant 2016-028 • American Express July lnv. $ 105.50 Warrant 2016-029 • Trustees Per Diem FPPTA School $736.00 V. New Business 1. KSDT & Co., Auditor- Engagement Letter Attorney Klausner said he has the engagement letter for our Auditors and he has reviewed it and it is the standard letter and he is ok with the letter as long as the Board is ok with the fee of $10,050.00. The Fire Board noted that there was something which stated "You will also be billed for travel and other out-of-pocket costs, if any." Also, the Fire Board wants to receive the Audit February 28, 2017 a week before the regular Pension Meeting so there is enough time to go over the audit and not receive it the day of the meeting. With these (2) two reservations, Attorney Klausner said he would recommend the engagement letter be executed in the same fashion as the Fire Board, authorize the appropriate officers of the Board to execute the engagement letter with the letter being amended to, estimated of reasonable expenses and a delivery date to the Board of one week prior to the March 6, 2017 Pension Board Meeting. Trustee Kroon made the motion to approve the engagement with the (2) two recommendations from Attorney Klausner, seconded by Trustee Chadwick. Ayes: Bihus, Foss, Kroon, Chadwick and Chairperson Clanton. Nayes: None 2. GRS-Mortality & Investment Return Studies as of October 1, 2015 Melissa Moskovitz from GRS was present to go over the Study with the Board. Mortality Assumption • All Plans will be required to use the same Mortality Table effect with the next Valuation which is being used by the Florida Retirement System. FRS uses the RP 2000 generational mortality table projected using Scale BB for healthy lives and without projection for disabled lives. The base table is not too different from the current table that we are using, but there are variations with Public Safety and even General Employees and males & females. For females there is always a 100% white collar adjustment that applies and for males depending on if it is a Public Safety Plan it is a 90% blue collar adjustment and for General Employees it's a 50/50 blue collar adjustment. City of Wilton Manors GE & Police Pension Board of Trustees Minutes Page 3 of7 September 6. 2016 Investment Return • We currently have a 7% assumption investment return and we asked for this study to show a 6.50% assumption investment return. This is due to the maturity of the Plan and that the Plan is closed. • The required City contribution Study I -as of October 1, 2015 using FRS mortality and leaving the investment return assumption at 7.00% will be an increase of a little over $30,000. Study II- as of October 1, 2015 using FRS mortality and lowering the investment return Assumption to 6.50% will be an increase of roughly $200,000. Recommendation • Use of the FRS Mortality Tables is required under state law beginning with the Actuarial Valuation as of October 1, 2016. GRS also recommends lowering the investment return assumption from 7% to 6.5% and be adopted. Discussion Chairperson Clanton asked about lowering a quarter (7% to 6.75%) and Melissa said it would be about a $50,000 increase for each quarter lowered. Chairperson Clanton said we have no choice about the FRS mortality table, but she would be willing to go down to 6.75% this year and hope that the Board would continue to do this until they get down to 6%. Bob Mays, Finance Director said he had just received this information over the weekend and it is a lot of information for him to digest and asked if the Board would defer their vote on lowering the investment assumption until the next meeting. He would like the Board to consider a few things: • The City has spent several months preparing a budget for 2016-2017 and the action this Board takes is going to have a direct effect on that budget. • Right now the $1.64 million that the City contributes is 24% of all of the ad valorem property taxes that the City collects. • An additional $230,000 would add .2 mils to everyone's property tax bill in the City. That is a lot, which is a big hit. Bob thinks it is too much. Going to 6.5% is way too far and going to 6.75% is probably too much at one time. • Mr. Mays asked the Board for more time to do further research to see how this will affect the City before the Board makes a final decision. There was a brief discussion and Trustee Kroon said he would like to honor Mr. May's suggestion to table this recommendation from GRS until the next meeting until he can research and bring back further information to the Board. Trustee Kroon said he would make a motion to table this until next meeting & to adopt the Mortality Table which is required by the State, seconded by Trustee Chadwick. Vote: Ayes: Trustee's Bihus, Foss, Chadwick & Kroon. Nayes: Chairperson Clanton City of Wilton Manors GE & Police Pension Board of Trustees Minutes Page 4 of7 September 6. 2016 3. Discussion of Debit/Credit Card or Reimbursement Policy for the Board Chairperson Clanton said the American Express Card the Board has now has her name on it and it will be cancelled at the end of the month. She is not sure how the Board wants to handle this. There was a brief discussion between the Board and Attorney Klausner about getting another credit card for the Pension Board. Attorney Klausner said he would contact American Express and research this further for the Board. This item was tabled until next meeting. VI. Other Business 1. Approval of Transfer for Payment of Quarterly Benefits & Expenses 2. Asset Allocation August 31, 2016 3. Rebalance Recommendation Chairperson Clanton said this is something that we have discussed before, that we would have a system so we do not have a problem and by meeting the third month of the quarter if it is a standing agenda item which is how we set it up that allows John Small the opportunity to decide how to rebalance and from where to take the money and it would be available in our operating account the beginning of the next quarter. It will be on here every time with a recommendation from John Small as how to rebalance everything and we estimated about $900,000 for benefits and expenses and other things that come up for every quarter. John Small will also have the authorization to directly and direct Regions on these transactions and Joan Wall will be copied on everything for paper trail. Trustee Bihus made the motion to approve the above recommendations for John Small seconded by Trustee Kroon. Vote: Ayes: Chadwick, Foss, Kroon, Bihus and Chairperson Clanton. Nayes: None 4. Southeastern Advisory Services- QE 6/30/2016 John Small was present to go over the Investment Performance for the Quarter ending 6/30/16. • The S&P 500 had a good quarter up 2.5% - 1 year only up 4.0% - 3 year up 11.7% • MSCI EAFE Index (Net) for the quarter -1.5%- 1 year down -10.2%-3 year only 2.1% • Barclay U.S. Aggregate for the quarter 2.2% - 1 year 6.0% - 3 year 4.1% • 91 Day Treasury Bills for the quarter 0.1% - 1 year 0.2% - 3 year 0.1% • Consumer Price Index for the quarter 1.2% - 1 year 1.0% - 3 year 1.1% • There was a gain of $685,918 • Several changes were made after the last meeting • The fund had a good quarter up 2.8%/15th- bad year -3.4%/98th • Snow Capital was for partial quarter 4. 7% they were liquidated in early June, bad one year number -17.5% • Garcia Hamilton Equity - 1.2% for the partial quarter- 1 year 0.2% • Vanguard Mid Cap- 0.6% for the partial quarter- 1 year -2.6% • Ivy Mid Cap Growth Index 0. 7% for the partial quarter- 1 year -8.9% • Harding Loevner Inti. -1.9% for the partial quarter- 1 year -7.6% • Wentworth, Hauser & Violich for the partial quarter 2.9% - 1 year 8.3% • Garcia Hamilton-Fixed 1.5% for the quarter- 1 year 5.5%  City of Wilton Manors GE & Police Pension Board of Trustees Minutes Page 5 of 7 September 6, 2016 Allocation of Assets for the Quarter Ending June 30, 2016 • Equity 58.1% • International Equity 0.2% • Fixed Income 33.2% • Cash 8.6% 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. Not Achieved 5.4% - Objective 6.2% • The total rate of return should rank in the top half of the Wilshire Cooperative Public Fund Universe over a rolling three year period. Not Achieved 881h Each security class to exceed the appropriate selected unmanaged market index over a 3 year period • Garcia Hamilton - Fixed Income- Achieved 4.2% vs 3.0% Percentile Rank of Manager in Appropriate Universe Must Exceed the Median (501h percentile) • Garcia Hamilton - Fixed Income Achieved 34th Percentile Rank of Manager in Appropriate Universe Must Place /within the Top Third (33 1/3 percentile) • Garcia Hamilton - Fixed Income Achieved 29th Asset Allocation: Actual vs Policy Actual- Quarter Ending 3/31/16 Equity- Within Range 58.3% - Fixed Income- Within Range 33.2% - Cash -Within Range 8.6% Everything within range and no violations of policy. *Per May 31, 2016 asset allocation model. Vanguard Russell 1000 Index Fund 30.0% Vanguard Mid Cap Value Fund 11.5% Atlantic Capital (Eaton Vance) SMIO Cap Fund 15.8% Garcia Hamilton Intermediate Bonds 33.2% Regions Money Market Fund 9.5% Total Fund 100.0% The Asset Allocation will be rebalanced to the above model every quarter. • Everything within range and No Violation of Policy • Really good quarter • Disappointing year • The transition went very well Chairperson Clanton thanked John Small for the many years that she worked with him. Chairperson Clanton is leaving the Board after serving 30 years. Trustee Richard Foss is leaving the Board after serving 26 years. City of Wilton Manors GE & Police Pension Board of Trustees Minutes Page 6 of 7 September 6, 2016 5. Joan Wall, Administrator- Approval of 2016/2017 Budget Joan Wall went over the budget with the Board. • Last year budget $170,000.00 • Actual Expenses FYE 9/30116 $117,490.00 • Proposed Budget FYE 9/30/17 $157,000.00 There was a brief discussion about the budget and determined that Education & Dues should be increased because we will have two maybe three new trustees and they will need to attend classes and this will be an additional expense this year. The recommendation was to make the Proposed Budget FYE 9/30117$200,000.00. Trustee Kroon made the motion to approve the Proposed Budget FYE 9/30/17 at $200,000.00, seconded by Trustee Bihus. Vote: Ayes: Foss, Chadwick, Bihus, Kroon and Chairperson Clanton VII. Attorney Report Attorney Klausner was present and said that at the Firefighter Board meeting that when they closed their plan they had 10 people in it and Florida Law actually contemplates what happens with a closed plan when you run out of members. Attorney Klausner said he would like to come back with a recommended succession plan for what happens as our population ages and we will have a smaller group from which to choose from with the elected members of the board, finding the City appointees will be a little easier. Good future planning is in order and he will bring back a succession plan. Chairperson Clanton was a little concerned about the signing of things for the month of October. Attorney Klausner said that Florida has a holdover jurisdiction and that Chairperson Clanton and Richard Foss continue until their successor is seated. Chairperson Clanton will still have authority to sign things until the first meeting the new Board is in place. Chairperson Clanton said the three authorized signatures should be Joan Wall, Judith Hoekstra and John Small. Attorney Klausner suggested the Board acquire a Bond. It is a Fidelity Bond for essentially anyone who handles money. A $500,000 Bond is more than sufficient and Attorney Klausner said it literally costs next to nothing. Attorney Klausner said he would get information on the Bond. He also reminded Brenda & Richard Foss to fill out the exit form 1F and send it to the Supervisor of Elections. VIII. Reports from Board Members Chairperson Clanton said she received a letter from Judy Hoeskstra requesting an increase in her hourly salary. It was noted that she has not received an increase in the 15 years she has been working for the Pension Fund. Chairperson Clanton said with her leaving that Judy will be doing most of the work that Brenda was doing and interacting more with Joan Wall, John Small, Regions Bank and the Attorney. Chairperson Clanton asked for a motion to approve Judy's hourly rate be Increased from $15.00 to $25.00. Trustee Kroon made the motion to raise the hourly rate to $25.00, seconded by Trustee Bihus. Vote: Ayes: Foss, Chadwick, Bihus, Kroon & Chairperson Clanton. Nayes: None Chairperson Clanton thanked Trustee Richard Foss for serving/volunteering on the Pension Board for 26 years and said he added a lot of knowledge and expertise to the Pension Plan over all those years. City of Wilton Manors GE & Police Pension Board of Trustees Minutes Page 7 of 7 September 6. 2016 IX. Participant Section None X. Adjournment Trustee Foss made a motion to adjourn the meeting. Respectfully submitted, o~fo.~ Judith A Hoekstra Recording Secretary Approved: Date: ) 2- fA - I Cz