FMTF10-21-08 BOARD OF TRUSTEES
Florida Municipal. Trust Fund Retirement Plan and Trust
for the Firefighters. and Police.Officers
Longwood City~Commission Chambers
175 West Warren Avenue
Longwood, Florida
REGULAR MEETING
_ MINUTES
October 21, 2008 ~ ~ .7:00 p.m.
Present: Marc. McLarnon, Chair
. Robert Redditt, Vice Chair
Matthew Jammes, Secretary
Frank Herndon, Member
Jack Smythers, Member , , ,
H.-Lee I)ehner, Board Attorney
Carol Rogers, Director of Financial Services
Linda F. ,Goff, Recording Secretary .
1. Call to Order. Chair McLarnon called the meeting to order~at 7:02 p.m.
2. Pledge of Allegiance. Chair McLarnon led the Pledge, of.Allegiance.
3. Approval of Minutes , • .July 15, .2008 Regular Meeting: ,
Member Smythers moved to approve the minutes of July 15, 2008 as
presented. Seconded by Vice ,Chair Redditt and-carried by a unanimous
roll call vote.
4. Certify the Election of Firefighter Frank Herndon.
Member Smythers moved to accept the nomination by acclamation of
Firefighter Frank.Herndon. Seconded. by Secretary Jammes .and carried by
a unanimous voice vote.
5. Review of Agenda Packet:Material.
A. Plan Account Statements.. : =
The Plan Account Statements for June, July, and August 2008 were
reviewed. f ~ .
~ _ -
Ms. Rogers said there•was some serious bleeding. In July;.there was a loss
of $24,000 and in June it dropped $265,000 in value. She stated the
September Statement would be ,delayed and. there would also be a twelve
~ month recap. She said the numbers in the Plan Information for the quarter
ending June. 30„ 2008 do. not exactly match. the June ending balance. She
stated she would need to determine what the difference was..
Pension 10-2.1-08/1
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Chair IVIcLarnon said he received a letter in the mail stating there was a
deposit to the account from the-State of Florida. He inquired what month
this would take place.
Ms. Rogers advised this was the 2008 premium money for the Police, Fire,
and Fire Supplemental. She stated it was .immediately deposited.
Chair McLarnon said certainly they know the numbers axe not going to
- ~ `look favorably for any fund at this time. He stated they were'trusting°in the
Florida League of Cities to invest well. Fortunately the funds were in 40%
bonds. He said as far as the Firefighter`s and Police Officers were
concerned, this does not affect their'actual~retirement since it is a Defined
Plan.
Member Herndon inquired where the funds that weredeposited came
from.
Ms. Rogers explained this-was the State premium money. She said the.
Statute provides that a percentage of the insurance; premium. mone_ y was
deposited for the`.benefit of the Chapter Plans.
Ivlr: Definer exp'Iained the Fire money was'~1:85%'of premiums paid on
property insurance within the municipal boundaries of Longwood. The
Police`money was 0:8'5% of premiums paid on casualty insurance within
the municipal boundaries of Longwood.
B: • Investm'ent'Performance~Review: , ~ ' -
The Investment Performance Review for the quarter ending June 30, 2008
was reviewed. _ . _ .
6. ~ Other~Business: , , . _ - • ~ , . _ ~
A. Review of Operating Rules' and Procedures.
. ,
Mr. Definer said the document he had distributed a.t the last meeting had
incorporated all of the changes to-that point: Th'e~orily outstanding ifem
was to receive from Mr. Shamoun ~their'procedures in processing pension
payments.
Chair McLarnon inquired if the Board would be able to move forward
with the adoption of the Operating Rules and Procedures when that
• ~inforrriation is'received': ...u - - ' ' -
' Mr: Definer 'responded in'tle affirmative. '
• - - ~ Secretary 7amrries said~their Uriiori lad pu't'''out some information in
refererice~to~tlie Iriternal`Revenue~Service trying to make some changes so
Pension ]'0=21=08/2~'~~
people cannot retire before the age of 55. He asked Mr. Delmer if he had
any information. regarding this.
Mr. Delmer said he had heard about it and he would be addressing that
matter.
Chair McLarnon asked the Recording Secretary to provide Member
Herndon and Ms. Rogers with a copy of the current draft of the Rules and
Procedures. ti
B. Discussion of Buyback Provisions.
Chair McLarnon said. he has been in contact with Mr. Shamoun, .as well as
Mr. Delmer to discuss getting this matter resolved.
Mr. Definer said he had received a proposed Ordinance from Mr.
Shanioun amending the Plan to incorporate buyback provisions. This also
included language to. correct the situation in the current Plan whereby a
vested terminated person camlot draw a benefit. He stated he had several
comments and items to bring before the Board for discussion, and Mr.
Shamoun was aware of these. He,said this was something the Board
should give direction on with respect, in particular, to the buybacks.
Mr. Definer said in regards to the normal retirement date, the Plan
provides that a vested terminated person can begin to draw a benefit at
their otherwise normal or early retirement age. He stated Mr. Shamoun
addressed that by amending the Plan to add an additional nornial
retirement date.of SS,years of age and five years of service.. He advised
that one of his comments to Mr. Shamoun was that the fornl document in
the Plan refers to.an early retirement date and this is not applicable.
Chair McLarnon inquired if Mr. Definer was satisfied with the verbiage
that Mr. Shamoun has drafted relative to this. He also asked if this had to
be presented as a separate, item or could it be added in as clarification to
the document.
Mr. Definer advised it could be included in one ordinance with the other
items. He said it would not be a clarification,, it would be considered an
amendment.
Mr. Definer said with regards to the buybacks; this was an issue of what
they want for their Plan. He stated they had discussed. the opportunity to
buy time for Certified Fire Service with another agency or Police Officer
Service with another agency. They also had discussed buyback of prior
military service. He said in reviewing the language Mr. Shamoun had
prepared, there were a couple of items he felt would be appropriate for the
Board's consideration. One issue; with respect to buyback of time, Mr.
Shamoun's provision would not count towards vesting. He advised most
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Plans do not accord vesting time if it is not served with the municipality. ~
He stated it also provided that`it would not count for eligibility for
retirement. He stated most buybacks count time purchased. for eligibility
purposes and benefit purposes. He reiterated that Mr. Shamoun's
provision would not count toward vesting or eligibility. He said this was
an issue for the Board's consideration and determination as to whether
they wanted to count it for eligibility and benefit: He suggested it should
not be counted toward vesting. The second~issue was that Mr. Shamoun's
amendment provides for a maximum number of three years that can be
purchased. He stated most of the provisions he is familiar with provide a
combined maximum of service with another agency of four to five years.
He said they may want to consider allowing more credit than three years.
He reiterated this is what they desire for their Plan.
Chair McLarnon inquired if they made it five years as a maximum could
the member buyback between one to five years.
Mr. Delmer responded in the affirmative. He said with respect to the
payment, it is provided that the payment would' be made in a cash lump
sum or a direct transfer rollover of monies from another qualified plan. He
stated there could be'a'combination. ~ '
~ f,
Chair McLarnon said the three basic points they were talking about was
not counting toward vesting, determining whether to count the eligibility, . i
and the maximum number of years.
Member Smythers asked for an example of how~buyback would work for
someone buying back service from another municipality.
' ~ I _
Mr. Delmer said a Firefighter or Police Officer in our Plan would need to
provide proof that they had service in the other City, and then they could
buy that time at an actuarial calculation. He explained that under State
Law, if a Plan member bought that time in our Plan, they would not be
• able to draw the benefit from the other municipality for those same years
of service.
Member Smythers inquired if military time would fall under the same
- ~ 'guidelines. ~ ' ~ '
Mr. Delmer responded in the affirnative.
.Chair McLarnon said it was hi's understanding that the State Statutes
clearly define «~ho qualifies to be eligible to buyback time.
Mr: Delmer responded in the affirmative. He advised that you could only
' • receive credited service in these plans, under Chapter 175 for Firefighters --J
- and` Chapter 185 for Police Off cers, for time that was served as a fulltime
Firefighter or Police Officer, or prior military time.
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~ Member Herndon inquired if that also included an .EMT.
Mr. Definer advised this would only be the case if the EMT service was as
a certified Firefighter that required the EMT certification. He said this was
also the case for Fire Inspectors.
Chair McLarnon inquired if this would be considered cost neutral to the
City. .
Mr. Definer said the actuary would have to make that determination.
Ms. Rogers inquired who would pay for the actuarial study.
Mr. Definer said the person doing the buyback should pay for the study.
Chair McLai-~ion said he agreed the buyback time should not count toward
vesting. He stated he was open for eligibility and allowing up to five
years, only because it is cost neutral to the City..
Member Herndon said the way the Ordinance is drafted, if buying back
three years it would not count toward eligibility. He inquired what would
be the purpose of buying back the time.
Mr. Definer said. that was correct, the way this is drafted, it would not
count toward eligibility and you would have to work the full number of
years. He stated buyback would enhance the benefit calculation.
Member Smythers inquired how most municipalities provided for
buyback.
Mr. Definer said the vast majority of Ordinances they have drafted
includes eligibility and benefit. However, it excludes vesting.
Vice Chair Redditt said that seems more reasonable.
. Member Herndon said he would like to see allowing up to f ve years.
Member Smythers said five years would make the City more competitive
from a standpoint of attracting people: from other services.
Chair Mc~Larnon said it was very expensive to buy back time.
Member Herndon said it did not cost the Plan; it cost the person buying
back time.
Mr. Definer said another issue that is ancillary and left open for
consideration is whether to allow these purchases-multiple times during
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employment. He stated he would recommend providing the opportunity to
make multiple purchases during the period of employment. He said this
would allow them to buy back time as they save money and can do so. He
said the way this is drafted; that could be done by a rule of the Board.
Member Smythers said he would like to -allow five years and count it
towards eligibility, but not vesting.
Secretary Jammer agreed it should not count toward vesting. He said
people should have to work their time. He inquired if they were
technically going to have two vesting years, five years at age 55 and ten
years at age 50. He stated if someone has nine years in and they purchase
back a number of years, would this count toward their retirement age of 50
or only toward their retirement age of 55.
Mr. Deluler advised with this Plan it would not count. He said when Mr.
Shamoun was here several dmeefings ago, they had' discussed for
determination of years, whether years, would lie imputed or whether they
had to be actually worked years. In this Plan to get any credit for years for
these purposes, they have to be actually worked.
Secretary Jamines inquired if someone had worked seven years and they
purchase two years of military time, this would give them nine years of
service. If they leave, then they would start withdrawing their benefits at
. 55, but would just have an extra 6% for the military time or prior service
purchased. '
Mr. Dehner advised it would depend on how it is drafted in the Ordinance.
He said they could go either way. He suggested once they decide what
they would like to have, to pass this along to Mr. Shamoun to amend since
he did the original draft of the Ordinance.
Secretary Jammes said it'should count toward eligibility. He inquired what
the point was in having two different vesting years.
Mr. Dehner said the reason the proposal was made for the five years and
age 55 was to give the-vested terminated person an opportunity to draw a
benefit when they did not actually work ten years.
Secretary Jammes said he wasn't sure why it wasn't just a straight age 50,
if you were vested, to start drawing. He stated there were several people
that have left, that this directly affects. He inquired if an actuarial study
was done to see if there would be a cost to the Plan or to the City.
Mr. Dehner said they could provide that a vested terminated employee
could start to draw at age 50. He stated this proposal was Mr. Shamoun's
suggestion. He said from the funding standpoint, they would have to do a
' ' ~ calcula'tion. -
Pension 10-21-08/6
Chair 1VIeLarnon inquired how the retirement was currently defined.
Mr. Delmer advised it was currently defined as twenty .five years of
service and out or age 50 and ten years of service. He said the problem
was .if .somebody is vested at f ve years of service, they have no way to
start to draw.
Secretary Jarmnes said he was recruited that once you serve five years you
can start drawing your retirement. at age 50.
Ms. Rogers said that was the issue, in one place of tlie.documents it says
that and in another place it is different. She stated they have had an
Ordinance drafted ready to fix this issue. However, there have been so
• many open items she would not want to take it to the Commission until the
Board~agrees on all of the items.
Secretary Jammes said this was a major issue and needed to be cleared up.
He stated.he agreed with the military buyback, He said once a person is
vested they should be able to buy back time and have it count toward
eligibility.
Mr. Delmer recommended allowing buyback prior to vesting because of
~ the expense.
•
Member Sniythers. said the longer they wait; the more expensive it is to
purchase time. He suggested they give the flexibility to buybacks as it is
more cost effective for the individual.
Secretary Jammes inquired if there would need to be an actuarial study
done for each individual person, or could a group get together and have a
grid done.
Mr. Delmer said each person needs their own study. However, some plans
will pay the .actuary to do a grid that will give individuals an idea of
whether this is feasible for them.
• ~ •
Chair McLarnon moved to amend the proposal.reeeived from Paul
Shamoun such that it does not include vesting, but does include
. eligibility for,the military buyback, move the amount of time t11at
can be purchased from the suggested three years up to five years,
that it .can be purchased, in increments and not be required all at
one time, the purchase and payment can be made from multiple
sources, as long as the payment is made in full, and he investigate
and provide a cost analysis on entitlement to draw~vested at age 50
and five rather than age 55 and five. Seconded by Secretary
• • • •Jammes: , ,
•
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Chair McLarnon asked Ms. Rogers if she would be able to contact Mr.
- • Shamoun and work with Mr. Delmer in getting this arranged.
Ms. Rogers responded in the -affirmative.
- Mr. Delmer suggested the Board may want to consider a Special Meeting
to review the cost studies so they can. make a final determination in
regards to a recommendation to the City.
Ms. Rogers advised she did authorize the actuarial study and the
Individual Plan Statements will be performed as of September 30th. She
' ' said they are required to do this every'tlree years and she' authorized it at
two -years. •
- ~ ''Secretary Jammes inquired if the Board was interested in doing a one time
grid. , .
Mr. Dehner'said his recommendation would be fo do the grid once the
• Ordinance was" adopted'with the. buyback provision.
.
Chair McLarnon said it was suggested they have a Special Meeting in
order to review the proposal when Mr. Shamoun has incorporated these
' ~ ~ amendments. - .
Mr. Delmer suggested this be set outside the meeting and have the
Recording Secretary contact his office for available dates once they are
ready.
Motion carried by a unanimous roll call vote.
1Vfr.. Delmer reviewed proposed' dates for the quarterly meetings. The dates
they suggested were January 20th, April 14th, July 14th; and October 20th.
- The Recording'Secretary advised'-the meetings were required by
Ordinance to be held on the third Tuesday of the month at'7:00 p.m.
.
Mr. Delmer asked the Recording Secretary to contact his office regarding
- the meeting dates. ' ~ ~ '
i~ ~ •~'dl ~ ~ Vii`: '
C•: Discuss Language~for Vesting and`Normal ll2etirement Age.
. . ~ ~
Chair 1VIcLarrion said they had previously cover'ed`the language for vesting
• . ~ 'and the normal retirernerit age. = ' ~ ~ -
.D., Unum Insurance Payment from Fund.
Secretary Jammes inquired if the City was mandated by the State to
maintain a minimum life insurance policy on the Police Officers or
Firefighters.
Pension=10-21=0878 '
Ms. Rogers advised this was a provision of the Plan. She said. the Plan
makes the payment to provide $50,000 of life insurance for the Plan
members:
Secretary Jammes inquired if the City maintained a life insurance policy,
on the Police Officers,, that is paid by the City.
Ms. Rogers said every employee has a life insurance policy through the
benefit p1~an. She stated this. was in addition to that. She advised the City
provides. for the Accidental Death and Dismemberment that is maintained
by Statute for Police Officers. She reiterated that every employee has a
$50,000 life insurance policy provided by the City. The Unum Insurance
is separate •and an extra benefit provided by the Pension. Plan: ,
Mr.: Definer said he wanted to make sure they were all in accordance with
respect to when a vested, terminated member can start to draw. He stated
the way the amendment appeared in the drafted Ordinance,. was to add an
additional normal retirement date of age.5.5 and five years. He said, as he
understood the discussion, it was to ask for an additional normal
retirement date of age 50 and five years. He suggested, as an alternative,
they also ask him to cost a provision. which would just allow a vested,
terminated. member to begin to draw at age 5.0. He stated by adding an
additional normal retirement date of age 5.0 and five years would be more
expensive than just allowing a vested, terminated member to begin to draw
at age 50.
Ms. Rogers said since they don't have early retirement, it is not discounted
and that could. be a difference.
1VIr: Definer said this is most .often done, for affordability purposes.
E. 40th Annual Police Officers' & Firefighters' Pension Conference
Ms. Rogers said if a member should want .to attend,. the City will advance
the funding and. seek reimbursement from the Plan. 1
Chair McLarnon inquired if there were any requirements in the. State
Statutes for a member of the Boardto,receive education.. .
Mr. Definer advised the minimum statutory requirement for Trustee
education was to receive education at least once a term in two areas;
investment related and, legal related,topics: He,advised the session held at
the City met that requirement and this conference would also meet the
requirement.
.Member Herndon said he would like to attend the conference.
Ms. Rogers told 11im to contact her regarding travel requirements.
Pension 10-21-08/9
7. 'Board Attorney Report.' ~ ' ' "
"
Mr. Dehner reported they were working on a bill that is going to be pre-filed
which is going. to be very similar to legislation they talked about last year. Most
significantly it would affect the Board by allowing. more than '10% in foreign
securities and investments. It will also allow corisideration~ of four year rather than
two .year Trustee terms, and it will allow making direct transfers of money from
the Pension Plan to an insurance company: He said this would allow a normal or
'disability retiree to take advantage of the: $3,000 federal`tax'exclusion. He
reported there was also legislation pending in Washington regarding this.
Mr. Deliver suggested Ms. Rogers mention to Mr. Shamoun regarding
amendments required for federal compliance of the Pension Protection Act. He
said once Plan amendments are made, they should provide an updated Summary
Plan Description to help"avoid some of the"confusion they have had previously.
" Mr. Dehrier reported that Rule 60T being proposed by~Charles Slavin, State
Actuary, primarily deals with~actuary practices and guidelines. He said for the
first tirile in over thirty years everyone has been on one side ~of an' issue that has
been involved with a pension proposal, and that is'fo oppose it. He stated there
have been two' workshops on this and they were participating in these workshops.
' 'He'said the bottonrline is;'"for'most funds, if these rules-were'passed in their
' current°form, it would result in increased money requirements' and increased
administrative'expenses. -He`stated he would keep the Board posted on this matter.. ~
8. Member Comments. .
Member Herndon said when it was explained to him how the retirement worked;
he was told that any incentives for the Fire Department did not count toward their
retirement. He inquired how~they coul~d~go°about changing this. He declared this
was $8,000 a year not counted toward their retirement. He stated he would like to
make a change so that their W2 wages was what their retirement was based on.
1VIr. Dehner ad"vised~it~~would'b'e=an'amendment to ~the'Plan to include those
additional items of compensa`ti'on. The process would be 'fo identify these to Mr.
Shamoun so he can have the actuary do a cost analysis on it. It would then be
provided 'to'the'Board to determine whether they want to make a recommendation
to the City for adoption by'Ordinaiice. • - ~ '
Secretary Jatnmes said they had-this discussion a few meetings ago with Mr.
Shamoun. He stated there was a section iri their book that covers this. He
recommended Mem'be'r Herndon'read~the`Ordinance and the documents in the
book.'He said this may be`helpful for him.
Secretary Jammes said prior to Ms. Rogers having left, they had talked about
doing away•with the DRAGO Option and she had made a reference to increasing ~
the percentage. He inquired if the City was willing to increase the percentage rate
on this Option.' ' ~ '
Pension 10-21-08/10
~y Ms. Rogers said, she was not sure where they were on that because of all of the
other changes being made. She stated she could not make a statement to that
effect without further investigation.
Secretary Jan~tnes said Mr. Shamoun had provided some documentation to him.
He stated he had been trying to determine how the account was split, as they had
discussed previously, and how those funds were dissipated. He said he still had
not received any specific related documents as to that particular incident. He
stated he was asking a very specific question as to when the fund was separated
under the new Ordinance and how much money was moved from the defined to
the City reserve, and to the DRAGO Option. He said he would like to see some
specific numbers related to that. He stated he would like permission from the
Board to talk with Mr. Shamotan to ask for those specific numbers. He said Ms.
Rogers was gracious enough to go through boxes and did not have this
information.
Ms. Rogers said she would reinitiate that request.
9. Public Participation.
Tim Byfield said he has worked 12 years as a Firef ghter with the City of
Longwood and is a member of the Plan. He stated they have had some
~ discussions in reference to some of the issues with the Fire Department not being
based upon the W2 wages. He said he believed the Police did receive benefits
based on their W2 wages. He stated they `were finding that their incentives are not
apart of this and they would like that to be rectified.
10. Adjournment. Chair McLanlon adjounied the meetnb at 8:04 p.t11.
Mar .r_
ATTEST"
inda F. Goff, Record g Secretary
Pension 10-21-08/11