FMTF09-19-06 BOARD OF TF;USTEES
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
MINUTIES
September 19, 2006 7:00 p.m.
Present: Jack Smythers, Chair
James Seibert, Vice Chair
Robert Redditt, Secretary
Jeremy Brown, Member
Chris Kempf, Member
Carol Rogers, Director of Financial .Services
Linda Goff, Recording Secretary
1. Call to Order. Chair Smythers called th.e meeting. to order at 7:02 p.m.
2. Approval of Minutes -June 20, 2006 F~egular Meeting.
Vice Chair Seibert moved to approve the minutes of June 20, 2006 as
presented. Seconded by Secretary Redditt.
Chair Smythers said there were some que;stions on DROP and COLA. He
suggested they invite Mr. Shamoun back to discuss these items.
Member Kempf said he already talked to Mr. Shamoun and he gave him a brief
overview of COLA if the Board desired to implement it. He .said there were
several different plans and he would pass around the letter.
The Recording Secretary advised they should complete approving the minutes
unless this was a correction to the minutes.
Ms. Rogers inquired if there was anything omitted from the minutes, particularly
item. five.
Chair Smythers said he was not aware of anything being left out.
Motion carried by a unanimous voice vote.
Ms. Rogers said Paul Shamoun was trying to send her a list this afternoon of the
.Board of Trustees responsibilities and aul:hority. She stated they fell under the
City's purchasing policy as far as expending funds. She advised they incurred a
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liability in having this study done and spent funds without prior approval. She
said Mr. Shamoun was under the impression this had been authorized bythe
Board.
Member Kempf said he had been told at the last meeting he could contact Mr.
Shamoun for proposed language and it was what he wrote for him.
Ms. Rogers explained what he had was a. cost study and this study incurred a
couple of thousand dollars in expenses to the fund. She explained they would
need to go to the Commission and make a request to go forward.
Chair Smythers said he was just calling for questions to be answered, not to have
any studies completed. He inquired if 1VIr. Shamoun was on billable time when he
canie to one of the Board meetings.
Ms. Rogers explained he was the Plan A~Jministrator and that was part of his
responsibility. She said if he were requested to come to every meeting, there
might be expenses incurred.. She stated it was important for the Trustees to attend
the Annual Conference in order to understand their duties and responsibilities.
She affirmed an actuary had to perform this type of study.
Member Kempf said Mr. Shamoun did not state there was any cost involved with
doing this. He told Mr. Shamoun the Board wanted some verbiage for an
Ordinance. He did not ask for a cost study.
Ms. Rogers said the Board would make a motion to ask the Commission to
consider amending the plan.
Member Brown said he was just looking for some verbiage to propose to the City
Commission. He said a lot. of places werf; adding DROP.
Ms. Rogers stated they already had a DROP.
Member Brown said they did not have a :DROP; they had a supplement with a
lump sum paid at the end of 25 years service.
Ms. Rogers said it was based on a similar calculation. She stated they would not
get both; it would be one or the other. She stated the Board would need to approve
the invoice authorizing the funds for the study once it is received.
3. Review of Agenda Packet Material.
A. Plan Account Statements.
Chair Smythers reviewed the Plan Account Statements for May 2006, June
2006, and July 2006.
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B. Investment Performance Review.
Chair Smythers reviewed the Investment Performance Review for the Period
ending June 30, 2006. He made note of a loss of ($79,436.39) documented on
May's Plan Account Statement.
4. Other Business.
A. 38th Annual Police Officers' & Firf:fighters' Pension Conference.
Chair Smythers stated the 38th Annual Pf;nsion Conference was being held
locally, starting on Wednesday, October 25th and there was no registration fee. He
said he found the conference he attended two years ago to be very helpful. He
confirmed he would like to attend at least. the first day.
Member Brown said he would like to attend all three days.
Secretary Redditt said they voted to .approve expenditures for Trustees to attend in
the past.
Ms. Rogers said, at the Board's discretion, ifthey make the arrangements ahead
of time, she could have the Florida League of Cities issue the expense checks. She
advised expenses would be the same as t:he State travel rates.
Chair Smythers moved to approve the expenses for any Trustee wishing to
attend the annual conference. Seconded by Secretary Redditt and carried
by a unanimous voice vote.
5. 1Vlember Comments.
Member Kempf distributed the information he received o:n the. COLA. He said
this was a deferred COLA for five years.
Chair Smythers pointed out the document states if the COLA is adopted, the
City's annual minimum required contribution is estimated to increase by
$126,781 for the 2006/07 plan year, or by 8.54% ofpayroll.
Member Kempf stated this was for the total plan and included Police and Fire.
Chair Smythers asked if this: was in effect for other cities.
Member Kempf said the City employees who were on the State retirement had
COLA's. He stated the majority of the cities in the area have a COLA.
Member Brown said .Orlando did 5% every three years rather than 3% a year.
Member Kempf said to defer for five years was more cost effective for the City.
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~ Member Brown inquired if this was based on the current contribution of 1
Member Kempf said the overall would b~~ 8.54%.
Ms. Rogers said this would be an additional contribution of 8.54% so they would
be up to almost 10%.
Chair Smythers inquired if it would be noncontributory by the employee.
Ms. Rogers said the employee would have to pick up that part of it.
Chair Smythers inquired if that would be matched by the City.
Ms. Rogers responded in the negative. She said the City made a contribution and
if the employee wanted to add this, in all likelihood the employee would have to
pay the increase.
Member Kempf said in Lake Mary the erployee and City share the expense.
Ms. Rogers said this was a very rich plan and the contributions and benefits they
receive from this pension far exceed the benefits from a COLA. She said the
supplemental they receive at the end builds in the COLA during the working
years. She said the State reti"rement gets 1.6%.
Member Kempf stated the State received 3% per year. He said they also have a
DROP benefit and they receive health insurance benefits each month.
Ms. Rogers declared when this plan was designed it was designed to exceed the
State (FRS). She said there were comparisons done and she has not updated them
to compare to the final. adopted plan. She stated this was what the employees
asked for and it was agreed upon that this was equal to or better.
Member Kempf said everyone has looked over the plans and there was a big
inequality in both plans. He said they votc;d that they wanted to get this COLA
and he was asked to proceed with this.
Member Brown said the State retirement will receive a 3% cost of living increase
each year and with inflation rates you would be alright. He stated he knew the
lump sum was designed to be reinvested in order to cover the cost of living
increases, but you did not know what the economy was going to be doing five to
ten years from now.
Ms. Rogers said asking for this benefit would increase the property tax rate and
they would be right back in the same boat. She declared the money had to come
from somewhere.
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Member Brown stated he spoke with the Police Department and they wouldn't
mind paying an additional amount. of percentage if it meant. in the long run they
would be able to have the benefit.
Member Kempf said splitting the cost w~~s something they had discussed as well.
He said that would be fair.
Member Brown said they would not expf;ct the City to front the entire bill. He
said that was unreasonable.
Chair Smythers inquired what they needE;d to do to have more light shed on this in
regards to the expense.
Ms. Rogers advised there would have to be a cost study and then an impact study.
She said once the group decides what they want, then the actuary does the
computations and it could cost $5,000 to $10,000 to do the calculations. She
stated Mr. Shamoun has an actuary retained for the plan and they would have to
do the calculations. She declared it was a lengthy process and could take until
next year. She said most of the articles were already being bargained for this year.
Chair Smythers inquired if we knew specific figures of what people were willing
to do.
Ms. Rogers said they had a number now and knew what it would cost to do a five
year deferred 3% COLA.
Mr. Smythers said we knew that would cost $1.26,000 per year.
Member Kempf said that was 8.5% of everyone's salary per year. He said if
splitting it, the City could pay 4% and they could pay 4%.
Member Brown said the plan members would want to see what the end result
would be or an assumption of what they would need to contribute.
Ms. Rogers inquired if the benefit fund went from 2.5 times to 3 times would that
offset the benefit of the COLA.
Member Brown inquired she was referring to the lump swn benefit paid at the
end.
Ms. Rogers responded in the affirmative.
Member Kempf said what he did not like about that benefit was that the
fluctuation goes on at the beginning of th~~ year based on the content of the fund.
He said it was physically putting everything into the market and what it was going
Pension 9-19-2006/5
to bear in the future:
Ms. Rogers said you had. to assume you ~Nere going to receive the maximum.
Member Kempf said if they had a lot of crew plan members and the market
suddenly goes down, they would only get a percentage of that money at the.
beginning of the year.
Mr. Smythers said he thought the differe~ace in a Defined Benefit from a Defined
Contribution plan was that the Defined Benefit plan was guaranteed.
Ms. Rogers said the benefit was, but this was the supplement. She said the
supplement was equal to the DROP and they would receive a lump sum at the end
based on their accrued benefit.
Member Kempf said the supplement was an exchange for the DROP that the State
plan had, but the State retirement has a 3'% increased COLA that they do not
have.
Ms. Rogers said they did not have a discount for retiring early, where in FRS
there is a discount for the years. She stated you could take an early retirement
with a lower benefit. and they did not have that.
Member Brown said that was correct. He said that was another concern. He said
Lake Mary just received a 20 year retirement. with 60% of their salary. He said
they could take either 60% at 2D or 80% at 25 years of service in addition to the
DROP.
Member Kempf said the FRS supplements every month toward the health
insurance after retirement and they do no~~~ get that.
Member Brown said they did not receive any type of health insurance after
retirement.
Ms. Rogers said by law they had access t~~ the same insurance they have now.
Member Kempf said she was talking about COBRA and that was not considered a
benefit.
Chair Smythers asked where do they go from here.
Member Kempf said he would like to put in an Ordinance for a split plan where
they would pay half and the City pay half:
Member Brown said he would take that back to their members to hear some
feedback on whether they would be willing to pay at least 4% if it would. mean
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having a cost of living at the end of retirement. He inquired if the Union would
have to vote on this first before going to the City.
Ms. Rogers said it was an article in the contract so she thought it would have to be
bargained.
Member Brown inquired if the Trustees ~,vould need to vote on it first before
taking, it to the Union members.
Ms. Rogers said they would need to go to the Union members then come back to
the Board with a plan.
Member Kempf said they have already gotten it approved.
Chair Smythers suggested Member Brovem go back to his members and then at the
December meeting they could make a motion to approach the Commission.
Ms. Rogers responded in the negative. Slie said once they have a consensus from
the participants, then they would come ui~ with a scenario of what things they
want to have a cost study done on. They would then authorize a cost study to be
done by the actuary and once that is received they would pick what things they
think were the likely scenarios acceptable; and affordable. That would then go tc?
the Commission for discussion. She suggested they put together a list or a
memorandum of what they agree on and .provide. that to the Recording Secretary
to be included in the agenda packet.
6. Public Participation.
Herb Stewartson, Representative from Te:amsters Loca1385, said they have had
several inquiries about the City's Florida League of Cities Retirement. He said
there have been some issues about a lack of responsiveness from the League of
Cities for the Pension Trust Fund. He said some officers have explained they
requested about being able to buy back their military time,, the ability to get a
COLA or DROP; and they have been shut down by somebody from the League of
Cities. He stated their representatives canie here to, more or less, see what was
going on and find out what type of inforniation might be available and how they
might be able to assist in things. He did want to make one point; he said. it was
inaccurate to say that it is an article in the contract. He declared their retirement
benefit was not something that they negotiate at this time. He said neither the
State retirement benefit nor the League oi.' Cities was something that they
negotiate. He stated they were open to doing so if the City so chooses to do that
and make it an issue. He said if Ms. Rogers would like to bring Mr. Drago into the
loop on that, they would, by all means, gc? ahead and take on that task. He
affirmed it was probably better handled in this realm as opposed to going through
a contract negotiation. He inquired who v~~as the direct contact. and if there was a
direct phone number for him.
Pension 9-19-2006/7
Ms. Rogers said Paul Shamoun was the Administrator. She said the military buy
back issue had nothing to do with the Administrator. She said that was the plan
document.
Mr. Stewartson said as far as he knows anyone who has asked for a plan
document hasn't received one. He said there was suppose to be individual
statements received. They were not getting these statements on a regular basis and
some people have never received them.
Ms. Rogers said nobody has asked her for the plan document. She said this was a
defined benefit plan, so it was not like the defined. contribution where you have an
account balance. She stated the defined benefit. was based upon what your
earnings. are. She said the year to date paycheck statements show how much you
have contributed, so if you left before being vested, you could receive a return of
your contributions. She said that was the ownership. of the unvested portion of the
plan. She stated she has requested the annual statements. She said they would not
tell much, other than showing a calculation of the benefit based on the last. three
years earnings. She declared it would not tell you the actual value of the plan.
Mr. Stewartson .inquired if it was accurate to say someone has taken it upon
themselves to feel that information is irrelevant to the people who have requested
it.
Ms. Rogers said she was not saying that. She was saying. that they were supposed
to be providing plan statements and they claim they have.
Mr. Stewartson affirmed he could line up quite a few people who have never
received them. He inquired what would be the mechanism of getting that repaired.
Ms. Rogers said she could call Paul Shanroun and ask him again why they have
not received them.
Mr. Stewartson inquired if Ms. Rogers was the liaison from the City.
Ms. Rogers responded in the affirmative.
Mr. Stewartson inquired if she attended all of the Pension Board meetings.
Ms. Rogers stated she attended the meetings in an advisory capacity.
Mr. Stewartson stated he was on State retirement so he was here only representing,
the people in the Police Department. He said he has been hearing some of these
issues for years and they do not seem to be getting resolved. He said somewhere
along the line there is a roadblock.
Pension 9-19-2006L8
Ms. Rogers inquired if every Trustee on ~:he Board received the book that was put
together concerning the retirement plan.
The Recording Secretary responded in the affirmative.
Ms. Rogers said the plan document was in this book and every Ordinance about
the plan was in this book. She stated she was available to explain any questions
regarding the plan. She said she felt. she l?ad been fairly responsive to questions
they have had.
Mr. Stewartson inquired if there was a "water downed" layman's version of this
for the people involved in the retirement.
Ms. Rogers responded in the affirmative.
Mr. Stewartson asked if this was given to all new employees.
Ms. Rogers said she could not answer that as she did not. go to the orientations.
Mr. Stewartson inquired if that was something Dawn Jackson would know.
Ms. Rogers responded in the affirmative. She advised there was a document taken
to the Commission on September 8, 2003. It has the Ordinance that adopted the
changes and the Defined Benefit Plan and Trust Adoption Agreement. She
explained it has checked boxes and explanations as well as a detailed- explanation
of the supplemental benefit inclusive in approximately seven pages.
Mr. Stewartson asked if it explains to them what their benefit will be and how
they can do their calculations and somehc?w figure out relatively close what kind
of paycheck they can expect.
Ms. Rogers responded in the affirmative: She. explained all the calculations it took
was there; how many years times the multiplier comes up with the rate and you
take that by the average monthly compen;~ation, compute your benefit, then you
can compute your supplement. She said you would multiply the monthly benefit.
times 12 times 2.5 and that was what the supplemental check would be.
Mr. Stewartson inquired if there was any way this could be distributed to the
members on that particular retirement plan to get the information out to them.
Ms. Rogers responded in the affirmative. She stated she could build a spreadsheet,
do the calculations, and print a statement .for everybody.
Mr. Stewartson said there has also been a statement made that the City was
talking about going to a different retirement plan, but that was not going to be
offered to anybody on the League of Cities plan.
Pension 9-19-21)06/9
Ms. Rogers said she did not have any knowledge of anything like that ever being
discussed. She said this was a good bene:Eit plan and you just didn't change
pension plans.
Mr. Stewartson said he just wanted to get that on the table. to find out if it was
rumor or fact.
Ms. Rogers said the League of Cities feels this was going to be one of their
prototype plans they will offer .since it is such a good plan.
Mr. Stewartson said the COLA was something all the employees from the Police
Department were rather interested in. He said he could not speak for the Fire
Department, but he thought their representative had made that clear. He stated,
from the union standpoint, he would really like to see the Board and the City
come to some agreement on possibly splitting the cost.
Ms. Rogers advised it was probably one of the more expensive. benefits you could
add to a plan.
Mr. Stewartson asked if there was a way to change the amount of the
supplementary benefit to help offset the cost of the COLA.
Ms. Rogers said it was three times your final average compensation and was
something that could be on the table.
Mr. Stewartson said in talking with people from the Police Department, the
COLA was something that would be guaranteed every year. Whereas, the
supplemental benefit was not really something you would want to hedge your
future on. He said there was a lot of volatility in trying to invest it and you may or
may not be able to count on that as a cost of living. He stated if you know you
were going to get 3% every year added to your benefit was much more substantial.
and concrete: He said that highlights the point they were trying to make.
Detective Roman Bruce, said he was with the Police Department and he was on the
League of Cities plan. He said they do have concerns and they have been talking
with Jeremiah Brown about their concerns. One of the things they would like is
the COLA. He said they do understand th.e fact that they get the supplemental in
the end, but from their understanding thai:,takes the place of the DROP program
and has nothing to do with the COLA anc13%. He stated from their
understanding, also, this plan was. supposed to be better and stay on the same lines
as the State or better. He said it was lacking in a few benefits that the State
retirement has so he did not see how it could be this great plan and better than the
State retirement when it does not have the COLA and it does not have the
insurance and things like that. They would like to see, something done about it and
progress forward. He stated he has been here .for ten years and he has never
Pension 9-19 2006/10
received any packet from the City on the: retirement plan from Dawn Jackson or
anyone when he first came in, nor the 2003 document referred to. He said he has
been here since 1996 and he has never sc;en it. He said he would like to see this
and he would like to see a statement to give him an estimate of where he stands as
he gets further along in his career so he can make adjustments in his life for his
family and himself to be where he needs to in order to make sure he has a decent
retirement. He said if the State retirement can do statements and other agencies
can, then the League of Cities should be able to come up with some type of
documentation to show people where the:y stand and where they are going to be.
He said he would like to see some type of COLA and he would like to see some
statements and he would like a copy of the seven page document to have more
information on how his retirement will go.
Matt Jammes said he has been with the Longwood Police Department for five
years this October. He said when he was first hired here he never received
anything as far as the retirement was concerned. He said everything he has ever
heard was by word of mouth. He said less than one year ago he went to Ms.
Jackson and requested something from the League of Cities and he was told she
didn't have anything. He said a concern i.'or him was that he had five years of
military time and with the State he could buy that and it would be added into the
cost per month. He stated he asked that question from Mr. Brown well over six
months ago and has still not received an answer. He said he would like to see a
statement and be able to plan his future just like everyone else. He declared the
adjustable rate at the end of the 25 years was great, but as Detective Bruce stated,
that was to cover the DROP. He said COLA was a concern for them because as
the cost of living increases and they stay the same, they lag behind. He affirmed
investing and what you get back from investing is always a gamble. He said he
appreciated the time and hopefully they could get some of these questions
answered.
Member Kempf inquired what they contribute to their Pension right now.
Ms. Rogers stated they contribute 1
Member Kempf asked how much those on the State plan contribute.
Ms. Rogers said she only had combined numbers.
Member Kempf said they contribute 0%.
Ms. Rogers stated the City contributes 21
Member Kernpf inquired how much the City contributes to the League of Cities
plan.
Ms. Rogers advised it depended on the actuarial requirement. She said it changes
Pension 9-19-2006/11
based on the investments.
Chair Smythers stated it appears as thoul;h they have a request to receive some
documentation.
Ms. Rogers said she would like to make one statement that the purpose of electing
the Trustees was to get that information i:~or them. She said every Trustee has had
this book with the information. She said she was sorry they have not had this
information and she would be glad to provide it. She affirmed she would have a
book put together and get it out to everyone again and give a one page synopsis of
how it does work.
Mr. Stewartson asked if she was saying that it was the new employee's job to
figure out who their Trustee is to the Pension Board and go to them to get their
retirement information.
Ms. Rogers responded in the negative. Slie was saying that questions about the
COLA or military buy back would go to the Trustee.
Mr. Stewartson said these questions have; gone to the Trustees which is why they
have brought it up. He said he did not think the problem was with the Board,. but
the problem was more with the Administrator not providing the information back
or giving an answer that it was too expensive or something along those lines. He
declared somewhere along the line there was a breakdown in communication
outside of this Board.that was not coming; back. He said the seven page document
was another issue in itself that could be rectified very easily. All the other
questions just were not coming back and they would really like to see this get
fixed.
7. Adjournment. Chair Smythers adjourned the meeting at 8:08 p.m.
ck Smythers, Chi it
ATTEST:
Linda Goff, Recordi ~ Secretary
~.o..-
.Pension 9-19-21)06/12