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FMTF01-16-07SM BOARD OF TRUSTEES Florida Municipal Trust Fund 12etirement Plan and Trust for the Firefighters and Police Officers Longwood City Commission Chambers . 175 West Warren Avenue Longwood, ]Florida SPECIAL MEETING MINUTES January 16, 2007 ~ ~ 7:00 p.m. Present: Jack Smythers, Chair Robert Redditt, Secretary Jeremiah Brown,.Member Chris Kempf, Member Carol Rogers, Director of Financial Services Linda F. Goff, Recording Secretary Absent: James Seibert, Vice Chair 1. Call to Order. Chair Smythers called the meeting to order at 7:00 p.m. ~ Chair'Smythers announced that Mr. Seibert would be resigning due to health reasons. Chair Smythers said they needed to start with an amendment to the agenda. He .asked Ms. Rogers to clarify the purpose of the .amendment. 1VIs. Rogers said this would add an opportunity for discussion from Mr. Shamoun and presentation of the Actuarial Report. Secretary Redditt moved to amend the agenda to allow for discussion and presentation of the Actuarial Report. Seconded by Member Kempf and carried without objection with Vice Chair Seibert absent. 2. Discussion. and. Presentation of the Aci~uarial Report. Paul Shamoun, Florida League of Cities, Inc., said the Actuarial Valuation Report was done every two years to reassess how the Plan is doing and set the contribution rates for the next two years. He said this was to make sure the Plan was being funded as it should be and on a_sound .basis. He referred to page four and said this was a recap of the last valuation and the current valuation with.the costs being listed at the bottom of the pa;e. The contribution rate between the 2004 year and the 2006 year dropped about 3.75% primarily due to good investment returns. He reported the total required contribution by the State and Pension O1-1E.-07/1 the City was approximately $302,000 for this current year and would go up to approximately $304,000 next fiscal year. The City's contribution reserve was $1,417,129. The Plan_increased in total participants from 38 to 49. He explained in the origina12004 valuation there were 12 plan members terminated that were owed funds and not accounted for so they were accounted for in the 2006 calculations. Chair Smythers inquired why- the .figures under the 2006/2007 State Contribution and Advanced City Contribution were in parentheses. Mr. Shamoun explained this was money they knew was coming in and the State money was the base. He advised the City has a surplus accumulated. The City has not been required to make contributions for a number of years, but they have continued to fund the plan at 7% of salary. He confirmed the.Actuary stated this was the best funded Retirement Plan he has done. He said he had received a number of questions regarding the accounts. He-stated there was $4.2 million in the whole trust fund. He pointed•out the. Actuarial value of assets was listed on page five at $1.9 million. He explained this represented the amount of money set aside to pay the retirement benefit itself. In addition to this is the $1.4 million that is the City's contribution reserve and there was a little over $800,,000 in the surplus benefit account. He broke down the three accounts. The main account is comprised of the City's money, State's money, and the employee's money. It is used to pay the monthly retirement benefit for life. There is another account that any money from the State over $302,000 for the year goes into and that account is ~ the funds for the supplemental benefit. There is also the City's reserve. Member Kempf asked if the State money was going into the monthly amount of money they would be receiving. Mr. Shamoun said a portion of this money was going there. He explained there was the State base and when benefit improvements were made, the amount of money it cost to make the improvement was used to fund the monthly benefit. Member Kempf said. he was under the impression that this was money that could be used to .make changes to ,the Plan. Mr. Shamoun advised under a normal Plan that was correct, However, the City's Plan has all of the State funds over the base going into the supplemental account. Member Kempf inquired when the supplemental benefit was established. Ms. Rogers advised it.was established. in 2002 with the final changes being a~d~opted in 2003:. Mr. Shamoun referred to page nine of the .Actuarial Report .and said this was the page. that would tell the Board whether the City was making the. contributions the. Pension 01-16-07/2 Actuary was requiring. He said every year the City has made all of the required contributions. He reviewed the Schedule: of Funding Progress and said there were no unfunded liabilities. He advised this ~Nas a very unique situation, that most plans.in the State were not fully funded. He stated, on the average, most funds were only approximately 85% funded. Member Kempf said they had 49 plan members at this tune and the lump sum was worth approximately $833,000. He inquired what would be the estimate of the lump sum bonus. Mr. Shamoun said it would be hard to say because it was also based on service. He reviewed how the benefit was calcul~ited. He advised the .Benefit Statements would be distributed in the next day or t`vo. They will give current value for today and this will grow with time. He said it vas almost impossible to give a projection for this benefit. Chair Smythers inquired if the statement would give the plan member what their benefit would be if the person retired today. Mr. Shamoun said each plan member's i~idividual statements will have that shown. He explained the statements would have the monthly retirement benefit projected. He said it would have the current amount earned, projected retirement, and a current supplemental amount showing the value of the supplemental benefit to date. He reiterated they cannot project the supplemental due to the number of variables involved. He stated some other things to think about was that the Legislature was in session dealing with property insurance and this could affect the dollar and the amount of money com%ng to the Plan. Chair Smythers inquired if there was any other insurance in which part of the premium goes into the retirement fund. Mr. Shamoun advised the Police Officers receive automobile insurance funds and the Firefighters receive property insurance funds. Chair Smythers inquired if there was a w~bsite the City employee could go to and pull-their specific information. Mr. Shamoun advised not at this time. Hf; stated they just signed a contract to hire a new software vendor and they were probably a year away from the employee being able to put in a pin number and social security number to obtain projections. Chair Smythers said a point of contention has been that they did not know what they had. Mr. Shamoun said this was partially because they haven't done benefit statements ~ in a number of years. He stated they did valuations, but if the Plan did not ask for Pension 01-16~-07/3. participant statements, they did not do them because there was a charge. He . explained that when they changed actuaries last year they made participant ~ statements part of the valuation process: Every year a valuation is performed, from this~point forward, the employees will receive: an individual participant statement. Member Kempf inquired who the actuary was.. Mr. Shamoun reported the actuary was Charles Carr with Southern Actuarial Services from Atlanta, Georgia. Chair Smythers said Mr. Shamoun had stated the City's Plan performance-was substantially in better shape than most other Plans. Mr. Shamoun stated the Actuary said it was better than all others that he has as clients. He reiterated the Plan was 100% funded and the City has a $1.4 million surplus. He said the .health of the fund itself it was the best funded. and in the best shape. He stated most Plans were behind. He said with. a lot of Plans the municipalities require plan members to contribute 10% of their salary. He stated the City still has a number of employees in the Florida Retirement ..System (FRS) and as this population ages through time, the costs were .going to rise .for the Plan. Chair Smythers .inquired what the goal was for return. ..sl Mr. Shamoun advised the goal for return was 7.5%. He reported the Plan, on an actuarial basis; made 14.2% last year and the year before 20.68%. Member Brown inquired how they could increase benefits without it costing the .Plan members or the City more money, with the current structure of the Plan of the entire overflow going into the lump sum account. Mr. Shamoun advised they could not; that the design of the Plan was placing these funds in the supplemental. He explained other Plans that do not have this lump sum cash benefit at retirement would pool the funds into a reserve account that the City Council could use toward more benefits. He reported he also brought the State, Annual Report. and gave it to Ms. Rogers. She will. be reviewing this and obtaining signatures from the Board. Chair Smythers asked Mr. Shamoun,, in his professional opinion, if there was anything the City could do to make the Plan better. Mr. Shamoun said there were always other benefits that could be added. He stated there were plans all over the State that have different structure. Some have DROP, some have health subsidies, or COLA's and many use a share plan like this. Member Kempf said hopefully they would have a good payoff at retirement, but Pension O1: 16-07/,4 you never know what the market will do. He said.this was a concern he had and this was why he was trying to weigh the Pro's and Con's. Mr. Shamoun said if the .money continuf;s to go up the pace it has over the past five years they could come out better thin the entire state. Member Kempf inquired if there was a minimum amount they would receive. He said he knew there was a maximum amount. Mr. Shamoun said the minimum would be whatever the credits were worth. Member Kempf said he sees that benefit added on as a benefit to other agencies, but not solely relying on it as a major benefit. Mr. Shamoun said another thing they needed to factor in when looking at this was that most of the Plans they were looking at has a substantial employee contribution rate. He stated it was typica:~ly not 1 % when there were benefits such as COLA involved simply due to the expense. He advised that as a Board, their job was to maintain and oversee the Plan.. It was not to be an advocate one way or another for any benefits. - Chair Smythers said this type of plan for non-government employees was. very foreign. ~ • . - Mr. Shamoun said it basically did not exist. He stated the Defined Benefit Plan was a great plan for employees. Member Kempf said all the benefits were good, but they were concerned about where. the money was .going from the State. Mr. Shamoun said there were two ways; either put in a share like they were doing, or they would continuously be negotiating with the' City on how it would be spent. Member Brown said their concern was that all excess State money goes into this rather than using these funds for other benefits. Mr. Shamoun said in the long term the C+ty was always on the hook. The employee would be at the capped employee contribution rate and never have any more 1'iability than that amount. He stated if investment returns are not there in future years it will cost the City that, much more. Member Kempf inquired about the administration costs. Mr. Shamoun advised the total administration fees last year was $16,000. He reviewed the distribution and legal fees. ~ • Pension. O 1-16••07/5 3. Review and Discussion of Listing of Pension Board Attorneys. Member Kempf said he did some research on Pension Board Attorneys. He stated he talked to a few attorneys over the phone., He said James Loper was currently the Pension Board Attorney for Orlando and he was the attorney for Tampa. Fire and Rescue for twenty (20) plus years. He works out of Tampa, but is in Orlando often for OFD. He reported the.rates were anywhere from $300 to $400 an hour. Member Brown said the Board Attorney would probably be attending the meetings which are four times a~~year. Chair Smythers asked why there was a feeling the Board needs legal representation. Member Kempf said this was the trend all the agencies were going to. He stated they have their own Pension Attorney to help with legal issues such as to draw up any Ordinance they may want to present. He said by law they could get their own attorney. He declared they could use the help and guidance. Member Brown said any legal questions that may arise; they would .guide the Board on any legal aspects. He stated when he went to the conference every person there on a Pension Board had an:attorney. Chair Smythers inquired if the names being submitted were local. r Member Kempf said Mr. Loper was from Tampa. He said a lot of the Pension Board Attorneys were from Miami or Tallahassee. He supported Mr. Loper and he spent time talking with him. He, said Mr. Loper could make our meetings and he has good rates. He has been a Pension: Board. Attorney for approximately 35 years. He represents Tampa, East Naples, Starke, and several other agencies. Chair Smythers inquired if they were' all within the State.: Member Kempf responded in the affirmative. Chair Smythers inquired if Mr. Loper was familiar with our plan. Member Kempf responded in the, affirmative,. Mr. Shamoun said Tampa has to go to the State legislature to change the benefits in their Plan. Member Kempf said it would benefit the Board to have. this input. Mr. Shamoun said if they had a Board Attorney they would look to the Attorney for procedural issues. He stated if they ever had a disability claim they would v; Pension 01-16-07/6. want a Pension Board Attorney guiding them through that process. Chair Smythers inquired.if Mr. Loper would be averse to handling a disability case if one came up. Member Kempf said he did not ask Mr. lJoper regarding disability claims, but he was a Pension Board Attorney. Member Brown said the purpose of this ~.neeting was to get. a list of four to five attorneys. He said he drafted a letter to rf;quest them to come and essentially have another meeting. in February to interview. He stated the Board would be hiring the attorney. He suggested sending a letter for four or five attorneys and from those they choose who they would like to represent the Board. Chair Smythers asked, in addition to a potential disability claim and advising the Board on the Plan, what other issues would be of benefit to the Board that they would want to make sure the attorney they chose could. satisfy. . Member Kempf said any changes the Board would want to make to the Plan in the future, the attorney could guide them through those steps. Chair Smythers said it was his understanding the Board could not effectively change the Plan. Mr. Shamoun advised the Board cannot rnake changes to the document or the benefit structure. He said this can only be- done through the governing body. Member Kempf said the attorney he spok:e to said he could legally show the Board how to propose changes to the benefits through unions and other venues. Mr. Shamoun said this was going past Board member into advocate territory if talking to unions on how to get things do~ae. Member Kempf said they have had questions in the~.past about certain issues and no one could explain what to do. Mr. Shamoun said he would not disagree to having legal representation. He stated the Plan was now over $4 million .and growing. He said the Board should have a legal representative and he would not argue against that. He said if for nothing less than making sure they have the right procedures in place and the Board was following them. He .stated it would be up to the Board. whether they needed them to come to every meeting. He advised many attorneys require a retainer and everything they do is in addition to the retainer. Member Kempf said Mr. Loper has a flat hourly fee. He stated travel expense was ~ anon issue. Pension 01-16-07/7 Member Brown said there were other procedural. matters they have not come across such as if someone has to forfeit a pension. He said there would be a lot of legal issues and liability on the Board's part and he would want to have an attorney present for such issues. Mr. Shamoun said it covers them and having an attorney should be something they all would want. Secretary Redditt agreed, but. he said they should pay by the. hour, not a retainer. Member Kernpf said he wanted to keep the expenses down. He stated he did think. we needed that information and knowledge. Secretary Redditt inquired,if payment of an attorney would come from the fund.. Mr. Shamoun responded in the affirmative. Chair Smythers asked if there were. four to five prospects. Member Kempf said he had a list that he started with the one he liked the most. He stated one was in Miami. . Chair Smythers asked if he talked to Lee Definer. ,,a Member Kempf responded in the affirmative and said he was one of the. more expensive and Mr. Klausner was very expensive. Discussion was held regarding fees. of .the various attorneys. Member Brown said he found one or two attorneysthat were more local,, but the larger firms were more diversified. Member Kempf said some of the larger firms he spoke with said they would send a partner if they were not available. He stated Mr. Loper would be attending himself. Member Brown said he listened to both Mr. Klausner and Mr. Definer speak at the conference. He stated they may be more expensive, but you get what you pay for. He suggested having four or five attorneys come before the Board :to present and the Board be. able to ask questions they may have. Chair Smythers said he would not recommend having all four attorneys present during questioning. He inquired who would cover their expenses for that meeting. Member Brown said this was an invitation and it would be up to the attorney if Pension 0-1-16-07/8 they would be interested in representing the Board. Chair Smythers said the Board meetings normally last approximately one to one and a half hours. He questioned if the attorney would wazit to travel to the meetings if charging by the hour and.the:re being only four meetings a year. Member. Brown said that was a question that could be asked. He stated they were currently structured to meet only four times a~ year: The Recording Secretary explained they could hold Special Meetings. However°, the Ordinance required the meetings. be held at 7:00 p.m. in the Chambers. Mr. Shamoun said they could have a Special Meeting. He stated he looked. into this earlier today with their attorney and wen though the subject goes out, the Chair can add to the subject matter of the;- agenda and the Board can conduct any business at an open posted meeting. He said there was an Attorney General's opinion on this. However, if taking controversial actions; the. Board may want to wait and setup another meeting with that; posted as part of the. subject. Chair Smythers inquired which attorneys the Board would like to interview. Member Kempf said he would like Mr. Loper to be interviewed. He asked - Member Brown if he liked Mr. Klausner. ~ ' Member Brown said he heard both Mr. Klausner and Mr. Delmer speak and he would pick Mr. Delmer. Chair Smythers said he has heard Mr. Delmer speak as well and he speaks very well. Member Kempf said he spoke to Jim Linn and he represents only cities. He asked Mr. Linn if he could give him any insight on who he would recommend. He liked Stephen Cypen. He stated Mr. Cypen had reasonable rates and represents a lot of different agencies. He suggested inviting him. Discussion was held regarding attorney ff;es and the required travel to attend meetings. Chair Smythers said the attorneys needed to know what they were getting into as far as travel. He said he did not anticipate monthly meetings. Member Kempf suggested the Board could contact them by conference call and they would not have to come all the time. Secretary Redditt said it made sense to conduct business by conference calls unless there was a major issue. Pension 01-16-07/9 Chair Smythers inquired what Mr. Shamoun's experience was regarding attorneys using conference calls. ~ • Mr. Shamoun said Steve Cypen typically reviews the minutes and will contact the Board if there was anything he questioned. He will address issues through a conference call. He stated Lee Dehner typically would not take you as a client if not placed on a retainer or not.allowed to.come to all of the meetings. Member Kempf said that was another reason why he liked Mr. Loper. He was willing to charge hourly and does. conference calls. Mr. Shamoun said Bob Klausner was typically by retainer. He said Steve Cypen would .contract on an.hourly basis as well as Mr. Klausner and.Coffman.:He'said those attorneys on retainer also bill for additional work they do. Member Kempf said he preferred an hourly basis. Chair Smythers suggested Member Kempf talk to four or five attorneys to see if they would agree to conference calls. Secretary Redditt and Member Brown concurred. Member Kempf inquired what the Board would like. him to do by the next meeting. Secretary Redditt suggested he obtain two to three attorneys names willing to attend the meetings by conference calls and review the meeting minutes as well as willing to come in person for any serious problem. Ms. Rogers suggested they poll the attorneys to see if they would be interested in that type of arrangement. Member Brown said he thought the intent for today was to select three or four attorneys and send letters to them. Member Kempf inquired. if they would want to hold another Special Meeting in a month to do this so it would be done by the next quarterly meeting. Member Brown asked if they wanted to have another meeting in February and then send a letter out or did this need to be done before the Board. He inquired if the Board could direct Member Kempf to talk with the attorneys, contingent: upon their willingness to contract hourly and in this manner. Mr. Shamoun said the Chair or the Board could authorize him to act. in that capacity. ~i Pension 01-16-07/10 Chair Smythers asked Member Kempf to get in touch with Ms: Goff or Ms. Rogers with this information. He said ~vllen he has four or five attorneys, the Board could hold a Special Meeting. The attorneys can attend or they could discuss over the phone with them and then decide who they want from that meeting. He affirmed they could then have the go ahead for the March meeting. Member Brown said that was what. he w,~s hoping for. He stated he has a prospective letter that could be used to sE;nd to the attorneys. He suggested they schedule the Special Meeting at this time: so the attorneys would be able to atte~id via telephone or in person. It was the consensus of the Board for Member Kempf to narrow down to two or • three attorneys for a Special Meeting in lebruary. It was the consensus of the Board to hold a Special Meeting on February 13, 2007. Member Kempf said he would inquire if the attorneys would be willing to talk by phone during the February 13`h meeting. . Chair Smythers opened public comment. Jeff Candace, Teamsters Loca1385, said he currently works for the Teamsters and prior to that he was a law enforcement officer with the City of Daytona Beach. He stated he has been through what they were going through several times, and he would like to correct one thing. He said the Pension Board Attorney was not an advocate for the Union and was not an advocate for the City. They are an advocate for the fund and an advocate for the Board. He cautioned to not go with the least expensive attorney. He said they would want to get the best. He stated he represents over 1,000 law enforcement officers in Central Florida and has seen some really good attorneys. He said he his never heard of Mr. Loper and said he has seen a lot of Mr. Dehner. He stated when inviting these attorneys to come, if they are interested they will be here. He said Mr. Dehner has clients throughout Central Florida. He said most of what they do in the public sector was to compare themselves to other agencies. He declared some officers will leave and go to other agencies simply for better benefits. He said it has been very incumbent on the City and they have done a diligent job in trying to maintain that pace and keep good employees. He said their goal was t~~ keep pace with other surrounding agencies in terms of getting competitive 1•~enefits. He stated Longwood has a decent pension; could it be better, yes. He; said there were, without a doubt, questions that needed to be answered so that all members understand what they're getting. He said this lack of knowledge is helped immeasurably by having a qualified pension specialist attorney to help guide the Board and the members. Pension 01-16-07/11 Matt Jammes, Longwood Police Officer, said there were a couple of things he would like to point out. He said, as a veteran, he would like to see an attorney step forward to draft the language so he can have the option to purchase his military time. He stated others have questions about the 2.5, and the attorney looking out for their best interest was what the members were asking for. He said he agrees that you get what you pay for. He said he has read Chapters 175 and 185 of the Florida Statutes and realizes the authority the Board has and sitting on the Board was a large obligation. He thanked the Trustees for their time. 4. Adjournment. Chair Smythers adjourned the meeting at 8:23 p.m. i Jack Smythers, air ATTEST: Linda F. Goff, Record Secretary Pension 01-16-07/12