FMTF09-19-07 BOARD OF TIRUSTEES
~ Florida Municipal Trust Fund :Retirement Plan and Trust
for the Firefighters and Police Officers
Longwood City Commission Charr?bers
175 West Warren Avenue
Longwood, Florida
REGULAR MEETING
MINUTES
September 19, 2007 7:00 F?.m.
Present: Jack Smythers, Chair
Chris Kempf, Vice Chair
Jeremiah Brown, Secretary
Marc McLarnon, Member
Robert Redditt, Member
H. Lee Dehner, Board Attorney
Linda F. Goff, Recording Secretary
1. Call to Order. Chair Smythers called the meeting to order at 7:02 p. m.
2. Approval of Minutes June 19, 200'1 Regular Meeting
~ Member Redditt moved to approve the minutes as presented. Seconded by
Vice Chair Kempf and carried bey a unanimous voice vote.
3. Review of Agenda Packet Maternal
Vice Chair Kempf said he had been recE;wing a lot of questions from Firefighters
that are over his head. He would like to ask the Board for permission to make
three telephone calls per quarter to Mr. l~ehner.
Chair Smythers asked Vice Chair Kempf what the length of these telephone calls
would be. .
Vice Chair Kempf said for the most parr: they would be 10 minutes, but should not
be more than half an hour.
Member Redditt asked if he would have plan members present so all questions
could be answered.
Vice Chair Kempf responded in the affirmative. He inquired if the Board desired
to put a time limit on the calls.
Chair Smythers said he did not think there was a need for a time limit as long as it
was used judiciously at this point.
Vice Chair Kempf moved that th.e members of the Board have the
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opportunity to call Counsel .briefly at times during the quarter for specific
questions with possible plan members participating. Seconded by
Secretary Brown.
Mr. Dehner advised they needed to make sure, for purposes of the Sunshine Law,
that there was not another Trustee among the group of people. He said anytime
there was more than one Trustee together and communicating about pension
business, it needed to be at a noticed meeting with minutes being kept. He also
cautioned to be careful not to communicate through a third party between two
Trustees.
Motion carried by a unanimous voice vote.
Member McCarron said in reading through the minutes he noted it had been
previously discussed regarding the buyback availability for military time. He
inquired if there had been any additional. inquiry into the benefit, He stated the
benefit seemed very positive, if it is cost. neutral for the City, for the Firefighters
and Police Officers who have military service.
Vice Chair Kempf inquired about. airtime buyback.
Mr. Dehner advised airtime came with the Pension Protection Act by Federal
Legislation signed into law in August of'last year. He explained, as a matter of
~ State Law, Chapters 175 and 185 restricts from buying airtime. He said
alternatively they could allow a purchasf: of a higher benefit rate in the plan that
would have the same effect. IIe stated the actuary may have a problem with this
as it could cause an administrative probl~sm. He said for plans where certain
members desired to make more contribuitions for higher benefits, they could
create tiers for contribution rates. He stated most of the municipal plans in the
State have buyback provisions for military and prior police or fire service. He
recommended if they were interested in Looking at this further that he draft
examples of provisions to review.
Chair Smythers said he was not familiar with buyback and he would like to see
some examples.
Vice Chair Kempf said there was a Firefighter that had four years in the Marine
Corps. He inquired if he would be availaible for military buyback.
Mi•. Dehner responded in the affirmative. He said the military buyback was for
military service prior to initial employment. He stated they could go up to five
years on this and the cost would be an actuary calculated amount with the
individual paying the full value. He advi;;ed there were three things that credited
service can count for in this plan: vesting credit, eligibility for retirement or
benefit calculation. Generally you would not count military time for vesting since
it was not time served with the City. He ;aid most plans that have the provision
~ for buybacks give the members an opportunity to make multiple requests for the
buyback during their period of service to the City. He stated typically no more
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than five years total is allowed between combination of military and service with
another agency and this would not count: for vesting purposes.
Member McLarnon inquired if this was effectively cost neutral to the City.
Mr. Dehner responded in the affirmative.
Mr. Dehner said he was reviewing the valuation report acid noticed the City did
not have any retirees with this plan.
Chair Smythers responded in the affirmative.
A. Plan Account Statements
The Plan Account Statements for M~~y, June and July 2007 were reviewed.
B. Investment Performance Review
The Investment Performance Review ending June 30, 2007 was reviewed.
4. Other Business
A. Schedule of Meetings -Not discussed.
5. Board Attorney Report
Mr. Dehner advised he had given most of his comments in previous discussion.
He said he had not received the Summary Plan Description and requested the
Recording Secretary to check with Ms. P:ogers regarding this document.
Mr. Dehner distributed a draft of Rules and Procedures pursuant to discussion
from the last meeting. He said these could be discussed and amended to exactly
what the Board would like.
Member McLarnon inquired if these were the Rules and Procedures for claims.
Mr. Dehner advised claims procedures were included as a part of the Rules and
Procedures. He said he spoke to Patricia Shoemaker earlier today, and she wanted
him to encourage the Board of Trustees to attend the conference in St. Petersburg
in October. She will be discussing the importance of Rules and Procedures at this
conference. He stated a lot of people think Rules and Procedures were optional,
but they were not. He .said there was a lot: not covered in the Statutes and the
Statutes often refer to rules and regulations. He advised the claims procedures
were legally required. He said should the Board need to adjudicate entitlement to
a disability claim, or if someone has a question about their benefits not being
correct, the Board makes that determination. He advised when doing so they sit as
~ aquasi-judicial body and must follow thE: procedural due ,process.
Member McLarnon said they discussed tlae Deferred Retv-ement Option Plan
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(DROP) at the last meeting and inquiredi if this was a lump sum payment from the
State to the retiree.
Mr. Delmer explained the DROP was n~~t from the State. He said there was a
provision in the plan where the members can accumulate money through the
excess State monies, whereupon normal. retirement they could receive a lump
sum. He said there were two other mecl•~anisms to accomplish when one retires in
addition to the monthly annuity payment where they receive a lump sum payment.
He stated the DROP has been the most popular over the last 10-12 years. At early
or normal retirement age you can choose to go into the DROP and the
contributions will go into the DROP acc;ount. He said DROP is normally for five
years. He advised the Partial Lump Sun: Option (PESO) was another optional .
form of benefit. He said he would provide some draft language if the Board was
interested in this program.
Vice Chair Kempf said he would like to see members receive the lump sum that
was now provided .for at the time they g~~ into the DROP.
Mr. Delmer said they would not be able to receive a lump sum while still
working, but they may be able to provide this as a credit into the DROP account.
Vice Chair Kempf said a number of the :Firefighters have expressed an interest in
this program.
Mr. Delmer inquired to the date of the last Summary Plan Description. He said
these were to be done every other year.1:3e explained the DROP had no additional
funding requirements. The PESO was done on an actuarial equivalent basis. The
military buyback was paid by the individual buying back, so there was no
additional cost to the City. He explained the value was calculated based on the
benefit rate and provisions of the plan at the time the buyback was done.
Vice Chair Kempf inquired if Mr. Dehnc;r would also provide information on a
COLA.
Mr. Delmer recommended they ask the actuary through the Florida :League of
Cities to do some cost studies of what various COLA's would cost.
Vice Chair Kempf said they did a cost study on it before and it almost equated to
the amount of the State funding. He stated people were concerned with the way
the fund keeps decreasing.
Chair Smythers said the investments were very conservative. He said the target
divisions were very close.
Member Redditt said the market has been down and it would come back.
~ Vice Chair Kempf said there had been nc? line item accountability for which funds
were doing poor or which were doing well. He inquired if they could look at
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getting another fund manager.
Member McLarnon said they should be ;reviewing the fund manager every three
years.
Mr. Dehner said if there was a concern about how the fund performance compares
to other funds, they may want to consider hiring an investment consultant to do a
one time evaluation. He stated the Boarcl could direct him to do RFP's and send
them out to consultants who provide sen~ices to municipalities in Florida for a one
time review.
Member McLarnon said it was already iii the package stating they should have it
independently reviewed.
Secretary Brown said the Florida Statutes state there should be an independent
review.
Chair Smythers said perhaps they should. have someone from the Florida League
of Cities attend the meetings on a quarterly basis to provide some specifics.
Member McLarnon said. since the Florid,. League of Cities was taking the funds
and investing the funds as a group, then 1:hey should have the money manager
provide a more accurate report. He inquired if they knew what the forward cash
requirement was in order to meet the anticipated retirees.
Vice Chair Kempf responded in the negative. He said he would make a motion to
hire a consultant.
Mr. Dehner recommended doing a written request for a proposal and send it out to
the firms. He said they would send writtf;n responses for the Board to review. He
recommended making a short list from triis and interviewing up to three
consultants to determine who they would. like to use.
Member McLarnon inquired if this would be paid by the City or by the fund.
Mr. Dehner advised it would be paid by the fund.
Mr. Redditt inquired approximately what. this would cost.
Mr. Dehner estimated approximately $3,000 to $5,000 for this size fund.
Vice Chair Kempf moved to have: an RFP made for a fund analyst for a
one time analysis in order to give some direction in the performance of the
fund. Seconded by Secretary Bro~Nn and .carried by a unanimous voice
vote.
Member McLarnon asked Mr. Dehner who he would recommend perform an
analysis of the cash requirements based on retirement.
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~ Mr. Dehner advised it would be the actuary. He said it would be an actuarial
assumption.
6. Member Comments
Member McLarnon inquired about liability insurance for the Trustees.
Chair Smythers advised they had coverage.
Mr. Dehner requested a copy of the policy. He advised the protection as Trustees
was provided by obtaining a waiver of recourse endorsement. He said the
premium for the waiver of recourse endorsement should be paid by a separate
City check. He said this was a technical distinction, but an important one.
Discussion was held regarding State funds and how they can be distributed.
Secretary Brown said one question that arose at the last meeting, and was briefly
discussed, was in regards to the 99-1 Legislation. He said their plan had a total
fund amount of about $1 million in 199~~. He stated the entire fund was placed in
what they call the City Reserve and it seemed that the fund for normal retirement
and supplemental benefit was started from zero. He said the City was claiming
they could use all of this if the State fun~js fall short. He inquired if 99-1 was
meant to allow them to take the entire fund for this reason.
Mr. Dehner said under the 99-1 Legislation the provision. was that you start with
the amount received in the base year, which was 1997. Excess amounts over and
above this amount that came in after the effective date of the Legislation, .March
12, 1999, could only be used for benefit improvements or to fund into a
supplemental vehicle such as the City's. He stated the monies that came in prior
to the base amount could continue to be used for reduced City contributions. He
said the actuary could inform the Board .how this was handled here.
Secretary Brown said Ms. Rogers reviev~~ed the documentation she had with him
and one other person from the Police Department. He stated the fund had a total
of approximately $1 million. He stated now when you break down the
contributions it shows that since the Legislation the City has contributed only
$389,000, but their portion of the fund is $1.9 million.
Mr. Dehner said amounts over that base :year amount should not reduce the City
contribution; it should go to the share aa;ount. He advised the October
contribution for the Fire supplemental distribution was $82,598.04.
Chair Smythers inquired what this amount represented.
Mr. Dehner said this was a rebate of the iinsurance premium tax money. He
affirmed for Fire it was 1.8% of the premiiums paid for property insurance by
residents of Longwood and for Police it `vas 0.85% of casualty insurance paid by
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the residents. He explained that the Poli<:e receive the entire amount collected for
the tax paid to the fund. The Firefighter; have a cap on the amount they can
receive of an amount equal to 6% of payroll or one-half of the net amounts of
distribution, whichever is greater. He stated five years ago they began to do a
supplemental distribution of monies over the amount back to the Pension Funds.
7. Public Participation
Matte Jammes, Longwood Police Officer, said he previously had been the one to
ask about the 99-1 money. He asked Mr. Dehner to go over this again.
Mr. Dehner said the question was how much could continue to go to City
contributions and how much had to be se;t aside for benefit improvements. He
explained the base share amount was the: amount being received in 1997 and from
that amount you measure increases. He s~,tated when increases over that amount
were received; those need to go for benefit improvements or funding the share
account.
Mr. Jammes said his question was in regards to the money that was in the Defined
Account and where it was directed to have gone according to State Statute: He
asked if it was all allowed to be transferred to the City Reserve, or was it suppose
to stay in the Defined with any excess to go into the overflow; i.e. the D.R. A.G.O.
option.
Mr. Dehner said it was to provide benefit enhancements to the plan beyond those
that were in effect on Mareh 12, 1999, which is the date 99-1 was signed into law.
Mr. Jammes asked Mr. Dehner if he would say the City Reserve was designed to
increase benefits.
Mr. Dehner said he would need to review this information since he has not seers
the numbers. He stated this was something the actuary was supposed to be
keeping track of.
Mr. Jammes said he had concerns about ~~VIr-. Shamoun in that he continues to say
he is looking out for them. He said when asking direct questions about 99-1 and
how this money was split, everyone refers back to it being all under one fund. F[e
stated if it was all under one fund, do away with the City Reserve and put it into
the fund. He said no one could answer his question, so obviously there was a
problem. He asked who should be looking into this matter. He said he would
request that someone from the Board ask those questions.
Mr. Dehner said they could ask the actuary to provide a schedule going back to
1997 showing exactly what happened to the money and how much went to the
Reserve and how much went to their account.
Secretary Brown said they had the contribution history back to the beginning of
the Plan which was where they came up with their numbers.
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~ Mr. Dehner recommended they ask the actuary to prepare a schedule going back.
to 1.997 and bring it forward.
Mr. Jammes asked if he was correct in ~issuming since the City Reserve was not
used to enhance benefits for the members, then the State money should not go
into the City Reserve account.
1NIr.:Dehner asked for an explanation of'the City Reserve; account.
Mr. Jammes said when the actuary did ~i study, Mr. Shamoun said this was the
best funded plan he has ever seen. He said his point was, if it was funded well
from the State, and they have never had a shortfall, the City has never had to
make a contribution into the Defined Account.
Mr. Dehner said the excess State money should be going into the Defined
Retirement Accumulation Group Oblig~~tion fund which is the Shared Account.
Mr. Jammes said the City established in 1999 what they refer to as the City
Reserve and this was their "rainy day fund" and their contributions do not go into
the Defined account, nor do they go into the Shared Account. He stated it goes
into the City Reserve because they have never had a shortfall.
~ Mr. Dehner said there was an actuarial technique where reserve accounts can be
established. He stated it sounds like this may be what the City Reserve was. He
said it should not be funded with excess State money.
Secretary Brown said in 1999 they took the entire account and made it into the
City Reserve and established it based on the entire pension fund and then started
to go forward with the excess money in the D.R. A. G.O. option.
Mr. Dehner said those amounts may be ~imounts that were not excess amounts
under the new Legislation. They may be amounts from prior years and then they
were entitled to equal amounts, not the excess amounts, but equal amounts, to the
benefit of that in future years. The restriction is that excess amounts cannot go
anywhere other than the Shared Account. He said the Reserve Account was
something the City does in consultation ~Nith the actuary. He advised the Board
should be aware of this and under the St~itute when an evaluation was done the
Board has a responsibility to approve it.:Following Board approval, it is then filed
with the State. He said since there are so many questions he would recommend
having the actuary come and make a pre~centation of the 2007 valuation report.
Mr. Jammes inquired if the City was mandated to keep all of the financial records
for the Pension.
Mr. Dehner responded in the affirmative.
Mr. Jammes said when he has gone to the, office with a member from the Board
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they have not been able to produce these records.
Mr.:Dehner said the actuary would have: to have all of the data to do the valuation
reports and should have the information..
Member 1V1cLarnon suggested Mr. Jamrnes put his questions in writing to the
Board so they can contact the actuary and have him put together the information.
This would provide an opportunity to get answers.
8. Adjournment. Chair Smythers adjourned the meeting at 8:27 p.m.
L~~~y1~ Vr?~
Jack Smyther ,Chair
ATTEST:
Y.inda F. Goff, Recording etary
09-19-07/9