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FMTF04-15-08BOARD 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 Apri115, 2008 Present: Marc McLarnon, Chair Matthew Jammes, Secretary Shane Smith, Member Jack Smythers, Member H. Lee Dehner, Board Attorney Paul Shamoun, Florida League of Cities Linda F. Goff, Recording Secretary Absent: Robert Redditt, Vice Chair 7:00 p.m. 1. Call to Order. Chair McLarnon called the meeting to order at 7:10 p.m. and was followed by the Pledge of Allegiance. 2. Approval of Minutes January 15, 2008 Regular Meeting Member Smythers moved to approve the minutes of January 15, 2008 as presented. Seconded by Secretary Jammes and carried by a unanimous voice vote with Vice Chair Redditt absent. 3. Appointment of 5th Trustee Member Smythers moved to appoint Marc McLarnon as the 5th Trustee. Seconded by Secretary Jammes and carried by a unanimous voice vote with Vice Chair Redditt absent. Mr. Dehner advised the Board should certify the election results of Firefighter Shane Smith. The Recording Secretary advised that Mr. Smith was the only nominee. Chair McLarnon moved to accept the nomination by acclamation of Firefighter Shane Smith. Seconded by Member Smythers and carried by a unanimous voice vote with Vice Chair Redditt absent. Peusiou 04-15-08/1 4. Review of Agenda Packet Material ~` A. Plan Account Statements The Plan Account Statements for November and December 2007 were reviewed. B. Investment Performance Review The Investment Performance Review ending December 31, 2007 was reviewed. Mr. Shamoun advised the statements for the March quarter end should be done by the end of the week and the Performance Review will be available in three to four weeks. He reported that for March they were basically almost even. He said the conservative nature of the portfolio has really helped. He stated the return for the Bond Fund was a 10.75 positive return for the end of February. He said this would help mitigate the losses on the equities seen in the last quarter. 5. Other Business A. Review of Operating Rules and Procedures Mr. Dehner said the revised draft document before the Board incorporates items from Ordinance No. 04-1687. He stated the only other item that needs to be addressed was with respect to election procedures. He asked the Recording Secretary to provide documents reflecting the procedure that has been followed for elections. He said he would incorporate this procedure in the document and it will be ready for approval. Member Smythers inquired if there were other Boards that would subscribe to the same ordinances and procedures. Mr. Dehner said the Rules and Procedures followed by other Boards are generally the same, but they are also unique to each individual Board. He stated there were some provisions in the Ordinance that were unique to this Board. He advised the Ordinance provides for the Election of Officers to be done every year. Also, there is a provision in the Ordinance with respect for Special Meetings to have seventy-two (72) hours notice, which is a little more notice than required by State Law. He advised that Rule 14 in this document, Claims Procedures, was in place if the Board was required to sit in a quasi- judicial capacity to determine entitlement to a Pension Benefit or a Disability Benefit. He said the quarterly meetings were administrative functions of the Fund. He stated they would legally have the responsibility at times to sit as a quasi judicial body and there were certain legal requirements to comply with. -- One of these requirements is to provide procedural due-process to the claimant. This simply means having the rules in writing and following them. Pension 04-15-08/2 Chair McLarnon inquired if any Plan Members were ready for retirement. Secretary Jammes said there was one member from Police that left last year and had reached the 10 years of service, but has 11 years before attaining the age of 50. Another member is over age 50 with 9 years of service and he plans to stay a few more years. He stated Detective Bruce has 11 years of service. Chair McLarnon inquired if this document would give these individuals the format to follow when applying for their retirement or was it just the guidelines of the Plan. Mr. Definer stated these were the guidelines for the Plan. Mr. Shamoun said the Florida League of Cities provided all of the forms to be utilized for retirement or to obtain their money. He stated that by the time someone in this Plan retires, their new software system will be up and running. He explained how the system would work and that it would recognize someone who has a termination date. They will then mail the appropriate paperwork to that individual. He said the Board would receive a packet with everything necessary to approve the start of the retirement payment. Mr. Definer said with disability he would ask that their forms be utilized. He stated all they would need to do would be to submit the disability application form with the attached physician statement and they would take care of the remainder. Mr. Shamoun said most of the Boards had a policy where they give the Chair the authority to sign off on this so the retiree is not delayed in receiving their payments. The Board would ratify the decision at their next meeting. Secretary Jammes inquired if the Plan Member would have all of his plans done before the day he leaves. Mr. Shamoun advised they could not do a calculation prior to the last payroll. He said they could do a calculation for the individual. However, at this time there would be a fee for this since they have to go to the actuary. He stated that part of the new system will do calculations. Mr. Definer recommended that the Board pay for two calculations to be done for Plan Members; one as an estimated calculation, and then the final calculation. Mr. Shamoun said they will receive an estimated statement each year. Chair McLarnon said he wants to make it clear for the Board, and what they are to do, but also for the Plan Members so they know what to expect. Pension 04-15-08/3 Mr. Dehner inquired who the Plan Member would contact locally in order to receive the information from Mr. Shamoun. Mr. Shamoun said he would like for the Plan Member to directly contact the Plan Administrator without going through someone from the City. 6. Board Attorney Report Mr. Dehner reminded the Board members that their Financial Disclosure Forms should be filed prior to July 1St, and he recommended they should have proof of filing. He said a new Trustee should file within thirty days of taking office. He explained that a Trustee leaving the Board will need to file a Form 1 that will be for the last calendar year and also a Form 1 and a Final Disclosure for the period of time from January 1, 2008 to the date they step down. Mr. Dehner gave a Legislative update. He said a Bill moving through the House that could have an impact on the Plan was House Bill 171 and there is a companion Senate Bill. Primarily if these pass, they would allow the Trustee terms to be increased from two to four years. They would allow an increase of investments in foreign securities up to 20% with the current maximum being 10%. They would allow making a direct transfer of money from the Pension Plan to an insurance company which would enable a retiree with either a normal or -~ disability retirement benefit, to take advantage of the $3,000 Federal Tax exclusion for health insurance or long term care insurance premiums. He advised that currently the only retirees that can take advantage of this benefit are those who take insurance through the City. Also, on the Federal side there is a proposal for an amendment to the Pension Protection Act which would eliminate the requirement of this benefit as a direct transfer from the Fund to an insurance company. He stated Session was set to adjourn May 2nd and they will know by the next meeting what has passed. He advised a Bill returned this year for the fourth time where; if a Police Officer or Firefighter should sustain a catastrophic injury in the line of duty, and as a result of a felonious act, they would receive the minimum 80% disability benefit. He said they will follow up on these items and report back to the Board at the next meeting. He added that on the $3,000 exclusion, there is a proposal in Washington to extend this to all public employees. 7. Member Comments Secretary Jammes said he has been receiving feedback from Officers that they would like to see some issues taken care of that have been referenced at prior meetings. He stated one of the issues was regarding the vesting language. He said in one area it states the vesting is 5 years and in another area it states 10 years. He stated if in the retirement it states 10 years, they could change that to vested where -~ it references the vesting period in the Summary Description Plan. He said if they could make this change, if there was ever an amendment in the vesting period again, they wouldn't have to change the language. Peusiou 04-15-08/4 Mr. Dehner said the requirement was to review the Summary Plan Description at least every other year. He said he would review this matter and report back. Mr. Shamoun inquired if there was a typographical error in the Summary Description Plan. Secretary Jammes responded in the negative. He said the City has recruited them for the past 10 years with the vesting period being 5 years. He advised when one of the Firefighters just left; he had an issue with the City as to when the vesting period was. He stated they had this discussion previously with Ms. Rogers who made reference to these being housekeeping issues. Mr. Shamoun inquired if the Ordinance itself said 10 years. Secretary Jammes said he was not sure how it was listed in the Ordinance. He stated they needed to make a motion to change it to 5 years and the City has agreed to the fact it was suppose to be 5 years. Mr. Dehner advised it would take another Ordinance to amend the number of years. Secretary Jammes said they had also discussed the difference between DROP versus the PLOP. He stated he sent this information out to all of the Plan Members of the Police Department. He referred to information provided by Mr. Dehner and said the members would also like to see language on the PLOP. Mr. Definer advised the PLOP was a Partial Lump Sum Option. He said for the past 10 years most Plans have. had a DROP provision and now they are interested in a PLOP provision being added. He explained they were amending some Plans to elect taking a Partial Lump Sum in increments between 5% and 20% and this can be overlaid on any of the optional forms. Then the annuity is calculated over the remaining percentage. Chair McLarnon said the DROP was cost neutral to the City and inquired if it was the same for the PLOP. Mr. Definer advised it was an actuarial equivalent basis, so additional funding was required. Mr. Shamoun advised the PLOP also was cost neutral. Chair McLarnon inquired about the housekeeping issues. He asked if this was a housekeeping measure that can just be changed, or would it have to be presented to the Board for approval. Secretary Jammes said he understood that Mr. Definer would draft the language and the Board would have to approve it. Pensiou 04-15-08/5 Mr. Definer explained that the Ordinance would not become a part of the Plan until it was adopted by the City Commission. He said he would not describe this matter as a housekeeping item. He advised the Board will approve whether to make the recommendation to the Commission. Mr. Shamoun said he would assume the actuary was not assuming 5 year vesting when he has done the valuations. He stated housekeeping was not the right term, because there will be a cost associated with moving vesting from 10 years to 5 years in the valuation. Mr. Definer explained the process would be to have the actuary determine cost, and provide a letter of impact or no impact to file with the Ordinance. The Board would then determine whether to make a recommendation for adoption to the City. Secretary Jammes said there have been approximately twenty Police Officers hired being told by Personnel that they are vested at 5 years. He stated this has been one of the major issues at the Police and Fire Departments, in that the Plan states 10 years and they are recruited at being vested at 5 years. Mr. Definer said the Summary Plan Description does say 5 year vesting. He explained the normal retirement date and being vested are two different things. -~ He said the normal retirement date is age 50 with 10 years of service. He stated this was a common misconception at times. Assuming there was an Ordinance amended for 5 years vesting; this does not mean the retirement date is going to change. People think that if they have vesting, that does not mean the retirement date is going to change. He explained the only significance of the number of years required to vest was how many years you have to work before you can terminate and be eligible to draw a benefit in the future. Secretary Jammes asked if he had 9 years of service and left at age 40, when would he claim his retirement. Mr. Definer inquired if they compute years of service. Mr. Shamoun said that was the issue. He stated there was no normal or early retirement that someone with 6 years can comply under the Ordinance. Mr. Definer said if they compute years of service, then it is possible. If it is actual years of service, then this is a problem. Mr. Shamoun said he was fairly sure it was actual years of participation in the Plan. He stated he recalled approximately six months ago having drafted an Ordinance to make that change. He said the Ordinance would reign over any -- differences between the Summary Plan Description and the Ordinance. Secretary Jammes said they need language in place so the Plan Members know Pension 04-15-08/6 when they start receiving benefits. Mr. Shamoun said that technically, if someone comes to them with 9 years of service, they are going to return their money. He advised under what they are authorized to do as the Administrator, they are not vested under the legal document. Chair McLarnon said they need to break out exactly what the Ordinance and the Summary Plan Description state for the next meeting so they can clearly identify where these two documents differ. The next step would be to present something to the Commission. Mr. Delmer said he would review the documents to determine if there are provisions for 5 year vesting. He stated there were different ways to handle this with the retirement at age 50 and 10 years of service. He said one way was to compute the years. Chair McLarnon inquired if this would need to go to the actuary to determine the cost to the City. Mr. Delmer responded in the affirmative. He advised the Ordinance would need to be adopted by the Commission and then submitted to the State as a matter of record. Secretary Jammes inquired if there should be a motion made for Mr. Delmer to draft language for a PLOP Benefit. Mr. Delmer recommended they do all changes at one time. He said the materials he sent explain it well. Secretary Jammes inquired if a Plan Member decides to go into the PLOP and if they continue to accrue percentages for the years they work. Mr. Shamoun explained the PLOP was a choice upon retirement. You either take a 10 year certain payment, or you elect to take some of it in cash and the remainder in a 10 year certain payment. He said it was not an entry. Mr. Delmer said, unlike the DROP, where you elect to go into the DROP and continue to work; the PLOP is not elected until you are ready to retire. He stated another decision to be made is whether they want to offer a combination of the DROP and the PLOP. Secretary Jammes said another question being asked by the Officers was whether the salary included the special assignment pay and overtime pay. Mr. Delmer said he would have to look at the definition of the Plan and the Valuation Report. Pension 04-15-08/7 Member Smith said the Fire Department has some concerns in that the Paramedic incentive was not added in with the retirement. Mr. Dehner said they needed to verify how it is defined in the Ordinances and look at the Valuation Report to see what is being valuated. Mr. Shamoun read the salary definition as defined in the Adoption Agreement for both Police and Fire. Mr. Dehner reiterated they need to see what is being valued. The next step is to determine if the amount being reported matches. He said he would check to see that the valuation was the same as the Ordinance. Mr. Shamoun suggested the Chair write a letter to the City to ask what was included in the salary being reported to the Plan Administrator. He said the Actuary uses the same data as reported in the Annual Report. The Actuary would also use the language from the signed Adoption Agreement. Chair McLarnon suggested Secretary Jammes follow through with the City on this and report back to the Board. He said Secretary Jammes was a Police Officer within the City receiving special assignment and overtime. He could look at his numbers against what was being reported and track this. Mr. Shamoun said they basically want to know, when the calculation is done for their employee contribution, what amount of gross salary is being used. Secretary Jammes said they had received language on the military buyback that Mr. Dehner had previously provided and agreed they should do everything at one time. He asked the Board to read over this information. He stated he would email the documents to Mr. Shamoun for him to send out to the Trustees. He said Plan Members have asked that these items be considered and adopted. He would like to vote on these at the next meeting and send the recommendation to the Commission. 8. Public Participation. None. 9. Adjournment. Chair McLarnon adjourned the meeting a ATTEST: Linda F. Goff, Recordi ecretary Pension 04-15-08/8