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Pension07-17-12Min 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 July 17, 2012 7:00 p.m. Present: Robert Redditt, Chair Peter Katauskas, Vice Chair Derek Chenoweth, Member Marc McLarnon, Member Lee Delmer, Board Attorney Jon Williams, City Administrator Pamela Barclay, Director of Financial Services Sarah M. Mirus, Recording Secretary Absent: Chris Kempf, Secretary 1. Call to Order. Chair Redditt called the meeting to order at 7:05 P.M. 2. Pledge of Allegiance. Chair Redditt led in the Pledge of Allegiance. 3. Approval of Minutes: January 17, 2012 Regular Meeting and April 17, 2012 Regular Meeting. Vice Chair Katauskas moved to accept the Minutes as presented. Seconded by Member McLarnon and carried by a unanimous roll call vote with Secretary Kempf absent. 4. Review of Agenda Packet Material. A. Plan Account Statements (March 2012, April 2012, May 2012, Preliminary Draft for April 1, 2012 to June 30, 2012). The Plan Account Statements for March 2012, April 2012, May 2012 and the Preliminary Draft for April 1, 2012 to June 30, 2012 were reviewed by the Board. Chair Redditt noted that the Plan Account Statement for March 1, 2012 to March 31, 2012 had a Beginning Balance of $8,050,680.80, the Contributions were $18,327.74, the Earnings were $99,598.08, the Distributions were $0, the Fees and Expenses were $0, Other was $0 and the Ending Balance was $8,168,606.62. He noted that the Plan Account Pension 07 -17 -12%1 Statement for April 1, 2012 to April 30, 2012 had a Beginning Balance of $8,168,606.62, the Contributions were $16,618.94, the Earnings were $24,677.15, the Distributions were $0, the Fees and Expenses were ($10,254.38), Other was $0 and the Ending Balance was $8,199,648.33. He noted that the Plan Account Statement for May 1, 2012 to May 31, 2012 had a Beginning Balance of $8,199,648.33, the Contributions were $16,974.95, the Earnings /(Losses) were ($297,917.30), the Distributions were ($1,399.84), the Fees and Expenses were ($1,949.62), Other was $0 and the Ending Balance was $7,91.5,356.52. Member McLarnon said Participant Bert Roberts had a distribution of ($1,399.84) and inquired if he had left the City. Mr. Williams stated Participant Roberts had retired. Member McLarnon inquired if the distribution was a one (1) time distribution or if this was going to be an ongoing distribution. Mr. Williams said according to the detail that was provided with the Account Statements, it looks like it was a lump sum detail. Member McLarnon moved to plan account statements as presented and to exclude the Preliminary Draft dated April 1, 2012 to June 30, 2012. Seconded by Vice Chair Katauskas and carried by a unanimous roll call vote with Secretary Kempf absent. B. Quarterly Performance Review (January 1, 2012 to March 31, 2012). The Board reviewed the Quarterly Performance for the period ending in March 31, 2012. C. Invoices. a. Christiansen & Dehner, P.A. (June 2012) Chair Redditt stated there was a statement in the amount of $408.40 and there was a previous balance of $171.80. He inquired if they failed to pay that at the last Meeting. Mr. Williams said he would have to go back and look at the record. He said he submitted all the invoices and will have to process those payments. Vice Chair Katauskas moved to approve payment of $408.40 to Christiansen & Dehner, P.A. Seconded by Member McLarnon and carried by a unanimous roll call vote with Secretary Kempf absent. Pension 07 -17 -12/2 D. Declaration of Returns. Chair Redditt stated there was a letter in their packet dated July 18, 2012 to Mr. Douglas Beckendorf, an Actuary from the Bureau of Local Retirement Systems in Tallahassee, Florida. Mr. Williams said it was a letter Ms. Mirus prepared on behalf of Secretary Kempf. He said there was an annual Declaration of Returns that Attorney Scott Christiansen had brought to their attention during the last quarterly Meeting and the Item was withheld until this Meeting, pending the results of the Actuarial Evaluation. He said the City has since received a copy of the Actuarial Evaluation and the Declaration or Assumption of Returns that was contained within the Evaluation was 7.5 %. Attorney Dehner stated the Statutory requirement was that with the receipt of each evaluation report, the Board had to make a determination about the total expected annual rate of return.for three (3) time periods, current year, the next several years and long term thereafter. He said most folks think that was a ridiculous requirement, nonetheless, that was a Statutory requirement, so the Board by motion needed to make a finding in which they anticipate the total expected annual rate of return will be for those three (3) time periods. He said that, in turn, needed to be provided in correspondence to the Division, and that was what that refers to. Vice Chair Katauskas noted this was discussed at each of the previous meetings. He noted at the January and April Meetings it was discussed and if they look at the Minutes of the January Meeting, on page three (3) of the Minutes, part of Mr. Paul Shamoun's with the Florida League of Cities (FLC) discussion was in respect to this rate. He said this was what they decided. Attorney Definer said the action now will not be the assumed rate, but what they actually expect, and generally, it would be the assumed rate. He said the reason for the statutory requirement was to develop an appreciation on the Boards part of the relationship between what they were actually expecting and what their Actuary was assuming. Mr. Williams said in anticipation of this discussion, he reached out to Ms. Stephanie Forbes, who was a Financial Analyst with the FLC, confirming what the FLC's position was with the Declaration of Returns, and her response was, it was still 7.5% which was consistent with the Evaluation. Attorney Definer stated the appropriate action would be a motion by the Board to determine that the total expected annual return for the current year, the next several years and long term thereafter will be 7.5 %. Pension 07 -17 -12/3 Member McLamon moved to support the statement by returning. Seconded by Member Chenoweth and carried by a unanimous roll call vote with Secretary Kempf absent. Attorney Dehner pointed out the correspondence would need to go to the Division, with a copy to the City and a copy to the Actuary with the FLC. 5. Other Business. A. Review and discuss the proposed Addendum to the Operating Rules and Procedures of the Board of Trustees for the City of Longwood Police Officers' and Firefighters' Pension Trust Fund. Chair Redditt said this was an Addendum to their document, which essentially increases the amount of bills from $250 to $5,000, if approved by the City's Finance Director. Attorney Dehner responded in the affirmative. He said this was actually an Amendment to their Operating Rules and Procedures on payments from the fund, with respect to bills that were received that can be paid without prior Board approval. He said previously, the limit was $250, and the Board asked that they prepare an Amendment to that to state that if it was approved by the City's Finance Director, up to $5,000 could be paid in the interim without prior Board approval. He said the other expenses to be paid without prior Board approval were the statements received for services pursuant to contracts with their consultants, which was the way it has always been. He said the change was just to increase the authorization for $250 to $5,000 if approved by the City's Finance Director. He noted that even though they were paid, it would have to be approved by the Board after, even though they had already been paid. He said it would come to the Board subsequently for ratification. Member McLarnon moved to accept the Amendment to Section 5.2 on the Expense Payments from the Fund. Seconded by Vice Chair Katauskas and carried by a unanimous roll call vote with Secretary Kempf absent. B. Determine whether the Pension Board wants to conduct the Probable Cause Hearing for former Police Officer John Zeh on October 16, 2012 as currently scheduled or grant Mr. Zeh's request to delay the proceedings until his release in September 2013. Attorney Delmer said one (1) of the requirements of the Board in adjudicating these quasi-judicial matters was that they afford judicial process to a claim. He said part of that would include his ability to address the Board and appear. He said it was his understanding he cannot be released to appear 'for this purpose. He stated he asked for the extension for that reason,, and also, he had informed them there were Pension 07 -17 -12/4 certain documents he had not received yet and been able to review. He stated there would be no detriment to the fund in granting his request for the extension, and it would potentially take away an argument that they did not give him due process. He said his recommendation would be to grant his request and have the proceeding at that time. He said Attorney Christiansen reviewed the procedure with them. He said unlike disability adjudications where they operate under the Board's rules, in forfeiture proceedings they operate under Chapter 120 of the Florida Statutes, which was the Administrative Procedures Act. He said specifically, under Chapter 112 through 173 under forfeiture provisions, the first step was for the Attorneys for the Board to review the information to determine whether there would be any legal basis for the Board to determine there should be reason to believe there should be a hearing convened. He stated Attorney Scott Christiansen had done that, and they were at the step where now they come before them with the October date that they previously discussed. He said their first determination would be whether or not they would find reason to believe that they should convene a hearing to determine whether there should be forfeiture. He said if they grant his request, it would simply postpone that initial hearing to a time when he was able to be present. He said he has over six (6) years of service, and his contributions in the Plan were apparently greater than what he was being paid. He said even if there was forfeiture, he was entitled under the Statute to his contributions back, so there was no potential for a financial loss to the fiind. He said where they would have that concern would be if they had someone retire and were receiving their payments and it gets to the point where their payments exceed their contributions, then they could be in a position where they have to recover their money back, but that would not be the situation with Mr. John Zeh. Member McLarnon asked what was the position on the forfeiture as a result of actions taken, and asked if that was spelled out why there would be a forfeiture versus a distribution. Attorney Dehner said that was actually what would need to be determined. He said they have informed Mr. Zeh that he has the opportunity to withdraw his contributions from the Plan, if he chose to do that, then there would not be a forfeiture proceeding because if he forfeited his own benefit, he would be entitled to contributions back. He said to date, he had not chosen to do that, and ultimately, the Board would determine whether or not pursuant to the Statute, the requirements for forfeiture were met or not. He said when they get to that point, if they determine that essentially the probable cause hearing when they have the reading to determine whether there was reason to believe there should be a forfeiture hearing. From that point they could proceed in one (1) of two (2) ways. He said they have done it in both ways and it will be up to them. He said they, as a Board, can sit as the hearing officer, and they would act pursuant to the rules in Chapter 120 under the Administrative Procedures Act in Pension 07 -17 -12/5 conducting that, or they could contract with the Division of Administrative Hearings with an administrative law judge to be appointed to conduct the hearing, and ultimately, the judge would issue recommended order findings and conclusions of law to the Board, from which they make the final order of forfeiture, or not. He said that was a decision they can make at a later time. Chair Redditt asked to confirm even if he forfeits the pension, he gets his contributions back. Attorney Dehner responded in the affirmative without interest. Chair Redditt said he gets back what he put in. Attorney Delmer stated if he forfeits, he would still get his contributions back. He said if he forfeits that would be his only entitlement because he was vested in six (6) years of a benefit that he would be eligible to receive when he met the age and service requirements. He said if he prevailed in the forfeiture, he would be entitled to more than just the contributions. Chair Redditt said it seems it would be prudent to wait and give him the opportunity to be here, and to protect themselves by giving him every option so he cannot come back and say they did not give me a chance to even show up. Discussion was held regarding some documents Mr. Zeh had requested and he had not received them. Member McLarnon asked if Mr. Zeh was representing himself and communicating with them, or does he have counsel that was acting as a liaison. Attorney Dehner said to his knowledge, he did not have an attorney at this point, and there has not been much communication. Discussion ensued regarding, the records that Mr. Zeh had requested. Attorney Dehner said he ultimately would be entitled to whatever documents were going to be before the Board. He said his recommendation that grant his request was that he could not be here physically. Member McLarnon said he wanted to make sure that the Board understands all the implications that come with having this hearing, and whether or not they need to review the Internal Affairs documents, or whether they rely solely on the Attorney to give them guidance as to if they need to do this or that. He said he does not want to get caught not Pension 07 -17 -12/6 having an answer for a question. Attorney Delmer said when they determine when to have the meeting for them to determine whether or not there was reason to believe there should be a hearing. He stated all the documents they have and that they will need, will be before you. Vice Chair Katauskas said last April, when they discussed this fairly extensively, it was documented in the Minutes on page seven (7). He said at that time, Attorney Christiansen had made them aware that he had written and asked for a delay. He stated Attorney Christiansen did not see any reason to delay the decision until that point, because he did not have a problem with waiting until conviction was final. He said the problem with conviction was he does have the right to appeal. He asked if Mr. Zeh has made an appeal and the attorney answered he did not know. He had asked about a Statute of Limitations beyond which he would not be able to make an appeal, and Attorney Christiansen said there probably was a time limit for an appeal. Attorney Delmer said he did not know if he had filed for one. He said one (1) of two (2) things coupled with commission of one (1) of the offenses could result in a forfeiture of his pension benefit. He said one (1) would be if there was a conviction, which was broadly defined for this purpose or an admission of the commission of the act and a termination as a result, which will all come before them when and if they have the hearing. Vice Chair Katauskas said he has been convicted and was serving his sentence, but it was not considered absolute final because he does have the right of appeal. He asked if that was a correct interpretation of the law in its simplest form. Attorney Dehner responded in the affirmative. He said even if it would end up with the conviction being reversed, they could still need to look at the issue of whether under what occurred, there was an admission in the termination as a result of the admission. Vice Chair Katauskas said even if his conviction was overturned, they would still have this decision based on his behavior as to whether or not benefits would be forthcoming. Attorney Dehner said based on his behavior and based on whether or not he admitted it in some fashion, it was terminated from his position as a result. He said Mr. Zeh did say on April 2, 2012, he did receive correspondence notifying him of the probable cause hearing with respect of the forfeiture, and he said also enclosed were the documents to be utilized by the Pension Board to make the determination. He said he acknowledged he received documents and indicated he did not have Pension 07 -17 -12/7 adequate time to go through everything. He said his concern was under due process, and his opportunity to be physically present to address the Board. Mr. Williams said for clarification, it was not a matter of having all the documents, it was more a matter of not having the time. Attorney Definer stated he had everything they had at that time. Chair Redditt asked what if he was released early. Attorney Definer said the phase date to be determined should be included in the motion. Member McLarnon moved to postpone the October proposed date until a hearing date to be determined in the future. Seconded by Vice Chair Katauskas and carried by a unanimous roll call vote with Secretary Kempf absent. 6. Board Attorney Report. Attorney Dehner said he had some updates. He said during the last Legislative Session, no legislation was passed to hurt them. He said the next Session will be in March and April. He said they did have two (2) bills signed by the Governor, which became effective July 1 which impact the administration of the Plan. He said the (1) one was with respect to confidential information was exempt from public records for Police Officers: He said the confidentiality provision currently protects Police Officers' home addresses, social security numbers, children day care centers, schools, etc. He said they added to that list of confidential information, which if somebody makes a public records request was redacted, was birthdates. He said with respect to Beneficiary designations in a situation where a married individual designates his or her spouse as their designated Beneficiary, the law had been in that situation if there was a subsequent divorce and the Beneficiary designation had not been changed to another Beneficiary, then the ex- spouse would be entitled to the pension benefit. He said that has been the position in the State of Florida, as well as other states, of long standing. He said essentially, this Statute would void a designation to an ex- spouse in the event of a divorce. He said he thinks it was very likely this could be found unconstitutional for impairment of contract rights, which in most cases, was unconstitutional. He said it may or may not be challenged and may or may not occur, but the way to avoid the whole problem was to encourage their members, just as they say on the front page of each of the summary plan descriptions, that what they need to do was keep their Beneficiary designations current. He said they have to get this advice to their plan members because it a problem that occurs fairly frequently where they have an ex- spouse that was still on the pension as Beneficiary designation, and the member will change the will and life insurance Beneficiary designation, everything but the pension plan. He said they have had situations Pension 07 -17 -12/8 where they have had Board hearings where they have had the ex- spouse come in. and claim they are the designated Beneficiary and they are entitled, which has been the correct position. He said then they have a current wife that was there arguing with an attorney on principals of intent that apply to wills and trusts that do not apply to pension plan administration, because of the impediment to efficient administration of the pension plan. He said the least desirable thing a Board has to do was adjudicate disabilities. He said it was the most unpleasant thing. He said, now he thinks it was the second least desirable thing because when they have been there with an ex- spouse and a spouse that was the most undesirable thing, so the way to avoid the whole situation again was to remind their members to have a current Beneficiary designation. Member McLarnon said that was also true in the military as well because he knows of an exact situation just like this where the designated Beneficiary got it all, and the twenty (20) year second wife was out in the cold and there were no hearings. Attorney Dehner said it has been very clear until now, because this has muddied the waters in Florida. Vice Chair Katauskas asked if he had a form letter that they could send out to member's various pension plans that says due to Florida's Statutes Regulations there can be issues with Beneficiaries that this would be a reminder to keep your Beneficiaries up to date. He stated Ms. Mirus could send it out once a year. Attorney Delmer said they do not have a form letter, but they could do a letter. He said what they do in lieu of that, when they do our summary plan descriptions on their new plan document, which was the one (1) they did, and on the front page in a box in bold print, it says be sure your Beneficiary designation was current. He said they will do that, and they could do a written notice in addition. Vice Chair Katauskas said this was important that it does not just go out one time. It should go out every other year at least on the summary plan description. Mr. Williams said along that point, they have annual open enrollment that was conducted every year in the City, and typically they try to make sure that it was communicated to update that Beneficiary information so he can pass it along to the Human Resources Division to make sure they include a statement to address retirement and pensions, so they can try to capture it there. Vice Chair Katauskas said from his experience, they can never send out a notice like this too often. Attorney Delmer said the courts have just determined that with wills and trusts where they try to determine intent, that was most important and they look to factors such as, were there other indications they did not intend for that person to be a Beneficiary. But, with respect to administration of pension plans, they have Pension 07 -17 -12/9 taken this position because they said a pension Administrator or a Board should not have to go behind the document and try to figure out intent, because that would be inefficient for plan administration. Attorney Dehner said the last thing he had was whether or not everybody has filed their Financial Disclosure Form. He said one (1) suggestion in that regard, and that was maybe for Ms. Mirus or Mr. Williams could check the Ethics Commission website, and maybe the local Supervisor, because their name will actually be listed as having been of record as filed. He said they have had numerous situations around the State where. Trustees filed and they have proof they filed, but for some reason, they do not end up of record. He said if they find they were not of record prior to September 1 they can get it squared with the local Supervisor of Elections. He said if they do not find out until after September 1 than they were dealing with the Ethics Commission. He said, so be sure their names were all there on the website. He noted they have stressed since 2001, the timely filing, because of the fines. He said something occurred this last year on the east coast that emphasizes the importance of accuracy on their disclosures. He said there was a. Trustee who was having a dispute with a City Commissioner. He said the City Commissioner checked the last filing that the Trustee had done and saw there was something not accurate. He said it ended up costing the Trustee over $39,000 for fines and attorneys' fees. He said it was getting worse all the time, especially in the climate they were in. he said what they were mainly interested in these days was categories of assets and conflicts of interest. 7. Member Comments. None. 8. Public Participation. Mr. Williams introduced Ms. Pam Barclay, the new Finance Director, and said she was going to be taking over for him at the Pension Board Meetings. He said he will periodically check in and if there was something the Board needs with his assistance, he will be happy to attend those meetings, but Ms. Barclay will be taking over from tonight. Mr. Williams said secondly, a quick update about individual pension statements. He said they have received those statements, and he passed them off to their Human Resources Division, and she has been reaching out to the individual members and having them, come in and sign and take a copy of those. Chair Redditt asked how often that would be done. Mr. Williams said they have requested them every year since he has been with the City. He said he knows they have gotten them every year for the last three (3) years, and they have made it a policy of keeping a copy and having them authorizing receipt or acknowledgement of receipt of the original, and they place them in the personnel file for them. Pension 07- 17 -12/10 9. Adjournment. Chair Redditt adjourned the meeting at 7:51 p.m. Robert Redditt, Chair ATTEST: C � Sarah M. Mirus, M'MC, MBA, Recording Secretary Pension 07 -17 -12/11 This Page Left Blank Intentionally. Peiision 07 -17- 12/1 -2