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Pension01-15-13Min.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 January 15, 2013 7:00 p.m. Present: Robert Redditt, Chair Marc McLarnon, Member Derek Chenoweth, Member Scott Christiansen, Board Attorney Paul Shamoun, Florida League of Cities Pamela Barclay, Director of Financial Services Sarah M. Mirus, Recording Secretary Absent: Peter Katauskas, Vice Chair Chris Kempf, Secretary 1. Call to Order. Chair Redditt called the meeting to order at 7:15 p.m. 2. Pledge of Allegiance. Chair Redditt led in the Pledge of Allegiance. 3. Election of Officers. A. Chair. Chair Redditt opened the floor for nominations of Chair. Member McLarnon moved to nominate Tom Redditt as Chair. Seconded by Member Chenoweth and carried by a unanimous roll call vote with Vice Chair Katauskas and Secretary Kempf absent. B. Vice Chair. Chair Redditt opened the floor for nominations of Vice Chair. Member Chenoweth moved to nominate Peter Katauskas as Vice Chair. Seconded by Member McLarnon and carried by a unanimous roll call vote with Vice Chair Katauskas and Secretary Kempf absent. Pension 01-15-1311 C. Secretary. Chair Redditt opened the floor for nominations of Secretary. Member Chenoweth moved to nominate Chris Kempf as Secretary. Seconded by Chair Redditt and carried by a unanimous roll call vote with Vice Chair Katauskas and Secretary Kempf absent. 5. Approval of Minutes: October 16, 2012 Regular Meeting. Member McLarnon moved to accept the Minutes as presented. Seconded and carried by a unanimous roll call vote with Vice Chair Katauskas and Secretary Kempf absent. 4. Review of Agenda Packet Material. A. Plan Account Statements (September 2012, October 2012 and November 2012). Chair Redditt noted that the Plan Account Statement for September 1, 2012 to September 30, 2012 had a Beginning Balance of $8,314,444.13, the Contributions were $248,134.41, the Earnings were $117,220.58, the Distributions were $0, the Fees and Expenses were ($6,710.53), and the Ending Balance was $8,673,088.59. Chair Redditt noted that the Plan Account Statement for October 1, 2012 to October 31, 2012 had a Beginning Balance of $8,673,088.59, the Contributions were $54,232.09, the Earnings (Losses) were ($37,390.66), the Distributions were ($1,000.57), the Fees and Expenses were ($4,137.61), and the Ending Balance was $8,684,791.84. Member McLarnon inquired about the State Excise Contribution and asked if they typically receive that. He stated he did not recall seeing that in past years. Mr. Shamoun said to look at the September Statement. There were two (2) deposits, one for $146,404.40, and the other for $85,022.63. He said those were the initial Police and Fire and stated there was a supplemental Fire Distribution that was released in October. Member McLarnon said the other question was about a lump sum distribution to Shelby Ann Hopk Smith and asked if that was someone who left the City that was vested. Pension 01-15-13/2 Mr. Shamoun stated it was a return of contributions. He stated he was told that was someone who left unvested, and then asked for a return of their money. Chair Redditt noted that the Plan Account Statement for November 1, 2012 to November 30, 2012 had a Beginning Balance of $8,684.791.84, the Contributions were $18,113.61, the Earnings were $72,071.59, the Distributions was $0, the Fees and Expenses were ($1,000), and the Ending Balance was $8,773,977.04. Member McLarnon inquired about the Excise Tax and asked how the numbers compare to what they have received in previous years. He stated this was a percentage of the homeowner's insurance fees that were paid. Attorney Christiansen said it was for the premiums tax. Mr. Shamoun said he was told the 2007/2008 year was the peak at $428,000, which was all three (3) combined. He said it went down to $347,000, $277,000, $267,000, and now $263,000. It started at $296,000, in 2002 and built up to the $428,000, and came back down. He said they could look at that and see their property values right there at that curve. Member McLarnon stated about the third Contribution of the $36,904.85 was reflected in the payroll ending September 30, 2012, but because the date of posting was October 19, 2012 that will not show up until the next quarter. Mr. Shamoun said the reason they post that as a September 30a', was because their system will accrue that back to the previous fiscal year, so that money was accounted for in the valuation and all the recording that money was accounted for in that. Chair Redditt noted that the Plan Account Statement for July 1, 2012 to September 30, 2012 had a Beginning Balance of $8,067,837.95, the Contributions were $289,888.35, the Earnings were $325,848.26, the Distributions was $0, the Fees and Expenses were ($10,485,97), and the Ending Balance was $8,673,088.59. Mr. Shamoun said for that quarter they were up four (4%) percent. This was for the September 30, 2012 ending quarter. That brought the annualized return for the Fiscal Year to 17.2%. The bright spots for the Fiscal Year were the Small Cap Fund at thirty-two (32), all the Equity Portfolios were up above twenty-six (26) with most of them in the thirty (30%) percent return range for the year. He stated the Bond Funds return for the year was about 4.05, right above coupon rate. The Actuarial Valuation was the best funded plan in the State, at 100.1 V2 % funded. That was taking out all the DRAGO money and all the City's surplus. When Pension 01-15-13/3 they take all those out, they still were at 100.1 %% funded. Their unfunded liability was 0% of payroll and $0. That was using the 7%s % assumption that they have been using. He said last year, the City used up a significant amount of the City's surplus that was built up into the fund. They used about $236,000 of it. That was the bad news. The good news was there was still $700,000 of City reserve in the fund. He does not know what the City was putting in as a contribution rate. The new valuation amount was 18.7%. The normal cost was 19.3%, but because they have more money than their liabilities, they actually only put in 18.7%. He said what that seventeen (17%) percent return did, it brought the rate from 24 down to 19. It cut the City's contribution rate by twenty (20%) percent in one (1) year of seventeen (17%) percent returns. That was the return open fund. He said in previous years, the City has not allocated at much and decided to use some of their reserve. Member McLarnon said if they were looking at the Excise Contribution and going back the three (3) years, it was $277, $267, and $263, assuming that the City puts in, they cannot figure on getting seventeen (17%) percent return on investment (ROI) again next year. Mr. Shamoun responded in the affirmative. The contribution rate assumes they were going to make 7'/z% this year and every year into the future. If they return ten (10%) percent this year, that nineteen (19) was going to come down even further. In a year with a loss or anything under the 71/s, the nineteen (19) could go up. He noted they took the hit in 2008, and then have been bouncing a little bit since then. He said when they look at the valuation, they were going to see that the Actuarial Assets they were using were about $6.3 million total in the Trust Fund. But there was $8.6 million in total in the Trust Fund. He said $1.6 of that was the DRAGO Fund, so that was taken out of that number. And then the $706,000 excess City contribution was taken out and then they use the $6.3 million. Look at the liabilities, and that was what calculates to them at 101 % with those assets removed. He said they were in good shape. He said he will come next quarter and they will go over it in detail once they have a chance to look it over. Member McLamon said he had stated the City tapped the Reserve by over $200,000, so should the City be making alternate plans or do they anticipate the City having to access more funds next year, assuming they do not get a seventeen (17%) percent return. Mr. Shamoun said the number was the number, so what the Actuary calculates was that amount that needs to go in. The City can make a decision to not, put that much in by whatever amount they want to use up from the Reserve. He said that was a budgetary decision that the City has to make. He said they were well funded. Pension 01-15-13/4 Member McLarnon moved to accept the Statements as presented. Seconded by Member Chenoweth and carried by a unanimous roll call vote with Vice Chair Katauskas and Secretary Kempf absent. B. Quarterly Performance Review. The Quarterly Performance review was completed under the Plan Account Statements. C. Invoices. a. Christiansen & Dehner, P.A. (September 2012 and October 2012). Chair Redditt noted there were two (2) invoices totaling $3,149. Member Chenowth moved to approve payment of the bills. Seconded by Member McLarnon and carried by a unanimous roll call vote with Vice Chair Katauskas and Secretary Kempf absent. b. Renewal of Membership to the Florida Public Pension Trustees Association (FPPTA). Ms. Mirus said the amount for this was $600 per year. Member McLarnon moved to approve the renewal of membership to the FPPTA. Seconded by Member Chenoweth and carried by a unanimous roll call vote with Vice Chair Katauskas and Secretary Kempf absent. D. Lawyers Professional Liability Policy Declarations. Attorney Christiansen said this was provided for information purposes only. 5. Other Business. A. Upcoming Florida Public Pension Trustees Association (FPPTA) Events. Chair Redditt said there is a three (3) day conference in Ponte Vedra in Jacksonville, Florida at the end of this month. He asked if anyone has not been to that conference. There was another one coming on June 23 through June 26, 2013. There was discussion on the various schools and conferences. Pension 01-15-1315 6. Board Attorney Report. Attorney Christiansen said there was a new piece of legislation that has been circulating. It does not even have a number yet. It will be considered at a Committee meeting of the Governmental Oversight and Accountability Committee. It was a significant deviation from the current use of the State money. Everyone seems to be opposed to it and probably has very little chance, at least in its current State. Member McLarnon asked what they were proposing. Attorney Christiansen said the current methodology they have says the State money has to be used for additional benefits for police officers and firefighters. The City can use a portion of it, which was called the frozen amount, and anything over that has to be used for additional benefits. This will essentially change the rules for the use of that State money. Now it states that the State money cannot be used for any additional benefits in the defined benefit plan. It also requires that the money be used first to fund minimum benefits they got above the minimum. After that, a piece of the State money has to be used to reduce the unfunded actuarially accrued liability. They do not have any, so that will not affect them. They were saying it can only go into a defined contribution plan, not to enhance the defined benefit. He said it was a significant deviation from the current methodology. It also says the City's contribution to the plan cannot be less than what it was last year. He said he does not think it has much chance in its current form. It may get amended or withdrawn altogether. Attorney Christiansen said they were currently talking with their Tax Attorneys in Indiana, who specializes in tax issues for government pensions, who were looking at all of their plans. He said their plan was a tax qualified pension plan. He said what that means was that from time - to -time they have to make changes to the plan as the Internal Revenue Code changes, so they will be coming to them with some suggested changes to. the plan in order to maintain their tax qualifications. Typically, they do not have any cost associated with them, meaning additional funding required. But, they often have additional restrictions sometimes on benefits. Chair Redditt asked what the latest on the John Zeh situation was. Attorney Christiansen said they talked about that before. He has been moved from one (1) facility to another and was more local now. Member Chenoweth said he has been transferred to a work release correctional facility and was housed there and transported to wherever he works and then back to the facility. He noted he was still serving his sentence until October, and then will be out. Pension 01-15-1316 Member McLarnon said then he will present his case to them, and they do not have to render a decision at that point in time, or they can take what he was saying and discuss it and get an opinion letter from the Attorney. Attorney Christiansen responded in the affirmative to all of the above, and said he would get that opportunity. He said this particular forfeiture law was not a situation where he comes in and says this was going to be bad for me, and he really needs this money, and he was a nice guy, so please do not forfeit his pension. That has nothing to do with it. It was basically a black and white situation. Member Chenoweth asked what was the criteria that was spelled out to dictate forfeiture. Attorney Christiansen said basically, if they do certain things and commit certain felonies, and most have to do with stealing from a government employer. He then read the paragraph that would be applicable. He said they all know the facts of the case and what Mr. Zeh did. They want to give him a chance to speak to it before they make a decision. He said when they get ready to have the hearing, he will provide them with all the paperwork, but they were not there yet. 7. Member Comments. None. 8. Public Participation. None. Ms. Mirus noted Vice Chair Katauskas sent his regrets due to being under the weather. 9. Adjournment. Chair Redditt adjourned the meeting at 7:55 p.m. ao4gt —C Adwl—e6��' 'Robert Redditt, Chair ATTEST: Sarah M. Mirus, MMC, MBA, Recording Secretary Pension 01-15-13/7 This Page Left Blank Intentionally. Pension 01-15-13/8