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Pension04-16-13MinBOARD 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 April 16, 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 Matt Dickey, Florida League of Cities 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 7:01 p.m. 2. Pledge of Allegiance. Chair Redditt led in the Pledge of Allegiance. 3. Election of Officer. A. Vice Chair. Member Chenoweth moved to nominate Marc McLarnon as Vice Chair. Seconded by Member McLarnon and carried by a unanimous roll call vote with Secretary Kempf absent. 4. Approval of Minutes: January 15, 2013 Regular Meeting. Attorney Christiansen outlined a couple corrections that needed to be completed on the Minutes. Chair Redditt moved to approve the Minutes with those changes as mentioned. Seconded by Vice Chair McLarnon and carried by a unanimous roll call vote with Secretary Kempf absent. 5. Review of Agenda Packet Material. A. Plan Account Statements (December 2012, January 2013 and February 2013). Pension 0416-13/1 Chair Redditt noted that the Plan Account Statement for December 1, 2012 to December 31, 2012 had a Beginning Balance of $8,773,977.04, the Contributions were $27,397.89, the Earnings were $64,605.92, the Fees and Expenses were ($3,149.33), and the Ending Balance was $8,862,831.52. Chair Redditt noted that the Plan Account Statement for January 1, 2013 to January 31, 2013 had a Beginning Balance of $8,862,831.52, the Contributions were $19,149.44, the Earnings were $263,241.72, the Fees and Expenses were ($9,361.06), and the Ending Balance was $9,135,861.62. Chair Redditt noted that the Plan Account Statement for February 1, 2013 to February 28, 2013 had a Beginning Balance of $9,135,861.62, the Contributions were $19,734.62, the Earnings were $52,949.24, the Fees and Expenses were ($5,215), and the Ending Balance was $9,203,330.48. Vice Chair McLarnon asked about one of the disbursements for an extra $50,000 in life insurance. Ms. Barclay responded in the affirmative. She noted that an extra $50,000 was paid for each of the officers in life insurance. She said they chose to pay the premium. She noted it was her understanding that most other agencies have the premiums paid through them through the provider quarterly. Mr. Shamoun noted that when this Plan was set up a long time ago, there was a decision made by the City that predates their administration of the Plan, to have the disability benefits provided outside of the pension fund. They were required to have those benefits as part of their pension in order to comply; they were purchased through an outside exterior policy through Unum Group for a long time. That was how the disability coverage for the officers in the plan was being provided to them, through an outside policy. Vice Chair McLarnon asked if this was a disability policy or a life policy. Attorney Christiansen said it was a life policy. Mr. Shamoun said the plan was not funding for that. The contribution rate that the City was putting in does not account for any possibility of that death benefit happening because it was being paid for through this other policy separately. The Trust was paying the policy premiums through the City, and the City was then getting reimbursed. B. Quarterly Performance Review. Pension 04-16-13/2 Chair Redditt noted that the Quarterly Plan Account Statement ended December 31, 2012. Vice Chair McLarnon asked if this was an annualized purchase that the City makes and was reimbursed. Mr. Shamoun said he thinks it was the monthly premium for all the members of the Plan's policies. Ms. Barclay responded in the affirmative. Mr. Shamoun said the City was paying eight (8) months of it and then asking for reimbursement. Ms. Barclay said this was a monthly payment to be reimbursed through the Pension Plan, and that was why it was a lump sum and next month they will see the next lump sum. This was just for Fiscal Year 2012. She said Fiscal Year 2013 will be in next month's statement. Mr. Shamoun said if they look in the agenda further on in the Expenses, there was a lot of back up for each of these months. There were fifty-nine (59) eligible lives, and there was also a life and accidental death and dismemberment (AD & D) part. There was also a premium of $767 per month. Chair Redditt stated the Quarterly Statement for December 31, 2012 ended with a Balance of $8,862,831.52. The Board reviewed the Quarterly Performance in detail and asked Mr. Shamoun their questions. Discussion was held in regards to what was happening with the bond market. Mr. Shamoun noted at their Advisory Committee Meeting, they did ask Asset Consulting Group, Inc. who was their consultant, to look to see if there was something they were missing. Is there an asset class they should have added or should add, or was there any added diversification under the models ad return and lower volatility, those kinds of things. He said they will come back to them in about a month, and they will start looking at that at their Investment Advisory Committee level. Eventually, that will all come out as to what they will decide to do and whether it makes sense to do some of those things. Attorney Christiansen asked what if they came back and said you should be invested in real estate. Pension 04-16.13/3 Mr. Shamoun said then they will open up a real estate investment portfolio. Attorney Christiansen asked what if all their plans do not have the authority to invest in real estate. Mr. Shamoun asked why they wouldn't. Attorney Christiansen said it was because real estate was not listed in the State Statute as a permissible. Mr. Shamoun said they all adapt the F & PTF Investment Policy. Attorney Christiansen stated the Investment Policy has to be in line with what was in the ordinance. He said if they have their ordinance, then okay, but what about a plan that was not using their ordinance. Mr. Shamoun said they all adapt that from F & PTF's Investment Policy, so an investment policy would allow for real estate investments, and all the Boards investment policies would allow that as an allowable investment. He said the way it was normally done was all the Boards adopt the investment policy of the Trust Fund, and the Trust adds a portfolio to the investment policy. He said they will have to talk to him about it. Vice Chair McLarnon moved to accept the Statements as presented. Seconded by Member Chenoweth and carried by a unanimous roll call vote with Secretary Kempf absent. C. Invoices. a. Christiansen & Dehner, P.A. (January 2013). Chair Redditt said the Invoice from Christiansen & Dehner was in the amount of $1,164.05 for services rendered. b. Florida Municipal Pension Trust Fund (January 2013) C. United Health Care- Specialty Benefits (April 2012- March 2013). Chair Redditt outlined the invoices that were submitted in detail. Discussion was held in regards to the invoices submitted for United Health Care -Specialty Benefits. Vice Chair McLarnon moved to approve payment of all invoices as presented. Seconded by Member Chenoweth Pension 04-16-13/4 and carried by a unanimous roll call vote with Secretary Kempf absent. Discussion was held as to why they were getting these monthly and not an annual premium. Ms. Barclay said she would check on whether paying it annually would be cheaper than monthly and see if there would be a discount for doing so, and would let them know. 6. Other Business. A. Proposed Ordinance Amending the City of Longwood Police Officers' and Firefighters' Pension Trust Fund. Chair Redditt said this involves changes to the Pension Trust Fund that were required by the Internal Revenue Service (IRS). Attorney Christiansen said he told them at the last meeting, he would be working with the firm he works with in Indianapolis, Indiana, that specializes in tax issues. He said what they did was they arrived at a number of changes that needed to be made, not only on their plan, but on all of their plans. He said this Ordinance represents those changes. He said as they read the changes, they will not understand the things they were taking out, but when they read the things they were putting in, they would not understand those either. That was because what they were talking about were things that were restrictions and regulations under the IRS Code. He said each one of the changes in here has to do with one of those identified changes that they need to make in order to maintain their tax qualification status. He asked for any questions they might have, and said they need to approve this and ask that it gets sent to the City for consideration and adoption. He said they have already received from the Actuary what they call a no -impact letter, which essentially says that there was no cost associated with adopting this Ordinance. Vice Chair McLarnon moved that we forward this Ordinance for acceptance by the City Commission. Seconded by Member Chenoweth and carried by a roll call vote with Secretary Kempf absent. Ms. Mirus said she forwarded this letter to the City Administrator, Mr. Williams but she has not received a copy of the letter from Mr. Charles Carr saying there was no cost associated with this Ordinance. Attorney Christiansen said he would send a copy of this letter along with a letter explaining what it is all about to Mr. Williams. 7. Board Attorney Report. Pension 04-16-13/5 Attorney Christiansen said his notes indicate that Member Chenoweth's term was up in June, so they need to do an election before the next meeting. He said he talked with Member Chenoweth, and he was excited about staying on the Board. Mr. Christiansen asked about Member Kempf because he has not seen him for a few weeks. Also, he asked if the City was working to find someone to take the place of Peter Katauskas. Ms. Mirus said the City Commission has been working diligently on finding a replacement for former Vice Chair Katauskas. Attorney Christiansen brought up the John Zeh situation. He said Mr. Zeh may be getting out and has been moved into the area. Mr. Christiansen said he may be getting out earlier than the October date, and he may be showing up at the meeting in July. He was slated to be released on May 16, 2013, and it was assumed he would be at the following meeting, but does not know if he will be there. Mr. Christiansen said why don't they see where they were at the next meeting, because they were shooting for next October to do a hearing on his forfeiture, so they can assess where they were at the next meeting and be on schedule. He said he was not on paid status and was not eligible to draw a pension yet, so the fact that they wait another quarter was not going to matter. He has all the paperwork, which he will provide to the Board when they do the additional hearing. Chair Redditt asked if he shows up at the next meeting, what do they do. Attorney Christiansen said if he shows up at the next meeting, they will say he was out, and they will indicate to him that they will schedule it for their following meeting and give him notice of the hearing and an opportunity to be heard at that meeting. He will not just come in, and then they will have the hearing. They have to let him know they were going to have it. Chair Redditt asked Mr. Christiansen do they let Mr. Zeh know at the hearing what the decision was. Attorney Christiansen responded in the affirmative. He said typically it was a two (2) part process. The first part was the Board looking at the records and determining whether there appears to be a prima facie case for the forfeiture in the first place. If the Board determines there was a prima facie case, then they let him know that they have determined that there was a basis for forfeiture, and that he can request a hearing. He said he cannot remember if they already did that. They may already have done that first part. In either event, he gets to come in and say his peace and indicate why he feels his situation does not meet the requirements under the statutes of forfeiture. The Board ultimately makes the decision if there was a basis for forfeiture. Pension 04-16-13/6 Attorney Christiansen said as a reminder before their next meeting in July, they should be getting in the mail their financial disclosure forms. If they don't get it in the mail, they still have to file it, and it was due July 1 st, so they will take a head count at the next meeting to see who has not filed it. Even though it was past the July 1st deadline, there were no fines that start on July 1 st. They typically get a letter and the form in the mail from the Supervisor of Elections. If they don't file it by July 1st, the Supervisor sends them a "nasty -gram" that says they didn't file their form, so they have until September lst now to file the form. If they don't file by September 1st, there was a $25 a day fine for each day that they don't file that form after September 1st. They will have a meeting in-between, and they actually post online who has filed and who has not. Discussion was held regarding if former Vice Chair Katauskas was required to file a Statement of Financial Interest. Attorney Christiansen said he wanted to let them know that they may be having a disability file. They may have a police officer that may file a disability application. If that happens, he said he wanted them to know he explained things to the Police Chief and the City Administrator as to what needs to happen. He may be coming to Ms. Mirus for the application that was in his forms package. The application was in that forms package for him to fill out. If he files, that gets sent to him immediately, and then he begins the process of collecting the records and doing the interrogatories in line with the operating rules of procedure they already have in place under Rule 14. He said the Pension Plan has a disability benefit that was paid out of assets from the plan. This was a benefit that pays earlier than retirement and that begins payment right away because the -person was not able to do their job as a police officer or firefighter. Attorney Christiansen was asked if he was no longer qualified to do a particular activity or duty, but was qualified and can work the desk or do this or that, or was it he was eligible or not eligible for the pension. Attorney Christiansen said the disability, for their purposes, was unable to perform useful and efficient service either as a police officer or firefighter. Vice Chair McLarnon asked what if they were able to provide a light duty position. Attorney Christiansen said it would have to be a permanent light duty position, and he would still have to be a certified police officer or firefighter. If he lost his certification because he could not meet the physical requirements of his certification, then he cannot be a police officer anymore and therefore, he would be disabled. Pension 04-16-13/7 Attorney Christiansen said the last thing was at the last meeting they talked about legislation that was pending in Tallahassee. He said the Senate has passed their version of Senate Bill 458, which changes all the rules regarding the use of State money that they get every year. That State money will no longer be able to be used for making or paying for additional benefits in the defined benefit plan they have now. This legislation will provide that each plan will have to set up a separate component of the plan that was a defined contribution component. So each member will have a defined benefit component and also have a defined contribution component. State money will be funneled into that defined contribution plan, and when somebody retires, they will get their annuity, plus they will get whatever their account balance was in that defined contribution. He said the Bill has passed the Senate. There was a companion Bill in the House side, which was different than the Senate Bill. They both have to pass the same Bill in order to pass it into law, so it was not a done deal yet. He said the League was still opposing it, and the unions were opposing it also. Mr. Shamoun said they were well aware of it, especially with the floor amendment that was put on the Senate floor last Wednesday before it was passed. There was a floor amendment that was accepted and passed as part of the final Bill in the Senate that said no matter what, no City can cut benefits below 1991 limit. He said as far as the House Bill, it was in one committee, but has to go to another one before it can go to the floor. He said that committee has two (2) hours of meetings on Thursday and two (2) days of scheduled meetings next week, and that was it. He said if that Bill does not come out of that committee by the end of next Thursday, it probably was not coming out. Attorney Christiansen said there was one other bill. It was Senate Bill Number 534. This Bill was more of a reporting requirement than anything else. A couple of years ago, they passed some legislation that required each time they did an Actuarial Valuation, they had to do the Valuation based on their assumption. Their assumption was seven and one half (7%Z) in this plan too, so it really didn't do anything for them. He said what this was going to require was much more involved reporting requirements of the State that the Actuary was going to have to do each year, and then they will make available websites. He said it also seems to change the reporting requirements different than Governmental Accounting Standard Board (GASB). Mr. Shamoun noted that the City was going to have to comply with some new pension reporting requirements. The State of Florida believes that the National Government Accounting Standards Board does not know what it was talking about, so they took about eighty (80%) percent of what they wanted. Their new proclamations that the City was going to have to be audited too, and then tweak them to what the State desired, which was Pension 04-16-13/8 different. The net effect was they were going to have their funding valuation that they do now. The City was going to pay for a valuation separate for GASB 68, and then the Pension Board was going to pay for another valuation that was mostly like the City paid for, but a little like their funding one that will be required for the State report. It was going to cost the City more money, and the Plan, which was ultimately the City, more money. 8. Member Comments. None. 9. Public Participation. None. 10. Adjournment. Chair Redditt adjourned the me g at 7:52 p.m. obert Redditt, Chair ATEST• r Sarah M. Mirus, MMC, MBA, Recording Secretary Pension 04-16-13/9 This Page Left Blank Intentionally. Pension 04-16-13/10