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05-08-1997 Regular MeetingMIAMI SHORES VILLAGE PENSION BOARD MAY 8, 1997 The regular meeting of the Miami Shores Village Pension Board was held on Thursday, May 8, 1997 in the Chamber of the Village Hall. The meeting was called to order at 110 8:10 A.M. with the following members present: Present: Mary Ross Agosta, Mayor Louis S. Imburgia, Jr. Joseph Charles Officer Timothy Dearden Walter Latimer Richard Trumble Michael R. Couzzo, Jr. Also Present: Mark Ulmer, Village Attorney Patricia Varney, Plan Administrator 1. INTRODUCTION OF NEW BOARD MEMBERS. Mrs. Mary Ross Agosta, the newly elected Mayor, was introduced as the newest Board member. Mr. Louis S. Imburgia has been appointed to a second term on the Board as the Council representative. 2. ELECTION OF CHAIRPERSON Mr. Latimer moved that Mary Ross Agosta be appointed as Chairwoman. Mr. Trumble seconded the motion and the vote was unanimous in favor. 3. ELECTION OF SECRETARY Mr. Dearden moved that Mr. Trumble be appointed as Secretary. Mr. Trumble declined the nomination. Mr. Couzzo moved that Mr. Latimer be appointed as Secretary. Mr. Charles seconded the motion. The motion carried unanimously. Councilman Imburgia arrived at this time. Pension Board May 8, 1997 Page 2 4a. INVESTMENT REPORT FROM MR. DON BRYANT, BARNETT CAPITAL ADVISORS, INC. Mr. Bryant reported that the ending market value for the quarter was $6,107,202 with a return of 0.2%. For the quarter, the fixed income return was down 1.0%, a decrease of 0.2% over the Merrill Lynch Gov't Corp. The equity fund was under the S&P 500 of 2.7% with a return of 1.0%. 4b. INVESTMENT REPORT FROM MR. STEVE GORDON, STI CAPITAL MANAGEMENT Mr. Gordon reported that the total return for the quarter was 1.5%. The quarterly return on the fixed income fund beat the Lehman Gov't Corp of -0.9% with a return of -0.7%. The equity fund return was just under the S&P 500 return of 2.7% with 2.6%. Mr. Charles inquired as to the S&P composition of industries. Mr. Gordon explained that the S&P is a capitalization weighted index which considers the approximate 500 largest stocks in the market. 4c. INVESTMENT REPORT FROM MR. JEFF SWANSON, MERRILL LYNCH Mr. Swanson reported that the fund had a total return of 0.8% for the quarter slightly trailing the target index of 0.9 %. There was a decrease in the total market value of the fund by $25,761. The equity portfolio was up 1.9% under the S&P 500 of 2.7%. The fixed income return of 0.8% equaled the ML Govt Corp return. Mr. Swanson noted that the STI total fund has met or exceeded the target over the long term. 6. DISCUSSION AND POSSIBLE ACTION REGARDING INVESTMENT MANAGERS - Jeff Swanson Mr. Swanson provided the Board with a list of managers that would complement STI, some employing a growth strategy and some using a value strategy. Mr. Latimer inquired if the Board should consider a third money manager due to the increase in the size of the fund. Mr. Swanson replied that the portfolio as a whole is quite small and he would not recommend having more than two money managers. Mr. Couzzo asked Mr. Swanson's opinion in having one manager. Mr. Swanson stated that one manager would be sufficient for the size of the fund and there would be a reduction in fees. Mr. Charles commented that with two money managers, there is more motivation within the fund to outperform the other manager. Pension Board May 8, 1997 Page 3 Mr. Couzzo stated that the money managers have an obligation to meet the objectives of the investment policy. Barnett has not met those objectives over a period of time and there could be a financial impact to the fund in the long run. Discussion regarding one money manager ensued. The fees and administrative trustee duties were discussed. Mr. Charles suggested that the Board pursue a better money manager as STI has just met the policy expectations. Mr. Swanson noted that the investment policy mandates performance expectations. Mr. Ulmer asked if the proposed managers meet the statutory requirements. Mr. Swanson replied they did. However, Oppenheimer Capital is the only manager using a commingled fund which is what is used by the current money managers. The Board reviewed the proposed money managers. It was Mr. Swanson's recommendation should the Board decide to chose from these money managers, they pick three and have them make a presentation to the Board. Mr. Bryant responded to the Board's decision noting that Barnett has not met the benchmark. However, Barnett has responded to their performance in the equity portfolio by making changes. Mr. Bryant asked that the Board give Barnett a probationary period to allow for improvement. Mr. Swanson pointed out that the Board has given Barnett enough time to improve their returns. Officer Dearden suggested that the Board move to one money manager until the end of the year with an option of obtaining a second manager if the benchmark is not met. Mr. Latimer agreed and moved that the fund change its policy and switch to a single money manager. Officer Dearden seconded the motion. Mr. Charles stated that he would vote against the motion due to the complications discussed, such as the administrative changes and underperforming managers. The Board discussed the possibilities of the various managers. Mr. Latimer moved to amend his motion to include that STI be appointed as the money manager and trustee of the Pension Plan. Officer Dearden seconded the amendment to the motion. The vote was called and was as follows: YES - Mr. Trumble, Officer Dearden, Mr. Latimer, Mrs. Ross Agosta, Mr. Imburgia, Mr. Couzzo; NO - Mr. Charles. Mrs. Varney recommended that the custodial responsibilities be transferred to STI within 45 days to allow time to notify those retirees currently receiving benefits. Mr. Latimer commended Barnett Bank. Mr. Ulmer stated that the transfer of custodial duties must be by written notice. Mr. Couzzo asked that Mrs. Varney handle the matter administratively. 5. DISCUSSION AND POSSIBLE ACTION REGARDING ACTUARIAL SERVICE CONTRACT. Mrs. Varney stated that she has been happy with the services provided by Gabriel, Roeder, Smith & Company. The proposed fees will remain the same for the first year with an adjustment not to exceed six percent the next two years. Mr. Couzzo moved that Miami Shores enter into renegotiations with Gabriel, Roeder, Smith & Company not to exceed the proposed limits for three years. Mr. Trumble seconded the motion. • Pension Board May 8, 1997 Page 4 Mr. Charles asked that the proposed percentage increase be changed so that it does not exceed the rate of inflation. Mr. Couzzo stated that the difference is minimal. He also agreed that the services provided by the actuary have been exceptional. The vote was called and was unanimous in favor. Mr. Imburgia was not present to vote on this item. Mr. Couzzo stated that there will be two PBA contract negotiations that will affect pension benefits and will require an actuarial study. Mr. Couzzo asked for the Board's opinion on the financial cost of analysis. Mr. Latimer stated he was opposed to bearing the cost. Mrs. Varney noted that an ordinance was changed to reflect that any expenses incurred will be paid by the Pension Plan. It was the consensus of the Board to ask the PBA to share the cost of the impact studies. 7. REQUEST APPROVAL OF PAYMENT TO BARNETT BANK Mr. Latimer moved for approval of payment to Barnett Bank in the amount of $10,434.92 for quarterly management fees ending March 31, 1997. Mr. Trumble seconded the motion. Mr. Charles asked the motion be amended to include items 8,9 and 10. Mr. Latimer amended his motion with a second from Mr. Trumble. The vote was unanimous in favor. 11. APPROVAL OF THE FEBRUARY 13,1997 MINUTES Mr. Charles moved for approval of the February 13, 1997 minutes as submitted. Mr. Latimer seconded the motion and the vote was unanimous in favor. 12. ADJOURNMENT Mr. Couzzo moved for adjournment. Mr. Latimer seconded the motion. The vote was unanimous in favor. The February 13, 1997 meeting of the Pension Board was adjourned at 10:00 A.M. •1111 %/0 i! Walter ` . timer, Secretary