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09-15-2000 Regular MeetingMIAMI SHORES VILLAGE POLICE PENSION BOARD SEPTEMBER 15, 2000 1. CALL TO ORDER The regular meeting of the Miami Shores Village Police Pension Board was held on Friday, September 15, 2000 in the Chamber of the Village Hall. The meeting was called to order at 8:15 A.M. 2. ROLL CALL The following members present: Mayor Mark Ulmer Vice Mayor Robert Blum Detective Timothy Dearden Officer Robert Frame Also Present: Steve Cypen, Pension Board Attorney Mark A. Malatak, Plan Administrator Lisa Keeley, Recording Secretary For the record, Detective Dearden's resignation from the General Employee's Board was read. Mr. Malatak advised that Mayor Ulmer resigned from the General Employee's Board at the Village Council Meeting and was appointed along with Vice Mayor Blum to serve on the Police Pension Board. 3. SELECT CHAIRMAN Mr. Cypen recommended that an acting chairperson be nominated as there is one vacancy on the Board. Mr. Blum nominated Mayor Ulmer as the chairperson with a second from Detective Dearden. The vote was unanimous in favor. 4. SELECT SECRETARY Mr. Ulmer nominated Detective Dearden as Secretary with a second from Mr. Blum. The vote was unanimous in favor. 5. EMPLOYEE TIME BUY BACK Mrs. Keeley explained that Officer Moriarty left Village employment, but returned within a year to the same position and is currently asking to buy back the time he contributed before leaving Village employment. Officer Moriarty would have to contribute $3,696.61 to buy back into the pension system as of July 31, 2000 (an up-to-date amount will be calculated as soon as possible to coincide with his contribution date.) Mr. Blum referred to the letter from the attorney, Steve Cypen noting that an employee was ineligible. Mrs. Keeley explained that Officer Westbrook, also requesting the buy back, was rehired in March 1999, before the new police ordinance was in effect thus making him ineligible. Mr. Cypen noted that the old police pension ordinance did not allow for buy backs into the system. • Police Pension Board September 15, 2000 Page 2 Detective Dearden moved that Officer Moriarty be allowed to buy back his time in the pension system. Officer Frame seconded the motion. Mr Palmquist explained that under the current police pension system, the officer would have to redeposit the amount withdrawn plus any interest. Mr. Ulmer inquired as to the status of Officer Moriarty's departure and subsequent return. Detective Dearden explained the change The vote was called and was unanimous in favor. Officer Frame asked if Officer Westbrook could be allowed to buy back. Mr. Cypen replied that an amendment to the new ordinance would have to be prepared as there was nothing in the previous ordinance indicating a buy back provision. Detective Dearden noted that previous practice was to allow buy backs. Mr. Ulmer inquired as to the circumstances surrounding the departure of Officer Westbrook. Detective Dearden indicated that the officer went into private business. Mr. Ulmer indicated that the officer made a career decision ending employment as his time away was greater than time served. Mr. Cypen noted that if the buy back is allowed, then everyone similarly situated (who left Village employment and came back) would have the opportunity to buy back into the pension, contrary to the ordinance. Mr. Cypen suggested that administration see how many people would be affected and amend the ordinance with an effective date depending on the number of eligible participants. Detective Dearden moved that Officer Westbrook be allowed to buy back the time served. Discussion regarding circumstances ensued. Officer Frame seconded the motion. Mr. Ulmer noted his concern as legal counsel advises the ordinance does not allow for a buy back prior to 1/1/2000. 411 He indicated that the change should be done at the Council level with some study as to the potential ramifications. It was the consensus of the Board to direct staffto analyze the exposure of the Village as to how many people would be eligible to buy back to the pension plan if they were rehired. Mr. Palmquist offered some direction regarding buy back provisions of other municipalities. Mr. Ulmer advised that if the motion fails at this juncture, Officer Westbrook can never be allowed to buy back into the plan. Detective Dearden withdrew his motion until such time that staff provides the necessary requested information at the next regular meeting. Subsequently, Officer Frame withdrew his second. 6. APPROVAL OF THE PAYMENT WARRANT Detective Dearden moved for approval of the payment warrant with a second from Officer Frame. The vote passed unanimously. 7. DISCUSSION REGARDING THE RETENTION OF GABRIEL, ROEDER, SMITH AND COMPANY Mr. Palmquist addressed the issue of response time for various items citing the additional workload due to State Statute Chapter 99-1 requirements. Mr. Cypen confirmed the increase in work associated with the new requirements. Mr. Palmquist expressed concern for the Village's displeasure with Gabriel, Roeder, Smith & Company as there has been a long standing relationship between the • two. Mr. Malatak addressed the timeliness issue. Discussion regarding several outstanding issues ensued identifying the Drop Plan statements and deferred holiday calculations as priorities. • Police Pension Board September 15, 2000 Page 3 Based on Mr Palmquist's verbal commitment to address the issues presented, Detective Dearden moved that the Police Pension Board hire Gabriel, Roeder, Smith & Company as the actuary with a six month review period to coincide with the General Employee Pension Plan evaluation. Officer Dearden seconded the motion and the vote was unanimous in favor. 8. DISCUSSION REGARDING THE ACTUARIAL ASSUMPTIONS FOR SALARIES. Mr. Ulmer asked that Mr. Palmquist provide the necessary reports regarding the salary assumption rates to the Board at the next meeting as part of the engagement of Gabriel, Roeder, Smith and Company. 13. OTHER BUSINESS At this time, Mr. Ulmer addressed the issue of retaining legal counsel. Mr. Blum moved that the agenda be amended. Detective Dearden moved that Cypen & Cypen be retained by the Police Pension Board based on the same terms as provided by the General Employee's Board with an engagement letter to be provided. Officer Frame seconded the motion and the vote was unanimous in favor. 11. INVESTMENT STRATEGY AND ASSET ALLOCATION. • Mr. Cypen addressed Senate Bill 372 which mandates that certain provisions be included in the Investment Policy of each public pension fund in Florida. Mr. Cypen recommended that the Pension Plan come into compliance by December 31, 2000 and asked Mr. Hamilton of Merrill Lynch if they have addressed the issue. Mr. Hamilton replied in the affirmative. 13. OTHER BUSINESS Discussion regarding the vacancies on the Board followed. Detective Dearden inquired as to the response from the advertisement in the Village Newsletter. Mr. Malatak indicated he would check with the Village Clerk regarding any resumes submitted. Mr. Cypen suggested that the Board members identify someone locally with the necessary expertise who might take the position. Mr. Ulmer suggested Mr. Bill Heffernan and Mr. Mark Piper; Mr. Hank Courtney was also identified. Mr. Malatak indicated that a list of possible submissions would be available at the next meeting. 9. INVESTMENT REPORT: TRUSCO CAPITAL MANAGEMENT - Mr. Bill Tarry Mr. Tarry introduced the new firm, Trusco Capital Management. Mr. Tarry proceeded to review the performance of the last quarter ending June 30, 2000 indicating that the S&P 500 was down 2.7% and the Lehman Government Corporation was up 1.3%. The plan's equity portfolio was down 1.5% beating the S&P 500. The bond portfolio was up 0.6% up less than the Lehman Government Corporation bond. • Mr. Tarry explained the downgrading of the Suntrust high grade bond fund. He indicated that the Finova Bond credit rating was downgraded below the minimum credit rating which impacted the market price. Mr. Tarry ensured that Trusco should have the issue resolved within 15-30 days as the bond is noncompliant with the current investment policy. Police Pension Board September 15, 2000 Page 4 111 Mr. Tarry provided a current market analysis through August 2000 indicating that the third quarter has had a better performance. Mr. Tarry described the Trusco investment strategy as a conversion to a separately managed portfolio with both growth and value. Mr. Tarry characterized the fund's comparison to an index which invested 30% in technology stocks. The new portfolio has more of a safeguard against a strong industry group. • Mr Hamilton of Merrill Lynch clarified that the new Trusco core equity growth fund would be the sole stock portfolio, in essence abandoning the previous three prong approach of two value funds and one growth fund. Mr. Tarry confirmed it would be. The Board expressed some concern in the new portfolio especially in the category weighting within the fund. Mr. Malatak noted that fifty percent of the fund was allocated to technology and cyclicals which is currently on a down slide. Mr. Ulmer noted the fiduciary obligation of the Board to monitor the judgement of the investment manager especially with the change in philosophy from STI's conservative nature to Trusco's investment strategy based on an increasingly upward market with holdings in technology and cyclical financials which do well in an upward market. Trusco's prediction of a slow down in the economy with rising inflation rates is not consistent with their strategy. Mr. Tarry noted that the outlook in the market has changed since June 30, 2000. It was noted that the 7.1% return from October 1, 1999 to August 30, 2000 was contradictory to the consistently negative returns in the quarterly reports. Mr. Ulmer asked for a copy of the police ordinance, proposed investment policy from Merrill Lynch and an accounting of the fund to be available for the next meeting. He also indicated that the fifth member of the Board be recommended to the Village Council in order to set policies and review investment managers as soon as possible. Mr. Tarry left at this time. 10. INVESTMENT REPORT: MERRILL LYNCH - Mr. Craig Hamilton Detective Dearden asked Mr. Hamilton to provide copies of other police pension boards investment policies for the Board's review. Mr. Hamilton touched upon several issues that need to be addressed due to the recent splitting of the Board. The first item is to update the investment policy with a provision to allow foreign investing. He also suggested that the top three credit rating requirements on stocks be dropped. Mr. Hamilton posed some consideration in identifying domestic investment managers that are successful in both growth and value. He noted that there are economies of scale in considering a joint venture with the General Employee fund suggesting a pooled investment. He encouraged a special meeting to address these issues. Detective Dearden noted that the Board has no policies in place and should act immediately. 12. FUTURE MEETINGS Discussion regarding a meeting date for the selection ofthe fifth member ofthe Police Pension Board ensued. In order to allow time to submit the nominee to the Village Council for administrative approval, September 22, 2000 at 8:00 am was selected with a submission deadline for possible • nominees of September 21, 2000. • • Police Pension Board September 15, 2000 Page 5 It was the consensus of the Board to have the regular meeting on the second Thursday of the second month following the close ofthe quarter. The first regular meeting following this format would be on November 9, 2000. Those dates for 2001 will be provided via written memorandum to the Board of Trustees. A date to have a special meeting to address investment managers, investment policies and foreign investments was discussed. It was agreed to have the meeting on October 25, 2000 at 8:00 am with a joint meeting of the Police Pension and General Employee Pension Boards following at 9:00 am. Staff will provide a copy ofthe new police ordinance, the current investment policy and, as requested of Merrill Lynch by Detective Dearden, investment policies of other police pension funds. 14. ADJOURNMENT The September 15, 2000 meeting of the Police Pension Board was adjourned at 11:00 A.M. Timot earden, Secretary Mayor Mark Ulmer, Chairperson • WARRANT - P No. 00-1 For payment from the Village Pension Fund for Police Officer's in the Village of Miami Shores, Florida. To Chair and Administrator, or such other officers, who from time to time are duly designated and authorized by the Board of Trustees of said Fund, to sign checks, drafts or orders for the payment of money; You are hereby authorized by the Board of Trustees of the Miami Shores Village Pension Fund for Police Officer's in Miami Shores Village to pay the amounts Listed below for services rendered to the said Board of Trustees, and to pay the persons named below, hereby certified by the Board of Trustees as being on the Pension list of said Board at its meeting held on 9/15/00 , pensions from 5/17/00 to 9/14/00 inclusive, or for the period of time opposite the name of said persons. Name (Pensions, Benefits, Services Provided or Obligations) Amount Check Nr. Reimburse Miami Shores Village for Officer Dearden and Officer Frame: Registration for FPPTA conference October 2000 $ 500.00 159469 Hotel for FPPTA conference October 2000 $ 630.00 Per Diem for FPPTA conference October 2000 $ 312.00 Reimburse General Employee Fund for services provided by Gabriel, Roeder, Smith & Company - Invoice # 77512 Invoice # 77749 Invoice # 78330 $ 2,158.00 $ 500.00 $ 524.00 Estimated Payments: Payment for actuarial calculations Gabriel, Roeder, Smith & Company $ 3,000.00 Payment for Board Attorney Cypen & Cypen $ 2,000.00 Dated this 15t day of September, 2000 Approved by: Mark Ulmer As Chair of the Board of Trustees Village Pension Fund for Police Officer's in the Village of Miami Shores, Florida