08-08-2002 Regular Meeting•
•
•
MIAMI SHORES VILLAGE
POLICE PENSION BOARD REGULAR MEETING
AUGUST 8, 2002
1. CALL TO ORDER
The regular meeting of the Miami Shores Village Police Pension Board was held on Thursday, August 8,
2002 in the Conference Room of the Village Hall. The meeting was called to order at 8:05 A.M.
2. ROLL CALL
In order for the record to reflect those present the roll was called with the following members present:
Steve Cypen, Pension Board Attorney
Mark A. Malatak, Plan Administrator
Lisa Keeley, Recording Secretary
Mark Ulmer, Chairman
Robert Blum
Detective Timothy Dearden
Sergeant Robert Frame
William Heffernan
Also Present:
Janna K. Woods, Davis, Hamilton, Jackson
Carl O'Connell & Ryan Fitzpatrick, The Boston Company
Jeff Swanson, Merrill Lynch
3. APPROVAL OF MINUTES — May 9, 2002
Mr. Cypen requested that in those also present, the money managers also be included. He also indicated
that in 5A. line 3, the comparison of equity returns to 5B, line 2 should be the Russell 1000 Growth for
Davis Hamilton Jackson and the Russell 1000 Value for the Boston Company. Also in 5B, line 4 there is
a typographical error with the Merrill Lynch GovernmentlCorporation which should read Merrill Lynch
Government/Corporate. Mr. Cypen also found an error in 5A reporting the fixed income comparison to
the Merrill Lynch Government/Corporation return of -0.6%. This should be compared to the Lehman
Intermediate Government/Corporate return of -0.2%.
Detective Dearden moved for approval of the May 9, 2002 minutes with the recommended amendments.
Mr. Heffernan seconded the motion. The motion to approve passed unanimously.
4. APPROVAL OF PAYMENT WARRANT
Detective Dearden moved for approval of payment warrant P No. 02-3 as submitted. Mr. Heffernan
seconded the motion which was passed unanimously.
•
•
Police Pension Board August 8, 2002 Page 2
7A. IMPLEMENTATION OF A MINIMUM CHAPTER BENEFIT — Steve Cypen
Mr. Cypen explained that this is a result of Chapter 99-1 which requires certain minimum benefits
be added to the plan when additional chapter monies are available. The actuary, Mr. Palmquist of
Gabriel, Roeder, Smith and Company, indicated in his letter of March 6, 2002, that two of three
items may be afforded with the available revenue of $7,944. This includes allowing early
retirement at age 50 with 10 years of service, reduce early retirement penalty to 3% at no cost
impact. Additionally, a provision for a pre -retirement death benefit in the event of the death of a
vested member could be afforded for a cost of $6,540.
Mr. Cypen recommended the Board delay its decision to verify the amount of additional money
that may be available to allow the minimum chapter benefit of allowing a normal retirement at
age 55 with 10 years of service for a cost of $15,743. If this item can be afforded with the new
monies, the Board should consider the Plan amendment to include any and all minimum chapter
benefits for inclusion in one ordinance.
The Board agreed to wait until the final figures are obtained. Mr. Heffernan moved to table this
item until the next meeting with a second from Mr. Blum. The vote was unanimous in favor.
7B. OTHER BUSINESS
Mr. Heffernan inquired as to the declining Pension Fund market value and its effect on the
Village's funding obligation. Mr. Malatak replied that the actuary uses a smoothing method to
calculate the Village's contribution. Due to the recent fluctuation, there will be a larger
contribution this year. However, the smoothing method stabilizes the contribution to avoid large
variations in one year.
Mr. Heffernan expressed his concern in having a defined benefit plan due to the various impacts.
He asked that a survey of other municipalities in the State and across the nation be done to
compare the Village Plan with other options. He reiterated his opinion of a bifurcated plan or
having new employees enter a defined contribution benefit plan. His utmost concern is the
future cost impact to the Village.
Mr. Cypen indicated that to his knowledge, there are no other municipalities with Police pension
plans that are a defined contribution as a defined benefit plan is required to participate in
premium tax money distribution. He stated that it is a labor and management decision to be
considered.
5A. INVESTMENT MANAGER REPORT - The Boston Company - Carl O'Connell & Ryan
Fitzpatrick
Mr. O'Connell reported that the fund's total market value as of June 30, 2002 was $4,782,080. The total
return for the quarter was -6.5%; with a -12.5% loss on equities compared to the Russell 1000 Value of
• -8.5%. Mr. Fitzpatrick reviewed the 4.2% fixed income return which beat the 3.8% Merrill Lynch
Government/Corporate return.
Mr. Heffernan left at this time.
•
•
•
Police Pension Board August 8, 2002 Page 3
5B. INVESTMENT MANAGER REPORT - Davis, Hamilton, Jackson & Associates - Janna Woods
Ms. Woods reviewed the performance of the fund with a total market value of $4,730,382 as of June 30,
2002. The total return for the period was -6.1%; the equity loss of -13.4% compared to the Russell 1000
Growth return of -18.7% and the fixed income return of 3.7% just beating the Lehman Intermediate
Government/Corporate return of 3.5%.
Mr. Cypen noted that Davis, Hamilton, Jackson should provide a comparison that meets the
guidelines set by the Board. Ms. Woods confirmed they would make that addition.
Mr. Ulmer left at this time and passed the gavel to Mr. Blum.
6. CONSULTANTS REPORT - Merril Lynch — Jeff Swanson
Mr. Swanson reviewed the investment manager's returns for the quarter ending June 30, 2002. He
indicated that the market has been in one of the longest and deepest bear markets since the 1970's. The
fund ranked in the bottom twenty-one percent compared to the public balanced public fund sample.
Mr. Swanson recommended that the policy benchmarks be reviewed at the next Board meeting as the new
managers were transitioned into the existing policies rather than contouring a policy to meet the style of
management by each manager.
Mr. Swanson addressed international investing by suggesting the Board allow the money managers to
invest in ADR's. The fund is not large enough to hire an international investment manager at this time.
8. ADJOURNMENT
The August 8, 2002 regular meeting of the Police Pension Board was adjourned at 9:35 AM.
Mark Ulmer, Chairman Lisa Keeley, Recording Secretary