2014-05-05 General Meeting & General Fund MeetingM G
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CITY OF OKEECHOBEE/OKEECHOBEE UTILITY
AUTHORITY/POLICE/FIRE PENSION BOARDS
REGULAR MEETING MINUTES, MAY 5, 2014
CITY HALL, 55 SE THIRD AVENUE
OKEECHOBEE, FL 34974
TRUSTEE ATTENDANCE:
CITY OF OKEECHOBEE/OUA Jamie Mullis, Chairperson Melisa Jahner, Secretary
Daryl Roehm Robbert Ellerbee
POLICE: Denny Davis, Chairperson Bettye Taylor, Secretary
Ray Worley Bill Bartlett
Jack Boon
FIRE: John Koepke, Chairperson Adam Crum
OTHERS PRESENT: Scott Christiansen, Attorney
Jack Evatt, Bogdahn Group
Jay McBee, DiBartolomeo, McBee, Hartley & Barnes, P.A.
Melissa Algayer, Gabriel, Roeder, Smith & Company
Janet McKinley, OUA Financial Liaison
Basil Coule, OUA Financial Liaison
1. CALL TO ORDER REGULAR MEETING: Jamie Mullis called the meeting to order at 5:02 p.m.
2. PUBLIC COMMENT: Jamie asked whether there were any comments from the public. There were none.
3. INVESTMENT REPORTS: The Bogdahn Group
a) Mr. Jack Evatt, of the Bogdahn Group, presented an overview for the quarter ending March 31, 2014 as
distributed.
City General/OUA -The Total Fund Quarterly to Date for the: beginning 1/1/14 with $9,524,600.00 and ending 3/31/14
with $9,791,130.00. The Total Fund Year to Date: beginning 10/1/2013 with $8,970,452.00 and ending 3/31/14
with $9,791,130,00.
Police - The Total Fund Quarterly to Date for the: beginning 111/14 with 7,308,218.00 and ending 3/31/2014 with
$7,467,385.00. The Total Fund Year to Date: beginning 10/1/2013 with $$6,890,491.00 and ending 3/31/14 with
$7,467,385.00.
Fire - The Total Fund Quarterly to Date for the: beginning 1/1/14 with $3,119,065.00 and ending 3/31/2014 with
$3,134,546.00. The Total Fund Year to Date beginning: 10/1/2013 with $2,905,928.00 and ending 3/31/14 with
$3,134,546.00.
Mr. Evatt informed that all three boards have been changed from Bowen & Hanes to Dana Investment Advisors,
Inc., and the returns have been at benchmark or higher.
He asked each board to consider and approve the trade instructions as set out in the letter dated May 5, 2014, to
Ms. Farrow, of Salem Trust. It states that each (designated board) has elected to rebalance the portfolio and
instructs the following actions be acted out by DANA Investments:
City Gen/OUA:
1) Raise $1,000,000.00 in cash. Once the trades settle, Salem Trust is instructed to transfer $1,000,000.00 from
the DANA account to the R & D account and purchase the following mutual funds:
a) $800,000.00 of Dodge & Cox Income Fund (DODIX)
b) $200,000.00 of the PIMCO Total Return Fund (PTTRX)
2) Please notify the Bogdahn Group once all of the above has been completed.
Firefighter's:
1) Raise $375,000.00 in cash. Once the trades settle, Salem Trust is instructed to transfer $375,000,00 from the
DANA account to the R & D account and purchase the following mutual funds:
a) $275,000.00 of Dodge & Cox Income Fund (DODIX)
b) $100,000.00 of the PIMCO Total Return Fund (PTTRX)
2) Please notify the Bogdahn Group once all of the above has been completed.
Police:
1) Raise $900,000.00 in cash. Once the trades settle, Salem Trust is instructed to transfer $900,000.00 from the
DANA account to the R & D account and purchase the following mutual funds:
a) $650,000.00 of Dodge & Cox Income Fund (DODIX)
b) $250,000.00 of the PIMCO Total Return Fund (PTTRX)
2) Please notify the Bogdahn Group once all of the above has been completed.
4.(a) DIBARTOLOMEO, MCBEE, HARTLEY & BARNES, P.A. - Mr. Jay McBee reviewed the financial statements and
supplementary information for the years ending September 30, 2013 and 2012, noting that the audit was in
accordance with the standards of the Government of Auditing Standards issued by the Comptroller General of the
United States.. The results of tests, disclosed no instances of noncompliance that are required to report. He stated
that each plan had increased, and next year the statements will reflect the changes from GASB No. 67.
Plan changes for the OUA/City of Okeechobee Retirement System were as noted for these years: Effective
August 20, 2013, the Plan was amended to change the definitions of Credited Service and Maximum Pension to
comply with recent changes to the Internal Revenue Code. These changes in benefit calculations had no financial
impact on the Plan. Effective October 1, 2012, the plan was amended to relect a change in assumption to update
the mortality rates from the 1994 group annuity tables for males and females to the RP-2000 Combined Healthy
Mortality Table. The change will be phased over a three-year period and caused the employer required
contribution to increase by approximately $30,000 as a result the age adjustment change in mortality rates. The
City General/OUA Fund total assets as of September 30, 2013 were $9,009,108.00 compared to $8,197,044.00
as of September 30, 2012. The total liabilities as of September 30, 2013, were $32,597.00, compared to
$15,252.00 as of September 30, 2012. The net position (restricted for pension benefits) as of September 30, 2013
were $8,976,511.00, compared to $8,181,792.00 as of September 30, 2012.
Plan changes for the Fire Retirement System were as noted for these years: Effective August 20, 2013, the Plan
was amended to change the definitions of Credited Service and Maximum Pension to comply with recent
changes to the Internal Revenue Code. These changes in benefit calculations had no financial impact on the
Plan. Effective October 1, 2012, the plan was amended to relect a change in assumption to update the mortality
rates from the 1994 group annuity tables for males and females to the RP-2000 Combined Healthy Mortality
Table. The change will be phased over a three-year period and caused the employer required contribution to
increasy by approximately $9,000, as a result of the change in the mortality assumption for the coming year. The
Firefighter's Fund total assets as of September 30, 2013 were $2,943,479.00 compared to $2,810,371.00 as of
September 30, 2012. The total liabilities as of September 2013, were $9,383.00, compared to $8,462.00 as of
September 2012. The net position (restricted for pension benefits) as of September 30, 2013 were
$2,934,096.00, compared to $2,801,909.00 as of September 30, 2012.
Plan changes for the Police Retirement System were as noted for these years: Effective August 20, 2013, the
Plan was amended to change the definitions of Credited Service and Maximum Pension to comply with recent
changes to the Internal Revenue Code. These changes in benefit calculations had no financial impact on the
Plan. Effective October 1, 2012, the plan was amended to relect a change in assumption to update the mortality
rates from the 1994 group annuity tables for males and females to the RP-2000 Combined Healthy Mortality
Table. Effective April 12, 2012, the Plan was amended to reflect a change in benefit. For service earned after July
1, 2011, salary shall not include more than 300 hours of overtime per fiscal year and shall also not include
payments for accrued unused sick or annual leave. Payments for overtime in excess of 300 hours per year or
accrued unused sick or annual leave accrued as of July 1, 2011 and attributable to service earned prior to July 1,
2011, may still be included in pensionable salary, even if payment is made after July 1, 2011. With respect to
unused sick leave and unused annual leave accrued prior to July 1, 2011, salary will include the lesser of the time
accrued on July 1, 2011 or the actual amount of accrued time for which the retiree receives payment at the time of
retirement, at the ten current rate of pay. The Actuarial equivalence assumptions are changed from 8% interest
and 1983 Group Annuity Mortatility Table to 7% interest and the 1994 Group Ammuity Mortality Table. The Police
Officers Fund total assets as of September 30, 2013 were $6,959,825.00 compared to $6,394,477.00 as of
September 30, 2012. The total liabilities as of September 2013, were $18,386.00, compared to $12,832.00 as of
September 2012. The net position (restricted for pension benefits) as of September 30, 2013 were
$6,941,439.00, compared to $6,381,645.00 as of September 30, 2012.
4.b) GABRIEL, ROEDER, SMITH & COMPANY — Ms. Melissa Algayer presented the October 1, 2013, Actuarial
Evaluation Report as distributed.
All of the Boards have updated to the Mortality Table 2012 Valuation, from the 1994 Group Annuity Mortality
Tables for Males and Females to the RP-2000 Mortality Table using projection scale AA, phasing forward by two
years. The 2013 Valuation is set to phase forward one year, in which next year there will be no phase forward, will
be fully phased in. The phase forward is to project the future mortality improvements and ages since life
expectancy is improving. There will be a new Mortality Table RP2014, which the Boards will decide within the next
year whether they want to move forward with the newest mortality table.
City Gen/OUA — Summary as follows: The normal retirement benefit is 2.1 percent multiplied by the years of
service (YOS), multiplied by average final compensation (AFC). The AFC is the highest 5 out of the last 10 YOS.
The funding aggregate method did not change from last year. The employee contribution rate is 6 percent of
earnings. The City required contributions is determined by the present value of all future benefits
($13,224,674.00), which are expected to be paid in the future, subtracted by the actuarial value of assets
($8,644,814.00), not necessarily market value, leaving the present value contributions to be ($4,579,860.00),
which is divided by the difference of the funding period (9.2680 - years of active working lifetime), add on
administrative expenses of ($22,212.00), totalling normal cost ($516,362.00), applying interest of ($54,547.00),
then subtracting expected member contributions ($188,428.00), leaving a net result of ($382,481.00) or 12.91
percent as the required contribution for the City. The City has a prepaid contribution of $26,262.00 as of 1011113
which can be used to offset the required City contritbution. The total gain is $269,413.00 with an asset gain of
$64,655.00, leaving a liability gain of $204,758.00 (gains due to 1.2 percent of salary increases versus assumed
rate of 6 percent, three non -vested terminations, six vested terminated members who elected to take refunds, and
return on Actuarial Value of Assets of 7.9 percent versus the assumed rate of 7 percent). The historical gain/loss
shows this the second year of showing a gain. The funded ratio is 90.5 percent, up from last year of 87.7 percent.
The market value (MV) exceeds the actuarial value of assets (AVA) as of October 1, 2013 by $267,817.00. (The
required City contributions would have been 11.8 percent of paroll had the MV had been used instead of the AVA).
A recommendation was to lower the investment return assumptions, if possible. Discussion and suggestions by
Attorney Christiansend and Mr. Evatt, was to keep as is. GASB 67 will replace GASB 25 for periods beginning after
June 15, 2013. GASB 68 will replace GASB 27 one year later.
Fire — Summary as follows: The normal retirement benefit is 3.0 percent multiplied by the years of service (YOS),
multiplied by average final compensation (AFC). The AFC is the highest 5 out of the last 10 YOS. The funding
aggregate method did not change from last year. The employee contribution rate is 5 percent of earnings. The City
required contributions is determined by the present value of all future benefits ($4,128,979.00), which are expected
to be paid in the future, subtracted by the actuarial value of assets ($2,795,908.00), not necessarily market value,
leaving the present value contributions to be ($1,333,071.00), which is divided by the difference of the funding
peiod (10.6688 - years of active working lifetime), add on administrative expenses of ($22,297.00), totalling normal
cost ($147,246.00), applying interest of ($17,024.00), then subtracting member contributions, leaving a net result
of ($83,587.00) or 17.64 percent as the required contribution for the City. The City has a prepaid contribution of
$14,663.00 as of 1011113 which can be used to offset the required City contr►tbution. The total gain is $42,031.00
with an asset gain of $4,849.00, leaving a liability gain of $37,182.00 (gains due to 1.8 percent of salary increases
versus assumed rate of 7 percent, death of one DROP member, and return on Actuarial Value of Assets of 7.2
percent versus the assumed rate of 7 percent). The historical gain/loss shows this year as a gain. The funded ratio
is 101.7 percent, compared to 104.7 percent last year. The market value (MV) exceeds the actuarial value of
assets (AVA) as of October 1, 2013 by $55,507.00. (The required City contributions would have been 16.4 percent
of paroll had the MV had been used instead of the AVA). A recommendation was to lower the investment return
assumptions, if possible. Discussion and suggestions by Attorney Christiansend and Mr. Evatt, was to keep as is.
GASB 67 will replace GASB 25 for periods beginning after June 15, 2013. GASB 68 will replace GASB 27 one year
later.
Police - Summary as follows: The normal retirement benefit is 3.0 percent multiplied by the years of service (YOS),
multiplied by average final compensation (AFC). The AFC is the highest 5 out of the last 10 YOS. The funding
aggregate method did not change from last year. The employee contribution rate is 5 percent of earnings, The City
required contributions is determined by the present value of all future benefits ($8,592,505.00), which are expected
to be paid in the future, subtracted by the actuarial value of assets ($6,534,588.00), not necessarily market value,
leaving the present value contributions to be ($2,057,917.00), which is divided by the difference of the funding
peiod (8.0089 - years of active working lifetime), add on administrative expenses of ($25,523.00), totalling normal
cost ($282,477.00), applying interest of ($29,979.00), then subtracting member contributions, leaving a net result
of ($187,293.00) or 20.17 percent as the required contribution for the City. The City has a prepaid contribution of
$23,104.00 as of 1011113 which can be used to offset the required City contritbution. The total gain is $139,163.00
with an asset gain of $43,301.00, leaving a liability gain of $95,862.00 (gains due to 0.00 percent of salary
increases versus assumed rate of 7 percent, and return on Actuarial Value of Assets of 7.7 percent versus the
assumed rate of 7 percent). The historical gain/loss shows this the second year of showing a gain. The funded ratio
is 98.5 percent, up from last year of 97.0 percent. The market value (MV) exceeds the actuarial value of assets
(AVA) as of October 1, 2013 by $181,672.00. (The required City contributions would have been 17.5 percent of
paroll had the MV had been used instead of the AVA). A recommendation was to lower the investment return
assumptions, if possible. Discussion and suggestions by Attorney Christiansend and Mr. Evatt, was to keep as is.
GASB 67 will replace GASB 25 for periods beginning after June 15, 2013. GASB 68 will replace GASB 27 one year
later.
ITEMS/REPORTS FROM BOARD ATTORNEY CHRISTIANSEN.
■ He informed that General/OUA still has a vacancy for the 5f member.
6. UNFINISHED BUSINESS TO DISCUSS IN OPEN SESSION
Fire needs to remit a letter of approval for Gabriel Roeder Smith & Company fees, not to exceed
$1,950.00, for the inclusion of the GASB No. 67 accounting requirements.
Boards to Elect Officers.
7. NEW BUSINESS TO DISCUSS IN OPEN SESSION.
■ Approve the seven percent
■ Approve the Actuarial Report
■ Approve the Trade Letter submitted to Salem Trust
8. RECESS FROM OPEN SESSION AND CONVENE IN INDIVIDUAL SESSIONS AT 6:30 P.M.
� CITY GENERALIOUA PENSION BOARD OF TRUSTEE ITEMS
May 5, 2014 ✓
A. Motion to dispense with the reading and approve the minutes for the May 5, 2014, meeting. Jamie moved to approve
the Mav 5. 2014 meetin4 minutes as presented: seconded bv Darvl. Motion carried unanimouslv.
B. Motion to approve the financial reports as presented by Basil Coule, Pension Financial Liaison: Melisa moved to
approve the financial reports 1-4 as qresented on the aQenda; seconded bv Robbie. Motion carried unanimouslv.
1. Check register from January 2014 through March 2014.
2. Statements from Salem Trust that reflect activity for the General Pension Fund for the months
January 2014 through March 2014 for the following accounts: Receipt & Disbursement, Dana
Investments & Equity.
3. Approve the list of inembers terminated and/or contributions refunded or rolled over from 1/1/2014 to
3/31/2014: Joshua Davis (OUA), Anthony Ortiz (OUA).
4. New members enrolled from 1/1/2014 to 3/31/2014: Adela Nunez (City).
C. Unfinished Business or New items.
■ Robbie moved to appoint Jamie as Chairoerson; seconded Darvl. Motion carried unanimouslv.
Robbie moved to aoaoint Melisa as Secretarv: seconded bv Darvl. Motion carried unanimouslv.
■ Darvl moved to approve the Trade Instructions Letter, dated Mav 5. 2014. submitted to Salem T�ust Companv
to rebalance the portfolio: seconded bv Jamie. Motion camed unanimouslv.
� ■ Jamie moved to approve the Actuarial Evaluation Report from Gabriel. Roeder. Smith & Companv, as of
October 1. 2012 - the Annual Emalover Contribution for the Year Endina September 30. 2014, as presented
and distributed; seconded bv Darvl. Motion carried unanimouslv.
■ Jamie moved to accept the recommendation based upon the advice of Investment Consultant. Jack Evatt, of
the BoQdahn Group. the Citv General/0UA Pension Board ex�ects to receive a 7% rate of investment �etum
for the next vear, the next several vears and the lonp term thereafter: seconded bv Robbie. Motion carried
unanimousl��. Unfinished Business or New Items.
D. Adjourn meeting. Robbie moved to adiourn the meetina at 6:45: seconded bv Jamie. Motion carried unanimouslv.
Minutes prepared by: Melisa Jahner, Secretary
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