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May 2, 2016 Quarterly MeetingCity of Okeechobee and Okeechobee Utility Authority Employees' Retirement System City of Okeechobee Municipal Firefighters' Pension Fund City of Okeechobee Municipal Police Officers' Pension Trust Fund BOARDS OF TRUSTEES: QUARTERLY MEETING Location: Council Chambers, City Hall 55 SE 3rd Avenue Okeechobee, FL 34974 Meeting Contact: (800) 206 -0116 (Plan Administrator) AGENDA (OPEN SESSION) Time: 5:00 PM 1. Call to Order: Board Chairs General Employees/ OUA Board Jamie Mullis, Chair Melisa Jahner, Secretary Robert Ellerbee Daryl Roehm Jose Santiago 2. Approval of Agenda 3. Public Comment Police Officers' Board Denny Davis, Chair Bettye Taylor, Secretary Bill Bartlett Jack Boon Ray Worley Firefighters' Board John Koepke, Chair Michael Skipper, Secretary Glen Hodges Adam Crum Judy Douglas 4. Reports a. Audited Financial Statements (Jay McBee, Dibartolomeo, McBee, Hartley & Barnes, P.A.) b. Annual Actuarial Valuations (Melissa Moskovitz, GRS) c. Investment Reports 1) Dana Investment Advisors: Quarterly Report 2) Quarterly Consultant Report (Jack Evatt, Bogdahn Group) d. Attorney Report (Scott Christiansen, Christiansen & Dehner) 1) Dissolution of Marriage Memo 2) Final Agreements (Resource Centers) 3) Globe Tax Agreements (Salem) e. Administrator Report 1) Transition Update 2) Meeting Packet Delivery 3) Signature Authorizations 4) Member Introduction Letters 5) Summary of Plan Provisions 6) Website Information 5. Open Session a. b. Unfinished Business New Business 1) Foster Invoice 2) Traveler's Fiduciary Liability Policy 6. Adjourn Open Session NOTICE TO PUBLIC: This is a public meeting. Should any interested party seek to appeal any decision made by the Board with respect to any matter considered at such meeting or hearing, he will need a record of the proceedings and that, for such purpose he may need to ensure that a record of the proceedings is made, which record includes the testimony and evidence upon which the appeal is to be based. City of Okeechobee and Okeechobee Utility Authority Employees' Retirement System AGENDA (INDIVIDUAL SESSION) A. Approval of Minutes (February 1, 2016) B. Plan Financial Reports 1) Financial Statement a. Balance Sheet as of March 31, 2016 b. Salem Trust Custodial Statement 2) Expense Approval: Warrant dated May 2, 2016 C. Benefit Approvals 1) Retirements and Termination Refunds a. R. Scott Boyer (Utility Authority) b. Terisa Garcia (City) c. Melisa Jahner (City) d. Daniel B. Padgett (City) 2) New Member Enrollments a. Tyler Barber (Utility Authority) b. Mathew Cowing (Utility Authority) c. Bobbie Jo Jenkins (City) d. Donavan Whitehall (City) D. Cost Sharing Multi- Employer Plan Update E. Board Members F. Adjourn Individual Session: Board Chair Next Meeting Date: August 1, 2016 at 5:00 PM City of Okeechobee Municipal Firefighters' Pension Fund AGENDA (INDIVIDUAL SESSION) A. Approval of Minutes (February 1, 2016) B. Plan Financial Reports 1) Financial Statement a. Balance Sheet as of March 31, 2016 b. Salem Trust Custodial Statement 2) Expense Approval: Warrant dated May 2, 2016 C. Benefit Approvals 1) Retirements and Termination Refunds (None) 2) New Member Enrollments (None) D. Board Members E. Adjourn Individual Session: Board Chair Next Meeting Date: August 1, 2016 at 5:00 PM City of Okeechobee Municipal Police Officers' Pension Trust Fund AGENDA (INDIVIDUAL SESSION) A. Approval of Minutes (February 1, 2016) B. Plan Financial Reports 1) Financial Statement a. Balance Sheet as of March 31, 2016 b. Salem Trust Custodial Statement 2) Expense Approval: Warrant dated May 2, 2016 C. Benefit Approvals 1) Retirements and Termination Refunds Robert S. Morgan (Refund) 2) New Member Enrollments (None) D. Board Members E. Adjourn Individual Session: Board Chair Next Meeting Date: August 1, 2016 at 5:00 PM CITY OF OKEECHOBEE /OKEECHOBEE UTILITY AUTHORITY /POLICE /FIRE PENSION BOARDS REGULAR MEETING MINUTES, May 2, 2016 CITY HALL, 55 SE THIRD AVENUE OKEECHOBEE, FL 34974 1. CALL TO ORDER Jamie Mullis called a meeting of the Board of Trustees for the City of Okeechobee /Okeechobee Utility Authority /Police /Fire Pension Boards to order at 5:09 PM in the Conference Room at Station 83.Scott Baur called roll for the three Boards. TRUSTEES OTHERS CITY OF OKEECHOBEE /OUA Jamie Mullis, Chairman Jackie Dunham, Secretary Robert Ellerbee Daryl Roehm Jose Santiago POLICE Denny Davis, Chairman Bettye Taylor, Secretary Ray Worley Jack Boon FIRE John Koepke, Chairman Michael Skipper, Secretary Glen Hodges 2. APPROVAL OF AGENDA 3. PUBLIC COMMENT There was no public comment. 4. REPORTS Audited Financial Statements- (Jay McBee) Scott Baur & Brittany Park, Resource Centers Scott Christiansen, Attorney Tony Kay &Jack Evatt Bogdahn Group Janet McKinley -OUA Financial Liasion Melissa Moskovitz - Gabriel Roeder Smith (Departed 6:10 pm) Jay McBee- Jay McBee, Dibartolomeo, McBee, Hartley & Barnes, P.A.) Jay McBee presented the audited financial statements for the fiscal year 2015 and noted that the audit possessed an unqualified clean opinion. Mr. McBee reviewed the balance sheet for the Police plan and stated that they had $7.7M in assets as of 09/30/15. The net additions to the plan were positive; however the investment return was not great. There was a net decrease of $15k for benefits paid out and net assets decreased from 7.70% to 7.69% as a result of weak investment results. Meeting May 02, 2016 Page 2 of 6 Mr. McBee reviewed the Fire plan's balance sheet indicating that they had $3.2M in assets as of 09/30/15. Investment results weren't as strong as in previous years as the total additions were $127K this past year. Mr. McBee reviewed the General plan's balance sheet indicating that they had $10.2M in assets as of 09/30/15. The contributions into the plan were $554K with depreciation in the fair value of investments over the course of the year with $448K in net additions. Mr. McBee additionally explained the required disclosures as far as an accounting policy for the plan. The contributions into the plan are broken down between the employer and the employee and the comparison of those dollars. He advised that the financial statements are crucial as they are used as a tool in light of what the actuary says as looking down the road as far as expenses and financial results. There are additional footnotes describing the changes in the last few years which have impacted the plan. The last page is a detailed breakdown of all expenses. Scott Christiansen advised that on the footnote for the General Plan it needs to reflect to say a multiple - employer plan with cost sharing. Jaimie Mullis from the General Board made a motion to approve the audited financial statements. Jackie Dunham seconded the motion, approved by the Trustees 4 -0. Michael Skipper from the Fire Board made a motion to approve the audited financial statements. John Koepke seconded the motion, approved by the Trustees 3 -0. Ray Worley from the Police Board made a motion to approve the audited financial statements. Jack Boon seconded the motion, approved by the Trustees 4 -0. 5. REPORTS Actuarial Report- Annual Actuarial Valuations (Melissa Moskovitz) Melissa Moskovitz presented the Actuarial Valuation for the fiscal year ending 09 -30 -15 for Fire, Police and the Utility Authority and the City plan. She reviewed the fire plan and discussed the assumptions and mortality table RP200 scale double a to project future increases in life expectancies. She explained that this will be effective next year and all three plans will be required to use the same mortality as the Florida Retirement System. The required City contribution was based on the fiscal year ending 2017 based on the October 1, 2015 Valuation. She discussed the smooth value of assets and noted that smoothing reduces volatility due to fluctuations in the market. There was a total loss for the year of $42,629.00 and of that there was an asset gain which was due to the smoothing of the previous gain that occurred in the prior so they are continuing to recognize gains. Ms. Moskovitz pointed out that there was a loss; however when combined with all the other gains it results in a total asset gain. The liability gain or loss resulted in a loss of $62,758.00 due to salary increases of 7.7% vs the assumed rate of 7 %. Ms. Moskovitz stated that on a market value basis the investments return was -1.4 %, but when the smooth value of assets is looked at, the net return is 7.6 %$ higher than the 7% assumption. She explained that gains and losses overtime will cancel each other out and assumption changes are recommended if that is not the case. Ms. Moskovitz advised that the plan is 100% funded and in good shape. Her recommendations would be to continue to monitor earnings. Meeting May 02, 2016 Page 3 of 6 Ms. Moskovitz presented the new updates; GASB 68 as this is the first year of implementation for 9 -30- 15 using a 9 -30 -14 measurement date to report those results. The FRS disclosures read that if a report is accepted there will be 60 days until a similar report will need to placed on the City's website. This is required to show the funded ratio as well as the market value of current assets assuming no future contributions will come in. Glen Hodges from the Fire Board made a motion to approve the Annual Actuarial Valuation. Michael Skipper seconded the motion, approved by the Trustees 3 -0. Ms. Moskovitz presented the Police Valuation for the fiscal year ending 2015. She mentioned that the same mortality tables will be used next year just like the Fire Board. The total loss for the year was $47,371.00 which became an asset gain due to the smoothing of the previous year's gain. There was a $97,415.00 liability loss due to salary increases on average at 13.5% vs the assumption rate of 6 %. On a market value basis the investments return was -1.2% being spread over 4 years. This was just like the Fire plan as gains from the previous 3 years are offsetting the market value loss that occurred last year so the net result on a smooth value basis the net return is 7.7 %$ higher than the 7% assumption. She stated that they hope overtime that the gains and losses will cancel each other out. The accrued liability was $7.5M compared to the smooth value of assets at $7.6M and still over 100% funded. The smooth value of assets exceeded the market value by $335K. Ms. Moskovitz also recommended that they continue to monitor earnings. The GASB 68 is also in effect in addition to the Fire plan. Jack Boon from the Police Board made a motion to approve the Annual Actuarial Valuation. Ray Worley seconded the motion, approved by the Trustees 4 -0. Ms. Moskovitz classified the General plan as a cost sharing employer plan meaning that the City and the Utility Authority both contribute. All provisions are the same and the assets are allocated not divided. They use the same funding method as the police and fire plans. The City had a gain which is why the contribution decreased from last year to this year. Both the City plan and the Utilities Authority had asset gains due to the smoothing of the assets. In addition, both had a liability gain for the City and the Utility Authority primarily due to deaths and retirements in the plan. The percentage of pay also decreased from last year's individual results. The smoothing return for both the City and the Utility Authority is 7.9% which contributed overall into an experience gain. The accrued liability for the City is $114.5% and 88.9% for the Utility Authority. The smooth value of assets is less than the market value for both of the plans and if recognition of future gains and everything occurs as expected, the City's contribution rate would increase to 6.6% vs 4.55% of payroll. The Utility Authority contribution rate would increase to 15.3% vs 13.91 %. Ms. Moskovitz advised that they continue to the monitor investment returns and also recommended that an experience study be performed in the future for the purposes of focusing on retirement rates as well as the salary scale assumption. Mr. Christiansen advised it's not a legal requirement however it will be useful. They have the same GASB 68 requirements and mortality tables as the police and fire plans as well as the same disclosures. Daryl Roehm from the City and Utility Authority Board made a motion to approve the Annual Actuarial Valuation. Jose Santiago seconded the motion, approved by the Trustees 5 -0. Meeting May 02, 2016 Page 4 of 6 Investment Consultant Report (Tony Kay& Jack Evatt) Tony Kay reviewed the market environment for 2016 and explained that it has been a very challenging marketplace. The S &P had a gain by the end of the quarter and emerging markets had a strong quarter but overall losses for the year. Interest rates declined for the quarter and Bogdahn foresees a continued low rate environment. Mr. Kay reviewed cash flow and discussed performance noting that Dana Investors tends to underperform in strong markets; however management remains consistent and solid. The portfolio has strong diversification and reasonable fees. Mr. Evatt noted that the benchmark had an unusually high universe ranking so the active managers' gene rally trailed benchmarks. The market experiences a lot of speculations due to volatility. Growth has really been leading the marketplace and large caps have been the place to invest but that could change overtime. All three plans experienced positive returns for the quarter and Mr. Evatt does not recommend any changes at this time. Attorney Report (Scott Christiansen) Mr. Christiansen advised that all three Boards have to declare an expected rate of investment return. Based on the advice of the investment consultant the Board expects to get an investment return of 7.5% for the next year the next several years and the long term thereafter. Daryl Roehm from the City and Utility Authority Board made a motion based on the advice of the Investment Consultant that the Board expects to get an investment return of 7.5% for the next year the next several years and the long term thereafter. Jose Santiago seconded the motion, approved by the Trustees 5 -0. John Koepke from the Fire Board made a motion based on the advice of the Investment Consultant that the Board expects to get an investment return of 7.5% for the next year the next several years and the long term thereafter. Michael Skipper seconded the motion, approved by the Trustees 3 -0. Denny Davis from the Police Board made a motion based on the advice of the Investment Consultant that the Board expects to get an investment return of 7.5% for the next year the next several years and the long term thereafter. Jack Boon seconded the motion, approved by the Trustees 4 -0. Mr. Christiansen discussed the invoice from Foster and Foster and recommended approval of the 1 month of payments as they performed administrative services. Jamie Mullis from the City and Utility Authority Board made a motion to pay the invoice to Foster and Foster. Daryl Roehm seconded the motion, approved by the Trustees 5 -0. John Koepke from the Fire Board made a motion to pay the invoice to Foster and Foster. Michael Skipper seconded the motion, approved by the Trustees 3 -0. Jack Boon from the Police Board made a motion to pay the invoice to Foster and Foster. Ray Worley seconded the motion, approved by the Trustees 4 -0. Mr. Christiansen advised that at the last meeting the Boards selected their officers for the term. He also advised that a public records request can occur when anybody that's hired a particular vendor may have public records that the Board doesn't already possess. If a public records request comes in, a requirement needs to be put in to all future contracts stating the vendor agrees to cooperate with public records request. This does impact the plan and will it be in the contract. Meeting May 02, 2016 Page 5 of 6 Mr. Christiansen discussed Globe Tax and the biggest question is whether any money will be recovered by doing this service. Money can be recovered from the past and the names on the documents need to be revised and Mr. Evatt states that it is worth doing so. Mr. Christiansen presented the Dissolution of marriage memo. This is in regards to divorce cases and his office sends the memo to the client's lawyer so that both parties know the rules regarding an order by the court. If there is a division of assets split up between spouses then the pension plan cannot make that payment to the ex- spouse. However if it is alimony and child support, the pension plan can be required to make those payments to the ex- spouse and this is applicable to all three plans. Mr. Christiansen reviewed the request from the Utility Authority to change the plan to an agent multiple employer plan from what is currently a cost sharing multiple employer plan. Mr. Christiansen stated that Counsel decided not to change the plan and have it remain a cost sharing multiple employer plan. That is what was communicated to the Utility Authority and they can make the decision as to what they want to do. Bettye Taylor from the Police Board wanted to confirm with Mr. Baur how materials are distributed. Mr. Baur explained that his office will send materials electronically a week prior to the meeting. Hard copies can be delivered in advance if requested. Administrator Report (Scott Baur) Mr. Baur addressed the transition update and the background materials. Mr. Baur stated that he needs an updated contact list with updated information in addition to signature authorizations for purposes of directing Salem Trust to make payments. Letters of introductions were already sent to the active plan members and will soon go out to the retired members. The summary of plan provisions was introduced as they provide precise written procedures in terms of how Mr. Baur will calculate benefits in conjunction with the Actuary. This was done through reading of the plan ordinance and information from the Summary Plan Description and the Actuarial Valuation. Mr. Baur wants the Board to bring to attention to anything that appears incorrect. He really encourages members to interact and call the office if assistance is needed. Mr. Baur mentioned that the website has been established for all three plans with all of the required documents. Mr. Baur introduced Brittany Park in his office. He stated that the benefit approvals will be provided for all disbursements. Expense reports will be on the August agenda for the Police and Fire Boards. Mr. Baur also reminded the Boards of their form 1 disclosures due on July 15t.A motion is required from all three Boards to execute signature authorizations and warrants. Jack Boon from the Police Board made a motion to approve the expense warrant dated May 2, 2016.. Ray Worley seconded the motion, approved by the Trustees 4 -0. Jack Boon from the Police Board made a motion to approve the refund to Robert Morgan. Ray Worley seconded the motion, approved by the Trustees 4 -0. John Koepke from the Fire Board made a motion to approve the expense warrant dated May 2, 2016. Michael Skipper seconded the motion, approved by the Trustees 3 -0. Robert Ellerbee from the City and Utility Authority Board made a motion to authorize 2 receipt and disbursement accounts at Salem Trust. Jamie Mullis seconded the motion, approved by the Trustees 5 -0. Meeting May 02, 2016 Page 6 of 6 Jamie Mullis from the City and Utility Authority Board made a motion to approve the expense warrant dated May 2, 2016. Jackie Dunham seconded the motion, approved by the Trustees 5 -0. Robert Ellerbee from the City and Utility Authority Board made a motion to approve the benefit approvals. Jose Santiago seconded the motion, approved by the Trustees 5 -0. 6. ADJOURNMENT There being no further business, the Trustees adjourned the meeting at 7:35pm.