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A.1. Minutes 05-06-19 DRAFT RevCITY OF OKEECHOBEE GENERAL EMPLOYEES/POLICE/FIRE PENSION BOARDS REGULAR MEETING MINUTES, May 6, 2019 CITY HALL, 55 SE THIRD AVENUE OKEECHOBEE, FL 34974 1. CALL TO ORDER Nathan Pippin called a meeting of the Board of Trustees for the City of Okeechobee General Employees, Police, and Firefighter Pension Boards to order at 5:00 PM in the Council Chamber at City Hall. Scott Baur called roll. Those persons present included: TRUSTEES OKEECHOBEE GENERAL Jackie Dunham – Secretary Willie Hall, Jr. Melissa Henry Daryl Roehm OTHERS Kyle Tintle, Wanda Gordon & Scott Baur, Resource Centers Scott Christiansen, Attorney, Christiansen & Dehner Leon Palandjian, Intercontinental Real Estate Corporation Jay McBee, DiBartolomeo McBee Hartley & Barnes Larry Wilson & Shelly Jones, Gabriel Roeder Smith India Riedel, Finance Director City of Okeechobee TRUSTEES POLICE Bettye Taylor - Secretary Ryan Holryod Ray Worley TRUSTEES FIREFIGHTERS Herb Smith, Chairman John Koepke Josh Sanders 2. PUBLIC COMMENT There were no public comments at this time. 3. REPORTS Jay McBee, DiBartolomeo, McBee, Hartley & Barnes Mr. McBee appeared before the combined Okeechobee Boards to present the audited financial reports for the fiscal year ending (FYE) September 30, 2018. Mr. McBee provided a clean, unqualified opinion for the Okeechobee Employees’ Retirement System, (General Employees - GE); Okeechobee Firefighters’ Retirement System, (Firefighters’ – FF); Okeechobee Police Officers’ Retirement System, (Police - PD). He reviewed the gross total assets of the Plans: GE had $5,003,982 million, FF had $4,279,305 million, and PD had $9,617,497 million. Mr. McBee addressed the footnotes and the changes to the fiduciary net positions for the three Plans. He reviewed the balance sheets which included the employee and employer contributions for the FYE 2018. It was a very good year for the investment returns for the Plans and noted that the Plans are operating very efficiently with low administrative expenses. The changes in the fiduciary net positions were: GE $303,038; FF $317,400; and PD $680,238. Mr. McBee reviewed the balance sheet which includes the employer and employee contributions for the fiscal year 2018. Daryl Roehm made a motion to approve the Audit for the City of Okeechobee Employees’ Retirement System dated September 30, 2018. The motion received a second from Melissa Henry, approved by the Trustees 5-0. Meeting May 6, 2019 Page 2 of 7 John Koepke made a motion to approve the Audit for the City of Okeechobee Municipal Firefighters’ Pension Trust Fund dated September 30, 2018. The motion received a second from Josh Sanders, approved by the Trustees 3-0. Bettye Taylor made a motion to approve the Audit for the City of Okeechobee Municipal Police Officers’ Pension Trust Fund dated September 30, 2018. The motion received a second from Ryan Holroyd, approved by the Trustees 3-0. 5:19 PM Larry Wilson and Shelly Jones entered the meeting. Larry Wilson & Shelly Jones, Gabriel Roeder Smith & Company Mr. Wilson came before the Boards to present the October 1, 2018 Actuarial Valuations for the City of Okeechobee General Employees’ Retirement System, (General Employees - GE); the City of Okeechobee Firefighters’ Retirement System (Firefighters’ – FF); and the City of Okeechobee Police Officers’ Retirement System, (Police – PD). He began by reviewing the provisions and assumptions for the three Plans. The minimum payment for the GE for the year ending September 30, 2019 is 15.3% of covered payroll ($150, 582). This cost is based upon projected covered annual payroll for the fiscal year ending (FYE) October 1, 2019 ($986,150). The anticipated member contribution is 6.0% of covered payroll ($59,169). The City’s required minimum contribution is 9.3% of covered payroll ($91,413) to be paid in FYE September 30, 2020. The minimum payment for the FF for the year ending September 30, 2019 is 35.7% of covered payroll ($183,016). This cost is based upon projected covered annual payroll for the fiscal year ending (FYE) October 1, 2019 ($512,885). The anticipated member contribution is 5.0% of covered payroll ($25,644) and the State will contribute ($52,793) or 10.3%. The City’s required minimum contribution is 20.4% of covered payroll ($104,579) to be paid quarterly in FYE September 30, 2020. The minimum payment for the PD for the year ending September 30, 2019 is 25.6% of covered payroll ($239,057). This cost is based upon projected covered annual payroll for the fiscal year ending (FYE) October 1, 2019 ($932,186). The anticipated member contribution is 5.0% of covered payroll ($46,609) and the State will contribute ($81,690) or 8.8%. The City’s required minimum contribution is 11.9% of covered payroll ($110,758) to be paid quarterly in FYE September 30, 2020. Jay McBee left the meeting at 5:50 PM. Mr. Wilson recommended an experience study for all three Plans. The Government Finance Officers Association (GFOA) recommends a study every 5 years. He explained the GE Plan has 3 years’ experience separate from the Okeechobee Utility Authority. Mr. Wilson described an experience study before October 1, 2019. The Boards discussed the timing and cost of the study. The Boards listened to the recommendation and decided to wait and not take any action at this time. Jackie Dunham made a motion to approve the Actuarial Valuation for the City of Okeechobee General Employees’ Retirement System as of October 1, 2018. The motion received a second from Melissa Henry, approved by the Trustees 5-0. Josh Sanders made a motion to approve the Actuarial Valuation for the City of Okeechobee Municipal Firefighters’ Pension Trust Fund dated October 1, 2018. The motion received a second from John Koepke, approved by the Trustees 3-0. Bettye Taylor made a motion to approve the Audit for the City of Okeechobee Municipal Police Officers’ Pension Trust Fund dated September 30, 2018. The motion received a second from Ray Worley, approved by the Trustees 3-0. Meeting May 6, 2019 Page 3 of 7 Larry Wilson and Shelly Jones left the meeting at 5:55 PM. Attorney Report (Scott Christiansen) Mr. Christiansen reported that his partner, Lee Dehner, passed away leaving him with approximately 102 Boards. He plans on continuing to work with the Okeechobee Plans. Mr. Christiansen stated that the Summary Plan Descriptions (SPD) needs to be updated every two years. The last time the SPD’s were updated was February 2017 for the General Plan and May 2017 for the Police and Firefighters’ Plans. Daryl Roehm made a motion to approve authorizing counsel to update the Summary Plan Description for the Okeechobee General Employees Retirement System. The motion received a second from Jackie Dunham, approved by the Trustees 5-0. Herb Smith made a motion to approve authorizing counsel to update the Summary Plan Description for the Okeechobee Firefighters’ Retirement System. The motion received a second from Josh Sanders, approved by the Trustees 3-0. Ray Worley made a motion to approve authorizing counsel to update the Summary Plan Description for the Okeechobee Police Officers’ Retirement System. The motion received a second from Ryan Holroyd, approved by the Trustees 3-0. Mr. Christiansen informed the Boards of the proposed ordinances, and recommended amending the 3 Plans to be in compliance with the changes to the Internal Revenue Codes and Regulations, with guidance from the Internal Revenue Service and recent litigation. The proposed ordinances were submitted to the City to be addressed at the next City Council meeting. Mr. Christiansen updated the Firefighters’ on the cancer presumption bill passed by the legislature and signed by the Governor. The cancer bill will provide additional benefits for firefighters diagnosed when specific conditions are met. The firefighters’ will be presumed to become ill in the line of duty as a result of doing their job if diagnosed with the specified cancers. Mr. Christiansen inquired about the status of a former member of the Okeechobee General Employees Retirement System. Mr. Michael O’Conner, the member in question, retired. He was charged with a misdemeanor to avoid a possible forfeiture. Mr. Christiansen continued down his checklist and asked if the General Employees and the Police Officers recently elected a Chairperson and Secretary. Ms. Tintle acknowledged the officers were elected and she will provide the date of the appointments to the Attorney. Mr. Jack Boon applied for his retirement so he will have to resign from the Board. An election will have to take place for the vacancy on the Police Officers’ Board. Ms. Bettye Taylor will manage the election for a Trustee replacement. Mr. Christiansen reminded the Trustees that the Form 1 financial disclosure forms are due to the Supervisor of Elections in their place of residence. Next he discussed the declaration of the expected rate of return for the 3 Plans of 7%. The Trustees considered the expected rate of return for their individual Plan. Jackie Dunham made a motion to approve a 7% investment return for the Okeechobee General Employees Retirement System based on the advice of the investment consultant for the next year, the next several years and for the long-term thereafter. The motion received a second from Melissa Henry, approved by the Trustees 5-0. Josh Sanders made a motion to approve a 7% investment return for the Okeechobee Firefighters’ Retirement System based on the advice of the investment consultant for the next year, the next Meeting May 6, 2019 Page 4 of 7 several years and the long-tern thereafter. The motion received a second from John Koepke, approved by the Trustees 3-0. Ray Worley made a motion to approve a 7% investment return for the Okeechobee Police Officers’ Retirement System based on the advice of the investment consultant for the next year, the next several years and the long-term thereafter. The motion received a second from Ryan Holroyd, approved by the Trustees 3-0. Ms. Tintle will submit the investment rate of return letters to the Division of Retirement. Administrator (Scott Baur) Mr. Baur introduced Leo Palandjian to the Boards. Intercontinental Real Estate Corporation (Leo Paladjian) Mr. Paladjian came before the Boards to reiterate the information on the firm and its holdings presented previously by Peter Hapgood of Intercontinental Real Estate on November 5, 2019. He also wanted to address any questions the Trustees might have. Mr. Paladjian reviewed a sample investment report for the Boards. He explained that his firm focuses exclusively on real estate. Originally they were a construction company in the Boston metro area, then development, and evolved to an asset management firm with 106 employees. The fund is open ended which allows quarterly redemptions based on quarterly property appraisals by an external group of appraisers. Mr. Paladjian discussed leverage, diversification and property types. Holdings range from core, core plus, value added and opportunistic strategies. Intercontinental diversifies the geography and types of properties with a concentration in office and multi-family. Mr. Paladjian sees real estate as a diversification tool which provides an attractive return for portfolio. It takes approximately 3 months to get into the fund and about 90 days to get out depending on the que at the time. The 5 million dollar minimum to get into the fund was discussed and Mr. Paladjian will check on it. Mr. Baur asked if the Boards could jointly invest in the fund rather than separately. Mr. Christiansen did not think that was possible. If the Boards wanted to proceed with Intercontinental Mr. Paladjian would verify the specifics for the Plans. He thanked the Boards for their time and consideration. No action on real estate was taken at this time. Willie Hall, Jr. departed the meeting at 6:40PM. Scott Baur presented the AndCo Report in John McCann’s Absence Mr. McCann provided the quarterly investment reports for each Board’s review. In his absence, Mr. Baur presented the reports for the period ending March 31, 2019. After a challenging close to 2018, the markets rebounded nicely for the first quarter of 2019. He continued reviewing the performance of the portfolios for the General Employees’, Firefighters, and Police Plans. The General Plan ended the quarter with $4,826,681 versus last quarter ending with a balance of $4,395,306 in assets; the Fire plan ended the quarter with assets of $4,196,697 versus the previous quarter’s ending balance of $3,843,233; the Police Plan ended the quarter with $9,230,983 in assets versus last quarter’s balance of $8,645,622 in assets. Mr. Baur reviewed the asset allocations for each Plan noting that the total fixed income is outside the policy range for the General Employees’ Retirement System. He continued with the numbers for the quarter: The numbers were: General Employees 10.25% versus the policy of 9.20% a difference of 1.05%; Fire 9.96% versus the policy of 9.02%, a difference of 0.94%; and Police -10.11% versus the policy of 9.02% a difference of 0.94%. Mr. Baur reviewed the big picture of the fiscal year to date numbers, one year, three year, five year, and the returns since inception for each of the Plans. Meeting May 6, 2019 Page 5 of 7 Mr. McCann provided 3 possible replacements for Becker Value. The Boards reviewed the alternatives and made motions as follows: Daryl Roehm made a motion to replace Becker Value with Vanguard Equity-income Fund Admiral Shares. The motion received a second from Jackie Dunham, approved by the Trustees 4-0. Herbert Smith made a motion to replace Becker Value with Vanguard Equity-income Fund Admiral Shares. The motion received a second from Josh Sanders, approved by the Trustees 3-0. Ray Worley made a motion to replace Becker Value with Vanguard Equity-Income Fund Admiral Shares. The motion received a second from Ryan Holroyd, approved by the Trustees 3-0. There being no further business, the Boards adjourned the open session at 7:07 PM and the Trustees proceeded to their individual sessions. Ms. Gordon attended the Firefighters’ Board, Ms. Tintle attended the Police Board and Mr. Baur attended the General Board meeting. INDIVIDUAL SESSION: GENERAL EMPLOYEES The meeting began with a review of the February 4, 2019 meeting minutes. Daryl Roehm made a motion to accept the Quarterly Meeting Minutes for the February 4, 2019 meeting. The motion received a second from Jackie Dunham, approved by the Trustees 4-0. Scott Baur presented the Board with the financial statement for March 2019. The financial statements were received and filed. The quarterly expenses were reviewed by the Trustees. Jackie Dunham made a motion to approve the Warrants presented for February 26, March 12, April 2, and April 12, 2019. The motion received a second from Melissa Henry approved by the Trustees 4-0. Scott Baur presented the Board with the new employee’s acknowledgements for Tammy Hartwell, Robert Jarriel, and Robert Keefe, Jr. The acknowledgments were received by the Board. The new employee acknowledgements were accepted by consensus. The Trustees reviewed the benefit approval for Robert Siler to receive a refund of his contributions. Daryl Roehm made a motion to approve the benefit approval for Robert Siler. The motion received a second from Melissa Henry approved by the Trustees 4-0. The Board discussed investing in Real Estate with Intercontinental as a means of portfolio diversification. The Trustees did not take any action on the investment in Real Estate. A significant discussion was held in reference to reducing the DROP retirement age to 62 from 65. The Board addressed the impact of the ordinance change and India Riedel participated in the discussion. Meeting May 6, 2019 Page 6 of 7 Nathan Pippin made a motion to have an ordinance changing the normal retirement age of 65 to 62 immediately based on the cost study provided by the Plan’s Actuary Gabriel, Roeder, Smith & Company. The motion received a second from Jackie Dunham, approved by the Trustees 4-0. There being no further business, the Board was adjourned at 7:35 PM. INDIVIDUAL SESSION: POLICE BOARD Bettye Taylor called the individual meeting of the City of Okeechobee Police Officers’ Retirement System to order. The Board reviewed the minutes from the Quarterly Meeting which was held on May 6, 2019. Ryan Holroyd made a motion to approve the meeting minutes for the Quarterly Meeting of the Okeechobee Police Officers’ Retirement System held on February 4, 2019. The motion received a second by Ray Worley approved by the Trustees 3–0. Ms. Tintle presented the Board with the Interim Financial Statements. The Trustees received the financials and they were filed. The Board reviewed the expenses for the quarter. Bettye Taylor made a motion to approve the warrants from March 12, April 2, and April 12, 2019 for the Okeechobee Police Officers’ Retirement System. The motion received a second by Ryan Holroyd approved by the Trustees 3–0. Ms. Tintle presented the Trustees with the new member acknowledgement for Savana Smith. She updated the Trustees of the progress of adding a City resident to the Board. The City is still working on finding an appropriate candidate. Bettye Taylor will distribute ballots for the Police Officers’ election for a new Trustee. Ms. Tintle distributed the Share Plan Allocations for the Police Plan to the Board. Bettye Taylor made a motion to approve the new member acknowledgement for Savana Smith to the Okeechobee Police Officers’ Retirement System. The motion received a second by Ryan Holroyd approved by the Trustees 3–0. INDIVIDUAL SESSION: FIRE BOARD Herb Smith called the individual meeting of the City of Okeechobee Municipal Firefighters’ Pension Fund to order. The Board reviewed the minutes from the Quarterly Meeting which was held on February 4, 2019. Josh Sanders made a motion to approve the Quarterly Meeting Minutes held on February 4, 2019. The motion received a second by John Koepke, approved by the Trustees 3–0. Ms. Gordon presented the March 2019 financial statements which were received by the Board. She presented the Warrant for the following dates: February 25, March 12, April 2 and 12, 2019 for the Trustees to review. Josh Sanders made a motion to approve the Warrants for February 25, March 12, April 2 and 12, 2019. The motion received a second by John Koepke, approved by the Trustees 4–0. Meeting May 6, 2019 Page 7 of 7 Ms. Gordon reminded the Trustees to complete the third party anonymous survey for AndCo. She presented the benefit approval for Timmy Palmer for a refund of his contributions. Josh Sanders made a motion to approve the refund of contributions for Timmy Palmer. The motion received a second by John Koepke, approved by the Trustees 3–0. Seeing there was no other business the Fire Board adjourned their individual session at 7:19 PM.