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2008-10-20 Police Fund Meeting� • CITY OF OKEECHOBEE POLICE DEPARTMENT PENSION BOARD MEETING MINUTES October 20,2008 POLICE FUNDS 1. The meeting was held at City hall, 55 Southeast 3rd Avenue, Room 200, Okeechobee, Florida, and was called to order by Denny Davis at 5:00 p.m. POLICE OFFICERS MEMBERS Denny Davis, Chair - Present Bettye Taylor, Secretary-Present Victoria Williams - Present Louise Chandler - Present Bill Bartlett- Present OUA Representative Basile Coule-Present Denny Davis made motion to approve minutes from May 12, 2008 2°a by Bill Bartlett seconded the minutes. All in favor motion carried. Reading of expenditures waved. • Joe Bogdahn from Bogdahn Group reviewed the portfolio from August 11, 2008. Bogdahn said this meeting was to review Trusco (Ridgeworth) performance. Said everyone did well on the calendar year basis. Bogdahn compared Trusco to Bowen and Hanes and West End. Said Bowen looks good going back last 4 years. Shows a pattern of good stock selection and low risk with Bowen. Said Trusco was doing good then they moved their offices to Atlanta, started splicing funds with other companies, started changing personnel a lot. Ridgeworth is the old Trusco and have been struggling. They have a number of different CEO's for the last 4 years. The growth portfolio has had numerous managers. Right after we hired them they started all these changes. Said all of their performances started suffering after these changes. Said some of the changes are positive. But his concern with them is due to their unstable patterns. Their growth product had great 2007 and then fell off a lot in 2008. According to Bogdahn West End came in for interview with the other boards. They have a concentrated portfolio of inega cap companies. They buy the biggest of the big companies. They have a nice tract company. They have had a couple of bad quarters and a couple of good quarters. Over all they are doing pretty good. • Bowen Hanes have a global approach. They look at the macroeconomics approach. They look at what is going on and look for stocks that have to do with products that will be �3 . needed to make these new approaches. He said they had brought up stock in John Deere because they looked at the amount of corn that would be needed for the new fuels and decided that people would need equipment to harvest the product. They look at the big picture. Bowen Hanes was given the management fund after the other boards listed to all three companies. Bowen Hanes would like to manage the entire fund. He recommendations is let Bowen Hanes take over the Stock side of the portfolio for now and then look at eventually let them take over the whole portfolio. He gave examples of if we go with index funds we would have taken a large hit on Lehman Brothers. If we allow then take over they will not handle custodian portion. He advised he had got bids from different people to handle the custodian. Bettye Taylor asked about the fees we would be charged to have to hire a custodian. According to Bowen we would not get hit harder with fees. According to Bogdahn Bowen Hanes would charge us on balance basis, with 50's fees with custodian fees making it 10 basis points. Right now we are paying 65 basis points to Trusco. He said the fees would not go up and if we put the whole portfolio with them the fees would come down. He advised that Tampa Police had been with Bowen for 30+ years. Bogdahn said if all the boards went with the Bowen group they would base the fees on handling all the boards combined vs. each board paying the fees separately. • Bettye Taylor asked the status of our current fund. He advised the fund is down 12 to 14 percent for the fiscal year. He advised that the month of October, which is the new fiscal year, we were probably down another 10 percent but we had the rest of year to pull it up. Chairman Davis asked Bogdahn why we were holding off on transferring the whole fund. Bogdahn recommended that we allow Bowen Hanes to manage the entire portfolio or index. When questioned by Bettye Taylor about the index fund he said let custodian buy the Vanguard index fund at 9 basis points, which is inexpensive. Scott Christiansen said the fee is lower because we would buy all the bonds that are in the bond fund so obviously the fee would be lower because they don't have to do a lot of thinking as to what to buy or not buy because everything is in the Vanguard Fund. You lose some of the downside protection you would have with an active manager. If we put everything with Bowen we get lower fees if we allow them to manage the whole portfolio. He said the fee 65 is on the first 10 million and 40 on the amount that goes over and they will consider all three funds as one for the fee charges. They made the suggestion that we vote Bowen Hanes in for the Stocks and then let them talk to all the boards at the November meeting about taking over the whole portfolio. The best bid was Salem for custodian. John Zeigler in the audience asked if he had seen any management changes with Bowen Hanes like they saw with Trusco. According to Bogdahn they had not seen any of this. • Z/3 i ! . Motion made by Bill Bartlett to allow Bowen Hanes take over the Stock Portfolio. Louise Chandler 2°a motion. All in favor, motion carried. Scott Christiansen addressed the board next. Scott said the Police Disclosure Form were all up to date. Said he sent to the revised forms over for the Pension Funds. Said he had also sent a form over so Pension Money could be moved to a Roth IRA. There will be changes to the plan to bring us up to date with the new IRS tax code. Said it will not have a cost but just need to be done. Tax money was $134,000.00 this year but next year we will receive about $30,000. When they first implemented the new database we were given a guarantee for these past years. The guarantee ends this year so we will not get the same amount of money. Said we had to declare our expected rate of return. A letter had to be sent to Charles Slavin in Tallahassee telling him that we will not meet out expected rate of return this year. Bill Bartlett made motion 2nd by Denny Davis to send letter to Charles Slavin saying we do not to expect to meet our expected rate of return but do expect to return to our expected rate of return in the future years. All in favor motion carried. Denny Davis made motion to adjourn. Seconded by Louise Chandler. All in favor motion • carried. � /�G� Ch �' an Denn Davis �� ' Secret � � 3�3