2012-07-02 General Fund Special MeetingC�
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AUTHORITY/POLICE/FIRE PENSION BOARDS
SPECIAL MEETING MINUTES, JULY 2, 2012
CITY HALL, 55 SE THIRD AVENUE
OKEECHOBEE, FL 34974
CALL TO ORDER SPECIAL MEETING: 2:15 p.m. by Jamie Mullis
TRUSTEE ATTENDANCE:
CITY OF OKEECHOBEE/OUA
POLICE:
FIRE:
OTHERS PRESENT:
Jamie Mullis, Chairperson
Daryl Roehm
Linda Tewksbury
Bettye Taylor, Secretary
Billy Douglas, Secretary .
Mike Skipper •
Basil Coule, Financial Liaison
Brian Whitehall, City Administrator
Melisa Jahner, Secretary
Kevin Barbour
Bill Bartlett
Glen Hodges
CONFERENCE CALL: Scott Christiansen was present via conference call. He explained that there were no liabili6es should the
boards decide to make the change and that there were pros and cons on both sides. The general rule is to have separate managers,
but it would be up to the boards to decide which way they preferred.
• The boards were discussing the recommendation from Jack Evatt, Representative of The Bogdahn Group, to consider changing
fixed income managers from Bowen Hanes to PIMCO since Bowen Hanes has not met perFormance expectations. His opinion is that
Bowen Hanes is not a dedicated fixed income manager as they manage only one "fixed income only" portfolio. A memorandum from
Jack Evatt was distributed with the following reasons to consider: 1) Two managers instead of one reduces manager risk. 2) Good
combination of upside capture/downside capture by combining a more opportunistic manager (PIMCO) with a manager (Dodge &
Cox) that has historically protected the downside very well. He also identified what the necessary steps would be should the boards
decide to take action.
A memorandum from David Kelly of Bowen Hanes was also distributed. They understand that the portfolio has not performed as well
as the market index or our peers since the inception of our relationship. They have been "bearish" on bonds, which has been the
wrong call over the previous couple of years, but feel the porlfolio is posi6oned appropriately looking out over the next few years for
the following reasons: 1) long term growth trend/pro-business landscape improving 2) more sustained appetite for risk: Europe's
problems will not last forever, and once the clouds of uncertaintity lift, rates will move dramatically higher 3) the Fed's actions are
designed to increase inflation expectations, they are weakening the currency which also destroys purchasing power, these
ingredients will likely produce inflation at some point & once started it is very difficult to stop quickly, rising inflation would tend to
produce higher interest rates and lower bond prices. The question being: Does the Board believe in gradually higher rates over the
next few years or does the Board believe these rates will stay low or trend lower for the next few years? Their bottom line is they think
the weight of evidence is heavily on the side of higher interest rates and that bond performance of the past will be a distant memory.
Their timing has obviously been early, but in the end, will have worked out for the betterment of the Plans.
After discussion, the Boards decided not to take action, but to request the updated new quarter porlfolio before the August 6, 2012
meeting. Also, the Boards requested that Tim Nash, the assigned Consultant of The Bogdahn Group be present at the next meeting.
ADJOURN MEETING: The meeting was adjoumed at 3:00 p.m.
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