2016-11-07 General Meeting & General Fund Meeting•
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CITY OF OKEECHOBEE GENERAL EMPLOYEES/POLICE/FIRE PENSION BOARDS
REGULAR MEETING MINUTES, NOVEMBER 7, 2016
CITY HALL, 55 SE THIRD AVENUE
OKEECHOBEE, FL 34974
1. CALL TO ORDER
Jack Boon called a meeting of the Board of Trustees for the City of Okeechobee General
Employees/Police/Fire Pension Boards to order at 5:00 PM in the City Council Chambers.
TRUSTEES
OKEECHOBEE GENERAL
Nathan Pippin
Jackie Dunham
Melissa Henry
Daryl Roehm
POLICE
Bettye Taylor
Bill Bartlett
Ray Worley (absent)
Jack Boon
Ryan Holroyd
FIRE
Adam Crum
Michael Skipper
Glen Hodges
John Koepke
OTHERS
Scott Baur, Kyle Tintle & Brittany Park, Resource Centers
Scott Christiansen, Attorney
Tony Kay Bogdahn Group
Mindy Johnson, Salem Trust
2. GENERAL EMPLOYEES BOARD CHAIR AND SECRETARY
The Boards agreed to move the elections for Board Chair and Secretary to the General Employees
individual session
3. PUBLIC COMMENT
Mindy Johnson spoke and stated that she was there to stop in and see how everything was going.
4. REPORTS
Investment Consultant Report (Tonv Kavl
Tony Kay introduced himself as the investment consultant of the plan stating that his job is to help
oversee investment options and total asset allocation. Bogdahn is a completely independent firm and
their interests are aligned with their clients. Mr. Kay provided an update on firm stating that they are
going to be changing the name of the firm in 2017 the name is unknown at this time. The ownership of
the firm is not changing it is still employee owned.
Mr. Kay reported a good quarter for equities and the GDP is still positive. International equity markets
are up by 7%. This quarter was a rebound with smaller companies. There continues to be increased
Meeting November 7, 2016 Page 2 of 5
volatility in the marketplace as the election has a high impact. It is likely that the feds will raise interest •
rates in the upcoming year due to the recession. There continues to be high rankings within companies.
Mr. Kay reviewed the asset breakdown over the quarter. The General plan began the quarter with
$10.8M in assets. They had $4.45M as of September 30, 2016. The Police plan ended the quarter at
$7.93 and the decline was due to distributions over course of the quarter. The Fire plan was up for the
quarter with $3.4M up to $3.SM. 48.4% was in domestic equities. The Police plan had 45% allocated in
domestic equities international which was a similar breakdown to the Fire plan.
The largest allocation is the �xed income fund; Dodge and Cox. Mr. Kay reviewed the asset allocation vs
the investment policy. There were no deviations from long term targets for all three plans. He advised
that he continues to monitor this closely and feels these are healthy exposures to pension plans that are
trying to achieve 7.5% for the actuarial return.
Mr. Kay reviewed the financial reconciliation. In the General plan the market value as of October 1, 2016
was $10ZM and income and appreciation was positive for all three plans. The Police plan had $7.6m in
assets for the �scal year. The Fire plan had $3.2M in assets for the fiscal year. The performance year-to-
date for all three plans generated a return of 8.47% which is good in terms of absolute performance.
Mr. Kay explained that it was a challenging year for Dana ranking in 98th percentile. They were up 7.2%
vs 7.8$ for the S&P. Their returns have been a drag on the relative returns of all the portfolios.
Mr. Kay discussed Dana and their history over the previous quarters and suggested considering
alternatives and will bring to the next meeting.
Ms. Dunham asked what kind of manager Dana is. Mr. Kay explained that Dana is a large cap core equity •
manager with the goal to outperform the S&P 500. Mr. Kay advised that it makes sense to segregate the
portfolio into value and growth managers and let the best managers manage the value side of the
portfolio Mr. Kay advised that Dana's level of underperformance is starting to impact and it is the time
to change. Mr. Kay suggested that in some cases other clients move allocation into the index fund so
that they don't have to wait another quarter. The fee on the index fund is 5 basis points.
Ms. Taylor asked about risk and putting the money into an S&P index fund and Mr. Christiansen advised
they can do that with costs associated and they may add managers down the road at no cost. He
explained that it is a good place to be and stated that whatever the market does impacts what the
resulting return is. Mr. Baur explained that once this is voted on, it will take a few days per direction to
raise cash and upon settlement of securities can instruct Salem to move forward.
Mr. Kay suggested terminating Dana Investors and putting them into the Vanguard 500 index fund. At
the next quarterly meeting the Board would review ways to purchase the index fund. Dana would have
to sell all the stocks in their portfolio and the cash would be used to purchase the S&P 500 mutual fund
and would sell stocks in the portfolio. Ms. Dunham was concerned if they would take a loss and this
would depend on the market.
Mr. Pippin asked if in fact if nobody takes action, what could Mr. Kay can bring to the next meeting. Mr.
Kay advised that he would bring alternative investment managers; a document showing managers in the
large cap space and how they build portfolios what their fees are and who the people are. Ms. Taylor is
concerned that ever since they got Dana their numbers haven't been so high and the purpose of going •
to them was for better performance. Mr. Kay stated that since the recommendation to Dana, there have
been changes to their processes which have changed their ability to outperform going fonivard as well as
Meeting November 7, 2016 Page 3 of 5
• to generate excess returns. Mr. Kay explained that they wouldn't have recommended them if they
thought they would trail the benchmark. Mr. Kay advised that the liquidation to the new fund takes
about one day to the mutual fund.
Mr. Christiansen wants the Boards to understand the costs associated. He explained that if they were
going to get rid of Dana and replace with another active manager it would be little more expensive than
going directly from one active manager to another. The funds will sell out of Dana to go into cash for the
mutual fund and in turn there will be expenses to sell. There is no cost to go into the mutual fund just
costs going out of Dana. If they hire an active manager in the mutual fund, there is no cost to moving
from Vanguard to that other mutual fund. But if they hired another active manager who does an
independent account like Dana then there would be a cost associated and they would have to buy all of
the stocks.
Mr. Kay showed the fees totaling 0.65% in assets under management. There is 0.05% under Vanguard so
the trading impact will be minimal and results in a savings of 60 basis points. If the choices Mr. Kay
brings in are other mutual funds, then there will be no downside to going to Vanguard because there
wouldn't be any fees associated. In any event they will have to sell out of Dana.
The other managers have performed well. Growth outside the US continues to be positive and offers
diversification and generating positive returns. The fixed income manager; Dodge and Cox is 1.78% vs
less than'/:% of the benchmark, they have done a great job with adding corporate bonds.
Mr. Kay advised they will recommend a mutual fund for the next meeting.
• Attornev Reqort (Scott Christiansen)
Mr. Christiansen reviewed the Trustee terms for all three of the Boards. He began with the Police Board
noting that Ryan Holroyd was 5th Trustee appointed on September 30, 2016 and his term expires on
September 30, 2020. Bettye Taylor is an elected member who was elected on September 30, 2016 and
her term expires on September 30, 2020. Jack Boon was elected and his term expires on September 30,
2017. Bill Bartlett is an appointed member and his term expires on September 30, 2020. Ray Worley was
reappointed on September 30, 2016 and his term expires September 30, 2020. The Police Board held a
separate meeting to decide on the 5th Trustee in September which Ms. Park attended and will provided
the minutes for that meeting in February.
On the Fire Board there are no changes except John Koepke was reappointed. On the General Board
Melissa Henry was elected as of September 30, 2016. Nathan Pippin is appointed as of September 30,
2016. Daryl Roehm is a City appointment. Of�cers for the General Board will be selected in the
individual meeting for the General Board.
Mr. Christiansen advised that the Form 1s need to be issued to the new Trustees as well as to the former
Trustees that moved to the OUA Board as well as those who resigned from the Board.
The fiscal year end reports are a notice to the City commission to give them status of plan as of
September 30, 2016.
• The Police and Fire state money was received and deposited.
Meeting November 7, 2016
Administrator Report (Scott Baur and Brittanv Park)
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Mr. Baur introduced Kyle Tintle as a third administrator to meet with the individual sessions. He
additionally discussed conferences and Trustee education. He offered the options of The Division of
Retirement as well as FPPTA, as that is not one that these Boards have used previously, but in case they
wish to become members and attend those conferences. The FPPTA conference is next in Orlando at the
end of January. The fee for joining is $500 annually. Mr. Baur said that the auditors will ask for
documentation for Trustee education.
The Boards adjourned the open session at 6:20 pm and proceeded into their individual sessions. Ms.
Park will go to the Police Board; Ms. Tintle will go to the Fire Board and Mr. Baur to the General Board.
INDIVIDUAL SESSION: GENERAL BOARD
Scott Baur called the individual meeting of the General Board Trustees to order at 6:23 PM.
Nathan Pippin made a motion to approve the August 1, 2016 meeting minutes. Jackie Dunham
seconded the motion, approved by the Trustees 4-0.
Nathan Pippin made a motion to approve the Audit Engagement Letter dated September 30, 2016.
Jackie Dunham seconded the motion, approved by the Trustees 4-0.
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Nathan Pippin made a motion to approve the September 30, 2016 �nancial statement. Jackie Dunham •
seconded the motion, approved by the Trustees 4-0.
Nathan Pippin made a motion to approve the expense warrant dated November 7, 2016. Jackie
Dunham seconded the motion, approved by the Trustees 4-0.
Nathan Pippin made a motion to approve the GASBY 67 disclosures. Jackie Dunham seconded the
motion, approved by the Trustees 4-0.
Nathan Pippin made a motion to approve the 2017 meeting dates. Jackie Dunham seconded the
motion, approved by the Trustees 4-0.
The Trustees discussed the recommendation by Tony Kay to move out of Dana. They came to an
agreement that they are not performing in the way that was intended.
Nathan Pippin made a motion to move out of Dana. Jackie Dunham seconded the motion, approved
by the Trustees 4-0.
The Trustees discussed the election of officers. The Trustees agreed to appoint Nathan Pippin as Board
Chair and Jackie Dunham as the Secretary.
Jackie Dunham made a motion to elect Nathan Pippin as the plan's Chairman. Daryl Roehm seconded
the motion, approved by the Trustees 3-0.
Nathan Pippin made a motion to elect Jackie Dunham as the plan's secretary. Daryl Roehm seconded •
the motion, approved by the Trustees 3-0.
Meeting November 7, 2016
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� The Trustees additionally discussed and were interested in becoming members of the FPPTA.
The General Board adjourned their individual session at 7 pm.
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