LimeBike Memorandum of Understanding

Police Retirement Pension Board Minutes - April 26, 2016

Miami Shores Village

Police Retirement System Pension Board Meeting

The Police Retirement Board and the General Employee Pension Board jointly met on Tuesday, April 26, 2016 at the C. Lawton McCall Community Center. The General Employee Pension Board meeting was called to order at 8:23 AM. The following Trustees were present for the meeting.

Trustees Police - Present

Herta Holly

John Bolton

Cliff Vickers

Natasha McKay

Ivonne Ledesma

Approval of Minutes

The Chairman asked if anyone had any questions regarding the minutes of the meeting held 1/26/2016,

 

A motion was made to approve the minutes of the meeting held January 26, 2016 the motion was seconded and passed unanimously.

Approval of Payment Warrants

The Chairman asked if anyone had any questions regarding Warrant 2016-007 in the amount of $4,075.26

A motion was made to approve Warrant 2016-007 in the amount $4,075.26 the motion was seconded and passed unanimously.

Ratify Warrants 2016-003-2016-005

The Chairman asked if anyone had any questions regarding Warrants 2016-003 $6,650.00, 2016-004 $5,000, 2016-005 $8,052.47 & 2016-006 $825.00.

Trustee Bolton asked for an explanation of the Holland & Knight Invoices. Attorney Levinson replied that the invoices are related to amendments to the Plan regarding tax issues. He advised the Trustees that that it may be a good idea to do so to invite the partner from Holland Knight to attend a future meeting.

Trustee Bolton asked if the General Fund has the same invoices, Attorney Levinson responded affirmatively. Trustee Bolton said he just wants to make sure that the invoices are reviewed; Attorney Levinson agreed to monitor the process in conjunction with Cypen & Cypen. Attorney Levinson said based on the January invoice it seems they are at the end of the course since they were preparing the determination letter to the IRS on 1/29/2016.

The Chairman said she is hopeful that this process is finalized by the next meeting.

Attorney Levinson reminded the Trustees of the Sunshine Law and how Trustees cannot talk to each other on the same Board about pending items. Trustees can talk to the service providers or Trustees from other Boards.

Attorney Levinson responded to a question regarding Holland & Knight’s hourly rate and pointed out that their hourly rate is lower than what they usually charge.

Trustee Benton said that both of these Boards hired Holland & Knight at the recommendation of Cypen & Cypen and believed this was done sometime in 2009. The request for an IRS determination is not new, this is something they have been wrestling with the IRS over the past years and believes this will situation will be done with once and for all after this process.

Attorney Levinson encouraged the Trustees to attend the FPPTA conferences and go through the process of getting Trustee certified. It gives you the opportunity to talk to other Trustees and how they are allocating in their portfolio. You can compare notes with other Trustees in the state of Florida. Another conference is the FRRS.

Trustee Ledesma asked about the IRS determination process and if there is a recommendation about making future requests for one. Attorney Levinson replied you can no longer apply for a Plan determination letter as the IRS has modified the process.

The Chairman asked if there were any other questions regarding the warrants referred above,

A motion was made to ratify Warrants 2016-003, 2016-004, 2016-005 & 2016-006 as stated above the motion was seconded and passed unanimously.

Investment

Mr. West discussed Miami Shores Village Police Officers’ Pension Fund Investment Performance Review 1st Quarter 2016. He pointed out that at its lowest point on February 11, 2016; the S&P 500 had fallen by -10.3%. However, equity prices recovered through the second half of the quarter as investors reacted to improving economic data, a recovery in commodity prices, and various central bank announcements of continued monetary policy easing. As a result, the S&P 500 appreciated 13.0% through the end of March and finished the quarter with a return of 1.3%.

Each of the US stock market indices they track followed a similar pattern to the S&P 500 and were modestly positive through the 1st. Quarter with the exception of the Russell 2000, which returned -1.5% for the period. The US Treasury yield curve flattened throughout the 1st quarter. U.S. macroeconomic data fueled domestic equity returns for the 1st quarter. Domestic equity index performance was mostly positive during the 1st quarter. Large Cap and Mid Cap sector performance were positive for the 1st quarter. He pointed out that the Health Care and Financial sectors were the only laggards returning -6.1% and -4.3% respectively.

Mr. West said he thinks June results overall will show improvement.

Mr. West asked if the Board would like to have Wells Fargo come to the next meeting as he believes it would be important for them talk about the underperformance.

The Trustees agreed to have Wells Fargo come to the next meeting. Mr. West said reminded the Board that when Wells Fargo was initially brought in, they were in the top 10 percentile and had a very long history of outperforming the benchmark. After hiring them, they had the worst year. Mr. West said from a value investor standpoint he is still comfortable with them as they are successful in identifying companies that have a positive earning result but the market is not rewarding them. Since they are trailing their benchmark over more than one period, he recommends that they attend the next meeting.

Attorney Levinson asked for an explanation of the process of identifying and monitoring underperforming assets.

The Chairman asked for an explanation of the difference in benchmarking an index versus actively managed account.

Mr. West replied in the past he had presented reports which compared active management and passive management. Depending on the market both strategies may enjoy periods where each may perform better.

Attorney Levinson asked Mr. West to walk the Board through the process of the criteria used to move a manager. Mr. West said the said from the investment policy they have criteria from a performance standpoint so if there is a violation they are flagged. If they fail any regulatory reviews or change management of a product, they are automatically replaced. The investment policy and the review process is designed for discussion. The second part of it is more the expert qualitative analysis, and if we change our opinion, we come to the Board of Trustees with a recommendation.

Mr. West said he was able to obtain a fee reduction for the Wells strategy we are trying to figure how to work this into a mutual fund holding for accounts they are buying and selling securities where they are holding the bonds they are giving a 20% discount for the next four quarters.

Mr. West said the other item he wanted to address was a question about why can’t the Plan be 100% equity in the portfolio.   He responded that would only be recommended when there is an extremely high probability of hitting or exceeding the actuarial rate of return. In his opinion, the likelihood of relying on persistent high equity returns is not well advised.   He discussed the results illustrated in his comparative performance portfolio comparison as of December 31, 2015. The volatility of the equity market presents the biggest problem, and then there are other concerns from governmental reporting standards.

Attorney Levinson noted that recent reports from the State of show the following asset allocations - 67% Equities, 24% in Fixed Income, 5% of Real Estate and 4% in others different kinds of alternatives. If you were to compare this Plan you are a little more conservative than the state average.

Attorney

Attorney Levinson advised the Board of the Police Plan you don't have to take action but would like to discuss further at the next meeting. Senate Bill 172 was adopted by the prior Legislature which required all police and fire Boards to create an administrative expense budget, and you have to operate within the spending budget. At the next meeting, we have to make sure we are working within the budget of expenditure you created by the end of the fiscal year. The administrator will look and see year to date how we are doing within the administrative expense budget, and if we are getting ahead, we need to amend the budget. Then we need to do a budget for the new fiscal year in October.

Trustee Ledesma asked if there is any way to obtain other budgets from other municipalities around their size. Mr. Falcon replied the audits are available online, and some of the Cities may post their Police and Fire budgets.

The next item Attorney Levinson discussed applies to both the GE and Police Plans regarding Coordination of benefits. The question is what if I start as a General Employee and join the Police Plan or if a Police officer decides to become a civilian employee and join the General Employee Plan; there are specific provisions in your pension. They state you don't have to vest separately in each Plan you can aggregate together the time in each Plan for vesting purposes and retirement benefits. However, the retirement benefit will be paid out of each Plan according to each program's retirement benefit and eligibility requirements.

There was a decision from the Florida Supreme Court regarding how the sunshine law would work. The Board charged someone $350 for records request. The lesson is to make sure that we are very diligent with public records requests, these are public documents, and the sunshine law is very strict in this respect.

Administrator

Mr. Falcon discussed the employee orientation meetings held March 23, 2016.

Out of the meeting, he reported a few questions came up. For example, the COLA is compounded October 1st, what happens to a member if they leave the first week in September, if they left in August they would get a COLA increase, but if they left in September, the member has to wait until the following October. Another item is regarding longevity pay on police, the ordinance indicates that only pensionable income is used to determine both final benefit and contribution is based on regular payroll, but his understanding is the practice of the Village is not to collect pension contributions on longevity pay. The other item he was questioned about was the administration of the Family Medical Leave Act when the member is out on unpaid leave in the case of the General Employee Plan the ordinance indicates a member has until September 30 to make a contribution for any time they are out of work due to Family Medical Leave when that leave is unpaid, the Police Plan is silent on unpaid Family Medical Leave. You have one participant in the Police Plan who has approached us and asked if we are going to give her credit, or if there is a process to pay for that time she was on unpaid medical/Family Leave.

For Plans Survivor substitution questions came up, for example, what if I pick joint survivor and get divorced can I put in a new survivor, and how many chances does a member get to change survivor. Attorney Levinson said he would get together with administrator and present to the Board what the answers should be to those questions. The Police Plan you can't change the form of benefit but you can substitute the survivor beneficiary, and the benefit is recalculated, and it goes up or down depending on the age of the new beneficiary.

The next item is the payments for Klausner Kaufman Jensen & Levinson and FHA-TPA. You have set up some pre-designated vendors that can be paid without going through the Warrant process. The request we are making to the Board is to add us to that list. Attorney Levinson said that since FHA-TPA is a flat amount every month where his attorney bill varies, he is comfortable getting paid quarterly.

A motion was made to approve adding FHA-TPA to the pre-designated vendors list that can be paid without going through the Warrant process; the motion was seconded and unanimously passed.

The next item was a request for Trustee McKay to attend the FPPTA conference September 25-28, 2016.

A motion was made to approve Trustee McKay attend the FPPTA Conference September 25-28, 2016 a motion was seconded and unanimously passed.

 

The next meeting will be held July 28, 2016.

The Meeting adjourned at 11:15