minutes 08-02-12 - Resource Centers

CITY OF CAPE CORAL
MUNICIPAL FIREFIGHTERS’ PENSION TRUST FUND
BOARD OF TRUSTEES
MINUTES OF QUARTERLY MEETING
AUGUST 2, 2012
The meeting was called to order at 11:10 A.M. in the Community Room located
in the Cape Coral City Complex.
Those Trustees present on behalf of the Cape Coral Municipal Firefighters’
Pension Trust Fund were Richard Chappelle, Larrie Hedrick, and Damon
Alimonti.
Also Present: Lee Dehner, Christiansen & Dehner
Linda Runkle & Robert Kovacs, Pension Resource Center
Jeff Swanson, Southeastern Advisory Services
Doug Lozen & Ferrell Jenne, Foster & Foster
Steve Stack, ICC Capital Management
Kurt Phares, Delaware Investments
Victoria Bateman, Finance Director
Brendan Fonock, Union President
Christine Formoso, Steven Civera & Paulo Silva, Penn Capital Management
PUBLIC COMMENT
Union President Brendan Fonock addressed the Board. He requested that the
Board authorize service providers of the Pension Board to provide information to
the Union for contract negotiations. He reported that a review of contracts with
service providers should be preformed to determine if the consultants are being
paid within the standards of the industry. He requested that disability reviews be
held every 5 years until retirees reach age 50. Mr. Fonock reported that he is
working on the data base for collection of Chapter 175 State funds, and
expressed the support of the Union for reducing the investment earnings
assumption for the Actuarial Valuation from 8% to 7.75%.
APPROVAL OF MINUTES
The Board reviewed the minutes of the meeting held on May 3, 2012. Damon
Alimonti made a motion to approve the minutes of the meeting. Richard
Chappelle seconded the motion, approved by the Trustees 3-0.
INVESTMENT MANAGER REPORT: DELAWARE INVESTMENTS
Kurt Phares appeared before the Board on behalf of Delaware Investments to
provide a report on the performance of the MBS Fund, U.S. Governmental
Mortgage Backed Securities. Mr. Phares explained that Delaware Investments
joined the Macquarie Group in 2010. The MBS fund seeks to provide a positive
absolute return by investing in U.S. Government backed fixed income securities,
with particular focus on Agency MBS. He advised that the investment objective
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CITY OF CAPE CORAL
MUNICIPAL FIREFIGHTERS’ PENSION TRUST FUND
BOARD OF TRUSTEES
MINUTES OF QUARTERLY MEETING
AUGUST 2, 2012
seeks to return Libor plus 300 basis points annually, with no negative rolling
quarters. Mr. Phares reported that the current value of the portfolio is $4.14M,
and that the investment return for the year to date is 1.87%. He advised that a
realistic goal for investment earnings is 3.5%.
Jeff Swanson reported that the investment has worked well within the portfolio.
He recommended that the Investment Policy Statement be modified to adjust the
target return for Delaware Investments MBS Fund to Libor + 300 basis points.
Richard Chappelle made a motion to modify the Investment Policy Statement in
accordance with Mr. Swanson’s recommendation. The motion was seconded by
Damon Alimonti, approved by the Trustees, 3-0.
INVESTMENT MANAGER REPORT: PENN CAPITAL MANAGEMENT
Christine Formoso, Steven Civera, and Paulo Silva appeared before the Board
on behalf of Penn Capital Management to review performance of the Small-Mid
Cap Equity portfolio. Mr. Civera advised that the value of the portfolio on June
30, 2012 was $6.67M, down from $7.4M on March 31, 2012. He reported that
although the loss for the quarter was 10%, the current value is up 2%. Jeff
Swanson explained that Penn Capital Management has been under review
status since the third quarter of 2011. He advised that the first quarter of 2012
showed positive performance, but that the second quarter of 2012 was poor. Mr.
Swanson recommended that the Board move forward with a manager search to
replace Penn Capital Management.
INVESTMENT MANAGER REPORT: ICC CAPITAL MANAGEMENT
Steve Stack appeared before the Board on behalf of ICC Capital Management to
review the performance of the portfolio for the quarter ending June 30, 2012. He
advised that the value of the portfolio was $19.78M on June 30, 2012, down from
$21.05M on March 31, 2012, a loss of -6%. He reported that many companies
are doing well, are paying down debt, and have cash, and explained that “the
companies are not broken, the stocks are”. Jeff Swanson explained that ICC
Capital Management has been under review status since the fourth quarter of
2012. He advised that the first quarter of 2012 showed positive performance, but
that the second quarter of 2012 was poor. He recommended that ICC Capital
Management be given additional time to improve performance, stating that the
margin of underperformance was not as dramatic as that of Penn Capital
Management. ICC Capital Management will report to the Board on a quarterly
basis while under review status.
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CITY OF CAPE CORAL
MUNICIPAL FIREFIGHTERS’ PENSION TRUST FUND
BOARD OF TRUSTEES
MINUTES OF QUARTERLY MEETING
AUGUST 2, 2012
INVESTMENT CONSULTANT REPORT
Jeff Swanson appeared before the Board on behalf of Southeastern Advisory
Services to provide a report on performance of the portfolio for the quarter ending
June 30, 2012. He reported that the portfolio experienced a 3.2% loss for the
quarter, and advised that the portfolio value has increased by 12.7 % fiscal yearto-date.
The total value of the fund of June 30, 2012 was $89.5M.
Mr. Swanson reviewed the investments in the portfolio and explained that real
estate, fixed income, and Delaware MBS were the positive investments for the
quarter. He advised that he will bring recommendations to replace Penn Capital
Management at the next quarterly meeting.
Mr. Swanson recommended that Salem Trust Company be instructed to fund
cash needs for the Receipts & Disbursements account equally from ICC Capital
Management and Sawgrass Asset Management, and to distribute additional cash
receipts equally to C.S.McKee and PIMCO. Damon Alimonti made a motion to
modify the letter of instruction to Salem Trust Company in accordance with Mr.
Swanson’s recommendation. The motion was seconded by Richard Chappelle,
approved by the Trustees, 3-0.
ACTUARIAL ASSUMPTION CHANGES: EXPERIENCE STUDY
Doug Lozen appeared before the Board on behalf of Foster & Foster to answer
questions about the Experience Study that was presented to the Board on May 3,
2012. Mr. Lozen advised that assumption changes must be implemented by the
Board based upon reasonable expectations that rely upon actual experience.
Damon Alimonti made a motion to reduce the investment earnings assumption
from 8% to 7.75%, phased in over a three year period. The reduced investment
earnings assumption will be utilized for the 2012 Actuarial Valuation. The motion
was seconded by Richard Chappelle, approved by the Trustees 3-0.
It was a consensus of the Board that other proposed actuarial assumption
changes presented by Foster & Foster, as outlined in the Board Minutes of May
3, 2012, be discussed again in a year or two.
Mr. Lozen discussed the Foster & Foster Memorandum Regarding Funding
Requirements. He advised that the State of Florida permits the annual required
contributions to be calculated as a percentage of payroll, or in actual dollars. It
was a consensus of the Trustees and Finance Director Vickie Bateman that
dollars are easier to understand.
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CITY OF CAPE CORAL
MUNICIPAL FIREFIGHTERS’ PENSION TRUST FUND
BOARD OF TRUSTEES
MINUTES OF QUARTERLY MEETING
AUGUST 2, 2012
Damon Alimonti made a motion that the 2012 Actuarial Valuation will reflect
required pension contributions in dollars. The motion was seconded by Richard
Chappelle, approved by the Trustees 3-0.
ATTORNEY REPORT
Lee Dehner presented the proposed ordinance prepared by the City Attorney’s
Office. He explained that the new definition of “salary” for the calculation of
benefit entitlement will be limited to 300 hours of overtime, and the effective date
for determination of compensable vacation balances will be February 7, 2012.
Richard Chappelle made a motion to accept the ordinance. The motion was
seconded by Damon Alimonti, approved by the Trustees, 3-0.
Mr. Dehner reviewed the memorandum from Christiansen & Dehner regarding
benefit overpayments. Linda Runkle advised that Foster & Foster provides an
annual review of pension benefits, and she explained that the Pension Resource
Center and Salem Trust Company coordinate and confirm pension benefit
payments on a routine basis.
Mr. Dehner advised that new legislation effective July 1, 2012, requires that the
birth dates of public safety officers be redacted from public records. He also
reported that beneficiary designations must be updated after a divorce in order
for an ex-spouse to be legally recognized as a beneficiary.
Mr. Dehner explained that the current Travel Policy for the Board follows the
statutory reimbursement provisions of Florida Statute 112.061. He advised that
the Board may adopt the City’s Travel Policy, follow IRS guidelines, create a new
policy, or continue to follow Florida statutes. The Board will discuss this topic
further at the next quarterly meeting.
Mr. Dehner reported that Trustees should not communicate via e-mail about
Board business due to the statutory requirement that substantive discussions
must occur in open meetings in accordance with the “Sunshine Law”.
ADMINISTRATIVE REPORT
The Trustees reviewed the disbursements and benefit approvals provided by the
Administrator for review. Richard Chappelle made a motion to approve the
disbursements and benefit approvals as presented. Damon Alimonti seconded
the motion, approved by the Trustees 3-0.
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CITY OF CAPE CORAL
MUNICIPAL FIREFIGHTERS’ PENSION TRUST FUND
BOARD OF TRUSTEES
MINUTES OF QUARTERLY MEETING
AUGUST 2, 2012
The Trustees reviewed the Notice of Election and procedures for the expiring
Trustee term of Damon Alimonti. Nominations will be accepted starting August
13, 2012, and the nomination period will end on August 29, 2012. Mr. Alimonti is
interested in serving another term as Trustee. Linda Runkle reminded Richard
Chappelle that the term of his appointment by the City will expire on October 31,
2012. He advised that he will reapply for appointment by the City Council.
The Trustees discussed the fee increase proposal submitted by the Pension
Resource Center. Larrie Hedrick requested that a copy of the original contract
for services, and subsequent addenda to the agreement, be provided to the
Board for review and discussion at the next quarterly meeting. Mr. Hedrick
recommended that the Board review all service providers every five years to
determine if fees are in line with industry standards.
OTHER BUSINESS
Damon Alimonti made a motion to permit service providers to communicate with
the City and the Union during negotiations by answering questions and providing
requested information. The motion was seconded by Richard Chappelle,
approved by the Trustees 3-0.
SCHEDULE NEXT MEETING
With there being no further business and the next quarterly meeting scheduled
for November 1, 2012, the meeting adjourned at 1:45 pm.
Respectfully submitted,
Larrie Hedrick, Secretary
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