 |
BOARD MEMBERS PRESENT:
Jim Freeman, Chair
Micah Mathews, Secretary
Mike Fuller
Robert Rotondo
Benjamin Schlabach
STAFF AND OTHERS PRESENT:
Scott Christiansen, Board Attorney
John Thinnes, & Co Consulting (Joined the meeting at 11:06 am)
Doug Lozen, Foster & Foster Actuary
Cassi Bailey, Assistant City Clerk/Plan Administrator
Chair Freeman called the meeting to order at 11:01 AM and conducted a roll call.
1. AGENDA APPROVAL
MOTION: Mr. Mathews moved, Mr. Rotondo seconded, and the motion
carried 5-0 to approve the February 26,2024 Police Officers’ Pension Board Agenda.
2. PUBLIC COMMENT
No public comment.
3. APPROVAL OF MINUTES
MOTION: Mr. Schlabach moved, Mr. Mathews seconded, and the motion
carried 5-0 to approve the November 27, 2023 minutes.
4. APPROVAL OF EXPENSES
a.) City of Palmetto Reimbursement
b.) AndCo Invoice dated 12/29/2023
c.) Sawgrass Asset Management Invoice dated 01/09/2024
d.) Salem Trust invoice dated 01/11/2024
e.) Foster & Foster invoice dated 02/06/2024
f.) Christiansen & Dehner, P.A invoices dated 01/31/2024, 12/31/2023, 11/30/2023
Police Officers’ Pension Board of Trustees
February 26, 2024
Page 2 of 5
MOTION: Mr. Fuller moved, Mr. Schlabach seconded, and the motion
carried 5-0 to ratify the paid expenses as presented.
5. INVESTMENT REVIEW
This item was moved after item #6.
MOTION: Mr. Fuller moved, Mr. Schlabach seconded, based upon the
advice of the consultant, the Board expects to get a 6.75% investment return for the next year, the next several years,
and the long term thereafter. The motion carried 5-0.
Mr. Thinnes shared a one-page document explaining that andCo is being acquired by Mariner Wealth Advisors. Mariner currently only serves individuals. They don’t have institutional clients, such as us. AndCo has approximately 800 institutional clients. Therefore, andCo is going to be lifted up and they will be under the Mariner umbrella and rebrand into Mariner Institutional. The form in front of the Board is a consent form for reassignment. The contract doesn’t change. This will officially happen on April 2nd, 2024.
Attorney Christiansen noted that it is a stock purchase, being purchased by Mariner. There is an SEC requirement that requires them to notify the Board if there is a change in control of their company. The company entity is still the same. The contract is also still the same. The Board is just acknowledging the change of control. He has no problem with this form and suggests they authorize the Chairman to sign the form. He would like to make a new fresh agreement encompassing all the past addendums. He will be using the same fee agreement as in the current contract.
MOITON: Mr. Mathews moved, Mr. Schlabach seconded, and the motion
carried 5-0 for the Chairman to sign the consent agreement and authorize Attorney Christiansen to complete a new contract.
John Thinnes, andCo Consulting, presented the end of the quarter investment review. He highlighted the packet, which was included in the Agenda. We are currently at around 12% for this new fiscal year. He expects a lot of volatility around the election. Our portfolio is well diversified, as shown on the pie charts on pages 16 and 17. As of this morning we are just over $16 million. Real Estate is the only negative for this quarter. We already decided to do a full redemption. We’re at 9.5% of our fund for real estate. We used to be at around 15%. We’ve gotten around $500,000 back. He will continue to give updates each quarter. He noted the compliance section, on page 19, that there is a red triangle for domestic equity. Mr. Thinnes stated that we are technically still in compliance. He’s going to keep an eye on it. We were at 8.44% return for the quarter.
Individual managers were discussed, beginning on page 23. Mr. Thinnes reiterated that we have a well-diversified portfolio. Real estate was the only negative section for the quarter. We have put in for a full redemption for Principal. Overall, we are at 8.44% for the quarter.
Mr. Fuller asked what the cause was for our two-year under performance versus our peer group. Mr. Thinnes responded that T Rowe price is hitting a home run right now but had some bad quarters before that, which is
Police Officers’ Pension Board of Trustees
February 26, 2024
Page 3 of 5
part of that two-year number. The other part is the American fund. That two-year number has those two quarters which were discussed in past meetings, where they trailed by 10%. Those are the two main factors. Mr. Fuller questioned page 35. Mr. Thinnes further explained that the peer group is using funds under $25 million, and that peer group has fifty names in it. Most of those fifty names don’t have real estate. Discussions continued regarding large cap growth and historic numbers with particular managers.
Mr. Freeman asked about Principal and the full redemption. We have received about $500,000 back. It’s been about a year since we put in for the redemption.
Mr. Thinnes discussed private equity/private debt. His opinion for our size is that private equity is not worth our time. He gave ideas for private debt, but the space is getting more crowded. He doesn’t see the immediate need to do anything right now. There are funds we can use, but he is hesitant to do that, with how the markets are right now. Mr. Fuller wants their long-term numbers to be in the top quartile. He doesn’t mind short term pain for long term gain. He wants to keep this as an open discussion. Mr. Thinnes will bring back the last 15 years’ (60 quarters) allocation peer group numbers. On page 17, active versus passive was also discussed.
6. 2023 ACTUARIAL VALUATION REPORT
This item was moved before item #5.
Doug Lozen, Actuary with Foster & Foster, presented the 2023 Actuarial Valuation Report.
The contribution from the City is expected to go from 19.6% of the payroll last year to 22.55% of the payroll this year. The state contribution came in at a higher percentage than originally expected. The members currently contribute 5%. Mr. Lozen discussed the reasons for the increase. A year ago, he predicted the contribution would be 20.39% of payroll but the state’s contribution helped offset that to 19.6%. Our assumed rate of assumption is 6.75% return. We are still around 85.9% funded status. It is a good combination to have an 85.9% funded status with a 6.75% return. He predicts a higher contribution rate next year.
Mr. Fuller questioned why the increase in salaries changed the percentage of contribution. Mr. Lozen explained that you immediately recognize a loss, and you add to the unfunded liability. All the liabilities went up more than expected.
Mr. Freeman asked him to go to page 27, showing the active members. There was a drop in members from 33 to 27 over the 10-year history. The payroll history was discussed.
Mr. Fuller asked what FRS is at, Mr. Lozen answered 6.7%. Plans in general are around 7% in the country. He believed that 6.75% is still perfectly reasonable.
Mr. Mathews brought up the COLA discussion from the last meeting, regarding a cost study for an annual COLA. Ms. Bailey read from the November minutes to remind them of the discussion. Mr. Lozen responded that he would need more parameters to determine a quote for the cost. Mr. Mathews continued to discuss options for adding an automatic COLA. Mr. Fuller reiterated that because they are part of the Union, anything they did would need to be negotiated. Mr. Lozen stated that on average a study would be around $3,000. Mr. Mathews
Police Officers’ Pension Board of Trustees
February 26, 2024
Page 4 of 5
inquired how many scenarios would be detailed. Mr. Lozen responded that it would depend on the complexity, but he is estimating around 5 scenarios. Discussions of the cost of the studies and who would pay continued. Attorney Christiansen stated that the operating rules probably state that the Board can authorize the City and/or the Union to request studies directly from the Actuary. Mr. Freeman opined that he likes the fact that the current Ordinance mandates them to look at this, at least every 5 years, which provides flexibility. Attorney Christiansen noted that it would be appropriate to ask the City and the Union to request studies.
MOTION: Mr. Schlabach moved, Mr. Mathews seconded and the motion
carried 5-0 to allow the City and/or the Union to request the actuary to do benefit studies, on the condition that the requesting party pays for the cost of the study.
MOTION: Mr. Rotondo moved, Mr. Fuller seconded, and the motion carried
5-0 to accept the 2023 Actuarial Valuation Report.
7. BENEFITS DISBURSEMENT APPROVAL
a. DROP PARTICIPANT
· N/A
b. SEPARATED NON-VESTED EMPLOYEE
· N/A
c. SEPARATED VESTED EMPLOYEE
· N/A
d. RETIRED EMPLOYEES
· N/A
e. DECEASED RETIREES
· N/A
f. DECEASED ACTIVE EMPLOYEE PAYOUT
· N/A
8. NEW MEMBER ACKNOWLEDGEMENT (Informational Only)
· JORGE LOPEZ ll (01/03/2024)
9. SEPARATED MEMBER ACKNOWLEDGEMENT (Informational Only)
· N/A
10. ATTORNEY CHRISTIANSEN’S REPORT
Attorney Christiansen questioned whether Mr. Freeman was reappointed by Commission. Mr. Freeman was approved by Commission in December for reappointment. Mr. Fuller was reappointed at the November Police Pension meeting and the Commission ratified that appointment on March 4th, 2024.
Police Officers’ Pension Board of Trustees
February 26, 2024
Page 5 of 5
Form 1 will now be submitted through the online portal. It will no longer be submitted to the Supervisor of Elections. July 1st is still the due date for submission.
The Florida Legislature didn’t make any changes to Chapter 185. They are working on the budget, proposing to give some credit to policy holders on insurance policies. The insurers would be able get credit against their payment of premium tax monies. As a result, our state money may go down. He stated that we will have to wait to see how this plays out.
For the ESG reporting, we submitted a letter, provided by the Attorney, and the Investment Policy Statement into the portal in December. It was approved by the state. This doesn’t have to be done again for another two years.
Kessler Topaz is our securities monitoring firm. The only separate accounts we have are Sawgrass and our R&D account. He explained that they monitor if those companies get a class action filed against them. They are not only letting us know, but they are filing claims for us. Our agreement with them on filing claims was for them to take 4% off the top as their fee for securities monitoring. Now, the SEC has decided they can’t do that anymore. They have to give all the money to the client, then invoice the client afterwards for the 4%.
There was a consensus from the Board to approve the new system.
11. PLAN ADMINISTRATOR’S REPORT
Ms. Bailey reported that she and Mr. Mathews went to the FPPTA conference in January. Mr. Mathews passed his Basic CPPT test and Ms. Bailey passed her Intermediate CPPT test.
MOTION: Mr. Freeman moved, Mr. Fuller seconded, and the motion carried
5-0 to approve Mr. Schlabach to begin the CPPT certification program.
Chair Freeman adjourned the meeting at 12:24 pm.
Minutes approved: MAY 20, 2024
MICAH MATHEWS
MICAH MATHEWS
Secretary