CITY OF PORT ORANGE
FIRE AND RESCUE PENSION BOARD OF TRUSTEES QUARTERLY MEETING
††††† Monday, May 24, 2010, 7:00 P.M.
Members Present:†††††††††††††††††† Drew Bastian
††††††††††††††††††††††††††††††††††††††††††††††† Bob Pohlmann
††††††††† † ††††††††††††††††††††††††††††††††††† Jim Reardon†††
††††††††††††††††††††††††††††††††††††††††††††††† Dominick Leone†††††††††
Members Absent:††††††† ††††††††††† Frank Sheridan
Plan Attorney:††††††††††††††††††††††† Scott Christiansen
Plan Administrator:††††††††††††††† Sheila Hutcheson
Consultants:††††††††††††††††††††††††††† Burgess Chambers, Performance Monitor (BCA)
City Staff:†††††††††††††††††††††††††††††† Robert Zicker, Human Resources Director††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† ††††††††††††††††††††††††††††††††††† ††††††††††† Mark Vroman, Fire Department
CALL TO ORDER/ DETERMINATION OF A QUORUM
Chairman Bastian called the meeting to order at 7:04 p.m. and stated that there was a quorum with four members present.
APPROVAL OF MINUTES - Quarterly Meeting - February 23, 2010
Chairman Bastian made a motion to approve the minutes of the February 23, 2010 meeting; Member Reardon seconded the motion, which passed unanimously.
Burgess Chambers, Performance Monitor
Mr. Chambers distributed his report for the quarter ending March 31, 2010 and discussed the past three yearsí and five yearsí risk/returns ratios, noting that the fund has stayed ahead of the benchmark.† Plan member Mark Vroman asked about the effect on the returns if the City had funded a certain amount (funding floor) without smoothing for many years (contributing in excess of the minimum required amount in some years).† This approach does help the plan, but in the current economic environment, it would not be wise to recommend a funding floor, especially in view of the planís current high cost as a percentage of payroll.† Mr. Chambers continued by reporting that all the investments did extremely well over the past year. The fundís performance was 4.3% for the quarter (earning $584,517) and 7.9% (earning over $1million) for the fiscal year-to-date, both net of fees. The return for one year was 30.9% and the portfolio had $14,875,623 as of March 31, 2010.† Mr. Chambers discussed the REITís, which have done very well in the last year and reviewed the other asset sectors/managers.† He advised that he will be looking at alternatives to the PNC mid-cap investments and asked the Administrator to request that Janet Newcomb and the PNC mid-cap manager attend the August meeting.† The report concluded with a review of the compliance checklist.
Scott Christiansen, Attorney
∑ Consideration of fee increase ($325/hour for legal services; $162.50/hour travel time) as of July 1, 2010, with 4% annual increase each year, beginning July 1, 2011
Mr. Christiansen reported that the firmís fees had not increased for three years; that, if the new rates had been in effect for the past year, the total additional costs would have been about $770; and that the automatic annual increase had been requested by some Boards.† The fee structure will apply to all the firmís clients.
Discussion ensued among the Board with Chairman Bastian expressing his concern as to the timing of this request, based on the current economic conditions and the issues with the City with regard to the pension plan costs.† It was noted that these concerns were unrelated to Mr. Christiansenís expertise and excellent service to the Board, which were commented upon by the Board, the Consultant, and the Administrator.
Member Leone made a motion to approve the fee schedule of $325/hour for legal services and $162.50/hour travel time as of July 1, 2010, with a 4% annual increase each year, beginning July 1,
2011 and to authorize execution of the contract amendment by the Chairman and Secretary; Member†††††††††††††††† Reardon seconded the motion, which passed 3-1, with Chairman Bastian dissenting.
Attorney Christiansen also reported the following:
∑ Reminder to file annual Financial Disclosure Forms by July 1, 2010
∑ Legislative update
Of the more than a dozen bills proposed, most of which would reduce pension benefits, the only bill that passed was one affecting the DROP plan in FRS (the returns would be 3.0% on DROP accounts for anyone entering DROP on or after July 1, 2010, instead of the current 6.5% rate of return).† He also reported that the special risk class of FRS maintained its current contribution requirement of 21% or 22% at this time, but it is expected to increase to 29% next year.† This is an election year so that accounts for the reluctance of the legislature to pass the bills, but it is expected that most of the bills will be considered again next year.
Next, Mr. Christiansen reported that he had sent the ordinance to the City, with the Internal Revenue Code and statutory changes only, and it should go forward without issue, as it changes no benefits and has no cost impact.† Attorney Jim Linn reviews ordinances for the City and should not have any problems with this ordinance.† The Attorney concluded by reporting that the Summary Plan Description (SPD) needs to be updated, as it is beyond the two-year statutory time frame.† The consensus of the Board was to authorize the update of the SPD for consideration at the August meeting.
Sheila Hutcheson, Plan Administrator†††††††††††††
Ms. Hutcheson reported that she had the PNC contracts approved by Attorney Christiansen for execution by the Chairman and Secretary. †The Attorney noted that the fee schedules were not in the documents sent by PNC and the Administrator said she would ask Janet Newcomb, PNC, to send the schedules to maintain with the contract.† She also advised that the Division of Retirement has requested some additional information for the Annual Report and the Actuary will respond.
NEW BUSINESS, OLD BUSINESS - None.
DISBURSEMENTS/RETURN OF CONTRIBUTIONS and DEPOSITS
1. Sheila Hutcheson, Professional Services - $3,300.00† (administration fees)
2. Christiansen & Dehner, Professional Services - $984.00, $348.00, $928.00
†††††††††††††††††††††† 3.†††† PNC, quarterly fee, 1st quarter, 2010 - $12,691.34
††††††††††††††††††††††† ††4.†††† PNC, custody quarterly fee, 1st quarter, 2010 - $620.47
5.†††† C.S. McKee, quarterly fees, $9,307.10
††††††††††††††††††††††††† 6.†††† Burgess Chambers, Performance Monitor - 1st quarter, 2010 fee - $7,437.81††††††††††††††††††††††††
††††††††††††††††††††††† 7.†††† Foster & Foster, actuarial services - $7,480.00, $5,430.00
8.†††† Mike Amara, commencement of retirement on April 1, 2010 - lifetime with †††† ††††††††
††††††† 100% joint survivor (spouse) - $3,501.69/month
Chairman Bastian made a motion to approve the Disbursements, Return of Contributions and Deposits; Member Pohlmann seconded the motion, which passed unanimously.
STAFF REPORTS, DISCUSSION, AND ACTION/TRUSTEESí REPORTS, DISCUSSION, AND ACTION /REQUESTS FROM THE PUBLIC/EMPLOYEES PRESENT
ADJOURNMENT - The Chairman adjourned the meeting adjourned at 8:10 p.m.
Respectfully Submitted:†††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Approved:
Sheila Hutcheson, Plan Administrator††††††††††††† ††††††††††† Drew Bastian, Chairman