Download Minutes 08-02-12 - The Resource Centers, LLC

CITY OF CAPE CORAL
MUNICIPAL POLICE OFFICERS’ PENSION TRUST FUND
BOARD OF TRUSTEES
MINUTES OF QUARTERLY MEETING
AUGUST 2, 2012
The meeting was called to order at 8:33 A.M. in the Community Room located in
the Cape Coral City Complex.
Those Trustees present on behalf of the Cape Coral Municipal Police Officers’
Pension Trust Fund were Christopher Ellis, David Toumey, Lyndia Bradley, and
Michael Urraro.
Also Present:
Linda Runkle & Robert Kovacs, Pension Resource Center
Jeff Swanson, Southeastern Advisory Services
Steve Stack, ICC Capital Management
Lee Dehner, Christiansen & Dehner
Doug Lozen & Ferrell Jenne, Foster & Foster
Victoria Bateman, City Finance Director
Kurt Phares, Delaware Investments
Christine Formoso, Steven Civera & Paulo Silva, Penn Capital
Management
APPROVAL OF MINUTES
The Board reviewed the minutes of the meeting held May 3, 2012. David Toumey
made a motion to approve the minutes. Lyndia Bradley seconded the motion,
approved by the Trustees 4-0.
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
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 yield for the quarter was 2.76%. He advised that a realistic goal for
investment earnings is 3.5%.
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. Silva advised that the value of the portfolio on June 30,
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CITY OF CAPE CORAL
MUNICIPAL POLICE OFFICERS’ PENSION TRUST FUND
BOARD OF TRUSTEES
MINUTES OF QUARTERLY MEETING
AUGUST 2, 2012
2012 was $7.79M, down from $8.65M 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 $14.32M on June 30, 2012, down from
$15.28M on March 31, 2012, a loss of -6.27%. 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.
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 2.8% loss for the
quarter, and advised that the portfolio value has increased by 11.5 % fiscal yearto-date. The total value of the fund of June 30, 2012 was $87.2M.
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 the
Investment Policy Statement be modified to adjust the target return for Delaware
Investments MBS Fund to Libor + 300 basis points. Lyndia Bradley made a
motion to modify the Investment Policy Statement in accordance with Mr.
Swanson’s recommendation. The motion was seconded by David Toumey,
approved by the Trustees, 4-0.
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CITY OF CAPE CORAL
MUNICIPAL POLICE OFFICERS’ PENSION TRUST FUND
BOARD OF TRUSTEES
MINUTES OF QUARTERLY MEETING
AUGUST 2, 2012
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.
Lyndia Bradley made a motion to reduce the investment earnings assumption
from 8% to 7.75%. The motion was seconded by Michael Urraro, approved by
the Trustees 4-0.
Lyndia Bradley made a motion to implement the 7.75% investment earnings
assumption for the 2012 Actuarial Valuation. The motion was seconded by
Michael Urraro, approved by the Trustees, 4-0.
David Toumey made a motion to accept all proposed actuarial assumption
changes presented by Foster & Foster, as outlined in the Board Minutes of May
3, 2012. The motion was seconded by Lyndia Bradley, approved by the Trustees
4-0.
Lyndia Bradley made a motion to implement all assumption changes for the 2012
Actuarial Valuation. The motion was seconded by Michael Urraro, approved by
the Trustees 4-0.
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.
Lyndia Bradley made a motion that the 2012 Actuarial Valuation will reflect
required pension contributions in dollars. The motion was seconded by David
Toumey, approved by the Trustees 4-0.
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.
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CITY OF CAPE CORAL
MUNICIPAL POLICE OFFICERS’ PENSION TRUST FUND
BOARD OF TRUSTEES
MINUTES OF QUARTERLY MEETING
AUGUST 2, 2012
Lyndia Bradley made a motion to accept the ordinance.
seconded by Michael Urraro, approved by the Trustees, 4-0.
The motion was
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 police officers be redacted from public records. He also reported
that beneficiary designations must be updated after a divorce in order for an exspouse to be legally recognized as a beneficiary.
Mr. Dehner requested that a special meeting be scheduled for the purpose of
determining whether the Board has probable cause to schedule a pension
forfeiture hearing in the matter of prior police officer Albert Arroyo. Mr. Dehner
reported that he has completed a review of records and interviews that will be
presented to the Board for consideration prior to the special meeting.
ADMINISTRATIVE REPORT
The Trustees reviewed the disbursements and benefit approvals provided by the
Administrator for review. David Toumey made a motion to approve the
disbursements and benefit approvals as presented. Lyndia Bradley seconded
the motion, approved by the Trustees 4-0.
Linda Runkle discussed the Notice of Election for Michael Urraro’s Trustee term,
which expires on October 31, 2012. The new term will run from November 1,
2012 through October 31, 2016. Mr. Urraro has expressed interest in serving
another term. Nominations will be accepted from August 13-29, 2012, and the
election will be held September 24-26, 2012.
Ms. Runkle explained the fee adjustment proposal on behalf of the Pension
Resource Center. Lyndia Bradley made a motion to increase the monthly fee for
services to $1,700.00, effective September 1, 2012. There will not be an
automatic COLA, rather, an increase will be proposed by the Pension Resource
Center in the future. The motion was seconded by Michael Urraro. David
Toumey did not participate in the vote due to a conflict of interest. Form 8B,
Memorandum of Voting Conflict, is attached to the minutes. The motion was
approved by the Trustees, 3-0.
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CITY OF CAPE CORAL
MUNICIPAL POLICE OFFICERS’ PENSION TRUST FUND
BOARD OF TRUSTEES
MINUTES OF QUARTERLY MEETING
AUGUST 2, 2012
SCHEDULE NEXT MEETING
With there being no further business and the next quarterly meeting scheduled
for November 1, 2012, the meeting adjourned at 10:20 A.M.
Respectfully submitted,
Lyndia Bradley, Secretary
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