POL121316
CITY OF PORT ST. LUCIE MUNICIPAL POLICE OFFICERS' RETIREMENT TRUST FUND BOARD OF TRUSTEES MEETING MINUTES .1 DECEMBER 13, 2016 A Regular Meeting of the BOARD OF TRUSTEES of the MUNICIPAL POLICE OFFICERS' RETIREMENT TRUST FUND was called to order by Chairman Vega on December 13, 2015, at 2:00 p.m., at the Port St. Lucie City Hall, Room 188, 121 SW Port . St. Lucie Boulevard, Port St. Lucie, Florida.
1. CALL TO ORDER
2. ROLL CALL
Members Present: Assistan1 Chief William B. Vega, Jr., Chairman Natalie Cabrera, Trustee OfficerPaul Griffith, Trustee Sergeant Tara Pavlyshin, Secretary Members Not Present: Daniel Kleman, Trustee
Others Present: Jeanine Bittinger, Plan Accountant, Davidson, Jamieson, & Cristini Richard Cristini, Plan Accountant, Davidson, Jamieson, & Cristini Lee Dehner, Plan Attorney, Christiansenand Dehner, P.A. (arrived at 2:05 p.m.) Siera Feketa, Pension Plan Specialist Edwin M. Fry, Jr., Finance Director/Treasurer Doug Lozen, Board Actuary, Foster & Foster, Inc. Grant McMurry, Investment Manager, ICC Capital Management Karen Russo, Vice President, Salem Trust Co. Sandra H. Steele, Plan Administrator (arrived at 2:05 p.m.) Dave West, Senior Consultant, Bogdahn Group Jeannette C. Baeza, Deputy City Clerk
3. PUBLIC COMMENTS
No one signed up to speak under this Item. 4. ANNOUNCE THE NAME OF NEW POLICE OFFICERS HIRED SINCE THE MEETING OF THE BOARD OF TRUSTEES ON SEPTEMBER 20, 2016 - JEAN VALENTIN-BELLO AND MATTHEW REYNOLDS
Chair Vega announced the names into the record.
5. ANNOUNCE THE NAME OF POLICE OFFICERS WHO HAVE RESIGNED AND/OR TERMINATED SINCE THE MEETING OF THE BOARD OF TRUSTEES ON SEPTEMBER 20, 2016 - CARLTON TOPPIN (CONCLUDED 5 YEARS IN THE DROP)
1 MUNICIPAL POLICE OFFICERS' RETIREMENT TRUST DECEMBER 13; 2016 FUND MEETING MINUTES
Chair Vega announced the names into the record.
6. ANNOUNCE THE NAME OF POLICE OFFICERS WHO HAVE RESIGNED, AND ARE ELIGIBLE TO RECEIVE A DEFERRED RETIREMENT BENEFIT, SINCE THE MEETING OF THE BOARD OF TRUSTEES ON SEPTEMBER 20, 2016 - NONE
There were no names to be announced into the record at this time.
7. ANNOUNCE THE NAME OF POLICE OFFICERS. WHO HAVE REQUESTED A LEAVE -OF ABSENCE (MAXIMUM OF 180 DAYS) SINCE THE MEET[NG OF THE BOARD OF TRUSTEES ON SEPTEMBER 20, 2016 - NONE
There were no names to be announced into the record at this time.
8. ANNOUNCE THE NAME OF POLICE OFFICERS WHO ARE CURRENTLY -SERVING IN ACTIVE MILITARY SERVICE AND ARE NOT HAVING THEIR EMPLOYEE 9% CONTRIBUTION DEDUCTED FROM THE[R SALARY (ClTY CONTINUES TO CONTRIBUTE ITS CONTRIBUTION) - NONE
There were no names to be announced into the record at this time.
9i ANNOUNCE THE NAME ,OF POLICE OFFICERS WHO ARE PRESENTLY VESTED AND INACTIVE, AWAITING DISTRIBUTION OF THEIR RETIREMENT BENEFIT UPON REACHING ELIGIBILITY-RUSSELL CULLUM, THOMAS EISERT (BENEFICIARY), JOSEPH GOLINO, LUIS PAGAN, HAMLET POLANCO, ROBERTO SANTOS, AND FRED ZIMMERMAN
Chair Vega announced the name.s intothe record.
10. ANNOUNCE THE NAME OF POLICE OFFICERS WHO HAVE BEEN IN THE DROP PLAN BUT HAVE RESIGNED PRIOR TO THE END OF THEIR DROP AGREEMENT AND WILL RECEIVE A LUMP SUM DROP PAYMENT AND BEGIN TO COLLECT THEIR MONTHLY BENEFIT - JOHN FOX
Chair Vega announced the names into the record.
11. ANNOUNCE THE NAME OF RETIRED POLICE OFFICER WHO HAVE DIED SINCE THE LAST MEETING OF THE BOARD OF TRUSTEES ON SEPTEMBER 20, 2016-NONE
There were no name� to be announced into the record at this time.
12. REVIEW AND APPROVAL OF SALEM TRUST STATEMENTS FOR SEPTEMBER, OCTOBER, AND NOVEMBER, 2016 - HOLD FOR AUDIT
This Item will be held foraudit.
2 MUNICIPAL POLICE OFFICERS' RETIREMENT TRUST 'DECEMBER 1·3, 2016 FUND MEETING MINUTES
1:,t OLD BUSINESS
A. UPDATE; ON STATUS OF ADMMINISTRATIVE SERVICES AGREEMENT BETWEEN THE BOARD OF TRUSTEES AND CITY
Trustee Griffithstated, 'The two people we need are not here." Chair Vega stated, "We will come back to th_is one."
14. NEW BUSINESS
A. PRESENTATION OF QUARTERLY REPORT BY PLAN ACCOUNTANTS
Mr. Cristini stated, ''You should have a copy of the pompiled report in front of you. The only comment-tnat I would make, prior fo .getting started is that this work was done before our time onsite with your records, which was finished last 'night. The on·ly thing that we found as a result 0fthat, which· you will see differenGes in your audited statements, are the reclassifications in expense categories. The bottom lihe will not change. We reclassified some officeexpenses and a few other things, when we actually.sat down and went through the invoices. We felt that under Presentation Disclosure Rules, they should be reclassified. It was an authorized and approved expenditure, but it met certain categories that you typicaliy �ee in your reports better in other places."
Mr:. Cristirti· stated, ''If you turn to Page 3, it's the Statement of Fiduciary Net Position. For the current year, you Will see that the total receivables are $839,000, which is a big increase,from last year at thistime,. with the broker-dealer. As you r�call, this r�presents sales of securities for which you didn't receive ,the money until the first week in October. You did receive those dollars, so it closed. the loop. As for prepaid insurance, yo1,1r th insurance runs from September 15 to September 15th, so rather ttiansplit hairs, we just picked up the entire amount that you paid for your prepajd insurance, or your insurance, being $7,999. That was the premium for thatyear, �nd will expire on.September 15, 20,17. ' Investments at fair value, asyou can see in our total investments, i� $81.8 million, versus $71.6 million._ Just. a heads up ·here, something ,good happened, becau$e of the total investments. We'll come to how that occurred on the nextpage. Accounts payable went down, but we ended up with a lot of liabilities, one of which was th� Actuary's bill. Another one that is not goi_ng to be !'.:looked.in 'the number, we saw where this· 89ard approved the increase from $4,500 to $6,000;. as far as the administrative fee, but that had not been paid. Through September· 30th, the old fee was still paid. There was a calculation, and it comes .out to $11,638.74; but it is not in this payable num_ber. That represents the difference betw�en the $4,500 and $6,000 that this -Board: approved. My understanding was that there was an issue with the .agreement. itself, which is, why the payments did .not increase from $4,500 to $6,000. It looks like it is measur9-ble ,and ayailaple under the rules, except for the technicality of whatever needs to be a.djusted in the agreement betwe�nthis Board and the City, for this purpose."
The Finance Director stated_, "I have a question about. that. I know that the Board of Trustees· had agreed to thatr but my feeling is that until that ?greement has gone in,
3 MUNICIPAL POLICE ,QFFICERS' RETIREMENT TRUST DECEMBER 13, 2016 FUND MEETING MINUTES because I know the City and the Board have been working on that agreement... I guess my feeling is that even the Board is authorized, until that agreement is approved by the City Council, I would wonder about ... I understand that the Board has agreed to that, but the City Council hasn't approved the agreement at this point." Chair Vega asked, "Okay, so what do you have?" The Finance Director replied, "It is just a question. If I goes to the City Council, and the City Council, for whatever reason, feels that it should be different... I don't anticipate .... " Mr. Cristini interjected, "It almost falls under the Accounting Standards called Estimates. You can book an estimate and fix it next year. My concern with it is that let's say it goes through and is approved, but we leave it at the lower number, so we're walking around saying we have $81,556,000 in the Plan as a net position, well really, it's that number minus $11,638.74. It's not a material number. I have a reticence about carrying a wagon behind me, in case I get run over by a truck and somebody forgets. This is part of a transaction that occurred this fiscal year. Quite frankly, because of its size, the only thing that bothers me is that I know it's there and not to put it at the end of the year in which it occurred, The big part of the problem is that we have the debtor here, being the Board, who is saying, 'Yes, I'll pay it.' Now, we're saying that the party who is going to get the money is saying, 'I don't know if I want it or not,' for various reasons." Chair Vega remarked, "I know what you're saying." Mr. Cristini said, "It's like playing tennis, and there is a big wall between you. I can hit it over the wall, but I don't know if it's going to come back at me from the other side, because I can't see." Trustee Griffithasked, 'What is your recommendation?" Mr. Cristini replied, "My recommendation would be to book it. If it turns out not to be, we'll put the money back into the Plan on October 1 st." Trustee Griffith asked, "Do you need a motion forthat?" Mr. Cristini replied, "No. We'll write it up in the summaryof what we call the search form of recorded liabilities." Chair Vega asked, "Mr. Fry, do you feel there would be a problem with it not getting approved?" The Finance Director replied, "No, I just wanted you to be aware of it. It's a more conservative approach."
(Clerk's Note: Plan Administrator Steele and Mr. Dehner arrived at this time.) Mr. Cristini stated, "Also on the liabilities side, you have accounts payable broker/dealers. We bought a lot of securities right at the end of the year, in the amount of $1.1 million. They didn't write the check until the first week in October. Those investments are included in your total investments, up above, in the $81.8 million, so that is full accrual accountability. This gives us our net position restricted for pensions of $81,556,000, versus $70,388,000. If you tum to Page 4, near the end of September 30, 201.6, versus 2015, the total contributions were $5.6 million. It was a little bit greater as far as the employer is concerned, but the Plan members were pretty much the same for the year. As for Plan member buybacks, we had several of those this year, I think nine or 10. That data happens to be one of the items in your annual report that has to list every person's name, and the amount that they purchased. This has been picked up and reported. The state excise tax is up, but most of ours are flat or down, so that's good but it also means that you have more coverage this year, because you have more taxpayers paying your insurance premiums. ,Appreciation/depreciation is $5.1 million,versus ($2,659,000), fora $7 million swing. It's sortof like if you had 2014 as a space on the right-hand column, you would see the positive swing into negative, and now the negative swinging to positive. It's a much better year than it was last year, based on the market position of September 30,
4 MUNJCJPAL POLICE OFFICERS' RETIREMENT TRUST DECEMBER 13; 2016 FUND MEETING MINUT-ES
201.5, versus 2016. We have a schedule on that, which we will cover. Interest is down and divide11ds are down. Buyback fees were picked .up. The buyback fees are·going to go -up by'$108.39, because we had ·one o.foc1r buyback& where the amountthat was sent over to the Plan to be deposited for the purchase was more than what the a¢tu·ary calculated, by $-108.31. It-was decided to take that $108.31, and credit.it towards the $200 fee thatis charged for doir:igthis service.The balance- of $81.31 hasn't been paid yet. I'm not booking a receivable forthe·$8t. He owes it to you, you know it and we will pick that up in the nextQuarterly Report. He will pay the $200, .but it wi![ not be paid all at once."
Mr. Cristitti continued, ··There has been some_ class action revenue. You own securities in which there was legal activity, and you were one of the owners of the security .at the time the court ruled, �o you gof some money for being an ovmer. That category. was up from last year-. Our investment expenses are up just a little bit. The .net income investment/loss was a loss of $308,00.0 this year, and a $6 ..9 tniilion profit, or surplus, this year. Under deductions, for age and service, we had some retirees. In disability, there was a change in reduction for disability. As far as DROP pa.yments, we only had one DROP payout, in the amoant of $266,000. As far as refunds·- of contributions, we had $�Vera! of those. We've got the detail relative to ... And this is another area that your annual report requires a lot of detailed disclosure ih. The administrative expenses for the year are added in also, arid under total deductions, the total Js $2.6 million, versus $2.7 million. The net increase in n.etposition was $2. 7 million last ye�r; ver�us $11.1 million this year, so you have rnore dollars, to be put to work for -you; and included in your investment portfolio."
Mr. Cristini said, "Moving ori to Supplementary Information, here is your budget/actual presentation. As I said, somf! of these categories are going to be adJusted in the final year�end audited repori;, but basically, jt is going to !ook pretty much the same. On .Page 6, we have our inVestme.nt/administrative expenses and the schedule thereof forthe two years. You can see where .the detail comes .from, in:.terms of the total administrative or investment expenses, and the·comparison. You.'re down, in either case. You are all 1,mder .30 in everycategory. Rememper, in ,each category,. 1 % would be the rule of thumb, 'but you .are down there. When y_ou st�rt looking at your contracts, the amounts that you are paying forthose servicesare going to drive these percentages. If you are paying 35 basis points to a money manager, then you shouldn't be looking at something greater than that. Page 7 is the schedule you were talking about, where we Were -looking: at the re�lized revenue appreciation. As you caii.see, in 2016, we ,realized $965,000. We sold securities, and we made money, which is what you are supposed to do. Tl:le unrea)ized was $4, 196;000, which is more than last year's $2.8 million. This shows what the marketplace was doing at that date. It was up compared to the prior year, because this represents the differenGS between cost in market va·lue and Ute change in that from year to year. What we're saying is that your market went up. If you look down below, under investment at cost and mark�t value, and it is going to change now under the ,new rules to. fair value, the cost was $75.A million, and for f�ir value, we have $81.8 million. Last year-; the .cost was $69.4 million; .and the market wa$ $1.6 million,_ so you see that spread. is bigger this year than it was last year. You own securities that were doing well, in comparlson to the
5 MUNICIPAL POLICE OFFICERS' RETIREMENT TRUST DECEMBER··13, 2016 FUND MEETING 'MINUT�S prior year, suffice to say, and Mr. West can tell -you which ones. We had a good year, from that s_tandpoint." Mr. Cristini said, "Page 8 gives you the multi-year schedule of Plan information. If you look at it, it.shows how we did. on a yearly arid quarterly basis, to get to our $11 million. You can look and see over the last ·six years. How did we do back in S�ptember of 20.11? We made $293,000, and you can see· the. other y�ars. Last y�ar, 'i_n September of 20'1.5, We made $2.7 million. You're back on the right track .this year. _Looking at it from a five year standpoint, you're holding your own and doing what you should do. Page 9 is a schedule of Plan information. that represents your net position, going back to September 30, 2000. You can see how the Pian is growing.. If we are looking at $81 million now, that is going to be another $11 million onto this schedl)le. Page 10 was something you requested, You wanted to have a b_rief history of r.eve11uesand expenses for the last five years, for,this Plan, and what the net position and surplus was in e·ach of those years. If you're big .on .graphing, you cart startgraphing these results. Typically, the net increase in .net position. is d'riven by the gains in your investm�nts. Just a reminder, the GASS 72 is in effect. We haven't wri�en _a note, as it takes a- lorig time to. write .it, but w_e are being assisted by the Bogdahn Group, �nd their people are well-versed in GASB 72. What is GASS 72? GASS 72 is all about fairvalue. It's a note on investments. It mirrorswhat tl'.ley do .in the commercial sector under Codification Number 820, where you are req1,Jired to teil the reaqer how co_nfid�ntyou·ar:eabout the fair value being reported in your statement. You have government bonds, fixed securities, mortgagers, �nd alternative investments. You've invested in· real estate. The requirement under the Standard requires that we 'Select. .. There are· three levels that you can put each of these investments in, item by item. Level 1 basically tells the readerthat you have 'no problem finding_ out what fair value i� for �u,y security. They call it input. What can you look �t to, determine that Treasury bond is worth 91.6; versus 85.5? How much were those 100 shares of IBM? You �n- look it up on_ the Wall Street J'ournal, or Capital Adjustments. There are any numcer·of places that you can reliably· look that informationup and say, 'Yes, I reel comfortable/ because remember, the, ultimate party responsible fordetermining wh�t fair value is, is this Board. You're the ones who say, ''Yes·, I buy it,' and you carJalso say you d_on't. Level 3 is where you don't have as good an input, by{ you can look at a similar security to see wnat it would look like if it were 'in Level 1. in other words, you can look at other inputs,other information aboutpricin·g olit that investment. Finally, Level 3 is, we have no clue, we cannot tell you what the fairvalue is, there is a-faJrvaluethere, but we don't know.anything.about it. Level 3 i� not_-?· good place to put one Of your investments, only with oae exception: if you sold it on the last day of the year, or within 60 days· on either side of the year. Why is that? If you sold it, you measured fair value. In other words, you do knowwh�t it's worth,becau_se that's. what you _got, and you put it in the bank. That's t_he only exception to-that"
Mr. 'Cristini continued, "NAV is your real e�t�te investments, and it is going to re.quire a lot more information. like· yo_ur Level 1, Level 2, and Level 3, we typically .h�ve to get the Custodian, tq describe to us the pricing services they use. This stuff isn't secret, but it is the first .time we- are .being forthdght, puttingit ·in a footnote, and telling you ·about it. It's the same way with your alternative investments. We have to disclose in 'Separate data that you· invested $5 million. and that's what your'contract is for, but you've only put in $2.2 million, so it has to be disclosed that the balance· yet to be inve�ted is $3 million. This is
6 MUNICIPAL POLICE OFFICERS' RETIREMENT TRUST DECEMBER 13, 2016 FUND MEETING MINUTES .all investment:.styled information that everyone is going to say, ·w� all 'knew that._' Well yes, but now, it has to be in a ·footnote to tell you that. If ,there are aily lock-in peri9ds, it has to be in there. In a nutsheil, Jack Evatt ·is· the person we're working with at the Bogdahn Group. They've been verygood. They created a template thatthey are sending to all of our clients who are with Bogdah_n. They are sending ·it to the custodians of those plans. They've asked the custodians to fill out-the information in this template, which Will provic;ie the data that they can give us for the footnote, because we don't know a lot of this information. They are going to have to be the ones to tell us what that mortgage investment data is at:" Mr. West stated, "If I may, this is a very big deal, and is very time consuming, so we try to cqordinate our effort internally, so that we can maximize re$ources and be �ompletely responsive to all yoµr aud_ito_rs, .and all our clients' auditors. ·Thank you for the feedback; It seems to be going well." Mr. Cristini added, "The only problem is gettingthe custodians to answer him back. As much as he is working with us, they have to cooperate, because they're the ones who are holding these securities. As I said, some· performancemonitors are blowing. it off. I don't know what we can do, because if they don't fill' the footnote out, the report ca_hnot be issued; otherwise, I'll qµalify the report:» Ms. Bittinger said, ''.Mr: West, not only is it going well, it is making you guys look heads and tails above your competitors." Mr. Gristlni added, "That is· true." Mr. West said, 'We'.reholding as pig a stick as we can over the· custodian .s to get a respon!;e·."Mr. Cristini said, "It may hea 'who cares! for a lot of people, but the prob-lem is t.t,a_t we can't look at it th�t lightly, because it has fo b� 'in that report. The FinanGe Director is going to use it if he is going to rely on our report for the City CAFR"i::. There .are some issues that have to be complied with."
Mr. Cristini stated, "Yesterd�y, we finished ·the audit, testing. the compliance, and the eligibility. Today, we will cover ah item that we came up· With, and the Finance Director is aware of it, .because we brought-it to his attention." Ms. .Bittinger said, 'When we do this, we look at testing of the retirees. We went through those files, ?nd we also looked at testing ofthe payroll contrioutiQns every year. We just randomize� it to try-to cover different areas of payroll each _year, not to·do-1_ 00% testing, which is not cost effective for the Plan. Yesterday wa:sone of those luck of the draw tf;iings, where we picked a payroll period that had a clothing allowaAce, and what came to light' was that tne clothing allowance was being treated as pensionable wages, when we're not sure. that that is correct. The Finance Directorand Ms. Row�r in Payroll confirmed that, and she said that shewa$ not sure why; because all of the other allowances are not pensionable. Fortunately, it was being treated consistently, so n6 one was really being harme9 by it. .It wa$ being treated as pensionable wages, out it was a1$:o being given to the Actuary; because it is running through your payroll system as being pensionable there, as well. Ourthought, and the Finance Director concurred, is that it should probably be changed going forward, because your other allowances.are absolutely not pensionable." Mr. Cristini said, "There is nothing in the Plan r�cords that con�ins that information. Our recommendation. is that the Plan go ahead and identifythose -U,ings. We worked up a model. Keep in miild that all these items are· referred to �s non-accountable, which means it is ,subject to income tax and social· security. That is not a problem. That was taken care of properly, so nobody owes any money for:anything, it is just that is it mis-measuring· the pensionable wages for purposes. of... Quite frankly, it falls back to Mr. Loz�n. but we feed him .th� retiree's wages for his
7 MUNICIPAL POLICE OFFICER$� RETIREMENT TRUST DECEMBER 13,.20t6 ·FUND MEETING MINUTES information. As Ms. Bittinger said, I think we calculated it down and worst case scenario, it is $64.80, but J don't know what this would calculate into as far- as a retirement benefit for someone, but it would be a $64.80 overstatement, and it wo.JJld be on everybody. Our recommendation is to have the Board d�velop something inside tfie officialrecords of the Plan, and I don;t care if it feeds in from the Union agreement. I don't care wMere it comes from, but it needs to be somewhere written down in black le.tterthat this Board said, 'Yes, I agree with that,' W.ecoµldn't tell whether.this happened fnitially." Chair Vega asked, "Are you recommending that -the clothing allowan�e would not be pensionable wages?" Ms. Bittinger replied, 1'Yes, going forward."Mr. Cr:istiniadded, "From this time on."
Secretary Pavlyshin moved .that clothing allowance/from this point forward, will not be a pensionabl� wage. Trustee Griffitt, seconded the motion-, which passed unanimously by voice vote. Mr. Cri�tini sta.:ted-, "We'll come up with a list. .. · Because Wf? worked with Payroll, and they agreed with the list that we both looked at and that we worked off of when we were doing the testing. We will provide that to the Board, so· that you will see what it is, wl:!ether it is a shoe allowance, laundry, or whatever it happens to be."
B. APPROVAL FOR Tt1EPLAN ACCOUNTANTS TO DISTRIBUTE THE DRAFT AUDITE.D FINANCIAL STATEME.NTS TO THE CITY IN ADVANCE OF THE UPCOMING SPECIAL BOARD·dF TRUSTEES.MEl:TING ON FEBRUARY 13, 2017 Ms. Bittinger stated, "Another thing l wantE?d to bring up is that in -the past, this Board has allowed l;JS to give the draft to the .Finance Director before the Special Meeting and we just wanted to have you go ·on the record. We work for the Board, obviously, not for the· City. In order to release the draft, we wou'id have to have your permission." Chair Vega stated, 'We've been doing it."'Mr. Cristini replieo, ''Yes, yoL:Ihave." Chair Vega a�ked, "Do we need a motion for that, Mr. Dehner?" Mr. Dehner responded in the affirmative. Secretary Pavlyshin stated; "So moved." Trustee Griffith seconded the motion; which p�ssed unanimously by voice vote.
Mr. Cristini remarked; 'That concludes our report." Chair Vega asked, "Are there any questions?" There was no response. Secretary Pi:ivlyshin moved to approve the· Accountant's Report. Trustee Griffithseconded tliemotion, which passed.urianimousiy by voice vote.
(Clerk's Note, Item 13 a) was heard next.)
13. OLD BUSINESS
A. UPDATE ON STATUS OF ADMMINISTRATIVE SERVICES AGREEMENT BETWEENTHE BOARD OF TRUSTEES AND CITY
Mr. Dehner stated,, "I revieweg. the Addendum, .and it is fi_ne." Secretary Pavlyshin moved to approve Item 1:3 a). Trustee Griffith seconded the motion, which passed unanimously by voice vote.
8 MUNICIPAL POLICl= OFFICERS' RETIREMEN_TTRUST DECEMBER 1'3, 2016 FUND MEETING MINUTES
14. NEW BUSINESS
Chair Vega stated, "It h�s been requested that we move 1,.1p Salem Trust.Company's !tern on the Agenda. I c!on't! Mr. Cristini said, "It looks like on the year that wasn't a good year, the subsequent year, and now this year, we are still flipping over some com�istency with respect to follow-up with yqu; and sign-off. Is there anything, other than what management has said you were go[ng to do, to. try t9 clear this up? Instead of'saying we have five fnstances, or whatever, and· all of them are not material,, can we get one or two?"· Ms. Russo replied,, "If you look in the back of the report, there are many items thp.tare reviewed. For each item that i$ reviewed, they woulcl pull maybe38 items to· look at, and they would find one occ1Jrrence out of the 38_ ins�nces of that particLJla:r item, where maybe the was an income posting and they didn't have a second sign-off on, it. The procedures are in place-, and it is one out of .38 in that particular item., They do review what is said, and they go back and look at the circumstances, and decide whether something needs to be changed . . ._ . " Mr. Cristin] interjected, "Do you undel"$tand what we'r.e looking at? We're looking at reports from insuranGe companies and -everything else, and .I'm sitting there going, 'There is nothing. in this last column relative to results.' it should say, ··No exceptions were ide_ntified.' To me, th.at makes me happy. We've been catcning- something, and digging in, and -typit;ally, ,the auditor has said, 'Okay, I buy into it.' I guess what I was looking for one day 1s niaybe a report saying .that there were ,no exceptions identified." Ms. Rµsso replied, '\That woujd be n_ice, but I think that with everything they are viewing, there is a lot of information there, and lot of things they .test ·and many in each category that they test." Mr. Cri�tini remarked, "No argument" Ms. Russo continued, "With- the amount of transactions that we do handle, when you look at that.exceptiqn when you're talking about one out of 38 that they tested of that particularitem, and l think there are three that,are on the report.n 9 MUNICIPAL POLICE OFFICERS' RETJR.EMENT TRUST DECEMBER 13', 2016 FUND MEETING MINUTES Mr. Cristini asked, "How much remedial, training is maintained, not for these areas Where th�re was a failure, but how mucn is d9n� on a regular basis to keep this in the upper most region of th� minds of the people who are charged. with these responsibilities? Management's response is that they're going to look at it, and they are going tq c;lo this anp that. I am looking at a more broad .base arid saying we have everyone who has various responsibiiities and I am wonder.ing how rnuch remedial training is being done to help av9id these things, to ·try to get it in from of them on :a regulat basis, to. say, 'Hey, if I catft do it, or I diq it and forgot..' What I'm readjng is that these are the kinds of things· that are happening. Someone that is here was supposed to do it, and it didn't happen. I can understand that, but shouldn't someone have raised their hand when they went through l�ter? It's hard to determine.what theytested and. what the lookback is at all, with respect to any of th�$e transactions. In other words, is there some subsequent review? The bank puts out a daily statement.. Everymorning, -a banker comes in, and has to look at the balance sheet and the P&L forthat bank, as of the midnight prior. That's the world of banking. Fortunately, we don't have to do ttiat, but I was· Wondering if there was something, either on a qua,rterlyor other basis. Are you going what your auditor is doing to yourself? This is a peer review questionl?, which is what we do. We sit down and· go back over it, and then,we have the auditor come bac!<-,inand say, 'You didn't put that title in the right place on your report:' Then, he'll come. back arid say it is a management. The penultimate- responsibility for making sure that staffis trained, staffis instructed, rules are set down, and thatthe information aod communication monitpring... Then management does monitoring in addition to the folks you're paying to oom� in anq do it, because that is how we get- slammed. We have meetings With staffand we pick our own to go through and test." Ms. Russo stat�d, "I believe they do that. I'm not in the actual. operations; this is the backroorn. You're asking_ me to answer a question and I don't feel .comfortable.answering it to the extentof detail .that you are asking. I'll be glad to get tbat inform�tion for you." Mr. Cristini said, "It is not addressed •here by management." Ms. Russo responded, "I think it depends on the item ...." Mr. Cristini' interjected, "This is separate,and apartfrom this. It's what we do in a .normal course. How de;, we monitor ourselves? We give the instructions to: our people, and what we call commvnication and information, and then we come back and monitor." Ms. Russo said, •q believe they have all that in place, especially because there are different diVisioas, and differentareas." Mr. Ctistini said, "That kind of thing should help to ?lleviate what is on here,. because it is at the.top-of everybody's mind." Chair Vega asked, "Could you come back to the next Quarterly Meeting,?'' Ms. Russo said, "I feel prettyconfident that they are doing all of that. They are not just doing the work and nof-h�virJQ checks. If you look ?t the report, you will see· the qu?J.ntity of'trans?ctions that are going-on �no what they viewed. I think out of everything they tested, there-were tbree i�ems. When they tested, they looked at one case with 30-somethihg items, and ariothercasewith ,20-somethlngs items. It was one item ofthat, so it. is not times. I will be glad to reportback at the next.meeting. Is there anythi17g eise on the SSAE-16?" ihere was no response, Ms. Ru$so st�ted, "There were two other things I wanted to let th� Board know. Brad Rinsem, who is the President and CEO; is going,to retire. as of December 31 st. Mark 10 MUNICIPAL POLICE OFFICERS' RETIREMENT TRUST DECEMBER 13, 2016 FUND MEETING MINUTES Rhein, who is the current CFO, is going to step into Mr. Rinsem's role as President and CEO. Mr. Rinsem is not going to go a; he is going to serve on the board and he will continue to be involved with the FPPTA, do the classes, and also come to some meetings, so he willstill be involved. As for the last item, I had a confirmation of statement recipients; I don't know if you printed it or not. Once a year, we like to list out who the providers are that are receiving financial statements for each of your accounts, how often th�y are receiving it, and how they are receiving it; electronic or paper. It's just a nice review, because if somebody leaves, and We're still . . . ." Ms. Bittinger interjected, "We still haven't gotten back with you on Trustee Kleman. I think he's the only one who hasn't replied. I'm trying to get it for you." Ms. Russo said, "That was all that I had. I wanted to thank you very much for staying with us through the conversion. We appreciate that and we appreciate your business." C. PRESENTATION OF ACTUARIAL VALUATION BY PLAN ACTUARY Mr. Lozen stated, "Let's see if I can do this quickly, and then we'll find out if you have questions. I think I can just cover the highlights. You guys have been around the block on this enough times, right? Your efficient Plan Administrator has hard copies of the report printed out for you. Let's just jump right to Page 5. The page number is on the bottom right. I know that this is the page the Finance Director goes to right away, because it is what we have to put in. The right-hand column is for this fiscal year, so it's 2016/2017. We'll round that and call it $3.8 million from the City. That's not the number that you saw last year at this time. Last year at this time, it was actually a little bit higher, if you remember. You may be thinking, 'How can that be? How can a number in the same year go down?' That's because an ordinance passed during the year and the multiplier went up from 3.09 to 3.27 for all years of service. This is the first time I've seen it where a benefitimprovement happens and the City's costs go down." Trustee Griffithcommented, . "Because we're giving them more money." Mr. Lozen said, "This may be one of the laws the state has cast in a while that makes sense. Instead of the state saying, 'Here is how you guys can all use the state money,' they say, 'Membership and cities, you decide how to use it.' So the agreement was, 'Yougive us 3.27 for all years of service, and we'll give yo{J all the state monies.' The understanding there, the City was pretty shrewd on that. New hires coming in would've been at 3.09, and now they're at 3.27, so how do you account for that in the future? Well, just give us all the state monies. The state monies have been going up faster than the cost of bringing the new hires, so costs are lower for 2016/2017; in fact, it may even be lower by the time the year closes out. I did some quick math today, and the state monies the last 10 years or so have been gojng up 6% - 7% per year and long term, even more. Right now, we are estimating that the state money is· $1.2 million, but I would be surprised if it doesn't come in higher than that. I think if the Citybudgeted $3.8 million and put it in, they'll just develop excess contributions they can carry forward. Because the state monies went IJP this last year, the City has $500,000 sitting there that they can apply anytime they want. That is the update for this year." Mr. Lozen continued, "If you look at the number for 2017/2018, it's like, whoa! Where did $4.5 million come from? That is a $700,000 increase. There are more members in the Plan now. I think there have been fournew hires during the year, and the state-mandated 11 MUNICIPAL POLICE OFFICE�S' RETIREMENT TRUST DECEMBER 13,, 2016 FUND MEETING MINUTES mortality has come into play: You've known that, you've heard it for the last year-a.nd-a half, so here it is. We now have to assume that people live longer." Plan Administrator Steele stated, "Even though the news just had a reportthat said we ar� going to die." Mr. Lazen said, "Jf that holds true, then the new assumption of longer life expectancy, the cost you see here. Is going to come back in _gains down the road. Who knows what's right? People live longer than that. Here's what I think is a' really cool piece of information. I don't thin!< the City will t,ave to put in $4.5 million in 2017/2018. First of all, I was talking to the Finance Director and .he saio, 'I think we'll just use th.at $500,000 in that year.' That-would knock it down to $4 million, but if the state money keeps g0ing up on average 6%-7% a year, the way it has beer.i, I think by the time we g_et to fiscal year 2018, the additional state money will. bring the City contribution. back to about '$3.8 million. I think what you're looking at here i� that even with the payroll growing and new hires coming in, the City's· costs, as a dollar, a going to be staying about-the same, even though payroll is going up, which means the percent of payrc:>11 should be coming down. If this all works out well, it ' would be great." Mr. Lozen stated, "Yo.Ur e�perienc;:es last year were very close to .a breakeven. In a Plan of over $80 million, you had an a9tuarial. lo;,s of $200,000, so everything canceled out. Your investment returnwas a complete push·. We assumed7.75, and that's what you got on a four-yearaverage. Salary increases cameln very low and·thatWas a gain. Turnover was low and you had a loss. They all canceled. Let's jump to Page 9. Your funded status stayed abou.t the same. Halfway down, where it says Funded Ratio, last year this was 77.4%, and with new mortality, it is 77.8%, so it went up a little bit. It would have j1:1mped to 80% without the new mortality-. Where I can finish, and turn it over to you all for questions, is what i think the· City's requirement might be the ,next 'handful of years. If you jump over to Page 1.3 ... And by the way, I know you're getting ready to set up a Special Meeting· around F�bruary or so .... " Plan Administrator Steele interjected, "It might be in March. It's c;1. Special Meeting to discu� the funding and the-potential COLA." Mr. Lozen said, "Yes. Did I open up a ·can of worms?" Plan Administrator Steele replied, "This is the meeting that Trustee Kleman has beer.i wanting to. hold to further discuss the funding to. the 100%, and the possibility of implementing a COLA. It was approved forhim to consider having that discussed. We are trying to identifya meeting date that we could. connect ta, and it looks like jµst because of his sched1:1le and trying to get Mr. Lozen here, Wf3 were kind of missing on-·dates. WheA I spoke to 'Chair Vega, he mentioned maybe after the March meeting." Mr. Loze·n said, "For that meeting, 'I will do a cost runout, which we discussed last meeting, of whete I think the City'sdollar requirements are going over the next ten years or so. I can give you a precursor to that on this page. This .is the unfunded liability page, and I wantto focus on.all those num_pers on the bottom, the.scheduled numbers.The totality of the unfunded liability is the sum of the column .that is this .amount. These, are .all different pieces. Think. of debt pieces, things that have happened in the past: method changes, prior actuarial gains and losses, benefit changes, and so on. Eacn one of those has an ,annual payment, so a big ·portion of the City'$ annl;!al payment is from the unfunded liability. I want you to go down to _years remaining, under Number' 2. That is an actuarial loss from 2008, and the annual payment for that right now ie; '$435,999. Wheri r come 12 MUNICIPAL POLICE ·OFFICERS' RETIREMENT TRUST ·DECEMBER 13, '2016 'FUND MEETING MINUTE& back in twoyears, I'll have measured ,everything. I'll do :yournormal valuation ·on October 1, 2018, and I'll show you everything that is going on, 'Here is the experience iri tbe past year as the. new hires come. in, people who ·ieft,' you know, the usual routine. One thing will be different, though. That $436,000 is gone, so whatever the City's requirements would've been, you can suotract $43.6,000. These are det>tpayments th.at are falling out, so run it out a few more years·. Go down ,to the one whete it says three years left. The following yea�. $1.1 r'niliion falls off.That's an annual payment. The following year, We have to give back a little bit. See that credit pf $592,000? That credit expires, and when ·the credit expire�, your costs go up. Over the n�xt five ye_ars, the totality is that over $1 million will fall off-the City's ¢ontribLition requirements·fro_m What it would've been. I don't know what the City's base'.line will be ,five years from now, Because of new hires, .�xperience, and so on, but whatever it would have been, we get to subtract over $1 million that will be expiring from this page. That will be tbe point of me showing you a cost projection for the Spe_cial Meeting, among other dispussion items, -to say where the Cify requirement is going over the nextten years, as we bring in new hires, and as pieces of the. unfunded liability falloff. -r:o kind .of summarize here, l think you have a Plan right now that is pretty stable, as far as dollar and percent of payroll. There are no big surprises coming up." Mr. Lozen said, "I am going to turn it back to you guys now, with the understanding that I think I t,ave an Experience Study that has already been preauthorized. I will probably make that presentation at the_ june-meeting that I normally .come to. Is that true, or do we need to have follow up discussion on that?" Plan Administrator Steele replied, "Or a Speci.al Meeting, d�pending on how long it is going to take. Normally, the Experience Study has been done at a Special Meeting by itself, just because .of the length of it. Usually; we've done it iri Juiy or August" Mr. Lozen asked_, "Is that automatic? Should I put that on my to-do list?" Plan Administrator Steele replied, 1'-We have it on our radar screen." Mr. Lozen said, "I covered the main points that I always do. I know you hadn't seen the report until you came in here today, but do you have any questions?" There was no respons_e. Trustee Griffith moved to approve the Actuary's Report. Secretary Pavlyshin seconded the- motion, which passed unanimously by voice vote. Mr. Dehner stated, "Having cfone that, the Board will need_ to make a motion to determine the total expected. annual ta:te,of return for the current year and the next several, in the long-term thereafter, based ·on Mr. Wesfs,recomn,endation.;, Chair Vega asked, "Should we wait for Mr. Wests report, or do it .now?" Mr. Dehn�r- replied, "Do it now." Mr. West stated, 'We are comfortable that we've got a reasonable probability of achieving over the long-term, and on an intermediate term, the rate of return assumption. As-always, we hold a littlebit.of editorial because the.state requiresus to make a for�cc;!ston how we're going to do .in any single given year, so our epvept is that we may exceed, or we may fall short of the return requirement in any given_ year. We are comfortable with the current asset allocatio_n has a reasonable probability of hitting the returned. assumption." Mr. Dehner asked, "It is 7.8, .right?" Mr. Cristini replied,. "ft is 7.75." Trustee Griffith asked, "Do we .need a motion to maintain the same assumption rate that we have now?" Mr: Dehn.er replied, "It is not the assumption, it is the actual expected r�te of return." Secretary 13 MUNICIPAL POLICE OFFICERS' RETIREMENT TRUST DECEMBER 13, 2016 FUND MEETING MINUTES Pavlyshin stated, "I move that we expect 7.75 as the rate of return." Trustee Griffith seconded the motion, which passed unanimously by voice vote. D. DISCUSSION AND APPROVAL OF THE FINAL ACTUAL EXPENSES FOR THE 2015-2016 BOARD OF TRUSTEES ADMINISTRATIVE BUDGET Plan Administrator Steele stated, ''You'll see on the final actual expenses what we budgeted in 2016, and what the actual was. ·once the Board approves this, it gets sent to this CityClerk's Office, and a copy gets published o_n the City's website." Assistant Chief Vega asked, "Are there any questions?" Mr. Dehner remarked, "It is the same as reading the budget book." Trustee Griffith moved to approve Item 14 d). Secretary pavlyshin seconded the motion, which passed unanimously by voice vote. E. APPROVAL OF PAYMENT FOR THE FOLLOWING CONSULTANT INVOICES: • ASB CAPITAL MANAQEMENT, INVOICE #CH500050, FEE FOR QUARTER ENDING SEPTEMBER 30, 201(;;, IN THE AMOUNT ·oF $9,655.90 • BOGDAHN GROUP, INVOICE #19579, .IN THE AMOUNT OF $8,222.00, FOR CONSULTING SERVICES AND PERFORMANCE EVALUATION JULY 1, 2016 THROUGH SEPTE:MBER30, 2016 • CHRISTIANSEN & DEHNER, P.A., INVOICE #29399, IN THE AMOUNT OF $80.47, REFERENCE JAMES WEINERT DISABILITY • CITY OF PORT ST. LUCIE - INFECTIOUS DISEASE TESTING INVOICE DATED 10/31/2016 FOR $294.79 (OFFICER REYNOLDS) • CITY OF PORT ST. LUCIE - PLAN ADMINISTRATION INVOICES SEPTEMBER 2016 FOR $4,500.00 OCTOBER 2016 FOR $4,5.00.00 NOVE,MBER2016 FOR $4,500.00 • FLORIDA PUBLIC PENSION TRUSTEES As·soCIATION (FPPTA), INVOICES #21667, #21712, #21937, #2:1946,#22165, AND #22166 TOTALING $180.00 ($30.00 EACH) CPPT 2016 RE-CERTIFICATION FEES FOR BILL VEGA, TARA PAVLYSHIN,. PAUL GRIFFITH, NATALIE CABRERA, DAN KLEMAN, AND PLAN ADMINISTRATOR SANDY STEELE • FLORIDA PUBLIC PENSION TRUSTEES ASSOCIATION (FPPTA), INVOICE #22229, IN THE AMOUNT OF $600.00, FOR 2017 MEMBERSHIP DUES 14 MUNICIPAL POLICE OFFICERS; RETIREMENT TRUST DECEMBER 13, 2016 FUND MEETING MINUTES • FOSTER & FOSTE�, !NC., INVOICE #9753, IN THE AMOUNT OF $21,420, FO.R VARIOUS SERVICES AS LISTED • 'HIGHL.A"'D CAPITAL MANAGEMENT INVOICE #13477 (VAl-U.E), 1N. THE AMOUNT OF $1'4,491.75, FOR MANAGEMENT FEES (#303003099) FOR THE PERIOD OF JULY 1, 2016, TO-SE-PTEMBER 30, 2016 • HIGHLAND CAPITAL MANAGEMENT INVOICE #13478 (FIX.ED), IN THE AMOUNT OF$11,805.48, FOR' MANAGEME;NTFl=ES (#3040059691) FOR THE PERIOD OF JULY 1, 201 ij, TO SEPTEMBER 30, 2016 • HIGHLAND CAPITAL MANAGEMENT INVOICE ·#13477 (GROWTH), IN THE.AMOUNT OF $6,463.03, FOR MANAGEMENT FEES (#3040040999) FOR THE PERIOD. OF JULY 1, 2016, TO SEPTEMBER 30,2016 • SALEM TRUST .F�E ADVICE, IN THE AMOUI\IT OF $6,467.00, FOR THE PERIOD OF JULY 1, 2016, THROUGH SEPTEMBER 3Q, 2016 • SALEM TRUST fEE ADVICE, IN THE AMOUNT OF $35.00, FOR THE OVERNIGHT COST OF NJAILING THE SUN TRUST BANK CREDIT CARD PAYMENT Chair Vega read the 'invoices into the record. SecretaryPavlyshin moved to approve Item 14-e). Trustee Griffithseconded tlie mqtion, which passed Unanimously by voice vote. F. APPROVAL OF THE $500.00 REGISTRATION FOR EACH OF THE FOLLOWING ATTENDEES AT THE UPCOMING FPPTA WINTER TRUSTEES SCHOOL AT THE ROSEN CENTRE IN ORL.ANOO, FLORIDA, JANUARY 29 - FE'3RUARY 1, 2017: • CHAIRMAN _BILL VEGA • SECRETARY/TRUSTEE TARA PAVLYSHIN • TRUSTEE DAN KLEMAN • PENSION PLAN SPECIALIST SIERA FEKETA Chair Vega read the Item ·1nto the record. Trustee Griffith moved to approve Item 14 f). Trustee Gabrera seconded: the motion, Which passed i.lilanimousiy by voice vote. G. APPROVAL OF THE FOLLOWING NON-VESTED; PRE-TAXED RETURN OF CONTRIBUTIONS TO THE FOl.,.LOWING TERMINATED POLICE OFFICERS: • COLLEEN BAKELS -$1.,843.�(, • CHARLES DONNON -$2,564.15 • PHILLIP ENGEL -$590.,17 • MICHAEL LAM.ANilA -$2,551.0� 15 MUNICIPAL POLICE OFFICERS' RETIREMENT TRUST DECEMBER 13', 2016 FUND MEETING MINUTES, • STEPHAN.SALES -$1,125.70 • RYAN SNELLINGS - $1,819.25 Chair Vega read the. names and amounts into the record. Plan Administrator Steele stateq, "These are individuals who w�re terminated or left, and never came back to get a return. They did_n't responc;f to· letters, dign't r��pond to phone calls, or didn't return the necessary paperwork." Trustee Griffith asked, "At what point can we consider that abandoned property?" Plan Administrator Steele repiied, 'We try. We still have several more to go. We even have to convince them to take the m9ney." Trustee Griffith stated, "We'll take it." Trustee Griffith moved to approve Item 14 g). Secretary Pavlyshin seconded the mqtion, Which passed unanimously .by voice vote. H. DISCUSSION AND APPROVAL OF RECENT CHARGES AND/OR RECONCILIATION TO PLAN CREDIT CARD AS FOLl,,.OWS� • $ 200.17 - SEPTEMBER,.201.6 (CHARGES AS NOTED) • $1.1,450.80 - OCTOBER, 201� (CHARGES A_S NOTED) • $ 2i�$2.00 - NOVEMBER, �016 (CRARGES AS NOTED) Chair Vega read the charges into the record. Trustee Cabrera moved to approve Item 7 h). Secretary Pavlyshin seconded the motion, which passed unanimously by voice vote. I_. APPROVAL .OF REIMBURSEMENT TO PLAN CREDIT CARD, IN THE AIVIOUNTOF $33.85, FROM PLAN ADMINIST�TOR SANDY STEELE Plan Administrator Steele stated, "Unpeknownst tp rne, Amazon linked the credit card for the· Plan to my personal account, be_caase the l�st foyr digits are exactly the ·same. I placed an ord�r for something, and it showed up on the Pension Plan credit card, not my personal credit c�rd. It was only for $33'.85, and I reconciled and caught it rightaway, so I caµght it and reimbursed the Plan, and I also removed my· credit ·card from being linked. That was an Amazon thing." Secretary Pavlyshin moved to approve lt�m 14 i). Trustee Griffith seconded the motion,, whi_ch passed unanimously by-voice vote. J. DISCUSSION OF IDE_NTIFYING AUT_f-:IORIZED SIGNORS TO PLAN CR�DIT CARD IN OR.DER TO P�OCEED WITH THE BOARD'S PRIOR DIRECTION TO ISSUE PENSIO�·PLAN·SP ECIALIST SIERA FEKETA A CREDIT CARD FOR THE PURPOSE' OF CONDUCTING PLAN BUSINESS Plan Administrator Steele.stated, "In a nutshell, the Plan credit cards were issued in 2001, and Freddie William$ was the Chairman. Cbair Vega and I have continued to have the cards ·sihce then. When we went to add the Pension Plan Specialist, Siera Feketa, as a catdholder, it came to our attention that Freddie Williams is the on·ly one who can make that decision. With, that said, thi& is what ha� to be done. In the rninutes, it has to be recorded that Freddie Williams is .no longer the Chairm�!l of the' Board, Chair Vega is the 16 l !VJUNICIPAL POLICE OFFICERS' RETIREMENT TRUST 0ECEl\llBER 13, 2016 FUND MEETING MINUTES Chairman, and another individual who -are authorized to approve a credit card for the Pension Plan Specialist. Once SunTrust gets the minutes, they will take Freddie Williams off, and add the Chairman and two sign�rs. Based on the two signers, they can authorize the Pension Plan Specialist to hav� th� cr�dit car�;i. Also, if you don't mind indicating in the minutes; we also haye a new Federal Employee Identification Number assigned to the Plan, which we just got yesterday, so that we could have a separate number for accounting purposes. Th.is' will help keep the Pension Plan separate from the City for federal ID information." Mr, Dehner -remarked, "That should have been done a long time ago." Trustee Griffithasked, "Did we increase our credit limit?" Plan Administrator Steele repli�d,_ 'We did get it increased, because if we didn't get it increa�ed in October, we wouldn't- have had enough ofa credit limit to check out of the hotel, because we paid the· Fiduciary I.Jability Policy with the credit card so that we co·uld ,g_et the cashback rewards. Otherwi!3e,. it was quite an ordeal. We did get the credit limit. apprqved. The Board approved $14,500 for bot,h my card, and Pension Plan Specialist Feketa:'scard. They are both going to be $ 1'4,500, as long as. you approve· taking Freddie Williams off, adding two signers for the Board, and agree to allow Pension Plan Specialist Feketa to have a card, under that Federal Employee Identification Number." Chair Vega stated, "Under Item 14 j), the new Federal Em.pl6yee Identification Number is 81-4659210. Do we have a motion to approve changing Freddie Williams ... ls-it to Plan Admini.strator Steele or Pension- Plan Specialist .Feketa?" Plan Administrator Steele replied, "It can be one of y0u, .or one of us." Trustee Griffith·stated, "I move that we remove Freqdie Williams as the person in charge of the i;;redit card, put Chair Vega on there, and put Plan Administrator Steele and Pension Plan Specialist Feketa oil there." Secretary Pavlyshinseconded the motion, which passed unani'mously by voice vote. K. APPROVAL OF RETUR,NED PER DIEM CHECK, ISSUED TO PENSION PLAN SPECIALIST SIERA FEK.ETA IN THE AMOUNT OF'SasS.94, FOR CANCELLED ATTENDANCE TO, THE POLICE OFFICERS AND FIREFIGHTERS' PENSION CONFERENCE iN ORLANDO,. FLORIDA, IN NOVEMBER, 2016 Chair Vega read the Item into the record. Trust�e Griffith mov�d to approve item 14 k). Trustee Cabrera ·st!!condedtne motion, which passed unanimously by voice vote. L. APPROVAL OF THE MONTHLY DISABILITY PAYMENT OF PARTICIPANT JAl\l,IES. WEINERT, IN THE AMOUNT OF $2;959.82, RETROACTIVE TO JULY 29,. 2016, WITH PAYMENT -ON THE FIRST OF EVERY MONTH THEREAFTER Chair Vega read the Item into the record. Secretary Pavlyshin moved to approve Item 14 1). Trustee Griffithseconded the motion·, which passed unanimously by vorce vote. M. D1S.CUSSION AND APPROVAL OF THE FOLLOWING EARLY RETIREMENT: 17 MUNICIPAL P-OLICEOFFICERS' RETIREMENT TRUST DECEMBER 13, 2016 FUND MEETING MINUTES • PAUL GROHOWSKI -·COMMENCING JANUARY 1, 2017; MONTHLY RETIREMENT BENEFIT OF $4,891.89 Chair Vega read the item into the record. Trustee,Griffith moved to approve Item 14 m). Secretary Pavlyshin :seconded th� motion, which passed' unanimously by yoice vote. N. DISCUSSION AND APPROVAL OF THE FOLLOWING DROP DISTRIBUTIONS: • JOHN FOX - RESIGNED DECEMSER 7, 2016 AND WILL HAVE CONCLUDED 22 MONTHS IN THE, DROP (ENROLLED FOR 60 MONTHS); WILL BEGIN TO COLLECT HI$ NORMAL RETI_REMENT BENEFIT OF $4,785.49 ON JANUARY 1, 2017 AND HIS FINAL DROP BALANCE WILL BE $111,892.21 •· CARLTON TOPPIN - CONCLUDED 60 .MONTHS IN THE DROP ON OClOBER 31., 201:&; BEGAN GOLLECTING HIS NORMA! RETIREMENT BENEFIT OF $7,396.30 ON 'NOVEMBER ·1; 2016 AND HIS FINAL DROP BALANCE WAS $503,18·1.56 Chair Vega read_ the Item into the r�cord. Trustee Griffith moved to approve Item 14 n). Trustee Cabrera seconded the motion, which passed. una_nimously by voice vote. M. ANNOUNCE THE F.OLLOWING POLICE OFFICERS WHO HAVE REACHED NORMAL RETIREMENT ELIGIBILITY AND HAVE ENTERED THE DROP: • SYLVIA HARRIS - EFFECTIVE NOVEMBER 1 r 2016 • RENE SOHERLE-EFFECTIVE OCTOBER 1, 2016 Ohair Vega read the names into the, record. N. PRESENTATION OF QUARTERLY REPORT BY PLAN'S INVESTMENT MANAGER (ICC CAPITAL MANAGEMENT) Chair Vega $tated, "That shouldn't read ICC Capital Management anymore." Plan Administratqr Steele commented, "You're right. I. aporogize�" Mr. McMLirry stated, "I'm passing some papers out. It'll probably take longer to pass them out than it will for me to talk. I'll let Mr. West talk more about the Quarterly Report, as of the end of September. Let me talk more .gboµt what has happenec;i since, -bE3cause·1 think. that is more what is on people's rninds. This shows what your performance is for your portfolioas of September th 30 , and it includes .... Mr. Dehner already saw thatthis morning at the meeting we were at, so he doesn't need .a copy. As a matterof fact, this might di°$�ppear quickly. I always hate to give this kind of performance, a.lthough it is good performance, so it shouldn't bQther me too much·, but it is not necessarily going to stay. What this shows _is.that with all 9f the portfolios we _managefor you folks, we've done betterthan the benchmarks, or the indexes, for eaclil· one of them. I'll try to explain why. i spoke to mark Okada, who manages yourvalue and .growth, and I asked_ him why we· did so well. He said that the 18 MUNICIPAL POLIC�· OFFICERS' RETIREMENT TRUST DECEMBER 13, 2016 FUND MEETING MINUTES real answer was the fact that we use a computer model to help us with our decisions and the computer model didn't know who was going to win the. el�ction; as a matter of fact, it didn't even know there was going to be an election, We didn't rush to make any changes, but sorrie people probably did, and a couple of those chang·es were... Most people thought Hillary Clinto·n was going to win, so what d'oes. that mean? That means that you probably don't.want to be heading into healthcare stocks, because there is probably.a lot of pressure ·on pharmaceuticals watching their costs, if not reducing their costs, and hospitals; ;:1.ndso forth. You mjght wanna decrease your exposure to·financials, because there may be,additional regulations iri that area. In .thos� types of issues, I think we saw some movement 1n people's portfqlios in and out of those areas in the marketplace. We didn't do that. We_ just left th_ings the way they were. We had an overweight in finance, an9 an overweight in �nergy. lh finance, it helped, because the relief that the markets have felt has really beenexperienced in a couple of sectors of the market. Finance, in particular, has done extremely Well. The ·other one we did .well in was energy, not necessarily because of the election, but because of an OPEC meeting that occurred about a week and· a half aft�rthe election, in w.hi_ch the OPEC members decided to cut back on their production_,.and therefore, th_e .price of off went up, which helped the energy stocks. I've also thought that .there might be some ... Alth_oµgh this didn't factor in for a month, it kind of .factors into my positioning_ right now as to what might happen in the marketplace, and that is that with Trump being elected, there is an expectation that taxes are going to go·oown nextyear, especially c�pital,gains taxes. If y_ou have some gains in your portfolio, and actu�lly, �01'6 wasn't a bad year forequity investors, you are-probably not going to $ell them. You are going to wait until nextyear. If you have losses, you might f want to take them this year, because i taxes are going to be lower next year, tbe losses are not going to count as much as it would· this year." Mr. McMurry asked, "What does, that mean? I think that bodes well for.the stock market, going forw_ard. If stocks are going µp ... And when I looked last time, I think it was 15 points below 20,000 for the Dow. It was 19,90Q-something. That doesn't mean an awful lot to me, other than the fact that it means an awful lot to people. They're saying, 'Oh my gosh, we re�cbed 20,000! l've,got.to·get in the market.' Opposite that, as I think this gr�ph show$, we did ol 19 MUNICIPAL .POLICE OFFICERS' RETIRElVIENT TRUST DECEMBER 13, 201'6 FUND MEETING MINl)TES that we had kind of hurt us the first couple of quartets of this year, but is now helping us. By defensive, I mean being heavier in cor.porates, and ·in duration, a little bit 'lower. That is starting to ·pay·off. You're seeing better bond insurance in the market, but thE!Yare still negative. I don't like that, but what tan you db? Ha can maybe .find soni� alternatives to b,onq$, alt_houghl he a:nd I talked about this and it is hard to find,_ s9 I'll shut up." Chair Vega asked, "Does amyone have any questions on Mr. McMurry's report?" there was no response .. Secretary Pavlyshin moved .to approve the Investment Manager's. Report. Trustee C�brer(;! seconded the motion, which passed, -unanimously by voice vote� 0. PRESENTATION OF QUARTERLY REPORT BY PLAN'S PERFORMANCE MONl'tOR (THE BOGDAHN GRQUP) - WILL INCLUDE REPORT ON THE OTHER INVESTMENT ACCOUNTS Mr. West sti;ited, "Mr. McMurry teed r:ne up pretty nicely, because I actually do have an action recommendation to talk about as a result of what we see as a tectonic shift, or what we can call a shift of tectonic proportions, with the realization for the· e�pectations of the positive impact from Trumponomics_. In extremesummary form, there are two ways to get the economy going. You· have fiscal policy and· monetary policy. Monetary policy is the Fed, and they've done everytning they could, and ne.ed to get out of the way .now. All the while, we've never really had any fiscal policy. What Trumponomlcs ls proposing is fisGal policy in_ three very significant ways. First of all, _the obvious one is the infrastructure spending, with multiple· of billions of dollars, and immediate jobs, putting·people to work doing the infrastructure. The other two have far _greater impact, I think. The first I'm alluding to is corporate tax reform. Tax rates go up from 35 fo 15, as proposed. All that money sitting overseas ... There 1s over $2.5 trillion overs·eas on the balance sheets of the likes of AP,ple.They can now move that money back_ihto-the U.S. They are over tnere because they don't want to pay 35 cents on the dollar. If they move that in, they can reinvest tha:t. If they don't reinvest it in equipment_, they can buy back stock. Meanwhile, at home, this .makes it a friendlier operating environment for U.S. companies. Do you remember all the inversions that happened that kind of aggravated -qs? Companies domiciled ove�eas? .Maybe-they come back, or at- le�st we stop the flow, because from a tax stanc;:tpoint, the U.S. is more advantaged. There has already been a lot of discussion. about the third. one, which is decreasing the regulatory burden cit th� various businesses and industries. There has been a lot,ofnews and press on that. As Mr. McMurry pointed out, the market bas really completely changed its investment theme from what we were doing in this book, and has· taken'·on· a completely new directio11. The oid theme was to buy yield. We. need dividend $tocks, a.nd we n�ed. as much coupon ,and· interest as we cal') get, because the interest rates are so low. The new theme is that we're going to get a Whal� second leg to 'this economy, .and we'-re going to ,get some growth. As a result of that, equity markets, as Mr. McMurry·said, have been excellent and the bond market nad one of the sharpest, most critic.al sel!offsin history.Tbis was an extremeadjustment and in the new world_, it seems like .all of the· new information revelations that go into the marketplace readjust overnight, and it is done. This was a similar situation with the bond market adjusting. The Jesuit of th�t. and I will try to do this. efficiently, so- when we go through the report, I don't. want to talk about any of the economics; let's just go to the 20 MUNICiPAL POLICE OFFICERS' RETIREMENT TRUST DECEMBER 13, 2016 FUND NIEETING MINUTES- bottom line. As I go through it, 1. will m�ke the recommendation that I think we should adjust to. what I think is a new i_nvestmentdirection." Mr. West continued, "Hopping ·ihto the book, on Page 18, you'll find the bottom line. The Plan had a warygood year. If you follow with rneon the top line, the net investment return was 9.83%.- Our three-year number c!-nnualize� at 6.01, and again, as Mr. Lo,zen kind of alluded to, we had the disastrous market close last fiscal year, where returns were awfui, and that is still in the three-:year average. The.live-year, even with that year in there, is at 9.7, which_ isJmexcelleot result. If-you drop.down to the·second line, we do our benchmark comparisons of the year, adding back the invoiced manager fees, so we have a quasi gross numb.er there, which is ·1-0.11. The irwestment poli�y is our asset allocat_ion weighted by how the assets ·are invested, and assuming no fee. We would retum 11.5%, so we Jettalittle rnoney on the table, but at 10.11, we ·had a very nic�: peer group ranking. We ended up in the top 34th percentile, or top third if yqu will, of the Public Fund Universe. If we had achieved the index;we would have earned t1.·5, which would have bumped us up to the top eight percentile, but all in all, our results were very good. We had a lot of investments offsettingeach other�s gains and shortfalls, so it was an excellent year. The three-year number, we are annualizing at the 45tt:i percentile, with 6.31, and the five-y�ar, right at 1.0%, we're annualizing. in the 43rd percentile." Mr. West stated, "Drop down to. the nextgray· area. It really was the domestic equity, and to some extent the internatioRal equity that caused the total Plan· to miss the mark by a little bit. The .other ,thingWf; are. hoping is that with this shift in investment theme carrying over to all the rest of the �&P 500. sectors, _and mor.e of a focus on .companies that are going to ,earn money and not necessarily pay diviqends, we are hoping. that this finally creates an investment environment that is more· conducive foractive managers to once again startoutperforming the benchmark. Last year was a tough year, and that js where the deficit was. RLinriing down the line items quicldy, Highland was up 10.9 for the year,. tra_ilihg the bench_mark. Of cours�, we a_re indexed here a couple of ways. The S&P- 500 Fund, which r�presents our large cap domestic equity,. was up 15.22. We also have a significant slug in the Midcap 400 Index Fund, which was up 15.27. Strategically, just to pause for a quick second here, if the U.S. i_nvestment market, or U.S, operating environment, is going to be friendlier for U.S. companies, it would lik�ly benefitsmall and midcap companies mote tha_n th� multi-nationals: This whole :trade thing is a wild card still out there. All these ben·efits· should show Lip. with better earnings for the ·small and midcap,_ so I think we will see some beneficial incremental return coming out of our dedicated Midcap 400 cirea there. Dropping info the international on Page 1'9, we are indexed there with the Vanguard- Developed Markets Fl:md, which was up 8.06%. We hired WCM on September 1', 2016. The performance period we have for them is short, obviously, but they were up 1.23, all the way to the right for that mana.ger. The other.drag here is that unfortun�tely, we·had to terminate the International Equity Manager and rehire a new man�g�r. We had to lock in that underperforrnance at a very·inopportune time, so hopefully, WCM can earn someof that back. Oh the fixed .income side, as Mr. McMurry indicated, Highland Fixed Income 0utperformed quite nicely, at 6.2 versus 4.6. Our diversification strategies are to kind of hopeful_ly enhanGebond r�turns, or minimize bond market declines if interest rates ever went up. The Pimco Diversified Income Fund was 21 MUNICIPA_LPOLICE OFFICERS' RETIREMENT TRUST DECEMBER 13, 2016 FUND MEETING MINUTES up a whopping ·12.5% versus their benchmark of nine. The T�mpleton Global Bond Fund struggled during this period. They were up 0·.82 versus the CitiGroup World Government Bond-Index of 9071. Let me pause'here, because I have a recommendation. Justto remind everyone, the purpose of this fund was to come up with a bond ·strategy that was not sensitive to changes in- interest rates, so if one day, interest rates are goi_ng up, bond prices in this bond wquld not be negc1tivelyaffected. During this period of t1rne, if you look. at the. CitiGroup World Government Bond lnqex, interest rates came crashing down, so bond collection was appteciating wildly and this government bond 'index was .up 9.71%. It is exactly tlie opposite operating environment where. this bond should perform well. The other thing that happened this period was the use of .active currency overlay as a traditional source of investment return. During this period of time, the U.S. dollar met net gain strength, but it fluctuated quite a bit fora couple·of quarters, so the end result-was a pretty lackluster return." Mr. West said, ''Fast-forward, _I am going to ask you to add�ss the black and white handout that has three-graphs on the p�ge. Wh�t you're looking a there is the total return ta_ble. This is What transpired fr:omSeptember 30th to November 30th• This is post Trump election, and p0st our report.During this period of time, the firstindex that is listed there is this Fund's benchmark, the Global Government Bond Index. During this period of time, investors in that Index lost 8.44%. The nextline :item dpwn is the U.S. Investment Grade Bond Market Index, and for this period of time; it was, down 3.11 %. These are pretty bad return·s, because that was a serious ·spike in interest rates. When that happens quickly over a-short period of time, it shows up in a ·price depreciation of the bonds. The last line item there is.the-Templeton Global Bond Fµnd, which was up 4 ¾%. This Fund performed exactly a� we had hopec;L During a- period when interest rate� went up, the Fund was not affec;ted.. Also duri(ig .this period of time, the U.S. d�llar appreciated pretty wildly, for example, comparedto euro, the e1,Jrowent down,to like $1.05. That is how this Fund made all their money, so I am actually going to recommend that we take profits from this· Fund. It did wha_t rt was supposed to do. Any time you have an extrememove in the marketplace, and in this ca$e, we had a pretty e}(treme winner with this Funp, it is a good time to look at moving off, taking the profit, �rid going into an alternativeinvestment wrnich did not fare well. If you go'to the flip side of this, it's the same time perio.d and same total return. The first line item there, is the U.S'. Treasury Inflation Protec;:tion Securities Index. These are government b�nds that adju�t with-changes in the inflation rate, the CPI. Usually, these bonds do_n't s�II off as badly as your regular bond market does, which is the second line item We 1o·oked at that is down 3.11 %. In fact, for this· period of ijme, the TlPS Index went down signifi�ntly in bond terms, but it We!.� not down. anywhere near as much as the aggregate bond ·index. My recommendation today ... I just wanted to show a picture of how things should perform and how they did perform during a period where we have a s_harp spike in interest rates. My· recommendation today js· ... We don't .know how much more of this trade. is leftin-t_he Ternpleton Glob�.1 Bond Fund, How much stronger can the dollar get and how much more can interest rates adjust wfth the voracity that .just happened? It is not like!y. We have ah opportunityto take a· relative gain and an absolute gain from the Templeton Global Bond Fund, seil that f.und,,andinvest all the proceeds in the Vanguard Inflation Protection. Securities Fund. The second page -is actually the fact sheet on that Index Fund. This is no reason for doing it, but we· would c;1lso,be ,saving 22 MUNICIPAL POLICE OFFICERS' RETIREMENT TRUST DECEMBER 13, 2016 FUND MEETING MINUTES investment management fees. We'll be going from a fund that is around 43 basi$ points, down to this Index Fund, which would be priced at 7 basis points, so we'll be saving some investment management fees also. We don't qualifyto make the minimum investment for this Fund. This is the lowest possible cost, the Institutional Share Class, but as you know, we always tryto make the purchase through the Salem Trust Omnibus account, and then the fund· ownership gets dropped down into the Port St. Lucie Pension System, so we can work around the system that way and make sure we ·are investigating this cost fund. We view it as an opportunity to take a profit. We did have concerns for the Templeton Global Bond Fund, because the performance volatility was higher than we expected it would be, so that Fund has been on the radar screen to look at possible alternatives. Given the extrememarket move and the fact that this bond did so well, this seems like an opportune time to make a small change to the portfolio and shift into another investment area. We would like to build portfolio position up, because we think most pension systems should establish some sort of position in the TIPS portfolio. If inflation goes up, this is what we would pall a real asset, so if the coupon or bond value gets adjusted with inflation, the price will go up. If interest rates continue to go up, it is a bond, so it is still subject to potential climb in value, but we are slowly migrating very fate in the cycle to super high quality U.S. treasuries, and slowly starting to establish a position in the bond. There are a couple of reasons motivating the change. The bottom line is that we are recommending terminating or selling the Templeton Global Bond Fund, and purchasing and placing all proceeds into the Vanguard Inflation Protection Securities Fund. I'll stop there for questions or discussion." Chair Vega asked, "Are there any questions for Mr. West?" Trustee Griffith asked, "How much money are we talking about?" Mr. West replied, "I am going to r:eference Page 16. The Templeton Global Bond Fund, as of September 30th, had $1,276,000. It was right around 2%, or 2.5%, of the total Plan assets." Secretary Pavlyshin asked, "lf we approve this, will it be effective later on this week? How long would it take?" Mr. West replied, "My recommendations are always to get it d0,ne in the course of normal business; however, I would like to get this done before the holiday break." Trustee Griffith said, "The Fed just came out with a report this week. What did they say about interest rates?" Secretary Pavlyshin replied "It's tomorrow." Trustee Griffithasked, "Didn't the Finance Director just give a report?" The Finance Director replied, ''The official announcement will be Wednesday, but this part of the market is priced in at a quarter-point move." Mr. West said, "The market is fully adjusted,. very violently, with the expectation that interest rates did go up and that the Fed is going to embark on a rate increase, going forward." Chair Vega asked, "Are there any other questions?" There was no response. SecretaryPavlyshin moved to allow the sale of the Templeton Global Bond Fund, and to put the money into TIPS. Trustee Cabrera seconded the motion, which passed unanimously by voice vote. Mr. West stated, "Continuing along, Page 20 rounds out the portfolio and last, but not least, one of the most stable contributors has been the dedicated allocation to real est�te. American Core Realty returned 9% for the year, and the ASB Real Estate Fund was a little over 10%, so both of these funds, and obviously we have a significant allocation to 23 MUNICIPAL POLICE OFFICERS' RETl'r�EMENT TRUST DECEMBER 13, 201:6 FUND MEETING MINUTES the. re�I estate, have benefitted us enormously. Another strategic point, if we are going to have a new second .leg of growth in the economy, real estate is another .area that is going to continue to benefit from good domestic economic growth and if inflation ticks up, this is another real asset that will appreciate in line with ·inflation, ·so we think this potentially creates a more favorable op�rating environment for_real; estate inve$tment, going forward. We still w�nt to keep that over-allocation we ha.Ve in ]Jlace .there. Are there any questions on the percentages?" There was no response. Mr. West said, "Let me just finish up here. We've already covered cash flow, so let me leave yo_u with one last page. Since it is the Yearend Report, let's go to Page 43. We're all about fulld.isclosure and transparenc;:y, so Page 43 shows. the investment management fees as a percentage of assets broken down. In the case of Hig_hland, this is their contracted'fee at 50 ba�is points on the assets they manage. Obviously, tbe low-cost fund here, or the index fund, the S&P 500 Fund is at 9, and the Vanguard Midcap. Index Fund i� at 8. We calculate the dollar-weight exposure of all of tho$e funds to come ·up with a total exp.�m�e for you, and your total op�r1;1.ting expense is 0.39%, or 39 basis points, which is very lqw. You are getting some excellent results from a verylow-cost investment operation. I am going to leave it at that. I heed to give you ,one upaate, if I may, on the Bogdahn Group.If you flip back to page 1, this is a letter from my Managing Partner and President/GEO, Mike Welker. We are ba�ica_lly going to be rebranding the :Bogdahn Group, meaning we are going to change the narne of the Bqgdahn Gro1,1p. The purpose of the name change is to have a name that reflectsour steadfast, continued commitmentand pbilosophy for strict independence· ,and putting clients first, all the Way to our business, model so that we can structure everythingin such a way·so .thatit can't be, or at le�st we can minimize any possibil,lty of conflict of interest with our structure. The name is going to reflect that.I can't tell you what it is.It i_s going to be announced the·secot1dweek in January.We'll do a big press release, but you need to hear it from me· first, because all future material and cqrrespondence is· going to come to you from a diffe[entname and l don't wa_nt you asking, 'Who is that?' We won't knQw what it is; but that is formally being done/' Chair Vega asked, "Does is startwith a certain letter, so that if Plan Administrator Steele sees it, she knows it is you?" Mr. West replied, "We went back arid made sure that all of our contact information is accurate and u·p-to�c{ate·, so that ... :" Plan Ad_minist�tqr Steele interjected, "Because I didn't.get-some of the Actuary'sreports r�cently." Mr. We§;t said� "We'll follow that protocol so that we �n -distribute that.We defer to Mr. Dehner on this, but we tried to change our name ih such a way so that we didn't have to,change our contracts or anything.If you pull our AOD, our ownership structure is still the sani.e. 'Mr. Welker stiii remains the mass majoritymanaging own�r. I arn now a minority owner.. Nothing has changed with that The other thing we wanted to let you know is that we created some direcfQrship positions within the firm and we nave elevated some people into the management structure that we think will be tbe best in l�ading th� grol'.lp. aod an increasingly larger group down the road over'the next decade. We are 1;1.lsoworking on ways for· ir.icreasing equity ownership arid profit sharing so that we can keep all of our good people onboard. You heard it from me, so when the name change comes, there is· no surprise. That is all I have." Mr. Dehner said, "If you all send me the documents wnen they are completed for this Plan, I will look at th·em·and determine what needs to be done, if anything.". 24· MUN'iCIPALPO.LICE OFFICERS' RETIREMENT TRUST DECEMBER 13, 2016 FUND MEETING MINUTES Trustee Griffith moved to approve the Plan Performance Monitor's Report. Secretary Pavlyshin seconded the motion, which passed unanimously by voice vote. 15. ATTORNEY'S REPORT Mr. Dehner stated, "I just have a couple of things. The -legislation session· is- slated to convene March 7th• It will go for its usual 60 days.and adjourn in May. So far, I have not become aware of anything that come forward and hurt us, but as long as they're in se$sion, we're ·not safe. My feeling is that they've c;lone enough to us the last few years, in ferms of bills to reduce our admini$tratiye expen_ses and new mortality tables. We will know more at our next meeting,. beGa1:1se they are starting to ·pre-file bills now that are going to be ·considered while they're in session, so we'll have a better idea of what the situation is then. Also, forthe first time last year ... And we will need to do it every year as long as it is on the books. Under Statute 112.994, Mr. Lozen having done the report today and the Board having approve it; will do addltionar calculation,as required by the Statute. He will file electronically with' the Division_, and then he will. send a copy here and it will need to go on the City'swebsite. That has to be done within 60 days." Plan Administrator .Steele asked, "What do.we call that?" Mr. Dehner replied, "I think you call it the 112.664 disclosure. Under most of the-discussions We've had, it was Senate Bill 534, but it became . Statute. 112.664." Plan Administrator Steele said, "It is on the website within 60 days, so we willget it and post it on the website." Mr. Dehner said, "Similarly, Mr. West will provide 60P information that.also needs to ·go on the website. It is e;;sentially asset allocation and actua.l return r�tes versus. assumed returns." Mr. We$t said, "YE!s and actually, that just came across my mall. They just finished it for me, so I wili forward it to Mr. Dehner." Mr. Dehner said, "Ttien we will be. set. With lhe budget last time and the administrative expenses this time, those were two of the requirements under Senate Bill 172 that we are in compliancewith. The otherwas the mutual con�ent, which we know·is completed and agre�d upon and a)so to put. a Sh�re Plan in the Ordinance,. which has also been done, so we· are in good shape. That's it" Chair Vega asked, ''Are .there.any questic;ms for Mr. Dehner?" Mr. Cristini asked, "Should we have E&O coverage 'for this Plan?" Mr. Dehner replied,. "I think the fiduciary liability with the waiver of recourse is sufficient." Mr. Cristini asked, 'What about fidelity bond?" Mr. Dehner replied, "Fidelity bond I would recommend." Trustee Griffith asked, 'What is that?" Mr. Dehner replied, "It basically covers you for misappropri�tionoftheft ofthe actual aseets." Mr. Cristini ,said, "The last several .Board members were saying, 'Well, you have this control, this. control, and this control, but I don't trust him."' Mr. Cristini said, "We now have twoadministrators on the creditcard. I'm not'saying anything is.wrong with that, but I'm trying to hedge something like that." Trustee Griffith- asked, "How much wou-ld something like that cost us?" Mr. Dehner replied, "Fidelity bonds are inexpensive." T·rustee Grrffith said, 'Weli, it is an inexpensive option, and we are below our administrative costs. I make a motion that Plan Administrator Steele look into finding prices for that, so we can discuss it. I'm all about protecting 01;1rselves." Mr. Cristini said, "We·just got offa loog conversation with � plan attorney and it was one of the first things that came up, and· they said, 'We have E&O.' As-it turns out, the attorney believed they did." Mr. Dehner asked UDid he mention that he also has an insurance agency?" Mr. 25 MUNICIPAL POLICE OFFICERS' RETIRE;MENTTRUST DECEMBER,13, ·2016 FUND 'MEETING MINUTES Cristini replied, "Not that I .know c;,f." Plan Administrator ·steele asked, "Is that. something that is issu�d by majpr insurance cqmpanle�?" (Clerk's NQte: The_ respon�� was ihauqible.) Chair Vega stated, "OJ�ay, Plan Administrator SteeJe ...." The Deputy City Clerk interjected, "I'm sorry, Trustee Griffith made a motion, butwe. don't have a second." Trustee Griffith stated, "I withdraw my motion. It'll jl,ist be- a formal request." Plan Administrator Steele asked, "To ... ?" Tn,.istee,Griffith replied, "For you to get prices." 16. ADMINISTRATOR'S REPORT Plan Administrator Steele �tated, "We have four people attending the trustee school at the end of January. Trustee Cabrera is going to get :back- to U§ on whether or not she is going. So 'far, Trustee Gr_iffjthand I are npt going to tt.1atone. As far as February13 th, only TrusteeGriffith has re$ponded.In:fhe_affirmativethat:t:ie can make trae 10:00 a.m. meeting for the presentation of .tbe audited financial statements. I haven't heard from anybody else. Thi$ is just a reminder." Trustee Cabrera statec!., "I'm good." Plcm Administrator Ste.elesaid, "Trustee· Caorera is good-, Chair Veg� and Secretary Pavlyshin?" Chair Vega a$ked, "What time?" Plan Administrator Steele -replied, ''It's at 10:00 a.m. 1 still have to schedule itwith·the City Clerk's-Office, but I have the Board. Tmstee Kleman can be there as well. I've got everybody on the 13th at 10:00 a.m. ltis a Monday." 17. OTHER BUSINESS Mr. Cristini stated, "In light of you g�tting your own Federal Employer Identification Number, we are going to send a h�ndy dandy tax letter to the Chair for you to execute and send to the good peqple at the Department of Revenue. Within eight or nine days, you $hould get .the ta� exempt certificate in your Plah�s- name." Chair Vega asked, "Is there anything else?" Trustee Griffith replied, "We talked about doing the training and they are looking to put us_ on in April and May. That's j1,Jst an FYI to, come and help .me· with the training." Plan Administrator Steele askeg, "Is that something Officer Scott Johnson does?" Chair Vega replied, "It's thrQugh Officer Jimmy Olson." Trustee Griffith said, "He sent me an email saying that we are.going to tryfor April and May. They will set aside- a couple of hours for us to have some open disQussion about the Plan." Plan Admini�trator $teele askeq, "So one Tru$tee and us?" Trustee Griffith responded in the affirmative. 18. ADJOURN There being-no further business, the meeting adjourned at 3:52 p.m. Jea�11ette C. Baeza, Deputy City Clerk 26