Fort Walton Beach Council minutes — 12-02-08 special minutes — reading text

63 MINUTES OF THE SPECIAL COUNCIL MEETING OF THE CITY OF FORT WALTON BEACH, FLORIDA INVESTMENT MANAGERS/ GENERAL EMPLOYEES PENSION PLAN DECEMBER 2, 2008 INTRODUCTION meeting of the City Council of Fort Walton Beach, Florida, was held on Tuesday, A special December 2, 2008 at 5: 30 p. m. in the Council Chambers at City Hall, with the following members present: Mayor Mike Anderson Councilmen: Mike Holmes ( arrived at 5: 35 pm), Dennis Reeves ( arrived at 5: 40 pm), Bill Garvie, Dr. Wayne Pullen, Jim Hartwell, and Mike Minich Absent: Virgil Miller Also Present: Joyce Shanahan, City Manager; Helen Spencer, City Clerk; Brandy Wunker, Finance Director; Toni Craig, City Attorney; Department Directors. PURPOSE The purpose of this meeting is to discuss a possible change in Investment Managers of the General Employees Pension Plan and changes in the current investment policy. CALL TO ORDER The Mayor called the meeting to order and welcomed everyone. He requested anyone who wished to address Council to approach the podium after being recognized, and then state his or her name and address for the record. PLEDGE The Mayor led in the Pledge of Allegiance. PRESENTATION Joe Bogdahn with the Bogdahn Group presented the quarterly report as of September 30, 2008. Discussion included the possibility of conducting a ' Pension 101' education conference with the Council, acting as the Board of Trustees for the pension fund, and the Advisory Board, and will include the components and the way pension funds operate and are funded. Mr. Bogdahn noted that according to State Statutes, the Board of Trustees shall receive continuing education as it pertains to investments and trustees' responsibility to the fund, at least every two years, and that if Council was interested he could get with the Finance Director and set it up for the first of the year. Council noted this topic has been discussed in the past and that it was a good idea and the City Manager stated that Staff does receive the training. Mr. Minich suggested that any education or training for Council be held in April when a new Council will be seated. The Finance Director will work out a schedule with Mr. Bogdahn for April. The Mayor asked for public input. There was none. MOVE OF MUTUAL FUND TO SALEM TRUST Consideration of a request to authorize the Finance Director, as Plan Administrator for the General Employees Pension Plan, to move the America Euro Pacific Growth mutual fund held by Merrill Lynch to Salem Trust Company. 64 SPECIAL COUNCIL 12/ 02/ 08 MOVE OF MUTUAL FUND ( CONT) The Finance Director explained that in June of 2008 the City and Merrill Lynch terminated their consulting services agreement and the City retained the Bogdahn Group as their financial advisor. As well as formerly providing these consulting services, Merrill Lynch currently acts as custodian for the American Euro Pacific Growth, one of the City' s mutual funds, and these funds are subject to fees. In the past, as part of the consulting services agreement, these fees were refunded to the City, but with termination of the consulting agreement, the City no longer receives a refund of the fees. Therefore, Staff and the financial advisor are recommending that the mutual fund be transferred to Salem Trust, the current custodian of the other fund assets, and the City would not be subject to the fees, which are approximately $ 7, 500. 00 a year. The Mayor asked for public input. There was none. Mr. Minich moved to authorize the Finance Director, as Plan Administrator for the General Employees' Pension Plan, to move the American Euro Pacific Growth mutual fund held by Merrill Lynch to Salem Trust Company, the custodian for the other investments held by the Plan. Mr. Reeves seconded motion and it carried unanimously with Holmes, Reeves, Garvie, Pullen, Hartwell, and Minich in favor ( Miller absent). INVESTMENT POLICY REVISIONS Consideration of adoption of the revised investment plan for the General Employees Pension Plan, and if adopted, authorize Staff to file a copy of the Plan with the Florida Department of Management Services. The Finance Director reported that under review of the City' s existing investment policy, it was determined that although the policy is consistent with Florida Statutes and the Plan Document, some changes were necessary. These changes include the removal of unnecessary language to Section A, Current Policy; changing the investments in Collateralized Mortgage Obligations from 250/ to 150/0 in Section 3, Fixed Income Securities; 0 decreasing the Equity Portfolio from 50/0 to 30/0 in Section 3, Equity Securities; and the Fixed Income portfolio for 100/0 to 30/ decreasing 0 in Section 2, Fixed Income Securities. The Finance Director explained these changes will help limit the City' s exposure to investment risk. The Finance Director informed she will bring forward at the December 9, 2008 Council meeting an amendment to the plan document as an ordinance change to bring the plan document in line with the investment policy. The Mayor asked for public input. There was none. Mr. Minich moved to revise the investment policy for the General Employee' s Pension Plan as follows: the removal of unnecessary language to Section A, Current Policy; changing the investments in Collateralized Mortgage Obligations from 250/0 to 150/0 in Section 3, Fixed Income Securities; decreasing the Equity Portfolio from 50/0 to 30/0 in Section 3, Equity Securities; and decreasing the Fixed Income portfolio for 10% to 30/0 in Section 2, Fixed Income Securities, and to file a copy of the revised plan with the Florida Department of Management Services. Mr. Reeves seconded motion and it carried unanimously with Holmes, Reeves, Garvie, Pullen, Hartwell, and Minich in favor ( Miller absent). RFP FOR NEW INVESTMENT MANAGER Consideration of a request to waive the bidding process to authorize Staff to work with the Bogdahn Group to issue anRFP for investment management services for the General Employees Pension Plan, and endorse having the General Employees' Pension Advisory Committee review the short list of the candidates and bring the final recommendation to City Council for approval.  65 SPECIAL COUNCIL 12/ 02/ 08 RFP FOR NEW INVESTMENT MANAGER ( CONT) The Finance Director explained that Alliance Bernstein has acted as the Plan' s investment manager for the Value Portfolio since March of 2001, but recently Staff has expressed concerns regarding their performance and ability to adequately manage the pension portfolio. Mr. Bogdahn continued that Alliance Bernstein has been underperforming and that as financial advisor, he is recommending that the General Employees' Pension Plan begin the process to search for a new investment manager for the portfolio, and that the Bogdahn Group issue the RFP for the City and begin the search process. Mr. Bogdahn continued that they will review the initial responses and short list the candidates, and a committee made up of members of the Pension Advisory Committee will rank the short list and forward a recommendation to Council for final approval. The Mayor asked for public input. Zane Bell, City retiree, questioned whether the City' s pension plan is in trouble. Mr. Bogdahn explained that the City has a defined benefit plan, whereby the City contributes to the fund to ensure it is financially sound, and the bottom line is that the City' s pension fund is financially sound. There was no other public input. Council questioned whether the ordinance or policies should be changed if the bidding process will be waived on a continuing basis. The City Manager responded that the changing of the investment manager is reviewed periodically and that the City waives the bidding process only under certain circumstances and not on a regular basis; therefore, the policies do not need to be changed. Mr. Reeves moved to waive the bidding process to authorize Staff to work with the Bogdahn Group to issue an RFP for investment management services for the General Employees Pension Plan, and endorse having the General Employees' Pension Advisory Committee review the short list of the candidates and bring the final recommendation to City Council for approval. Mr. Minich seconded motion and it carried unanimously with Holmes, Reeves, Garvie, Pullen, Hartwell, and Minich in favor (Miller absent). ADJOURNMENT As there was no further business, the meeting adjourned at 6: 12 pm. 3J P; rl- ex: APPROVEDLJjir~ MAYOR: ~ / ALt- A~ EfT: IieQwl ,' i11liL- CITY CLERK Ive