Fort Walton Beach Council agenda — 06-26-2007 regular agenda — reading text

Director, Marketing and Client Service of Rigel went over how the firm is achieving client objectives and how they are organized for client success; the firm' s growth investment philosophy & process; their growth research process; their portfolio cbnstruction; their sell discipline and the factors initiating review; the key actions affecting performance large cap growth; the large cap growth portfolio characteristics; and the Rigel difference. In response to questions, Mr. Jessup further went over the firm' s large cap assets under their management; and their fee schedule. . S~ nta Barbara Asset Management John Gomez, 'Institutional Client Services of Santa Barbara went over' the firms stable growth portfolio; their research t~am; their investment philosophy; their investment methodology; their turnover analysis; their large cap stable growth portfolio statistics; their large cap stable growth model; their sell discipline; their large cap stabl~ growth consistent performance; their large cap stable growth composite statistics; and Santa Barbara' s defining characteristics.  GENERAL EMPLOYEES PL. ,ciION PLAN ADVISORY COMMITTEE 4~26- 07 SantaBarbara cont. In response to questions, Mr. Gomes further went over the firm' s sell discipline; their c fee schedule; and their account gains and losses. ADJOURNMENT Due to the hour, the meeting adjourned at 4: 35 p. m. to be continued at a later date. ddm  CITY OF FORT WALTON BEACH GENERAL PLAN ADVISORY COMMITTEE MAY 15, 2007 o INTRODUCTION A meeting 'of the General Pension Advisory Committee was held on Tuesday, May 15, 2007 in the Fort Walton Beach Annex Conference Room at 3: 00 p. m. with the following members present: Mark Wiltsie, Human Resources Director & Pension Chairman; Lisa Absher, Finance Director & Plan Administrator; Helen Spencer, City Clerk; Tony Anderson, Adult Coordinator P& R; and Michael Beedie, Utilities Operations Manager Also present: Brandy Wunker, Sr. Accountant Also: telephone conference with Larry Cole, Investment Advisor from Merrill Lynch. CALL TO ORDER The meeting was called to order. APPROVAt OF MINUTES Mr. Wiltsie noted the fol/owing correction to the minutes: March 29, 2007, the last sentence regarding the Pension Plan Forfeiture Proceedjng should read: ".. consider adopting g final Order at that point" rather than " the Final Order at that point." Mr. Wiltsie noted the April 26, 2007 Meeting was held in the Council Chamb~ rs and not at the City Hall Annex as reflected in the minutes; also, regarding the application for early retirement for Charlie Carson, it should state that Mr. Anderson moved to approve the application for early retirement for Charlie F. Carson effective April 1 , 2007, rather than for normal retirement as stated in the minutes. Mr. Anderson moved to approve the minutes of March 29, 2007, as corrected; April 26, 2007, as corrected; and May 3, 2007. Ms. Absher seconded motion and it carried unanimously with Absher, Anderson, Beedie, Spencer, and Wiltsie in favor. DISCUSSION/ SELECTION OF INVESTMENT MANAGER FOR PENSION FUND Mr. Wiltsie advised that a telephone conference will be held with Larry Cole, Investment Advisor from Merrill Lynch, to discuss the three firms that were interviewed and to select an investment manager for the Pension Fund. Via telephone, Mr. Cole reminded the Board where they were; after the presentations from the May 3, 2007 meeting, the firm of Santa Barbara Asset Management was ruled out, and it was between Altheia Research and Management, Inc., and Rigel Capital, LLC.  GENERAL EMPLOYEES PEt'iSION PLAN ADVISORY COMMITTEE 5- 15- 07 ELECTION OF INVESTMENT MANAGER (CO NT) Mr. Cole stated his confidence in the selection of either company; however, he did c\ suggest that if Altheia were selected he would ask if they would consider managing an assignment of $ 3. 5 million if there was concern from tbe Board of putting the entire $7 million with Altheia. Discussion included the different approach between the two companies, with Rigel being more' of a traditional manager; the difference in fees between the two companies; and that the past performance numbers for Altheia are impressive. The Finance Director discussed the importance of a strong asset allocation to hedge risk and expressed her confidence in Altheia. Mr. Cole added his opinion that he would be comfortable with either company that is selected, that he has confidence in Altheia and their approach. Ms. Absher moved to select Altheia Research and Management, Inc. as the City' s investment manager for equity funds. Mrs. Spencer seconded. motion. Also discussed was the time frame it would take to transition the assets to Altheia, how long before they are really running the show, and how long should they be given before the City really considers their returns Mr. Cole advised the transition would take about 30 days, or the middle of June depending on the contract with Davis Hamilton, He explained once a contract is in l place with Altheia it should not take long for the funds to be transferred via an in- kind transfer; and that an investment manager should be given at least 3- 5 years unless there were an array of changes that happened at one time with the manager, such as personnel changes or performance problems. Mrs. Spencer left the meeting at 3: 42 p. m. and stated her concurrence of Altheia. The Chairman called for the vote on the motion and it carried unanimously with Absher, Anderson, Beedie, and Wiltsie in favor (Spencer absent). Mr. Cole confirmed he will ask Altheia to send a contract to Ms. Absher so she can prepare the item for Council approval at the June 12, 2007 Council meeting. Mr. Cole confirmed he is scheduled to give the Merrill Lynch quarterly report to the Committee and to Council on June 12th. Mrs. Spencer returned to the meeting at 3: 45 p. m. PRESENTA TrON ON FINANCIAL CONDITION OF THE GENERAL PENSION FUND Mr. Wiltsie advised that at the Strategic Planning meeting in January Council directed Staff to review the City' s ment plans, and staff will present certain issues and retirE:! items to Council during the budget planning ~ ession that will be held tonight. H~ said one of the PQlicy Decisions for Council is whether the General Employees pension plan should be modified and staff recommendation will be to continue to review and evaluate existing General Employees Pension Plan performance and recommend changes as needed.  GENERAL EMPLOYEES P.t:.~' iSION PLAN ADVISORY COMMITTEE 5~ 15- 07 r= INANCIAL CONDITION OF THE qENERAL PENSION FUND ICONT) Ms. Absher advised she wants to ensure the Pension Board is informed about what c\ has gone on in the past and what is taking place now regarding the General Employees' Pension fund, and that she will pledge to give the Board up to date figures and follow through with good financial analysis. Ms. Absher distributed a spreadsheet detailing the General Employees' Pension Fund for the past 10 years and included employee contribution, actual contribution, rate of return per Merrill Lynch, and the rate of return per Actuary, and Ms. Absher noted the difference in the rate of returns between the two. Mr. Cole explained that the difference between the returns for Merrill Lynch are strictly the investment returns, while the returns shown by the Actuary are minus expenses, and taking into account beginning and ending market value, as well as the net cash flows in and out of the plan. Ms. Absher stressed the fact that the Board needs to be aware of the difference, and also discussed the' City' s employer contributions and the Actuary' s historical rate of return. Ms. Absher also distributed a sheet showing the City' s pension contribution Plan and a cash flow analysis of the General Plan for FY 2007 which displayed cash receipts and cash disbursements from the employees and from the City. Ms. Absher advised that at the next meeting of the' Pension Board she will provide spreadsheets that show the Pension Plan expenses and show a comparison with the police and fire pension plan expenses. Ms. Absher advised she contacted Foster and Foster to discuss them doing a second actuarial valuation for the general pension plan, for comparison purposes. She advised she was extremely disappointed in their resistance in giving a second opinion. Mr. Cole advised he would call Brad Heinrich at Foster and Foster and request they give a second opinion. Ms. Absher mentioned the possibility of recommending Charles Davidson for some type of recognition for bringing to the City' s attention a discrepancy which saved the Plan $ 400, 000 in liability and $ 36, 000 in real money. ADJOURNMENT There being no further business, the meeting adjourned at 4: 30 p. m. Ive Lisa Absher rom: Lisa Absher ent: Thursday, June 21, 20072: 16 PM fa: Jim Linn' Cc: Joyce Shanahan; Michael Beedie; Tony Anderson; Mark Wiltsie; Helen Spencer; Brandy Wunker - DPT005D; ' toni@tlcpa. gccoxmail.com' Subject: RE: Pension - Aletheia contact info Dear Mr. Linn, Thank you for the update! We are going to go ahead and save a space on the 6/ 26/ 07 City Council Agenda, just in- case the Agreement is finalized. Thank you! Lisa Absher Finance Director City of Fort Walton Beach, Florida Office ( 850) 833- 9513 Original Message----- From: Jim Linn [ mailto: jlinn@llw- law. com] Sent: Thursday, June 21, 2007 1: 50 PM To: Lisa Absher Subject: Re: Pension - Aletheia contact info have heard nothing back from my phone call and email to Aletheia. Sent from my BlackBerry Wireless Handheld Original Message----- From: Lisa Absher < labsher@fwb. org> To: Jim Linn Sent: Thu Jun 21 14: 04: 15 2007 Subject: FW: Pension - A1etheia contact info Mr. Linn, Can you please be so kind as to give me an update on how the Aletheia contract is coming along? Joyce' s " cut- off" for putting this item on the agenda for 6/ 26 is today, please see her note to me below. If you think we can have this shortly ( in the next few days), I' m sure we could hold an open space for it on the 6/ 26 Agenda. It' s just that our City Council takes vacation in July- so