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

aTY OF FORT WALTON BEACH City Council Special Meeting Agenda December 2, 2008 - 5: 30 P.M. City Council Chambers 107 Miracle Strip Parkway, SE Fort Walton Beach, FL 32548 CALL TO ORDER PLEDGE OF ALLEGIANCE - Mayor Mike Anderson I AGENDA 1. Presentation of quarterly reports for the General Employees Retirement Fund investments. Finance Director) ( See Backup) 2. Consideration of a request 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. ( Finance Director) ( See Backup) 3. Consideration of adoption of the revised investment policy for the General Employees Pension Plan, and, if adopted, authorize staff to file a copy of the revised plan with the Florida Department of Management Services. ( Finance Director) ( See Backup) 4. Consideration of a request to waive the bidding process pursuant to City of Fort Walton Beach Code of Ordinances, Volume II, Chapter 4, Section 4. 01 paragraph 4. 01. 023 and the Purchasing Policies and Procedures and 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. ( Finance Director) See Backup) ADJOURN Any person who decides to appeal any decision made with respect to any matter at this meeting will need a record of the proceedings, and for such purpose may need to ensure that a verbatim record of the proceedings is made, which record includes the testimony and evidence upon which the appeal is to be based. (FS286.0105). The City of Fort Walton Beach adheres to the American with Disabilities Act and will make reasonable modifications for access to this meeting upon request. Please call City Clerk Helen Spencer at 850-833- 9509 to make a request. For Hearing Impaired dial the City Hall TOO # 850- 833- 9925 or 1- 800- 955- 8771 ( TOO) or 1- 800-955-8770 ( Voice). Requests must be received at least 48 hours in advance of the meeting in order to allow the City time to provide requested service.  City of Fort Walton Beach Memorandum Date: November 25, 2008 To: Joyce Shanahan, City Manager From: Brandy Wunker, Finance Director/Plan Administrator Subject: General Employees Pension Plan - Quarterly Report The City currently engages The Bogdahn Group as the asset consultant to review the investment performance of the investment managers, AllianceBemstein, Davis Hamilton Jackson, and Aletheia to ensure adherence to the City' s investment goals. Joe Bogdahn with The Bogdahn Group will be available at the December 2nd City Council Meeting to discuss the quarter' s performance and make a brief presentation to Council. Respectfully submitted: F'\. By: ~ ^ ^ v · B:~ e~ Finance Director Attachments: The Bogdahn Group Quarterly Report as of September 30, 2008 AllianceBemstein Quarterly Report as of September 30, 2008 Davis Hamilton Jackson Quarterly Report as of September 30, 2008 Aletheia Quarterly Report as of September 30, 2008  Page 1 of 1 Brandy Wunker From: Joe Bogdahn Ooeb@bogdahnconsulting. com] Sent: Friday, November 21, 2008 6: 51 PM To: Brandy Wunker; Rose Berry; signa300@mchsLcom Cc: Brian Bizzell Subject: Mutual funds held at Merrill Importance: High As we discussed at the Police and Fire meetings this week, we need to get the mutual funds held at Salem and converted to the institutional share classes. Right now, you are continuing to pay Merrill for no reason. Please let me know if you have any questions. J Joseph Bogdahn, CIMA telephone 863. 293. 8289 facsimile 863. 292. 8717 l'ln' lOG.DAI.IN ROUI) simplifying your investment & fiduciary decisions 1 1 /")" II) ()() ~  CITY COUNCIL SPECIAL MEETING December 2, 2008 Special Meeting Agenda 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 Finance Director) Council Action 1st 2nd Vote: SP- 3 Agenda Item Number:  CITY OF FORT WALTON BEACH MEMORANDUM TO.: Joyce Shanahan, City Manager FROM: Brandy Wunker, Plan Administrator/ Finance Director SUBJECT: General Employees Pension Plan - Investment Policy Revisions DATE: November 26, 2008 Backaround On October 1, 2000 Council revised the investment policy for the General Employee' s Pension Plan. The Policy was revised again as addenda' s were issued coinciding with the hiring of the investment managers, Alliance Bernstein, Davis Hamilton Jackson, and Aletheia. The investment policies that are used for public pension plans throughout the State of Florida are required to comply with F. S. 112. 661. In June 2008, the City engaged the services of The Bogdahn Group as financial advisor for the General Employees' Pension Plan. The firm has since reviewed the current investment policy and has recommended minor changes be made to the policy. In addition, the formatting of the policy has been revised for ease of reading. Discussion Upon review of our existing policy, The Bogdahn Group determined that our existing policy is consistent with Florida Statutes and the Plan Document, but that some changes were necessary. In addition to the formatting changes, the revised investment policy includes the following: PaQe 3. Section A ( Current Policy) - This section refers to " limitations and conditions set forth in certain subsections of F. S. 215.47" and because the investment policy specifies these limitations the language is not necessary and has been removed in the revision. PaQe 4. Fixed Income Securities. Section 3 ( Current Policv) - The investments in Collateralized Mortgage Obligations ( CMOs) is currently limited to 25%; the new policy changes this limitation to 15%. PaQe 4. Equity Securities. Section 3 ( Current Policy) - To increase the City' s diversification and limit the City' s exposure, this percentage has been changed from 5% to 3%. PaQe 4. Fixed Income Securities. Section 2 ( Current Policy) - To increase the City' s diversification and limit the City' s exposure, this percentage has been changed from 10% to 3%. Attached is a copy of the current General Employees' Pension Plan Statement of Investment Policy that includes the highlighted sections specifically discussed above. Also attached is the proposed revision of the policy. The revision addresses the changes mentioned above and clarifies language for consistency with the Plan Document. In addition to the reVISions addressed in regards to the investment policy, staff has discovered minor inconsistencies between the current investment policies and the Plan documents. These specific inconsistencies are outlined below. Section 17- 12. 1 of the plan document outlines permitted investments, and does not mention mutual funds. However, the current investment policy allows for mutual funds.  Section 17- 12. 1 2( d) 2 limits the equity securities to 50% at cost of the fund. The current investment policy has a target of 65% in equities, with no cost limitations. Section 17- 12. 1 2( a) references the FSLlC. The Federal Savings and Loan Insurance Corporation ( FSLlC) was an institution that administered deposit insurance for savings and loan institutions in the United States. It was abolished in 1989 by the Financial Institutions Reform, Recovery and Enforcement Act, which passed responsibility for savings and loan deposit insurance to the Federal Deposit Insurance Corporation ( FDIC). To facilitateconsistency in the Plan documents, staff will prepare ordinance amendments for City Council consideration at the December 9, 2008 regular meeting. These Ordinance Amendments will amend the Plan document to: Allow for mutual fund investments ( currently being used) To limit the equity securities target at 65% ( currently being used), and To remove the obsolete reference to the FSLlC. The revised invesmtent policy has been reviewed by the Pension Attorney and adoption by motion of the new policy is acceptable. Recommendations Staff respectfully requests that City Council adopt the revised investment policy for the General Employees' Pension Plan and file a copy of the revised plan with the Florida Department of Management Services. Respectfully Submitted. Brandy Wunker Fina~ Director Concur Do Not Concur 1/ 1 v&/f)~ Page 2 Docid: U:\ FinanceA\ genda\ investment policy staff reprt 12.2. 08. doc Last Revised: 11/ 26/ 0812: 13 PM  City of Fort Walton Beach General Employees' Pension Fund Investment Policy Statement I. PURPOSE OF INVESTMENT POLICY STATEMENT The Pension Board of Trustees maintains that an important determinant of future investment returns is the expression and periodic review of the Fund' s investment objectives. To that end, the Trustees have adopted this statement of Investment Policy. In fulfilling their fiduciary responsibility, the Trustees recognize that the retirement system is an essential vehicle for providing income benefits to retired participants or their beneficiaries. The Board also recognizes that the obligations of the Fund are long- term and that investment policy should be made with a view toward performance and return over a number of years. The general investment objective, then, is to obtain a reasonable total rate of return - defined as interest and dividend