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Home My WebLink About2015-01-12 Police & Fire Pension Board Minutes City of Dania Beach Police and Fire Fighters Retirement System 113 S.W. 1 Street Dania Beach, Florida 33004 Phone: (954) 393-9061 E-mail: PFPENS@gmail.com Page 1 of 7 MINUTES January 12, 2015 REGULAR MEETING I. CALL TO ORDER The meeting was called to order by Chairman Rogers at 7:05 PM MEMBERS PRESENT: MEMBERS ABSENT: Chairman Larry Rogers Wardell Lee Richard Tarrant Carolyn Jones Roger Handevidt Todd Neal Rae Sandler Todd Lleras Mayor Marco Salvino ALSO PRESENT: Ken Harrison - Sugarman & Susskind, PA Cathy David – Administrator Steve Gordon – Steven Gordon CPA Melissa Algayer – Gabriel, Roeder, Smith & Company Jeffrey Amrose – Gabriel, Roeder, Smith & Company II. APPROVAL OF MINUTES MOTION: by Roger Handevidt to accept minutes from the November 16, 2014 regular meeting as submitted. SECOND: Todd Neal PASSED UNANIMOUSLY January 12, 2015 Page 2 of 7 III. PUBLIC COMMENT The floor was open and no public comment IV. CONSENT AGENDA No items listed on the Consent Agenda V. OLD BUSINESS VI. NEW BUSINESS 6.1 DRAFT-Audited Financial Statements-September 30, 2014 Steve Gordon, CPA Steve Gordon of the accounting firm Steven I. Gordon, CPA reviewed with the Board his firms’ DRAFT of the Audited Financial Statements for the Plan for year ending September 30, 2014. Mr. Gordon gave a clean opinion on the plan but he is waiting for a SOC report from the plan’s custodian Salem Trust in order to release the report from DRAFT status. The SOC report is given when Salem Trust’s audit is complete and should be done soon. This item was Tabled until the SOC report is finished for Salem Trust and the plans accountant Steve Gordon is ready to release the Audited Financial Statements. 6.2 Actuarial Report October 1, 2014 - GRS Jeff Amrose of Gabriel, Roeder, Smith & Company reviewed the highlights and distributed in writing the highlights of the actuarial valuation performed by his firm on the Plan for the fiscal year October 1, 2013. This System was fully closed to new members in January 2011. One consequence of this closure is that the annual payment on the unfunded accrued liability will continue to increase as a percentage of covered payroll as such payroll decreases from year to year. Therefore, the overall cost as a percentage of covered payroll will be increasing each year. Revisions in Actuarial Assumptions and Methods The Board adopted the following assumption and method changes in connection with this Valuation Report: January 12, 2015 Page 3 of 7 The assumed investment return was lowered from 7.5% to 7.25%. The assumed investment return will be lowered to 7% as of October 1, 2015. A change from the 1983 Group Annuity Mortality Table for males and females, with no provision being made for future mortality improvements to the RP-2000 Combined Healthy Participant Mortality Tables with future mortality improvements projected to all future years from the year 2000 using Scale BB was being phased-in at a rate of 25% per year starting October 1, 2012. This change was fully recognized in the current report. A change from the individual Entry Age Normal Funding method to the Aggregate Funding Method was being phased-in at a rate of 25% per year starting October 1, 2012. This change was fully recognized in this current report. These changes increased the required employer contribution by $1,479,259. Actuarial Experience There was a net actuarial loss of $1,615,075 for the year which means that actual experience was less favorable than expected. The loss is primarily due to recognized investment return below the assumed rate of 7.50%. January 12, 2015 Page 4 of 7 The year’s investment return was 8.1% based on market value of assets and 6.9% based on the actuarial value of assets. The net loss has increased the required employer contribution by about $291,000. Since the plan has a net cumulative loss there is no COLA available at April 1, 2015. Chapter 175 revenue as a percent of payroll this year (7.08%) is greater than the percent in 1997 (2.77%). Therefore, the addition to the subsidy this year is $115,248. After offsetting for $120,478 distributed to retirees during the year, the balance of the subsidy this year is $117,450 (October 1, 2014 to September 30, 2015) compared to last year’s balance of $122,680. The funded ratio this year is 57.4% compared to 57.5% last year. The Market Value of Assets exceeds the Actuarial Value of Assets by $846,860 as of the valuation date. This difference will be gradually recognized over the next several years, causing the contribution requirement to decrease, in absence of offsetting losses. If Market Value had been the basis for the valuation, the employer contribution rate would have been 179.2% instead of 184.7% and the funded ratio would have been 58.8% instead of 57.4%. In the absence of other gains and losses, the employer contribution rate should decrease to this value over the next several years. MOTION by Rae Sandler to approve the October 1, 2014 Actuarial Report as prepared by Gabriel, Roeder, Smith & Company based upon the recommendation of Melissa Algayer and Jeffery Amrose from GRS. SECOND by Carolyn Jones PASSED UNANIMOUSLY January 12, 2015 Page 5 of 7 6.3 GRS-GASB 67 Reporting Once the funding report is passed tonight GRS can prepare the separate report to the State that has to be done in 60 days from this date. Discussion took place regarding treating the plan separately for police and fire. MOTION by Carolyn Jones for Gabriel, Roeder, Smith & Company to treat the plan as one that includes police & fire for GASB 67 reporting purposes as recommended by Melissa Algayer and Jeffery Amrose from GRS. SECOND by Rae Sandler PASSED UNANIMOUSLY 6.4 GASB 67 REPORT Discussion took place with Melissa, Jeff and Ken Harrison about Senate Bill 534 that was passed in May 2014. The GASB 67 requires many additional disclosure items. The fee for this report and additional disclosures is between $2500.00 and $3000.00. The report is due 60 days after the Actuarial Report is passed but the actual rules for reporting as still being processed. GRS, The League of Cities and other Actuaries went to the State last year and spoke against Senate Bill 534 but it passed anyway. MOTION by Carolyn Jones to approve the additional $2500.00 to $3000.00 fee to Gabriel, Roeder, Smith & Company for the preparing the GASB 67 Report as required by the State Stature SECOND by Roger Handevidt PASSED UNANIMOUSLY 6.5 IRS Determination Letter The IRS approved the plans application for a Favorable Determination Letter. A Favorable Determination Letter is a ruling by the IRS that the plan document meets all of the legal requirements to be considered a “Qualified Plan”. Qualified Plans are entitled to favorable tax treatment including: 1) Participants of qualified plans do not pay taxes on the contributions made on atheir behalf; and 2) the trust is exempt from taxation on its earnings. The IRS did not require any amendment to this plan’s plan document. This determination letter is only good until January 2019. January 12, 2015 Page 6 of 7 6.6 Attorney Fee Increase Discussion took place regarding the attorney request for fee increases. Sugarman & Susskind is proposing the following retainer increase for the next three (3) years. Commencing January 1, 2015 $1,900, $2,300 commencing January 1, 2016 and $2,800 commencing January 1, 2017. According to Sugarman & Susskind records they averaged 9.2 hours of service per month to this plan over the most recent two year period. This is an increase in the amount of time that they have devoted per month to this plan’s affairs in prior years. The addition of new investment managers, amendments to the plan, as well as the usual day-to-day questions concerning benefits and plan interpretation increased the amount of time which they have spent on the plan’s affairs. The current level of activity will likely increase in the foreseeable future. As the Retirement System considers recent legislative actions and innovative programs appropriate for a system of this size, the amount, sophistication and complexity of the legal work will continue to demand additional time from Sugarman & Susskind. Sugarman & Susskind has been with the plan since inception. MOTION by Todd Neal to approve Sugarman & Susskind’s fee increase starting with the January 2015 fee of $1,900.00; increasing their fee to $2,300.00 January 1, 2016 and increasing their fee to $2,800.00 January 1, 2017. SECOND by Roger Handevidt PASSED UNANIMOUSLY 6.7 Tablet Purchase Discussion took place regarding the purchase of a 10.1 inch tablet for each trustee to load all plan documents for reading and analyzing rather than paper. Attorney Harrison mentioned that several boards are going with purchasing Apple iPad tablets. MOTION by Carolyn Jones for the administrator to purchase 10 iPad Tablets and Apple ICare service SECOND by Roger Handevidt PASSED UNANIMOUSLY January 12, 2015 Page 7 of 7 VII. CORRESPONDENCE VIII. RETIREMENTS / TERMINATIONS IX. OPEN DISCUSSION AND INFORMATION 9.1 Attorneys Report Attorney Ken Harrison discussed with the trustees pending issues with the state legislature in Tallahassee. Pension reform remains an issue in the legislature. 9.2 Bogdahn Consulting The plans former investment consultant Bogdahn Group has had a small change in ownership from a family business to an employee managed firm. Discussion took place with Mayor Salvino. He mentioned that he was going to see if another commissioner would take his place on this board since he is very busy at this time. He is extremely busy with airport issues. If not than he would continue to be on the board. He inquired that if he did step down and someone else took his place could he still come to the meetings. He was told that the meetings were open to the public and that he could come anytime he wanted. MOTION by Roger Handevidt to adjourn meeting SECOND: Ray Sandler Meeting adjourned at 8:59 PM