HomeMy Public PortalAbout2022-06-07_Pol Fire Meeting_MinutesCITY OF CRESTVIEW
POLICE OFFICERS' & FIREFIGHTERS' EMPLOYEES PENSION TRUST FUND
PENSION BOARD OF TRUSTEES
QUARTERLY MEETING MINUTES
198 N. Wilson Street
Crestview, FL 32536
TRUSTEES PRESENT:
TRUSTEES ABSENT:
OTHERS PRESENT:
1.
2.
3.
4.
Tuesday, June 7, 2022, at 2:30pm
Andrew Schneider, Chair
Ellis Conner
David Griggs
Corey Winkler, Secretary
Dan Krusenklaus
Tyler Grumbles, AndCo Consulting
Stu Kaufman, Klausner, Kaufman, Jensen, & Levinson
Drew Ballard, Foster & Foster
Kim Kilgore, Foster & Faster
CaII to Order — Andrew Schneider called the meeting to order at 2:53pm.
Roll Call — As reflected above.
Public Comments — None.
Approval of Minutes
a. March 1, 2022, quarterly meeting
The minutes from the March 1. 2022. quarterly meeting were approved. upon motion by Ellis Conner
and second by David Griaas: motion carried 3-0.
5. Reports (Attorney/Consultants)
a. AndCo Consulting, Tyler Grumbles, Investment Consultant
i. Quarterly report as of March 31, 2022
1. Tyler Grumbles commented Dana Investment would be making a
presentation today to determine if replacement was needed for this
investment.
2. Tyler Grumbles reviewed the market environment during past quarter.
3. Tyler Grumbles commented the Fund had around a $1.3 million decrease
in market value for the past quarter.
4. The market value of assets was $26,880,143 at quarter end.
5. The asset allocation by asset class for the fund was Domestic Equity at
41.80%, International Equity at 13.00%, Domestic Fixed at 24.90%, Non -
Core Fixed at 4.80%, Infrastructure at 3.90%, Real Estate at 9.00%, and
Cash at 2.60%.
6. Tyler Grumbles recommended to transfer $400,000 from Cash to invest in
International Equity which was the most underweight asset allocation to
bring closer to the median target range per Investment Policy Statement
(IPS).
The Board voted to approve to transfer $400 000 from Cash to the International Eauity investments
of Europacific Growth and Transamerica international Equity funds as recommended by the
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9twestment Consultant upon motioned by Ellis Conner and seconded by David Griggs: motion
carried 3-0.
7. The gross earnings for the quarter were -4.83% underperforming the
benchmark of-3.28%. The trailing returns for the FYTD, 1, 3, 4, and 5-
year periods were-0.34%, 5.23%, 10.67%, 9.11%, and 9.34%. Since
inception (10/01/1994) returns were 7.97%, underperforming the policy
benchmark of 8.09%.
8. Tyler Grumbles reviewed the performance of each of the investment
managers in the portfolio. Tyler commented Dana Large Cap Core Equity
strategy had lagged in performance for the quarter, past years and since
inception.
Dana Investments, Doug Giessen
1. Doug Classen introduced himself and thanked the Board for allowing him
to make a presentation at today's meeting.
2. Doug Giessen commented there were three things he wanted to discuss,
the pass seven years' performance, the transition period we are going
through now and what to do going forward.
3. Doug Classen commented Dana Large Cap Core Equity gross earnings
as of May 31, 2022, was 9.14% compared to the benchmark of 9.36%
since inception, with a difference of .22 basis points.
4. Doug Giessen reviewed the historical performance of the Russell 1000
Growth Index versus the Russell 1000 Value Index showing the Growth
stocks was the best performer for the past 15 years.
5. Doug Classen reviewed in March 2015, Dana investment had run into
trouble being a relative value investor and their investments tilted towards
value with less risk. Doug further commented in the early stages, value
was outperforming growth and since 2007 growth had been outperforming
which caused problems for Dana.
6. Doug Classen reviewed having FAANG stocks in your portfolio was all that
mattered. Doug commented these top five constituents of the S&P 500
had thrived over the last two years and more than doubling the return of
the Index and contributing 13% to the cumulative total returns of the cap
weighted Index.
7. Doug Classen commented in 2022 there was a pivot at the end of May for
value after a rough five months for this year.
8. Doug Classen reviewed Wall Street article from May 20, 2022, on the
"Eight Stocks Lead Downturn".
9, Doug Classen proposed for the Board to stay with Dana Large Cap Core
Equity investment until end of calendar year and if there were no change
in performance he would understand the termination. Doug further
commented they would consider a performance fee of 15 basis points, so
if they don't perform well, they would not get paid and if they outperformed
they would split the earnings 50/50.
Doug Ciassen left the meeting
10. Andrew Schneider asked about the 50/50 split on the earnings and Tyler
Grumbles commented it was a little aggressive and should be 30/70 split
instead.
iii. Large Cap Core Equity Manager Analysis
1. Tyler Grumbles reviewed the possible replacements for Dana Large Cap
Core Equity. The investment options for this manager evaluation report
were AQR Capital Management, LLC, J.P, Morgan Investment
Management, Inc., Parnassus Investments and Segall Bryant & Hamill.
2. Tyler Grumbles reviewed each of the managers' presented fees, portfolio
comparison and trailing performance.
3. Tyler Grumbles commented either we could stay with Dana's performance
base or could invest in the Index. Tyler reviewed the Vanguard Index fund
was a passive investor with low cost but had a more concentrated portfolio.
Tyler recommended to move on from Dana at this time and to choose
either to invest in Index and/or pick another manager.
The Board voted to approve to terminate the investment with Dana Lame CEO Core E<.; uity and invest
the proceeds to Vanguard Total Stock Index, upon motion by David Grioos and seconded by Ellis
Conner: motion carried 3-0.
b. Klausner, Kaufman, Jensen, & Levinson, Stu Kaufman, Board Attorney
i. Disability applicant update
1. Stu Kaufman reviewed they were collecting medical records and had set
the independent medical evaluation (IME) appointment for the disability
pension applicant in the next couple of weeks. Stu commented once the
IME was received a meeting would be scheduled to determine whether or
not to grant a pension benefit to the applicant.
ii. Signature authorization form
1. Stu Kaufman commented the signature authorization form should be
updated annually or when new trustees joined the Board.
Financial disclosure form
1. Stu Kaufman reviewed the financial disclosure memo and commented the
deadline for the trustees to file their financial disclosure forms was July 1,
2022.
iv. Legislation/Legal update
1. Stu Kaufman commented there was no legislation/legal updates at this
time.
c. Foster & Foster, Drew Ballard, Board Actuary
i. October 1, 2021, actuarial valuation report
1. Drew Ballard stated the contribution amounts presented in the report were
for fiscal year ending September 30, 2023.
2. Drew Ballard reviewed the minimum required contribution (MRC) as of
percentage of projected annual payroll had increased from previous
valuation from 23.90% to 24.60%. Drew further commented the City's
required contribution increased from 12.80% to 13.50%. Drew noted the
City had access to a prepaid contribution of $96,189.51 which would be
available to offset a portion of the stated required contribution for fiscal
year ending September 30, 2022.
3. Drew Ballard commented the increase in the MRC was mainly attributed
to assumption and method changes made after completing experience
study. Drew reviewed plan experience was favorable overall on the basis
of the plan's actuarial assumptions. Drew further reviewed the sources of
actuarial gain included an investment return of 9.85% (Actuarial Asset
Basis) which exceeded the 7.25% assumption and inactive mortality
experience. These gains were offset by a loss associated with an average
salary increase of 8.56% which exceeded the 6.19% assumption.
4. Drew Ballard reviewed the minimum required contribution of 23.90% of
total annual payroll was the sum of the normal cost of 17.10%,
administrative expenses of 1.50% and the unfunded actuarial accrued
liability (UAAL) payment of 6.00%.
5. Drew Ballard stated the UAAL balance as of October 1, 2021 was
$3,348,368 with an annual amortized amount of $298,591.
6. Drew Ballard commented the Plan's funded ratio was 88.00% with the 5-
year smoothing method and 95.00% with no smoothing.
The board approved the October 1, 2021 actuarial valuation as presented. upon motion by Ellis
Conner and second by David Grimm: motion carried 3-0.
The Board voted the Declaration of Returns for the Plan shall be 7.00% for the next year. the next
several years, and the Iona -term. thereafter net of investment related expenses, upon motion by
David Griaas and second by Ellis Conner: motion carried 3-0.
6. New Business — None.
7. Old Business — None.
8. Consent Agenda
a. Payment ratification — Warrants #19, #20 and #21
b. Invoices for approval — None
c. Fund activity report for February 23, 2022, through May 31, 2022
The Board voted to approve the Consent Agenda as presented, upon motion by Ellis Conner and
second by David Griaas: motion carried 3-0.
10. Staff Reports. Discussion and Action
a. Foster & Foster, Kim Kilgore, Plan Administrator
i. State annual report update
1. Kim Kilgore commented the State Annual report had been filed and we
were currently waiting for the City's audited financials to be completed to
forward to the State.
ii. Upcoming educational opportunities
1. Kim Kilgore reviewed the upcoming educational opportunities available to
the Board. Kim commented the FPPTA 38th Annual Conference would be
held June 26-29, 2022, in Orlando, Florida.
2. Stu Kaufman commented he could prepare an educational presentation
along with the Actuary for the Board. By consensus, the Board would like
to attend this educational program.
11. Trustee Reports. Discussion and Action — None.
12. Adiournment - The meeting adjourned at 3:55pm.
13. Next Meeting — August 30, 2022, at 2:30pm.
Re�pedtfully su1bmitted by:
Kim/Kilgou4, plan Administrator
Date Approved by the Pension Board:
Appro
ndrew Scneider, Chair
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