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12-03-2012 Fire Pension Meeting CITY OF CLERMONT FIREFIGHTERS PENSION BOARD OF TRUSTEES MINUTES 0900, Monday, December 3, 2012 CALL TO ORDER: Meeting called to order at 0910 AM by Chairman Lent Pension Board of Trustees meeting attendance • Judd Lent, Sy Holzman, Paul Anderson, Dean Luginbuhl, J VanZile • New Pension Board legal counsel, Stephen Cypen, Law Firm of Cypen & Cypen, attended duration of meeting via speaker-phone. Attorney Cypen introduced himself and gave a brief description of his experience (graduate of IF law school (Go Gators!), pension law since 1968, previous City Attorney in South Florida). Pledge of Allegiance (tabled due to no flag available in meeting room) APPROVAL OF MINUTES: Approval of the Minutes of the Firefighters Pension Board of Trustees Meeting held on September 10, 2012: • Holzman motioned for approval, Luginbuhl seconded, no discussion, motion passed unanimously. REPORTS: • Financial/expense reports for period 06/04/2012— 11/30/2012 o Reports distributed by Mr Van Zile. o Anderson asked if there was any data available on average administrative fees normally charged by plan administrators for funds of our size and if the quarterly fees charged by the League of Cities for managing our fund are in line with the average cost for a plan of our size. Attorney Cypen suggested requesting report from FLC on what other funds that they manage are paying. Anderson stated that he felt the FLC was doing a good job, but would like to see if the fees are in line with what other plan administrators are charging Anderson suggested that since the topic of looking at different plan administrators was brought up at the last meeting, that the fees be researched further for comparison, as we may want to keep FLC as the plan admiisitrator, but negotiate lower fees if they are found to be high Attornet Cypen inquired if we have a written contract with FLC, to which Mr. Van Zile replied that we did not Attorney Cypen suggested that may be a place to start, with lower fees negotiated in that o Financial reports included employee contribution distributions to former employees Kevin Rausch and Tim Knight. o Motion by Lent to accept financial reports, Attornet Cypen intervened, indicating that Chairman can not make motion New motion to accept financial reports by Luginbuhl, 2nd by Holzman, passed unanimously. OLD BUSINESS: • Continuation of discussion on pension plan changes moved to new business for review of new actuarial studies received. Page 1 of 4 CITY OF CLERMONT FIREFIGHTERS PENSION BOARD OF TRUSTEES MINUTES 0900, Monday, December 3, 2012 NEW BUSINESS: • Review of actuarial studies which include a 20 years and out plan and a study for retirement after 25 years of service with no age requirement. o Discussion initiated by Chairman Lent, who briefly went over report o Anderson suggested that language describing proposed changes be revised to indicate the option of"20-and-out" and a second option of changing the "normal retirement age"to "Option b" in the adaption agreement document, which is age 55 with 10 years of service or 25 years of service regardless of age, instead of calling it "25-and-out", because that option is a standard option in Chapter 175 The "20-and-out option would be identified as just that, with the selection of"Option c" under the designation of"normal retirement age" in the adaption agreement document, which is identified in the document as "Other". o Attorney Cypen inquired as to if the actuarial study was conducted prior to the "Naples Letter" or after, and then went on to explain that the interpretation outlined in the "Naples Letter" may have an impact on the study. o A discussion took place regarding the previous vote on the "20-and-out" option years ago Anderson briefed the board members on why it was voted down at that time due an overwhelming majority of the full-time members being older and not benefiting from the additional contribution that they would have had to make out of the pay. o Anderson suggested that the Pension Board recommend adapting the proposal to change the normal retirement date to :Option b" in the pension plan adaption agreement, indicating age 55 with at least 10 years of service, or 25 years of service regardless of age. Anderson stated that this option would be a minimal increase in the employee contribution, and even though it would not benefit at least 25% of the members, if not more, it would be good for the members as a whole as well as a positive recruitment tool. • A review of members revealed that 57% of the members would be age 52 by the time they have 25 years of service, so this option would benefit 43% of the members. o Luginbuhl and Holzman both suggested a recommendation to go with the "20-and-out" option, indicating that the PD has had that benefit for years and that it would provide more benefit for the member's increased contribution out of their pay o Anderson suggested that the board recommend funding whatever option is selected by using the 175 funds currently in our account to guarantee the fund for the first year and not increase the employee contribution until the second year, citing the fact that employees had not had pay increases, including COLA's, in several years and just received the first COLA of 2% Anderson indicated that instead of taking away the increase that they just received by increasing the employee contribution this year, that it may be better financially for the members if the employee contribution did not increase until the second year, when the members may begin receiving merit increases again, which would lessen the impact of the increased employee contribution Page 2 of 4 CITY OF CLERMONT FIREFIGHTERS PENSION BOARD OF TRUSTEES MINUTES 0900, Monday, December 3, 2012 o Lent indicated that he felt it would be more appropriate to increase the employee contribution immediately to show good faith on the part of the employees, but that the benefit should be funded by a combination of 175 funds and increased employee contributions, with Luginbuhl and Holzman agreeing. o A motion was made by Luginbuhl, 2nd by Holzman, for board to propose adapting the "20-and-out" option funded by a combination of 175 funds (both current and future) and increased employee contnbutions. • Further discussion included Attorney Cypen indicating that the use of future 175 funds is dependent on the interpretation of the "Naples Letter" • Motion passed unanimously • A review of members revealed that 22% of the members would be age 55 by the time they have 20 years of service, so this option would benefit 78% of the members. • Discussion on how the pension fund is allowed to use the 175 monies. o Attorney Cypen indicated that the state is reviewing all plans on a case-by- case basis as to how and whether the employer may use the 175 funds It appears that the language in Chapter 175 is now being interpreted that the employer may use future excess 175 funds to maintain current benefits in the plan instead of just increased benefits as previously interpreted. The question is whether the employer has access to past 175 funds accumulated in a bank account and would be able to utilize those funds to offset the employer's contribution to the plan There is a chance that funds currently in the account may still need to be used for plan enhancements or increased benefits, but that would be up to an interpretation upon review of our plan. o Mr Van Zile indicated that it was going to be the City's recommendation to utilize all of the 175 funds, both current and future, to fund the current benefit level and lower the City's contribution to the fund, which has been increasing over the last few years o Anderson asked Attorney Cypen if the City FD provided fire protection to unincorporated areas of the county outside the City, would the Clermont FF's Pension Fund receive the Chapter 175 funds from those areas. The Attorney advised that the City would not be allowed to collect those funds from unincorporated areas, even if providing fire protection in those areas, but can only receive those funds from incorporated areas (other municipalities, etc ) that the City may enter into a fire protection contract with • Discussion of starting a budget for the pension board to include educational opportunities for the board members. o Discussion initiated by Chairman Lent regarding implementing a budget within the pension fund for training education, as well as associated travel and per diem, citing the requirement for members of the pension board of trustees to be educated on their responsibilities o Mr. Van Zile discussed current process of City covering costs out of the general fund in compliance with city purchasing and personnel policy and then the pension fund reimbursing the city. Page 3 of 4 CITY OF CLERMONT FIREFIGHTERS PENSION BOARD OF TRUSTEES MINUTES 0900, Monday, December 3, 2012 o Attorney Cypen questioned if the pension board had any written policies in place At this time there are none He suggested that the board adapt a policy document and criteria for education and training expenditures should be included in that policy document o Attorney Cypen also commented that the pension board could have a credit card to be used for such purposes or go through the plan administrator for payment of expenses directly from the pension fund o Anderson questioned how that would work for card payment. The account would have to be administered by the fund administrator, currently FLC o Motion made by Luginbuhl, 2nd by Holzman, to table further discussion on pension budget and policy document for future meeting and to continue following current procedure with city for education and raining related expenditures until a policy and procedure manual could be developed Motion passed unanimously • Selection of dates for pension board meetings for the year 2013. o Discussed status of quarterly meetings or need for more frequent meetings General consensus was for maintaining quarterly meetings on first Monday of the quarter, with September meeting moved to second Monday due to Labor Day holiday on first Monday o Meetings for 2013 scheduled as follows o March 4th, 2013, 0900 AM o June 3rd, 2013, 0900 AM o September 9th, 2013, 0900 AM o December 2nd, 2013, 0900 AM • Appointment of 5th member of pension board of trustees. o Chairman Lent initiated discussion on expiration of term of 5th member and process for appointment for next term. o Mr. Van Zile indicated 5th member is appointed by consensus of the other 4 members, with the current term expiring the end of this year o Motion by Holzman, 2nd by Luginbuhl to reappoint Paul Anderson as 5th member. Anderson accepted appointment, passed unanimously by Lent, Holzman, and Luginbuhl. ADJOURN: Motion by Luginbuhl, 2nd Holzman, passed unanimously to adjourn at 10 03 AM Page 4 of 4