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Clermont Fire 01-31-2019 Joint Meeting Minutes signedCity of Clermont MINUTES POLICE OFFICERS AND FIREFIGHTERS PENSION BOARD OF TRUSTEES JOINT MEETING January 31, 2019 The Firefighters Retirement Plan Board of Trustees and the Police Officers Retirement Plan Board of Trustees met in a joint meeting on Thursday, January 31, 2019 in the Training Room at Clermont's Police Department. Firefighters' Board Members present: Judd Lent, Judi Proli, Jim Purvis and Ryan Moore. Attorney Bonni Jensen and Christiansen were present. Police Officers' Board Members present: John Baker, Michael Scheller, Scott Tufts, Mark Vitek, and Jason Sayre. Jeremy Langley with Florida League of Cities was present. Staff members present: Finance Director Van Zile, Risk and Benefits Manager Ohlinger. CALL TO ORDER Chairman Lent called the meeting to order at 9:02am. Chairman Scheller called the meeting to order at 9:03am. OATH OF OFFICE Deputy City Clerk Zinker administered the Oath of Office to Jason Sayre, Mark Vitek and Ryan Moore. UNFINISHED BUSINESS Attorney Christiansen provided a brief summary of the history for the request for presentations by the consultants and administrators. Finance Director Van Zile suggested discussing each presentation amongst the board before proceeding onto the next one. Board Member Moore indicated a time conflict after 3:00 pm. Investment MonitorlConsultant and Administrator Presentations Schedule AndCo Consulting Mr. Tyler Grumbles and Mr. Daniel Johnson entered the meeting at 9:09am Mr. Grumbles introduced himself and Mr. Johnson, Director of Consulting. Mr. Johnson, thanked the Pension Boards and presented AndCo's mission, vision, and values. AndCo Consulting is employee owned and operated. If the Boards decide to leave within the year, AndCo will refund any fees paid. Mr. Grumbles reviewed the General Consulting Services Model, the research group, consulting team, broker model, Florida League of Cities vs. Independent Model, Clermont Police Officers' and Firefighters' Plans Portfolio Notes, and sample portfolios. AndCo would allow for the Boards to customize their portfolio to their specific needs and allow for the Boards to take on more risks if they chose to do so. AndCo uses a flat fee which would save the Boards roughly $100,000 a year in the future. AndCo will transition from the Florida League of Cities quickly and smoothly to minimize the days spent out of the market. The annual fee is $25,000 for each individual board or $40,000 for both Boards. Mr. Johnson clarified the annual fees are guaranteed for three years. City of Clermont MINUTES POLICE OFFICERS AND FIREFIGHTERS PENSION BOARD OF TRUSTEES JOINT MEETING January 31, 2019 Finance Director Van Zile inquired about the other plans which AndCo converted from the Florida League of Cities. Mr. Johnson stated AndCo assisted the City of Jacksonville Beach with leaving the fixed income fund of the Florida League of Cities. Finance Director Van Zile inquired about the five clients which left AndCo due to dissatisfaction of services. Mr. Johnson stated he would have to look into the individual case files. Board Member Baker inquired about the average rate of return. Mr. Johnson stated the group is above the peer group average but does not have the specific information for last year. Mr. Steve Alexander, PFS, requested for elaboration on the expectations for the trustees to make decisions at each Board Meeting and what kind of information AndCo will be providing at each meeting. Mr. Grumble stated initially the funds would transition straight into the index funds then AndCo would bring reports each quarter with recommendations of what is performing well. The Boards could then make the decision to transition their funds or stay in the index. Mr. Alexander inquired about asset allocation decisions. Mr. Grumble stated they would obtain different mixes of allocations and asset classes on an annual basis as well as projections over the next 10 to 15 years. Finance Director Van Zile inquired about replacement of managers. Mr. Grumble stated they look at performance vs. benchmark and performance vs. peer group over a three to five-year time period. Researchers keep track of personnel changes within the corporations to make sure the corporations are not having any internal struggles with their managers. Finance Director Van Zile inquired about a maximum limit of clients. Mr. Grumble stated there is no maximum limit of clients but he will reduce his client load if he cannot keep up or serve the clients at the highest capacity. Finance Director Van Zile inquired about the average dollar amount of assets of the clients handled. Mr. Grumble stated a rough average is $20 million without Lakeland and Orlando utilities. Risk & Benefits Manager Ohlinger requested more information on service guarantee. Mr. Johnson stated a sample agreement containing the information could be provided. Attorney Jensen inquired about help with choosing custodians. Mr. Johnson stated helping to choose a custodian is a part of the services AndCo would provide. Mr. Johnson and Mr. Grumble left the meeting at 10:00am. Dahab Associates Mr. Gregory McNeillie and Mr. Thomas Donegan entered the meeting at 10:04am. Mr. McNeillie, introduced himself and reviewed Dahab Associates' clients, services provided, and the service models of Dahab Associates. ba City of Clermont MINUTES POLICE OFFICERS AND FIREFIGHTERS PENSION BOARD OF TRUSTEES JOINT MEETING January 31, 2019 Mr. Donegan introduced himself and reviewed the Police Pension Board portfolio, potential portfolio, Dahab Associates' philosophies, performance comparisons, next steps, fees and services included. The main difference between the current portfolio and the potential portfolio is the utilization of Passive Large Cap and the replacement of some Core -Plus Fixed Income with Real Estate and Core Fixed Income. Dahab Associates will provide unlimited manager searches and the process will be open for the Boards to follow along. The all-inclusive annual fees for the Boards will be $32,000. Attorney Christiansen inquired about the annual fee. Mr. McNeillie stated the fee is still $32,000 even if only one of the Boards chose to go with Dahab Associates. Mr. Donegan stated Dahab Associates created the software they use and will be able to customize the software to the Boards' needs. Finance Director Van Zile inquired about converted plans. Mr. McNeillie stated he has converted plans in Connecticut but not from the Florida League of Cities. Mr. Alexander requested for elaboration on the expectations for the trustees to make decisions at each board meeting and what kind of information Dahab Associates will be providing at each meeting. Mr. Donegan stated the Boards could vote to give Dahab Associates the right to make the selections for the portfolio or they can review each option themselves. Dahab Associates will gather the top managers and the Boards will decide which managers to hire. Mr. McNeillie stated the first step is making allocation decisions. Once the allocation is set then the Boards can decide how many managers are needed. Board Member Purvis inquired about the average time lapse for a transition. Mr. McNeillie stated the transition can happen right away if the Boards want to go straight from the Pension Trust to an ETF portfolio. However, Dahab Associates tends to take longer due to its process to finding managers. Attorney Jensen inquired about manager selection. Mr. McNeillie clarified he will narrow the list of recommended managers and propose a select few to the Boards. Attorney Christiansen inquired about the transfer process of the funds. Mr. McNeillie stated the funds are transitioned to the index quickly in about three to seven days. From there, the Boards would hire managers for each allocation fund and then distribute the funds to that allocation accordingly. Finance Director Van Zile inquired about clients lost over the past few years. Mr. Donegan stated unfortunately three plans went into the Pension Benefit Guarantee Corporation which ran out of funds due to a lack of members. Finance Director Van Zile inquired about client limit. Mr. McNeillie stated the average client amount is 9 with an average client size of $60 million. Mr. Donegan stated his average client size is approximately $50 million. Attorney Christiansen requested clarification on the fee. Mr. Donegan stated the fee is the same even if the Boards do not meet on the same day. Mr. Donegan and Mr. McNeillie left the meeting at 10:50am. City of Clermont MINUTES POLICE OFFICERS AND FIREFIGHTERS PENSION BOARD OF TRUSTEES JOINT MEETING January 31, 2019 Burgess Chambers & Associates Mr. Larry Cole and Mr. Mitchell Brendan entered the meeting at 10:57am. Mr. Cole reviewed a brief introduction of Burgess Chambers & Associates and its staffing. Mr. Cole stated he and Mr. Brendan would be the consultants working the account of the Boards. A lot of time is spent on due diligence on investment firms for the Boards. Mr. Brendan reviewed sample reports and two stress tests analysis. Mr. Cole reviewed sample manager highlights and clarified the firm is always looking at asset classes to add to portfolios. Mr. Brendan reviewed sample risk management research, risk management infrastructure analysis, and real estate analysis. Mr. Cole reviewed Burgess Chambers and Associates' commitment and fee proposal for both plans. Finance Director Van Zile inquired about converted plans from the Florida League of Cities. Mr. Cole stated the firm has converted some plans from the Florida League of Cities. Mr. Alexander inquired about the process moving from the Florida League of Cities. Mr. Cole stated the first step would be to look at the investment policy to make sure any changes the boards would like are made then followed by asset allocation. Burges Chambers and Associates would recommend specific allocations to the Boards. Mr. Brendan clarified the real estate asset would take a bit longer than the other asset allocations. Finance Director Van Zile inquired about average size of clients managed. Mr. Cole stated the average size is approximately $45 million. Finance Director Van Zile inquired about client loss in the past three years. Mr. Cole stated the firm has not lost a client due to services. Attorney Jensen stated the Boards will need a custodian should they decide to leave the Florida League of Cities. Mr. Cole replied Burgess Chambers and Associates would help the Boards with finding custodians. Board Member Watkins inquired about fixed income. Mr. Mitchell replied between infrastructure and convertibles, the convertibles have the higher yields. Attorney Christiansen inquired about the transition of funds and assets. Mr. Cole recommended for the Boards to work on finalizing an investment policy while looking for a custodian. Mr. Mitchell stated their offices are located in Orlando. Mr. Mitchell and Mr. Brendan left the meeting at 11:44am. Attorney Jensen clarified the consultants will help the Boards to create their portfolios by helping with the selection of managers as well as the monitoring of the managers. Attorney Jensen stated she has worked with all three of the groups and all three are good choices. 4 City of Clermont MINUTES POLICE OFFICERS AND FIREFIGHTERS PENSION BOARD OF TRUSTEES JOINT MEETING January 31,.2019 Attorney Christiansen stated if the Boards want to leave the Florida League of Cities, then the Boards will have to be more hands on with their plans however consultants typically tell the Boards which direction they should take. By the time the decision comes to the Board, the options will be narrowed down for the Board to choose from. Finance Director Van Zile clarified the difference will be the Boards have to do the work rather than relying on the Florida Municipal Pension Trust Fund Board and the Florida League of Cities. Attorney Christiansen reviewed the basic process of transitioning the funds from the Florida League of Cities. Once the plan is set up, the consultants will provide quarterly reports to the Boards at which time the Boards can choose to only get the report or to have the manager come in as well to give more details. The Boards will also be in a position to choose not to be with a manager. Mr. Alexander stated the Boards will have decisions to make while transitioning their funds of allocation changes. Chairman Lent suggested the Boards look at the consultants' basic strategies when deciding which one to choose. Board Member Watkins commented on similarities between Dahab Associates and the Florida League of Cities. Mr. Alexander stated the focus should be on the investment policy as decisions will be filtered through the Boards' investment policy as it should reflect the Boards' perception of risk and reward relationship. Chairman Scheller inquired of limitation on the amount of risk the Board can assume. Attorney Jensen stated the Board can remove the requirements in the Florida Statutes except for international. Finance Director Van Zile commended Burgess Chambers and Associates for never having lost a client in the last three years. Attorney Jensen stated the Board should also look at the consultants' ability to communicate to the Board. The consultant's job is to translate what the managers' report and communicate with the Board. Chairman Lent inquired as to any benefits of choosing a local consultant. Attorney Christiansen stated the only benefit to a local consultant is possibly more availability for special meetings. Mr. Alexander stated the Board should look at what the consultants will do to help the Board make the decisions going forward. Part of the Boards' decision process today is to put all of the nuances and differences to the side to focus on those consultants the Boards connect with and are comfortable with. Board Member Proli expressed support for AndCo. Chairman Lent expressed support for AndCo Consulting and Burgess Chambers and Associates but expressed opposition to Dahab Associates. City of Clermont MINUTES POLICE OFFICERS AND FIREFIGHTERS PENSION BOARD OF TRUSTEES JOINT MEETING January 31, 2019 Board Member Watkins expressed support for Burgess Chambers and Associates but expressed opposition to AndCo Consulting and Dahab Associates. Board Member Watkins inquired about convertibles mentioned by Burgess Chambers and Associates. Mr. Alexander replied convertibles have a time period to be converted into a bond which causes them to move in the opposite of the equity market. Burgess Chambers and Associates are trying to add asset classes which do not rely on equities. The convertible is another step in the process to protect your asset and helps diversify the Boards' portfolio. Board Member Watkins inquired about a convertible. Mr. Alexander replied a convertible is a stock from a big company that has the ability to go into a fixed bond. Board Member Moore expressed support for AndCo. Board Member Sayre expressed positives and negatives of each consultant firm. Board Member Vitek, Chairman Scheller, Board Member Baker, Board Member Tufts, Board Member Purvis and Board Member Moore expressed support for Burgess Chambers and Associates. Chairman Lent expressed opposition to the Florida League of Cities' investment policy and strategies. Board Member Purvis expressed agreement with Chairman Lent. Chairman Lent recessed the meeting at 12:29pm. Chairman Lent reconvened the meeting at 1:32pm. Foster & Foster Ms. Ferrell Jenne with Foster & Foster entered the meeting at 1:32pm Ms. Jenne reviewed the firm and its history, the staff, the firm's website portal, and the firm's fees. Foster & Foster has never been terminated, put on watch, or had a breach in their security. There is an online portal for the trustees to use. The firm's retainer fee includes four quarterly meetings however mileage and tolls would be additional fees. Chairman Lent inquired about annual benefit statements. Ms. Jenne replied the information on the portal is not individual information but the entire plan's information however, the individual reports will be e-mailed or mailed depending on the preference of the trustee. Attorney Christiansen clarified the individual member certificates are the responsibility of the actuarial firm. Chairman Lent inquired about actuarials. Ms. Jenne stated the firm has approximately 250 actuarials across the state. Finance Director Van Zile inquired about converted plans from the Florida League of Cities. Ms. Jenne stated she has had experience converting plans from the Florida League of Cities with Indian River Shores as an example. City of Clermont MINUTES POLICE OFFICERS AND FIREFIGHTERS PENSION BOARD OF TRUSTEES JOINT MEETING January 31, 2019 Finance Director Van Zile inquired about agenda preparation. Ms. Jenne stated Foster & Foster would prepare the agenda and post notice of the meetings to the public. The agenda is typically drafted in a word document which the City can upload the Word document to their software. Foster & Foster would also draft the meeting minutes as well. Attorney Christiansen inquired about a reduction of a fee if minutes are not done by Foster & Foster. Ms. Jenne said the fee does not change whether Foster & Foster prepares the minutes or not. Risk & Benefits Manager Ohlinger inquired Foster & Foster's role in the transition from the Florida League of Cities. Ms. Jenne stated the role taken is a City by City case but would try to make everything smooth in the transition. Ms. Jenne left the meeting at 2:00pm. Resource Centers Mr. Scott Baur and Ms. Phyllis Shuford entered the meeting at 2:09pm. Mr. Baur introduced himself and Ms. Shuford and reviewed the plan administrator's role, the people side of the job, and the data side of the job. Ms. Shuford reviewed the responsibilities and duties of Resource Centers. Mr. Baur clarified all calls are returned within 24 hours. Mr. Baur stated coming out of the Florida League of Cities, the Boards will have choices to make. The custodian can make benefit payments but Resource Centers can also make the benefit payments for the Boards. Attorney Christiansen inquired about tax information. Mr. Baur stated Resource Centers will prepare the tax information if they issue the benefit payments. Mr. Baur stated Resource Centers also handles shared and drop participants. Members can access information through the web portal in real time. Resource Center does not provide accounting or legal advice but does have legal counsel. The provided retainer fee could be negotiated should the Boards want to pick and choose the services which Resource Centers will provide. Board Member Vitek inquired about data stored. Mr. Baur stated the data is stored on mirrored servers and backed up nightly. Chairman Lent inquired about administrating to the Boards' portfolios. Mr. Baur stated he would initially personally handle the plan during the transition from the Florida League of Cities. Chairman Lent inquired about websites. Mr. Baur stated there is one website for the entire plan information and a log in section of the site for their individual accounts. 7 City of Clermont MINUTES POLICE OFFICERS AND FIREFIGHTERS PENSION BOARD OF TRUSTEES JOINT MEETING January 31, 2019 Finance Director Van Zile inquired about converted plans from the Florida League of Cities. Mr. Baur stated Resource Centers has moved plans into the Florida League of Cities recently but the last time plans were moved out was approximately ten years ago. Finance Director Van Zile inquired about drop statements. Mr. Baur stated the drop statements would be included but would like to look at how it is currently being done. Finance Director Van Zile inquired about agenda and minutes. Mr. Baur stated Resource Centers would prepare the agenda as well as the minutes. Board Member Purvis inquired about additional fees. Mr. Baur stated the quoted amount was $350.00 which would cover if the Boards chose to increase the number of meetings each year. Some of the fees quoted in the fee sheet may not be applicable to the Boards but were listed as the need for those fees have previously occurred with other plans. Finance Director Van Zile inquired about the number of meetings. Mr. Baur clarified the six meetings included in the quoted fee is per Board. Chairman Scheller inquired about terminated plans. Mr. Baur stated the reason for the recent termination of clients was due to a work/life balance but Resource Centers has never done that previously. Attorney Christiansen inquired about personnel. Mr. Baur stated if there is a quick meeting where he could not attend, then Ms. Shuford would be the person to fill in for him. If it is not a quick meeting, then a different person would fill in. However, the Board will always have say over who attends its meetings. Ms. Shuford suggested for the Boards to view their web portal on Resource Centers' website. Mr. Baur and Ms. Shuford left the meeting at 2:59pm. Board Member Tufts and Board Member Moore left the meeting at 3:OOpm. Florida League of Cities Mr. Jeremy Langley, Mr. Jeff Blomley, Mr. Jason Pulos, and Mr. Paul Shamoun entered the meeting at 3:OOpm. Mr. Langley reviewed services provided to the Board by the Florida League of Cities. Chairman Lent inquired about preparation of minutes and agenda as well as scheduling. Mr. Langley stated the Florida League of Cities does provide those services at an extra fee of $750 per quarter. Mr. Shamoun clarified the services were offered to the past boards but the consensus was for the City to take care of those duties. Board Member Purvis inquired about strictly administrative services. Mr. Langley stated the Florida League of Cities does not offer strictly administrative services. City of Clermont MINUTES POLICE OFFICERS AND FIREFIGHTERS PENSION BOARD OF TRUSTEES JOINT MEETING January 31, 2019 Mr. Pulos, Asset Consulting Group, reviewed Asset Consulting Group's history and responsibilities with the Florida League of Cities. Chairman Lent requested an example of a vehicle the Board would need to benefit the Florida Municipal Pension Trust Fund. Mr. Pulos stated private real estate would be an example of one such vehicle. Private real estate is a better diversifier and does not have the same sensitivity to bonds or the public market. Chairman Lent inquired about fees. Mr. Shamoun stated the fees have been decreasing. Finance Director Van Zile inquired about having a representative from Asset Consulting Group present at quarterly meetings. Mr. Shamoun stated the service to have a representative present from Asset Consulting Group is not currently a part of the fee structure. In an effort to keep fees low, the consultant from Asset Consulting Group does not attend the Boards' meetings but rather a representative from the Florida League of Cities attends the meetings to review the reports. Mr. Shamoun stated the fee of $750 is negotiable since the Boards' meetings are on the same day. Mr. Jeremy Langley, Mr. Jeff Blomley, Mr. Jason Pulos, and Mr. Paul Shamoun left the meeting at 3:32pm. Attorney Christiansen and Attorney Jensen expressed concern for false statement concerning real estate funds. Chairman Lent expressed interest in the Firefighters Pension Board of Trustees leaving the Florida League of Cities. Finance Director Van Zile suggested for the Boards to authorize their respective attorneys to negotiate fees. Attorney Jensen stated a contract could be negotiated with payment of benefits and compare the fees with the fees of the custodians. Chairman Lent expressed support for Resource Center. Attorney Christiansen suggested for the Boards to motion their intent to leave the Florida League of Cities if that is what they wish to do. Board Member Watkins moved for the intent to leave the Florida League of Cities: seconded b�,Board Member Purvis. The motion passed with all members present voting_ ape. Chairman Scheller moved for the intent to leave the Florida League of Cities: seconded Board Member Vitek. The motion passed 3 to 1 with Board Member Savre voting nay. Attorney Jensen and Attorney Christiansen reviewed the differences between Foster & Foster and Resource Centers. Board Member Purvis expressed support for Resource Center. Board Member Sayre expressed concern with staffing at Resource Center. City of Clermont MINUTES POLICE OFFICERS AND FIREFIGHTERS PENSION BOARD OF TRUSTEES JOINT MEETING January 31, 2019 Board Member Watkins stated Foster & Foster provided the better presentation. Chairman Lent recommended Resource Center. Chairman Scheller expressed agreement with the Firefighter Pension Board of Trustees. Board Member Purvis motioned to select Resource Center as the Board's plan administrator and authorize Attorney Jensen to neeotiate a contract: seconded by Chairman Lent. The motion passed with all members nresent voting ave. Board Member Savre moved to awrove Resource Center as the Board's Plan administrator and for Attornev Christiansen to neeotiate a contract: seconded by Chairman Scheller. The motion Passed with all members Present votine ave. Chairman Lent expressed support for Burgess & Chambers. Board Member Purvis expressed support for Burgess & Chambers. Chairman Scheller moved to select Burgess & Chambers and for Attornev Christiansen to neeotiate a contract: seconded by Board Member Savre. The motion Passed with all members [)resent votine ave. Board Member Purvis moved to select Burgess & Chambers and for Attornev Jensen neeotiate a contract. seconded by Board Member Watkins. The motion Passed with all members ,resent votive ave. 10 City of Clermont MINUTES POLICE OFFICERS AND FIREFIGHTERS PENSION BOARD OF TRUSTEES JOINT MEETING January 31, 2019 ADJOURN: With no further comments, this meeting adjourned at 3:58pm. APPROVED: Chairman Judd Lent ATTEST: Tracy Ackroyd Howe, City Clerk. City of Clermont MINUTES POLICE OFFICERS AND FIREFIGHTERS PENSION BOARD OF TRUSTEES JOINT MEETING January 31, 2019 ADJOURN: With no further comments, this meeting adjourned at 3:58pm. APPROVED: Chairman Michael Scheller ATTEST: Tracy Ackroyd Howe, City Clerk.