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Clermont Joint 01-21-2022 Meeting MinutesS. LERWT Retirement Plan and Trust for the Police Officers Retirement Plan and Trust for Firefighters of the City of Clermont DRAFT Minutes: Joint Special Meeting January 21, 2022 1. Chair Judd Lent called the Special Joint Meeting of the Retirement Plan and Trust for the Firefighters and Police Officers Board of Trustees to order at 9:07 AM, January 21, 2022 in Council Chambers at the Clermont City Hall. Those persons present included: POLICE TRUSTEES OTHERS Chris Martin Scott Baur, Administrator (Resource Centers) Jason Sayre, Acting Chair Kyle Tintle, Administrator (Resource Centers) via Zoom Mark Vitek Bonni Jensen, Attorney (Klausner Kaufman Jensen & Levinson) Ross Hutto Pam Brosonski, Finance Director FIREFIGHTER TRUSTEES Judd Lent, Chair Ariel Guerrero Dick Pastor Adam Watkins Ryan Moore, Secretary Mr. Baur welcomed Trustees and called roll and asked Jason Sayre to preside as acting Chair. The meeting was called to order at 7:03 AM by Judd Lent. Mr. Baur stated the special meeting was being held for the selection of an auditor for the plans. He emphasized nothing was wrong with the assets reported in the City's consolidated annual report but there was a timing issue with reporting for the Boards. He presented the timeline for the submission of the annual reports to the Florida Department of Management Services (DMS) for pension plans. Mr. Baur explained if the plans had their own auditor it would add a level of control to the process. The annual reports provide demographic and financial information of the plans to the state. The information needs to be submitted by March 15t" to DMS to receive an allocation of premium tax receipts from the state, the annual report needs to be approved by September 301". Ms. Jensen stated that many of the public sector plans engage their own auditors. Having their own auditor will give the Trustees another tool to review the assets of the plan; focusing on the plan rather than being combined with the City's financials. The minutes from the previous meeting was included to give background information to the new Trustees. As the annual reports were not delivered in a timely manner to the State and the City was notified they would not receive the allocated premium tax money so the City would have to make up the shortfall. An appeal was submitted by Ms. Jensen which was now withdrawn, as the annual reports have been submitted and the tax receipt money for the past years will be released. The delay in submission would be eliminated if the plans had their own auditor working to submit the information to the City which could be used as part of their consolidated audit. With their own auditor, the Boards could control the timing of the submission of the audit to the City. An abbreviated request for proposal for auditing services was sent out to several firms. Pam Brosonski confirmed the City has received the request for demographic information which is being worked on, which should be to Mr. Baur within the next month. Mr. Baur requested a summary from the prospected auditors, letters of interest were sent to 3 auditors. He requested a cover letter stating their qualifications, ability to get the work done, and the cost for the audits with engagement letters for 2021 S. LEWI �1T Retirement Plan and Trust for the Police Officers Retirement Plan and Trust for Firefighters of the City of Clermont DRAFT Minutes: Joint Special Meeting January 21, 2022 and 2022 to move the process forward. The firms are all companies that work in the public sector. No in person presentations were requested from the firms. Mr. Baur reviewed the size of the firms; he noted they all have audit teams. Proposals from BJM, Cherry Bekaert, KSDT, and Saltmarsh were received and included in the meeting packets for the Board to review. An open lengthy discussion of the audit firms followed. Questions were posed to Mr. Baur and Ms. Jensen for clarification of the process and review of each the audit firms. Pam Brosonski was asked if the City was familiar or ever worked with any of these firms, she has no personal knowledge of the auditing firms under consideration. Both Boards are not required to hire the same firm but each should select an auditor they prefer. Ryan Moore made a motion to hire Cherry Bekaert as the auditor for the Firefighter plan after the review of the audit engagement letter by Attorney Bonni Jensen. Adam Watkins seconded the motion. The motion was approved by the Trustees, 5-0. Jason Sayre made a motion to hire Cherry Bekaert as the auditor for the Police Officer's plan after the review of the audit engagement letter by Attorney Bonni Jensen. Ross Hutto seconded the motion. The motion was approved by the Trustees, 4-0. 7. Public Comment There was no public comment. 8. Other Business There was no other business for the firefighter board. Judd Lent made a motion to adjourn the firefighter portion of the meeting adjourned at 10:17 AM. 9. The next pension board meeting will be Wednesday, February 23, 2022 at 11:00 AM for the Firefighters. Firefighter Chair Firefighter Secretary Date 10. Other Business — Police Mr. Baur gave background information on Chadwick Edmondson's calculation. He described the retirement process and the steps leading up to the actuary providing a calculation which contained S. LEWI �1T Retirement Plan and Trust for the Police Officers Retirement Plan and Trust for Firefighters of the City of Clermont DRAFT Minutes: Joint Special Meeting January 21, 2022 options for the member to make their election. Mr. Baur continued, a question arose between his office and the actuary of what gets included in the final average salary. Mr. Edmonson retired in on November 5, 2021 which gives him 36 day into the new fiscal year. Included in his calculation are accumulated leave time which boosted his calculation for this 36 day time period to $48,000. This amount included regular pay but the majority of this money was his lump sum payout for accumulated time. The actuary looked a t the $48,000 compensation and he prorated it to 36 days subject to IRS rules they prorated the amount. This excluded about $28,000 from his calculation which would lower his monthly pension approximately $200 a month for that person or surviving joint annuitant. Mr. Baur conferred with Ms. Jensen of what should be included in the final average salary. He has never seen the IRS rule limitation applied in this way. Ms. Jensen has consulted a tax attorney IRS has a provision for pension plans, in order to be tax qualified until paid to the member, and a requirement is there is a limit on the amount compensation you consider. IRS limits this year is $305,000 and last year was $290,000. Understand Mr. Edmonson did not earn over that amount in any given year. The IRS statue was not intended to be used this way, the regulation is clear is the proration is intended if the plan has a short year, i.e. closing the plan or going from full year to fiscal year. Ms. Jensen reached out to Attorney Scott Christiansen and Attorney Lisa Harrison with Ice Miller tax attorneys who assisted with the tax language for the plan, a call is scheduled with Lisa Harrison later this afternoon. What Ms. Jensen would like is a motion to direct Chuck Carr to not apply the limit to Mr. Edmonson for the calculation once the issue has been resolved. Create a document for the plan that outlines how benefits are to be calculated and what is considered salary. Jason Sayre made a motion based on the advice from council, if it is determined that the amounts should be included in the calculation based to the ordinance, the attorney will give direction to the Actuary Chuck Carr to recalculate Mr. Edmonson's benefit options. Ross Hutto seconded the motion. The motion was approved by the Trustees, 4-0. 11. Public Comment There was no public comment. Jason Sayre made a motion to adjourn the meeting 10:45 AM. The next meeting is scheduled for Wednesday, February 23, 2022 at 9:00 AM. Police Chair Police Secretary Date