Meeting began at 12:05 p.m. with the following Board members present: Cathy Van Velzen, Roger Liesch, Stewart Moon, Dan Tackett and Greg Van Edema. Also present were Leta Chaney, Lee Dehner, Bryan Bakardjiev and Jack Evatt, Patrick Donlan and Mike Honkamp.
CHANGES TO AGENDA: None.
MINUTES: Dan Tackett motioned to approve the minutes of the 7/23/10 quarterly meeting. Stewart Moon seconded; motion carried.
COMMUNICATIONS: As listed on the agenda.
FINANCIALS: Salem Trust account statements & pension check registers for July-September
Invoices - Christiansen & Dehner - $1308.49 dated 9/16/10
- Bogdahn Consulting - $3875.00 dated 9/17/10 for 3rd quarter
- SalemTrust – $1250.00 dated 7/15/10 for 2nd quarter
- SalemTrust - $1250.00 dated 10/15/10 for 3rd quarter
- Foster & Foster – $7089.00 dated 10/19/10
- Dana Investment Advisors dated 10/8/10 for 3rd quarter
Deposits - Distribution of 2009 Premium Tax – $ 189,914.10
- Surplus from 2009 Supplemental Compensation Fund - $ 93,563.33
Payments were ratified with a motion by Stewart Moon, seconded by Dan Tackett. Motion carried.
INVESTMENT MONITOR’S REPORT: Bryan Bakardjiev gave the report for the quarter stating that returns for September were exceptionally good, although not typical, and it allowed us to meet our assumption of 8%. For the quarter our earnings were at 8.84% and we outperformed our peers at 8.75%. This brings our fiscal year-to-date earnings to10.66% which is great. Because of that, Bogdahn has no recommendations at this time.
Regarding scrutinized companies, Dana has confirmed that there are none in our holdings and Bryan didn’t find any when he reviewed the list so we are in compliance with State requirements.
Lastly, Bryan introduced Jack Evatt who will be our new representative. Bryan is transferring to a position that is more internal in the company but will probably attend meetings for the next six months.
INVESTMENT MANAGER’S REPORT: Mike Honkamp of Dana Investment Advisors presented the quarterly report stating that we are off to a good start for the fiscal year. The S & P 500 returned 11.3% in the third quarter and this was the best September since 1939.
INVESTMENT CUSTODIAN’S REPORT: Leta Chaney of Salem Trust provided proof of their insurance and asked if we needed a hard copy of the annual report? Mary Stephens replied that the auditor is usually satisfied with online access and that minimizes paper use and filing space.
ACTUARY’S REPORT: Patrick Donlan presented the annual actuarial valuation, stating that the District’s funding requirement has dropped from 22% for fiscal year 2010-11 to 21.6% for fiscal year 2011-12. Salary increases were less than expected which helped but the four-year expected return was also less which hurt – it was only 3.36%. Lee Dehner noted that was better than most other funds. Patrick added that two years ago they did an experience study and we decided to wait and see if we needed to change any of our assumptions; he thinks now we should. Additionally the State says all plans need to change from the 1983 mortality tables to the 2000 version. Regarding our investment return, Bryan Bakardjiev stated that Bogdahn still feels 8% is a reasonable expectation and recommends that we keep that assumption. Patrick offered that we could change from the aggregate cost method to the frozen entry age method which would save the District about 2%. He added that the value of current earned benefits is $2.4 million and we have $4.9 million in the fund right now. Therefore, the aggregate cost method is working well and funding benefits for when the firefighters will retire. Stewart Moon motioned to approve the valuation with a change from the 1983 to the 2000 mortality table; seconded by Dan Tackett. Motion carried.
ATTORNEY’S REPORT: Lee Dehner asked Bryan Bakardjiev to give his recommendation on our expected returns so Bryan stated that Bogdahn recommends that the total expected annual rate of return for our fund for the next year, the next several years and the long-term thereafter, shall be 8% net of investment related expenses but may be less than the current year. Dan Tackett motioned to approve, seconded by Roger Liesch. Motion carried. Bryan will provide the letter to support this and then Mary will mail both to the State.
Lee Dehner reported no change on the health legislation. As mentioned at the last meeting, we need to consider whether we want to file for a favorable determination letter from the IRS. Although the IRS hasn’t been examining plans in the past, they say they will start to do so. The fees to do that are estimated at $15,000 - $20,000 and there could be additional expenses. The IRS hints that if we file and they examine ours and find a problem, they may look more kindly on us. Stewart Moon motioned to decline the filing due to adequate professional consulting of our plan and because the cost of filing is inappropriate at this time; seconded by Greg Wigeri Van Edema. Motion carried.
Chief Price asked Lee Dehner if our plan allows lump-sum payouts such as the one done by Southern Manatee? Lee replied that some plans have a provision that gives the Board discretion to allow a lump-sum payout but ours does not allow total lump-sum payouts, although it does include an optional form of benefit for a partial lump-sum payout with a maximum of 25%.
OLD BUSINESS:
1) Change of Meeting Date: After some discussion all agreed to the fourth Thursday of January, April, July and October at 9:00 a.m. For 2011 that will be 1/27, 4/28, 7/28 and 10/27.
NEW BUSINESS
1) Fiduciary Policy Renewal: Gibson & Wirt have quoted a premium of $2287.13 for a one-year renewal. This is $188.35 more than last year’s premium. Dan Tackett motioned to approve the renewal, seconded by Stewart Moon. Motion carried.
2) Annual Expected Rate of Return: Done under Attorney’s Report.
3) IRS Determination Letter: Done under Attorney’s Report.
COMMENTS/QUESTIONS: Mary Stephens asked Lee Dehner to clarify the issue of the types of leave that are not creditable service that must be reported to the actuary for the annual report. Lee Dehner replied that any time under Worker’s Compensation that a member cannot perform as a firefighter or any unpaid leave time, such as FMLA or other unpaid leave, must be reported and contributions are not due for those wages. Sick time is not included as it is paid time from accrued leave per our policy.
DATE OF NEXT MEETING: Next quarterly meeting on January 28, 2011 at 9:00 a.m. at the new Administration building at 6417 3rd Avenue West in Bradenton.
ADJOURNMENT: At 1:38 p.m.
______________________________________
Chairman
______________________________________
Secretary
/ms
