MINUTES OF THE REGULAR MONTHLY MEETING
GENERAL EMPLOYEES RETIREMENT BOARD
TUESDAY, JUNE 16, 2009
The Board of Trustees of the General Employees Retirement Fund convened in a regular session at 1:00 p.m. on this the 16th day of June, 2009, in the Fifth Floor Conference Room, Tampa Municipal Office Building, 306 E. Jackson Street, Tampa, Florida, with John Tapley, Chairman, presiding. Members present upon roll call were Ernest Cabrera, Alan Weiner, Bonnie Wise, Steve Kenny, and John Tapley.
Jerry Winters was absent. Randy Goers arrived immediately after roll call.
City Staff in attendance were Justin Vaske, Assistant City Attorney (ACA) and Board Attorney; Maria Rivera, Recording Secretary; Marlene Herrera, Payroll & Pension Supervisor; Deborah Hodo, Plan Investment Coordinator; and Lee Huffstutler, Chief Accountant.
Others in attendance were Jay Love, Mercer Investment Consulting; Keith Reynolds, Mercer Investment Consulting; John Lessl, AON Consulting; Sharon Skrimshire, Retiree; Ben Pardo, Retiree; and Kenneth Coleman, City of Tampa Purchasing Department.
INTRODUCTION OF GUESTS AND VISITORS
Alan Weiner, New Board Member:
Mr. Tapley welcomed Mr. Alan Weiner once again as the new Board Trustee, and stated that he had provided a short summary of his background for everyone’s review.
Sharon Skrimshire, Retiree Introduction and Discussion of Letter of Concern:
Mr. Tapley indicated that the Board members had received a memo that Ms. Sharon Skrimshire had submitted asking the Board to consider several concerns she had regarding the City of Tampa General Employees Pension Fund. Mr. Tapley stated that, due to time constraints, the Board had not been able to address Ms. Skrimshire’s request at the last Board meeting; they had since reviewed her memo and were able to address her concerns at this time. Mr. Tapley asked Ms. Skrimshire to address the Board.
Ms. Skrimshire proceeded to read the first item on her memo which referred to the 3/17/2009 Minutes: Presentation of Bills. The concern referred to the previous Board decision not to list all the payments in the Consent Agenda section of the Agenda but rather a line that would reference that all vendor payments for the month are being submitted for approval. Ms. Skrimshire then quoted Sturgis Standard Code of Parliamentary Procedure where it references the purpose of the Consent Agenda and read her concerns. Ms. Skrimshire requested that the General Employees Pension Board Trustees revisit and reexamine the pension office request and return to government in the sunshine.
Mr. Tapley asked for ACA Vaske’s opinion on the matter. ACA Vaske stated that Ms. Skrimshire had raised some valid points however, he would take issue with the statement that the Board would have been operating outside the Sunshine as he does not believe that to be the case. ACA Vaske also stated that, as far as the
Agenda, notice of the Board meetings are always posted at City Hall stating that the meetings are conducted on the third Tuesday of every month. ACA Vaske stated that he agreed with Ms. Skrimshire’s point of following parliamentary procedure and would recommend returning to listing all invoices on the Consent Agenda. He reiterated that he did not agree there had been any Sunshine violations.
Motion: (Kenny-Wise) Mr. Kenny made a motion to itemize the bills under the Consent Agenda, as it had been done in the past. Motion carried.
Mr. Kenny stated that enough time was not being allowed before the Board meetings to send out the Agenda. He asked that the Agenda be sent out electronically no later than the Wednesday or Thursday before the Board meetings. Ms. Herrera indicated that she had already discussed the matter with her staff and that she will see to it that the Agenda is sent out at least 48 hours in advance; her goal is to send it out three days in advance.
Mr. Huffstutler stated that he believed this matter had been addressed before, and the deadline for sending out the Agenda had been set for the Thursday before the Board meeting. He indicated that the Staff will abide by that decision.
Ms. Skrimshire then stated that her next item of concern had been the timing of the mailing of the Pension Advice Statements. She indicated that this matter had already been addressed and resolved by Ms. Herrera.
Ms. Skrimshire then indicated that her last point of concern was the need for a Certified Plan Coordinator for the General Employees Pension Fund. She stated that the Plan had now been over 60 days without a
Certified Plan Coordinator well versed in Accounting Procedures and Practices, Florida State Statutes and Public Pension Law. Ms. Skrimshire quoted the Pension Act and its section which refers to the Administration of the Plan. She added that the Fund has always paid in its entirety for the salary, benefits, office staff, and supplies that the Plan Coordinator requires to perform pension fund business and to date continues to do so. Ms. Skrimshire further noted that due to the City of Tampa’s dire financial struggles to afford personnel, the Fund has only one full time employee who is depending on City employees, who already have full time jobs, to attempt to fulfill the void of the Plan Coordinator and this, is her believe, jeopardizes the Fund. Ms. Skrimshire requested that this may be an appropriate time to broach the matter of hiring the Fund’s own General Employees Pension Fund Plan Coordinator.
Ms. Wise indicated that Mr. Huffstutler, Chief Accountant, and herself, had already met with Kimberly Crum, Director of Human Resources and Sarah Lang, Employee Relations Manager, to discuss filling the position. Ms. Wise stated that Mr. Broughton had not given much notice when he resigned. She also indicated that even though the Plan Coordinator reports to the Board, the City of Tampa pays all the expenses of the Board. Ms. Wise further stated that Ms. Crum is reviewing the position to determine if it should be the same position that Mr. Broughton held, or a position with different type of qualifications that would meet the current needs of the Plan.
Mr. Tapley stated that Mr. Broughton had held the Plan Coordinator position for about 15 years and asked Ms. Skrimshire if she was stating that he had not been qualified to do so being that he was not a Certified Plan Coordinator. Ms. Skrimshire stated she had not meant so but that she was rather conveying that, at this time, with the investments the Plan is engaging in, calculations that have to be done because of the DROP, and the growth of the Fund, a person who is abreast of current financial and pension issues is needed. Ms. Wise agreed and stated that this was part of the discussion they held with Ms. Crum. They are looking at the possibility that the position may require someone who has a finance background.
Mr. Kenny asked Ms. Wise if they would have the ability to change the way the staff is funded as is done by the F & P Pension were, even though their staff are City employees, the Fund reimburses the City for their salaries and the staff takes directions from the Board. Ms. Wise indicated that the GE Pension staff salaries are also reimbursed to the City by the Fund; the difference between F & P and GE being that F & P is a contributory plan and GE participants do not contribute.
Mr. Goers asked if he was right to understand that the position is available, and just being reviewed for requirements. Ms. Wise confirmed that the position has not been lost and will be filled as soon as the necessary qualifications are determined and a qualified candidate is found.
Mr. Kenny insisted that, being that the Board is in charge of the Administration of the Plan, the staff should have a clear sense of whom they respond to. He mentioned an instance at the last Board meeting where Ms. Herrera’s respond to a question by a Board member regarding an action taken had been that she had acted according to Mr. Huffstutler’s direction. He believes the staff should be clear as to whom they answer to and would like this to be addressed.
Mr. Tapley thanked Ms. Skrimshire for her input and attendance at the Board meeting and expressed that her concerns had been well taken.
Election of Vice Chairman:
Mr. Tapley asked for nominations for the Vice Chairman position left vacant by Mr. Mark Carron’s resignation as a Trustee of the Board. Ms. Wise nominated Ernest Carrera. No further nominations were voiced.
Motion: (Wise-Kenny) Ms. Wise made a motion to name Ernest Carrera as the new Vice Chairman of the General Employees Pension Board. Motion carried.
Approval of the minutes of the General Employees Retirement Fund Regular Board Meeting held on Tuesday, May 19, 2009:
Mr. Tapley asked if there were any changes or corrections to the Minutes of the Regular Monthly Board meeting. None were noted.
Motion: (Wise-Weiner) Ms. Wise made a motion to approve the minutes of the General Employees Retirement Fund Regular Board Meeting held on Tuesday, May 19, 2009. Motion carried.
Mr. Tapley noted that the minutes of the General Employees Retirement Fund Investment Committee Meeting held on Tuesday, May 19, 2009 would be approved at the next Regular Board Meeting.
Staff Report:
Listing of Seminars: Ms. Wise noted that the Listing of Conferences and Seminars had shortened. Ms. Herrera stated that she does not receive the emails that Mr. Broughton received with conferences and seminars information so she is not aware of what is available. Ms. Herrera will request access to Mr. Broughton’s emails from T & I to see if there is any information there. Ms. Rivera stated that there were seminars that were for only a few hours and out of town and that those were not being included. Mr. Kenny indicated that he receives emails on seminars and conferences and that he will forward them to Ms. Rivera. ACA Vaske also suggested to check with F & P to see if they can forward those they receive that would apply to GE Pension.
Cash Analysis: Mr. Reynolds, Mercer Investment Consulting reviewed the asset allocation as of 4/31/09 and stated that $5.4M on DROP payments was forthcoming. He indicated that the allocation for the fund’s large cap managers was overweight, so his recommendation was to take $3.6M from Dodge & Cox and $3.6M from Waddell & Reed for a total of $7.2M to fund the cash account.
On a separate note, Mr. Reynolds stated that it was still appropriate to take the $15M to fund the ING account from Taplin.
Motion: (Weiner-Carreras) Mr. Weiner made a motion to take $3.6M each from Dodge & Cox and Waddell & Reed to fund the cash account. Motion carried.
Mr. Carreras stated that he had been looking at the Corporate and Municipal Bond Indexes and noticed that they have had a return of about 5% since the approval to change the SSGA account from the Aggregate to the Intermediate Credit Index Fund, and they had missed this opportunity. He recommended that a time frame should be established for acting on Board approved initiatives. Mr. Love proceeded to give an update on the bond market that explained why he believed that this was still a good investment opportunity.
Mr. Tapley asked Mr. Love to give the Board some steps, to include a timeline of how the process should be implemented and the time it would take to do so, when he presents an investment recommendation. Mr. Love agreed to provide the Board with more detailed implementation steps when a decision or motion on an investment is made. Ms. Hodo clarified that in addition to the fact that Mr. Broughton left before this transaction was completed, other factors, which included the Pension office not receiving the letter from SSGA for Mr. Tapley’s signature until April and the cancellation of the April Board meeting, contributed to the delay of the process.
Mr. Carrera insisted that it should not take so long to implement an investment decision and that two weeks should be enough time to do so. ACA Vaske noted that when the Board approves an agreement, a contract has to be drafted, the Chairman has to sign, and a contract negotiation period has to be allowed. He believes that 30 days would be a more realistic time frame, from the time the motion is made, to process the contract and present it at the next Board meeting. Less time than that would require an emergency or special meeting to be called to have the contract or agreement signed.
Investment Matters:
Revisions to Statement of Investment Policy:
Small Cap Equity Guidelines: The Domestic Small Cap Equity Investment Standards and Objectives are being changed. Mercer’s recommendation is that the small cap equity guidelines be amended to require that portfolio median and average market cap remain within the range of the benchmark.
Motion: (Carrera-Weiner) Mr. Carrera made a motion to approve the revisions recommended by Mercer to eliminate the 10% on either end so as to look at the whole fund and keep the small cap managers within the small cap definition. Motion carried.
Implementation timeline: next Board meeting.
Fisher Investments: Mr. Love stated that one of the guidelines in the Statement of Investment Policy has a general requirement that all managers report any soft dollars activity. This applies to both, the total firm wide soft dollar activity and any activity generated specific to our account. Fisher has expressed that they are unable to meet the firm wide requirement and has requested that they only report the activity specific to our account. Mr. Love explained that this may be due to the nature of Fisher’s business and stated that this is an acceptable request.
Motion: (Carrera-Kenny) Mr. Carrera made a motion for Fisher to be required to report soft-dollar activity, as described in the guidelines, to the extent soft dollar commissions are generated by the Tampa account. Motion carried.
Implementation timeline: next Board meeting.
Dodge & Cox: Mr. Love stated that Dodge & Cox’s compliance department had informed them that they are currently in violation of the Fund’s investment guidelines related to Technology sector weight. They have contacted Mr. Love to request an exception to the Fund’s allocation limitations. The guideline currently states that their allocation in any one sector needs to be tied to the sector allocation of their benchmark index which is currently 3.4%. Dodge & Cox is finding significant value in the technology index and is requesting an exemption for the maximum account allocation to the Technology sector to be greater of 20% or the standard guideline limit, through December 2009.
Motion: (Wise-Kenny) Ms. Wise made a motion to grant Dodge & Cox and exemption to the Statement of Investment Policy such that they can hold up to 20% in Technology until December 2009. Motion carried.
Implementation timeline: one week.
Allocation to Private Equity: Mr. Love indicated that they were presenting the search criteria for the Private Equity search and that they would have the search report available by the next Board meeting. The allocation to Private Equity would be from $20 to $25M. At Mr. Tapley’s request, Mr. Love explained the Private Equities style and that the investment types were leverage buyouts or venture capital, where a small company is not large enough to have public stock. Mr. Tapley asked if the Fund was large enough to own Private Equity; Mr. Love stated that it was. After some discussion by Board members it was decided to consider the Private Equity investment at a later time.
Waddell & Reed contract: Ms. Hodo stated that she had not received the signed Waddell & Reed contract. Mr. Love will follow up on this matter.
Victory Capital: Ms. Hodo stated that Victory Capital has requested to have their fees based on the value that’s assigned by J.P. Morgan rather than Victory’s value. Mr. Love indicated that is the way it should be. Mr. Tapley will sign an agreement to this effect.
Money Manager Expense Report: This report was presented for the Board’s information only.
Letter Denying Pension Benefits Inquiry from Alegcy Salgado
Memo to Legal Department Concerning Non-Payment of Overpayment from Andrea Palmore
Memo to Legal Department Concerning Non-Payment of Overpayment from Barbara Williams
The above letters were presented to the Board for information purposes only. These are matters that had previously been discussed and/or approved and the staff is presenting the letters to the Board as a follow up. ACA Vaske asked if the Board wanted to see internal correspondence from the Pension staff to him. Mr. Tapley indicated that was not necessary; only correspondence that was being sent out to a customer.
Consent Agenda (Invoices due for payment for June 2009; Comserv’s Report for June 2009; Longevity Retirements, Deferred Retirements, Deferred Retirement Optio Plan (DROP) Applications, and Surviving Spouse’s benefits): Mr. Tapley asked if all items on the Consent Agenda were in order. Ms. Herrera stated that they were.
Motion: (Wise-Kenny) Ms. Wise made a motion to approve all the items on the Consent Agenda. Motion carried.
Comserv Report: Ms. Herrera indicated that there were no overpayments. She also noted that they had requested for the Comserv Report to be sent at the beginning of the month to make sure any payments that need to, can be stopped on time.
Mr. Kenny asked how many employees from Hart and the Library, who are part of the City’s pension plan, are still active. Ms. Herrera indicated that there were none from Hart and three from the Library. Mr. Kenny asked how the DROP program affects these employees, as the Plan makes no mention of employees that are part of the plan but work outside the City. ACA Vaske stated that he would review this and report back at the next Board meeting.
Motion: (Kenny-Weiner) Mr. Kenny made a motion for the Legal Department to review how the DROP program applies to plan members that are working for Hillsborough County. Motion carried.
Mr. Kenny also asked how much money the County was contributing for these employees. Ms. Herrera will have that information available at the next Board meeting.
New Business:
Forfeiture Issue of James Spencer:
ACA Vaske stated that the Legal department was requesting approval to contract outside counsel Ford & Harrison to review if Mr. James Spencer’s adverse actions as a City employee grant forfeiture of his pension.
Motion: (Kenny-Carrera) Mr. Kenny made a motion to hire Ford & Harrison as outside counsel to do a preliminary investigation on the possible forfeiture of Mr. James Spencer pension. Motion carried.
Board’s approval of Mercer’s contract:
Ms. Hodo indicated that the resolution to approve the new contract for Mercer Investment Consulting was before the Board for approval and signing by the Chairman.
Motion: (Wise-Kenny) Ms. Wise made a motion to approve the resolution that will approve Mercer Investment Consulting’s contract. Motion carried.
Board’s approval of Victory’s contract:
Ms. Hodo indicated that the resolution to approve the new contract with Victory Capital was before the Board for approval and signing by the Chairman.
Motion: (Wise-Cabrera) Ms. Wise made a motion to approve the resolution that will approve Victory Capital’s contract. Motion carried.
Old Business:
Discussion on Pension Benefits, Ms. Thompson, A.K.A.Anderson, Application for Common-Law:
ACA Vaske stated that the law allowed common law marriages up to December 31, 1967. Ms. Thompson has submitted the required evidence as proof of her common law marriage to Mr. Herschell Anderson, a City retiree. ACA Vaske asked the Board to review the evidence and determine if Ms. Thompson did indeed have a common law marriage to Mr. Anderson and is hence eligible to surviving spouse benefits.
Motion: (Goers-Kenny) Mr. Goers made a motion to, as per evidence presented to the Board by Ms. Thompson of her common law marriage to Mr. Herschell Anderson, recognize the common law marriage and as per previous practice, approve Ms. Thompson’s surviving spouse benefits. Motion carried.
Gaetano Dalfino’s Deferred Retirement Option Program payment:
ACA Vaske indicated that he had an email from outside counsel informing him that they were still waiting for a response from Mr. Dalfino’s counsel to the City’s proposed settlement.
$20,450.80 Loss on conversion of 4,000 share of Global Acquisition Corporation:
ACA Vaske indicated that the Legal Department staff was still working on this matter.
ADJOURNMENT
There being no further business to come before the General Employees Pension Board at this time, Chairman Tapley adjourned said meeting at 2:36 p.m. on this 16th day of June, 2009.
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CHAIRMAN
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RECORDING SECRETARY
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PLAN COORDINATOR
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