MINUTES OF THE REGULAR MONTHLY MEETING
GENERAL EMPLOYEES RETIREMENT BOARD
TUESDAY, JANUARY 20, 2009
The Board of Trustees of the General Employees Retirement Fund convened in a regular session at 1:00 p.m. on this the 20th day of January, 2009, in the fifth floor Conference Room, Tampa Municipal Office Building, 306 East Jackson Street, Tampa, Florida, with John Tapley, Chairman, presiding. Members present upon roll call were Mark Carron, Ernest Carrera, Randy Goers, Steve Kenny, and John Tapley.
Ms. Wise arrived at 1:05 p.m.; Mr. Winters arrived at 1:23 p.m.
City Staff in attendance were Lee Huffstutler, Chief Accountant; Justin Vaske, Assistant City Attorney (ACA) and Board Attorney; Maria Rivera, Recording Secretary; Marlene Herrera, Payroll & Pension Supervisor; Deborah Hodo, Plan Investment Coordinator; and Paul Broughton, Accountant II.
Others in attendance were John Lessl, Vice President, AON Consulting; Mr. Richard McIntyre, Esq., McIntyre, Panzarella, Thanasides, Eleff & Hoffman, P.L., representing Ms. Beverly L. Terp Harris; Mr. Erick Slootsky, McIntyre, Panzarella, Thanasides, Eleff & Hoffman, P.L.; Ms. Beverly Terp Harris, Retiree’s Surviving Spouse; Mr. Steve Terp, Ms. Terp Harris’ son.
Mr. Tapley introduced and welcomed Mr. Ernest Carrera as the newly appointed Trustee to the Board.
CONSENT AGENDA
COMSERV’S TWO $50.00 BILLINGS FOR NOVEMBER AND DECEMBER OF 2008; COMSERV’S REPORTS FOR THE MONTHS ENDING NOVEMBER AND DECEMBER OF 2008; LISTING OF CONFERENCES OR SEMINARS; MERCER INVESTMENT CONSULTING’S $9,166.67 BILLING FOR THE MONTH OF NOVEMBER 2008; $20,539.00 AND $23,043.00 REIMBURSEMENTS TO CITY’S GENERAL FUND FOR PENSION BOARD EXPENSES; TAMPA OCCUPATIONAL HEALTHSERVICES’ $2,150.00 BILLINGS FOR DISABILITY PHYSICALS; WELLINGTON MANAGEMENT COMPANY’S $24,324.57 BILLING FOR THE QUARTER ENDING SEPTEMBER 30, 2008; WELLS CAPITAL MANAGEMENT’S $36,089.34 BILLING FOR THE QUARTER ENDING SEPTEMBER 30, 2008; DEFERRED RETIREMENTS, DEFERRED RETIREMENT OPTION PROGRAM (DROP) APPLICATIONS, SURVIVING SPOUSES’ PENSION BENEFITS, AND ESTATE PAYMENT.
DISCUSSION AGENDA
Presentation by Mr. Richard McIntyre, Esq., regarding Mrs. Louise Harris (formerly Mrs. Louise Terp):
Mr. Tapley indicated that Mr. McIntyre was present to request that the Board of Trustees reconsider its position that a Divison A surviving spouse’s pension would cease if the surviving spouse remarried, but, rather, as Chapter 2001-321, Laws of Florida, (an amendment to “the Pension Act”) provided, pay Mrs. Terp 50% of the benefits that would have otherwise been payable to Donald Terp from the effective date of the amendment to the Pension Act on June 5, 2001, through the present date and thereafter. Mr. Tapley then stated that the Trustees had received a memorandum from ACA Vaske with a recommendation to deny Ms. Terp’s request. Mr. Tapley then invited Mr. McIntyre to make any introductory remarks.
Mr. McIntyre argued in his presentation that the issue before the Board pertained to an old statute that terminated Ms. Terp’s 75% surviving spouse’s benefit upon remarriage and to a new statute that repealed and replaced the old statute by simply reducing, rather than terminating, Ms. Terp’s benefit to 50% upon remarriage. He argued that it is clear from the plain language of the Pension Act that the Florida Legislature intended for the law to include all surviving spouses and stated that they are asking for prospective and not retroactive compensation.
A copy of Mr. McIntyre’s Memorandum of Law is available in the Pension Office for review.
ACA and Board Attorney Vaske then argued that he respectfully disagreed with Mr. McIntyre’s interpretation of the statue. He stated that his position is that there is no evidence, either from the language of the 2001 Pension Plan Amendment or legislative history, that it grants widows or widowers to receive a deceased spouse’s pension benefit after remarriage prior to June 5, 2001. He argued that there was an effective date for the Act and that it applies from that point forward.
A copy of ACA Vaske’s memorandum is available in the Pension Office for review.
As an example of the legislative interpretation of the Statue by the Pension Office, Mr. Tapley presented the case of the surviving spouse of a Division A retiree who had failed to inform the Board of her remarriage before June 5, 2001, and had continued receiving her widow’s benefit. She was asked to return the monies she had wrongfully received to the Plan. He presented this as an indication that the Pension Office saw the Statute as applying from June 5, 2001, going forward.
Mr. Goers stated that the fact that the Pension Office did not send notices to surviving spouses who remarried prior to June 5, 2001, could be a clear indication that Chapter 2001-321 applies only to surviving spouses that marry or remarried after June 5, 2001, leaving no need to notify those who had remarried before the statute’s effective date.
Mr. McIntyre stated that this could be the case; however, he felt that this did not change the clear language of the statute. He further stated that, if everyone receiving pension benefits would be notified every time there is a change to the Plan, they would have an opportunity to contest or ask for clarification on the change, if they needed to do so. He stated that Ms. Terp was not aware of this statute until recently, or she would have questioned its application sooner.
There was discussion amongst the Board members and clarifying statements by ACA Vaske and Mr. McIntyre.
Mr. Carron stated that Mr. McIntyre and ACA Vaske clearly had two different interpretations of the statute and asked that ACA Vaske inform the Board as to the procedure to be followed. ACA Vaske indicated that, if the Board chose to follow his legal advice and his opinion was later overturned by the Court, the Trustees would be protected. However, he further noted that, if they chose not to follow his legal advice, they may not be protected. ACA Vaske stated that the Board could approve Ms. Terp’s request; deny the request; jointly file a Declaratory Action (DEC Action) by which a Judge interprets the Statute and renders a ruling; or go to Court, if Ms. Terp chooses to sue the Plan.
Mr. McIntyre stated that it was not Ms. Terp’s intention to sue the City and that they would be amicable to filing a DEC Action. He also indicated that he did not see how the Board would be liable for any course of action taken. Mr. Carron asked if this case would require hiring an outside counsel. ACA Vaske stated that the City’s Legal Department was able to handle the case and indicated that the City of Tampa was not open to a DEC Action. Ms. Wise asked why this was so. ACA Vaske stated that the City Attorney’s Office was confident of its interpretation of the Statute and that its litigators were capable of defending the City’s position. He added that its interpretation was also supported by AON Consulting’s actuarial report. ACA Vaske stated that a DEC Action could bring the potential of an unfavorable ruling against the City.
Since Mr. Lessl was the Fund’s actuary when the Statute was amended, Mr. Tapley asked Mr. Lessl for his opinion. Mr. Lessl agreed that the interpretation at the time was that the benefit would be prospective and applied only to active employees. No provisions were made for this Statute to apply to inactive employees. Mr. McIntyre suggested that the actuarial report would not be relevant in this case being that, if a retiree died before 2001 and the widow or widower remarried after 2001, he or she would still receive the 50% benefit, even though the retiree was an inactive employee in 2001. He further stated that if the City’s argument stands, the Board would have to terminate the benefits of all the widow or widowers whose spouse died before 2001, but remarried after 2001, and are receiving the 50% benefit as this was not taken into consideration in the Impact Statement. The retiree would not have been an active employee at the time of death. Mr. Lessl agreed that, if this was the case, the Impact Statement did not take this fact into consideration.
In closing, Mr. McIntyre stated that the Board has heard that there is some confusion on how to apply the Statute and has heard different methodologies on how to resolve the matter. Mr. McIntyre suggested that the statute clearly supports his interpretation; Mr. Vaske suggested that the statute clearly does not support Mr. McIntyre’s interpretation. He went on to say that the City’s interpretation is clearly supported by the statute. Mr. McIntyre said that he was offering an amicable, friendly resolution by whatever means necessary; but, in contrast, the City is open to going to Court. He stated that the Board is charged with deciding and determining the terms of the Plan and that it is the Board’s prerogative whether or not it agrees with the Memorandum at Law. He said that he felt that whether or not it is protected in its decision should not be a determining factor in the direction of its vote; rather, its job is to interpret the Plan, not to blindly follow the City’s recommendation. Mr. McIntyre further stated that, if the decision fell on the City, there would be no need for the Trustees to hear the case. He then thanked the Board for its time.
Mr. Tapley asked ACA Vaske if there was anyone else in the Legal Department involved in the City’s recommendation to the Board. ACA Vaske stated that Chief Assistant City Attorney Sal Territo assisted him in the construction of his memo. Ms. Wise asked if they needed to take action at the time. Ms. Wise also stated that all the Trustees take their fiduciary duties very seriously and that for anyone to suggest otherwise was very disturbing. For this reason, she would support the motion to delay rendering a decision until they can further review the facts before them.
Motion: (Winters-Wise) Mr. Winters made a motion to delay rendering a decision on this case as to allow the Board to review the facts just presented to them. In 30 days, that is, at the next Board meeting, a vote will be conducted.
Mr. Carron stated for the record that the Board had just received the January 20th memo from ACA Vaske at the Board meeting and, thus, wanted time to review it before rendering a decision.
Motion carried.
Mr. Tapley asked Mr. Broughton if all the items in the Consent Agenda were in order. Mr. Broughton indicated that they were.
Motion: (Wise-Kenny) Ms. Wise made a motion to approve the Consent Agenda. Motion carried.
Staff Report:
Mr. Broughton indicated that the Mayor had appointed a new Trustee. Mr. Ernest Carrera introduced himself and gave a brief background of his career.
Mr. Broughton called the Board’s attention to two memos from the Fidelity Real Estate Group Funds that stated that Fidelity Real Estate Growth Fund II had marked down its net ssets by approximately 17% and that Fidelity Real Estate Growth Fund III had marked down its net assets by approximately 8%. Mr. Tapley asked Mr. Broughton to ask Jay Love, Mercer Investment Consulting, to comment on the content of these letters at the next Board meeting.
Cash Estimate:
Mr. Broughton indicated that the Fund’s cash account will need cash by the end of May.
Mr. Broughton informed any of the Trustees who would be attending the February 2nd FPPTA Trustee School that a vote on updating the FPPTA’s Articles of Incorporation would beheld.
ACA Vaske asked the Board to call for a “Shade Meeting”, that is, a meeting not open to the public, to discuss pending litigation relating to Mr. Gaetano Dalfino. He stated that the meeting should be held from 1:00 to 2:00 p.m. on February 17, 2009, immediately preceding the GE Regular Board Meeting. ACA Vaske requested that Ms. Kelley Boesecker, the attorney that represents the City in this matter, be present at this meeting. Mr. Tapley asked Mr. Broughton to make the necessary arrangements.
Motion: (Carron-Kenny) Mr. Carron made a motion that the first hour of the next Regular Board meeting be noted as a “shade” meeting for purposes of discussing pending litigation regarding Mr. Dalfino and that Ms. Boesecker, the attorney representing the City in this matter, be present. Motion carried.
Minutes of the Regular Monthly Meeting held on Tuesday, December 16, 2008:
Mr. Tapley asked if there were any corrections or changes to the Minutes of the Regular Monthly Meeting held on Tuesday, December 16, 2008. None were noted.
Motion: (Carron-Winters) Mr. Carron made a motion to approve the Minutes of the Regular Monthly Meeting held on Tuesday, December 16, 2008. Motion carried.
Presentation by Mr. Lee Huffstutler on results of the RFP for consultant services:
Mr. Huffstutler stated that, upon the direction of the Pension Board Investment Committee, a group of City staff consisting of Paul Broughton, Pension Coordinator; Lee Huffstutler, Chief Accountant; Mark Boghich, Banking and Debt Supervisor (former Board member); Sharon Fox, Tax Revenue Coordinator (F & P Board member); and Linda Johnson, Senior Purchasing Analyst, gathered to review the ten (10) responses to the Request for Proposals (RFP) that had been received. The responding firms were: Asset Consulting Group; The Bogdahn Group; Citi Institutional Consulting; Dahab Associates, Inc.; Gray & Company; Mercer Investment Consulting, Inc.; Milliman, Inc.; PEPC, LLC; Segal Advisors; and Yanni Partners. Mr. Huffstutler explained the ranking system used in the evaluations and distributed a compilation of scores sheet.
Based on the results, the group recommended that the Pension Board interview the following firms for further consideration: The Bogdahn Group; Milliman, Inc.; and Mercer Investment Consulting, Inc.
There was discussion amongst the Board members regarding the selections and time that should be allocated to each firm’s presentation. Mr. Tapley asked if there was a request to interview more than the three recommended. Ms. Wise suggested that, even though she has not discussed the matter with Mr. Boghich, she would recommend adding Asset Consulting Group to the list of prospects as she had noticed that it had been Mr. Boghich’s (former Chairman of the Board) first place selection, she has also worked with it at the League of Cities and the League of Cities is satisfied with its performance. For these reasons, she suggested changing the number of firms to be interviewed from 3 to 5. It agreed to do so and adding Asset Consulting Group and Citi Institutional Consulting to the list of firms being interviewed. It was decided to conduct the interviews on February 17, 2009, from 9:00 a.m. to 1:00 p.m. with 20 minutes for the formal presentation and 20 minutes for a question and answer period allocated to each firm. Ms. Wise commended the committee for their work on the RFP reviews.
Motion: (Wise-Kenny) Ms. Wise made a motion to interview the top five (5) firms selected by the review group. The interviews will be on February 17, 2009, from 9:00 a.m. to 1:00 p.m., with 20 minutes for the formal presentation and 20 minutes for a question and answer period allowed to each firm. Motion carried.
Overpayment on Behalf of Mrs. Rita M. Wilson, Formerly Mrs. Rita M. Cranford:
Mr. Broughton indicated that discussion of Ms. Wilson’s overpayment, as it pertained to a widow who remarried before 2001 and lost her pension, could be in conflict with Ms. Terp’s pending request.
Motion: (Winters-Wise) Ms. Wise made a motion to table the discussion of Ms. Wilson’s overpayment to the next Board meeting. Motion carried.
Disability application submitted by Mr. Deandre Woods:
The Board reviewed the physicians’ reports on Mr. Woods’ condition.
Motion: (Kenny-Carron) Mr. Kenny made a motion to approve Mr. Woods’ disability application based on the physician’s reports. Motion carried.
Status on disability application submitted by Mr. William Newhouse:
Mr. Broughton indicated that, as per the Board’s request, Dr. Hughes and Dr. Steen had been asked to render an opinion on whether Mr. Newhouse’s medications and physical therapy would prevent him from rendering a useful and efficient service to the City. The Board members reviewed and discussed Dr. Hughes’ report, which stated these factors should not prevent Mr. Newhouse from rendering a useful and efficient service to the City. Mr. Carron asked if Mr. Broughton if he had received Dr. Steen’s report; Mr. Broughton indicated he had not. The Board asked Mr. Broughton to contact Dr. Steen’s office and request that she render her report as soon as possible. The Boardmembers agreed to table the decision on Mr. Newhouse’s application pending receipt of Dr. Steen’s report.
Mr. Michael P. Gallaugher’s (JPMorgan Chase Bank) Request:
Mr. Broughton indicated that Mr. Gallaugher had contacted the Pension Office requesting a Board Resolution listing from whom JPMorgan should accept instructions on behalf of the Board and who could be contacted to confirm the instructions given. Mr. Broughton recommended the following names: Mr. Tapley, Chairman; Ms. Debbie Hodo; Mr. Mark Boghich; Mr. Lee Huffstutler; and himself.
Motion: (Kenny-Goers) Mr. Kenny made a motion that a Board Resolution be prepared by ACA Vaske authorizing JPMorgan to follow instructions from the five names that had just been mentioned. Motion carried.
$20,450.80 loss involving share of Global Acquisition Corporation (GLAC):
Mr. Tapley stated that the Board had not received a response from SunTrust regarding the loss of $20,450.80 based on the Fund’s holding of shares of Global Acquisition Corporation and that it had been suggested that this matter be handled by the City Attorney’s office.
Motion: (Winters-Kenny) Mr. Winters made a motion to place the case of the $20,450.80 loss involving shares of Global Acquisition corporation (GLAC) in the hands of the City Attorney to file suit against the Corporation that appears to them to be more liable. Motion carried.
Mr. Huffstutler introduced Ms. Debbie Hodo and Ms. Marlene Herrera and indicated that he had asked Ms. Hodo, Investment Coordinator for the City of Tampa, to help with the Fund’s investments and Ms. Herrera, Accounting Supervisor in the Payroll Department, to lend her supervisory skills to the Pension Office. These changes were made in an effort to further improve the Pension Office’s performance.
ADJOURNMENT
There being no further business to come before the General Employees Pension Board at this time, Chairman Tapley adjourned said meeting at 2:30 p.m. on this 20th day of January 2009.
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CHAIRMAN
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RECORDING SECRETARY
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PLAN COORDINATOR
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