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06/13/2005 Pension Trustees Agenda Date: 06/13/2005 Location: Council Chambers - City Hall Call to Order Approval of Minutes 05-16-2005 Pension Trustee Items 1. Accept the employees listed below into membership in the City of Clearwater's Employees' Pension Plan. 2. Sandy I. Thompson, Police Department; Douglas Barry, Police Department; and Barbara Sexsmith, Development and Neighborhood Services Department, be granted regular pensions under Section(s) 2.393 and 2.397 of the Employees' Pension Plan as approved by the Pension Advisory Committee. 3. Thomas Wilson, Gas Department, be allowed to vest his pension under Section(s) 2.397 and 2.398 of the Employees' Pension Plan as approved by the Pension Advisory Committee. 4. Approve changing allowable pension investment to be set by state statute and forward to City Council and voters for approval in a referendum. Other Business Adjourn Pension Trustees Agenda 6/13/2005 Page 1 of 1 y :~. '.. ':"~. . , . .~ .. ~. . .' . .~'.'.....,,! ~ " ",,"~~'<-'-. , , . . . . / ,. I /, . ~ Pension Trustee Cover Memorandum . .................................................. Trackinq Number: 1,360 Actual Date: 06/13/2005 Subiect 1 Recommendation: Accept the employees listed below into membership in the City of Clearwater's Employees' Pension Plan. Summary: Pension Elig. Name, Job. Class, & Dept.jDiv. Hire Date Date Bryan Adamson, Police Officer/Police 3/21/05 3/21/05 Travis Yancey, Parks Service Technician I/Parks & Rec. 3/21/05 3/21/05 Catalina Horak, Legal Staff Assistant/Legal 3/21/05 3/21/05 Charles Jeffries, Jr., Public Utilities Tech. I/Public Util. 4/4/05 4/4/05 Jason Harbert, Parks Service Technician I/Parks & Rec. 4/4/05 4/4/05 Charlie Sims, Public Services Technician I/Public Services 4/4/05 4/4/05 Cristina Carosella, Police Officer/Police 3/21/05 3/21/05 Rick Jackson, Solid Waste Worker/Solid Waste 3/7/05 Joseph Deegan, Parks Service Technician I/Parks & Rec. 4/18/05 Adam Morris, Police Cadet/Police 4/18/15 4/18/05 Sharen Jarzen, Planner III/Planning 4/18/05 4/18/05 Rosanne Lacey, Staff Assistant/Fire 4/18/05 4/18/05 James Ream, Parks Service Technician I/Parks & Recreation 4/18/05 4/18/05 Jason Kutch, Parks Service Technician I/Parks & Recreation 4/18/05 4/18/05 Michael Sciortino, Fleet Mechanic/General Services 4/4/05 4/4/05 Sebastian Dembek, Public Utilities Technician I/Pub. Util. 4/4/05 4/4/05 John Knight, Public Utilities Technician I/Public Util. 4/4/05 4/4/05 4/4/05 * 4/18/05 * originally employed as temporary; transfer to permanent and pension eligible as of 4/4/05 Oriqinatinq: Human Resources Review Approval Cvndie Goudeau 06-03-2005 10: 19:49 y :~. '.. ':"~. . , . .~ .. ~. . .' . .~'.'.....,,! ~ " ",,"~~'<-'-. , , . . . . / ,. I /, . ~ Pension Trustee Cover Memorandum . .................................................. Trackinq Number: 1,358 Actual Date: 06/13/2005 Subiect 1 Recommendation: Sandy I. Thompson, Police Department; Douglas Barry, Police Department; and Barbara Sexsmith, Development and Neighborhood Services Department, be granted regular pensions under Section(s) 2.393 and 2.397 of the Employees' Pension Plan as approved by the Pension Advisory Committee. Summary: Sandy Thompson, Police Sergeant, Police Department, was employed by the City on January 7, 1985, and his pension service credit is effective on that date. His pension will be effective June 1, 2005. Based on an average salary of approximately $76,718 per year over the past five years, the formula for computing regular pensions, and Mr. Thompson's selection of the 100% Joint & Survivor Annuity, this pension will approximate $42,529 annually. Douglas Barry, Police Sergeant, Police Department, was employed by the City on October 13, 1980, and his pension service credit is effective on that date. His pension will be effective July 1, 2005. Based on an average salary of approximately $76,094 per year over the past five years, the formula for computing regular pensions, and Mr. Barry's selection of the 100% Joint & Survivor Annuity, this pension will approximate $50,935 annually. Barbara Sexsmith, License Inspector, Development & Neighborhood Services Department, was employed by the City on February 14, 1972, and her pension service credit is effective on August 14, 1972. Her pension will be effective July 1, 2005. Based on an average salary of approximately $45,388 per year over the past five years, the formula for computing regular pensions, and Ms. Sexsmith's selection of the 75% Joint & Survivor Annuity, this pension will approximate $41,310 annually. Oriqinatinq: Human Resources Review Approval Cvndie Goudeau 06-03-2005 10: 19:04 Regular Pensions Page 2 June 13, 2005 These pensions were approved by the Pension Advisory Committee on May 12, 2005. Section 2.393 provides for normal retirement eligibility when a participant has completed twenty years of credited service in a type of employment described as "hazardous duty" and further defines service as a Police Sergeant as meeting the hazardous duty criteria. Section 2.393 (p) also provides for normal retirement eligibility when a participant has reached age 55 and completed twenty years of credited service, has completed thirty years of credited service, or has reached age 65 and completed ten years of credited service. Mr. Thompson and Mr. Barry qualify under the hazardous duty criteria. Ms. Sexsmith qualifies under all the criteria. y :~. '.. ':"~. . , . .~ .. ~. . .' . .~'.'.....,,! ~ " ",,"~~'<-'-. , , . . . . / ,. I /, . ~ Pension Trustee Cover Memorandum . .................................................. Trackinq Number: 1,359 Actual Date: 06/13/2005 Subiect 1 Recommendation: Thomas Wilson, Gas Department, be allowed to vest his pension under Section(s) 2.397 and 2.398 of the Employees' Pension Plan as approved by the Pension Advisory Committee. Summary: Thomas Wilson, Gas Technician II, Gas Department, was employed by the City on November 5, 1990, and began participating in the Pension Plan on that date. Mr. Wilson terminated from City employment on January 3, 2005. The Employees' Pension Plan provides that should an employee cease to be an employee of the City of Clearwater after completing ten or more years of creditable service (pension participation), such employee shall acquire a vested interest in the retirement benefits. Vested pension payments commence on the first of the month following the month in which the employee normally would have been eligible for retirement. Section 2.393 (p) provides for normal retirement eligibility when a participant has reached age 55 and completed twenty years of credited service, has completed 30 years of credited service, or has reached age 65 and completed ten years of credited service. Mr. Wilson would have completed at least 20 years of service and reached age 55 on November 5, 2010. His pension will be effective December 1, 2010. This pension was approved by the Pension Advisory Committee on May 12, 2005. Oriqinatinq: Human Resources Review Approval Cvndie Goudeau 06-03-2005 10:17:25 y :~. '.. ':"~. . , . .~ .. ~. . .' . .~'.'.....,,! ~ " ",,"~~'<-'-. , , . . . . / ,. I /, . ~ Pension Trustee Cover Memorandum . .................................................. Trackinq Number: 1,380 Actual Date: 06/13/2005 Subiect 1 Recommendation: Approve changing allowable pension investment to be set by state statute and forward to City Council and voters for approval in a referendum. Summary: During implementation of the changes that the Trustees directed with the adoption of the Asset Allocation Study it became apparent that the investments listed in out allowable investments bore a striking resemblance to that of State Statute. Our pension attorney has recommended rather than adopting our own list of allowable investments that the Trustees and voters use the investments that are allowed by State Statute. The Trustees can restrict the investments with the Investment Policy. Attached is a sample of how the investments could be restricted via the Investment Policy. Also attached are applicable State Statutes and the proposed ordinance to go to the City Council and voters. Oriqinatinq: Finance Review Approval Marqie Simmons 06-02-2005 14:41:36 Cvndie Goudeau 06-06-2005 12:58:07 Bill Horne 06-06-2005 11:30:43 Tina Wilson 06-06-2005 10:23:43 Garrv Brumback 06-06-2005 11:03:34 Ordinance No. AN ORDINANCE OF THE CITY OF CLEARWATER, FLORIDA AMENDING THE CITY OF CLEARWATER EMPLOYEES PENSION PLAN; AMENDING SECTION 2.399 TO PROVIDE FOR EXPANDED INVESTMENT AUTHORITY FOR DIVERSIFICA TION OF PLAN ASSETS; PROVIDING FOR SEVCERABILITY; PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, the City of Clearwater has established the City of Clearwater Employees Pension Plan: WHEREAS, the City has authority to amend the plan as permitted by law; and WHEREAS, the City has determined that it is in the best interest of the participants and taxpayers to expand the investment authority of the Trustees. NOW, THEREFORE, BE IT ORDAINDED BY THE CITY COUNCIL OF THE CITY OF CLEARWATER, FLORIDA, THAT: Section 1: Section 2.399 of the Employees Pension Plan is hereby amended to read as follows: Sec. 2.399 Establishment and operating pension fund. (c) Powers and duties of trustees. The trustees may: *** (2) Invest and reinvest the assets of the pension fund in: *** (i) Notwithstanding any limitations to the contrary contained in this section, trustees shall have the authority to diversify the fund by investing pension assets to the full extent permitted by Florida law under Sections 112.661, 175.071, 185.06, and 215.47, Florida Statutes. (ii) Notwithstanding any provision to the contrary, direct investments, including real estate investments, in businesses or property located within the City of Clearwater shall be prohibited. Section 2: If any clause, section or other part or application of this Ordinance shall be held in any court of competent jurisdiction to be unconstitutional or invalid, such unconstitutional or invalid part or application shall be considered as eliminated and shall not effect the validity of the remaining portions or applications which shall remain in full force and effect. Section 3: All ordinances or parts of ordinances, resolutions or parts of resolutions in conflict herewith are herby repealed to the extent of such conflicts. Section 4: The question to appear on the Referendum Ballot shall be as follows: Pension Plan Amendments Shall the City of Clearwater Employees Pension Plan investments be set by Florida law under Sections 112.661, 175.071, 185.06, and 215.4 7 Florida Statute, with the additional restriction that there be no direct investments, including real estate within the City of Clearwater as provided in Ordinance ? For amendment to Employees Pension Plan Yes Against amendment to Employees Pension Plan No Section 5: This ordinance shall take effect immediately upon adoption. The amendments to the Employees Pension Plan provided herein shall take effect only upon approval of a majority of the City electors voting at the referendum election on these issues and upon the filing with the State. PASSED on first reading by the City Council of the City of Clearwater, Florida this _ day of , 2005 PASSED AND ADOPTED on the second reading by the City Council of the city of Clearwater, Florida, this day of , 2005 Approved as to form: City of Clearwater, Florida By: Leslie K. Dougall-Sides Assistant City Attorney By: Frank V. Hibbard Mayor Attest: Cynthia E. Goudeau City Clerk Coding: Words in stricken type are deletions from existing text/ Words in underline type are additions. Sample Investment Policy Restrictions Domestic Fixed Income: At least 90% of the securities in an investment manager's portfolio must be investment grade. Real Estate: The pension plan will have no direct ownership of any real property. All real estate ownership will be in the form ofREITS. International Fixed Income: The plan will have no allocation to emerging market debt securities. Target Asset Allocation Large Cap Value 10% Mid Cap Value 5% Small Cap Value 5% Domestic Fixed Income 30% Emerging Markets Equity 10% Emerging Market Debt 0% Large Cap Growth Mid Cap Growth Small Cap Growth REITS International Equity High Yield 10% 5% 5% 10% 10% 0% Florida Statutes 112.661PUBLlC OFFICERS AND EMPLOYEES: 112.661 Investment policies. --Investment of the assets of any local retirement system or plan must be consistent with a written investment policy adopted by the board. Such policies shall be structured to maximize the financial return to the retirement system or plan consistent with the risks incumbent in each investment and shall be structured to establish and maintain an appropriate diversification of the retirement system or plan's assets. (1) SCOPE.--The investment policy shall apply to funds under the control of the board. (2) INVESTMENT OBJECTIVES.--The investment policy shall describe the investment objectives of the board. (3) PERFORMANCE MEASUREMENT.--The investment policy shall specify performance measures as are appropriate for the nature and size of the assets within the board's custody. (4) INVESTMENT AND FIDUCIARY STANDARDS.--The investment policy shall describe the level of prudence and ethical standards to be followed by the board in carrying out its investment activities with respect to funds described in this section. The board in performing its investment duties shall comply with the fiduciary standards set forth in the Employee Retirement Income Security Act of 1974 at 29 U.S.c. s. 1104(a)(1 )(A)-(C). In case of conflict with other provisions of law authorizing investments, the investment and fiduciary standards set forth in this section shall prevail. (5) AUTHORIZED INVESTMENTS.-- (a) The investment policy shall list investments authorized by the board. Investments not listed in the investment policy are prohibited. Unless otherwise authorized by law or ordinance, the investment of the assets of any local retirement system or plan covered by this part shall be subject to the limitations and conditions set forth in s. 215.47(1 )-(8), (10), and (16). (b) If a local retirement system or plan has investments that, on October 1, 2000, either exceed the applicable limit or do not satisfy the applicable investment standard, such excess or investment not in compliance with the policy may be continued until such time as it is economically feasible to dispose of such investment. However, no additional investment may be made in the investment category which exceeds the applicable limit, unless authorized by law or ordinance. (6) MATURITY AND LIQUIDITY REQUIREMENTS.--The investment policy shall require that the investment portfolio be structured in such manner as to provide sufficient liquidity to pay obligations as they come due. To that end, the investment policy should direct that, to the extent possible, an attempt will be made to match investment maturities with known cash needs and anticipated cash-flow requirements. (7) PORTFOLIO COMPOSITION.--The investment policy shall establish guidelines for investments and limits on security issues, issuers, and maturities. Such guidelines shall be commensurate with the nature and size of the funds within the custody of the board. (8) RISK AND DIVERSIFICATION.--The investment policy shall provide for appropriate diversification of the investment portfolio. Investments held should be diversified to the extent practicable to control the risk of loss resulting from overconcentration of assets in a specific maturity, issuer, instrument, dealer, or bank through which financial instruments are bought and sold. Diversification strategies within the established guidelines shall be reviewed and revised periodically, as deemed necessary by the board. (9) EXPECTED ANNUAL RATE OF RETURN.--The investment policy shall require that, for each actuarial valuation, the board determine the total expected annual rate of return for the current year, for each of the next several years, and for the long term thereafter. This determination must be filed promptly with the Department of Management Services and with the plan's sponsor and the consulting actuary. The department shall use this determination only to notify the board, the plan's sponsor, and consulting actuary of material differences between the total expected annual rate of return and the actuarial assumed rate of return. (10) THIRD-PARTY CUSTODIAL AGREEMENTS.--The investment policy shall provide appropriate arrangements for the holding of assets of the board. Securities should be held with a third party, and all securities purchased by, and all collateral obtained by, the board should be properly designated as an asset of the board. No withdrawal of securities, in whole or in part, shall be made from safekeeping except by an authorized member of the board or the board's designee. Securities transactions between a broker-dealer and the custodian involving purchase or sale of securities by transfer of money or securities must be made on a "delivery vs. payment" basis, if applicable, to ensure that the custodian will have the security or money, as appropriate, in hand at the conclusion of the transaction. (11) MASTER REPURCHASE AGREEMENT.--The investment policy shall require all approved institutions and dealers transacting repurchase agreements to execute and perform as stated in the Master Repurchase Agreement. All repurchase agreement transactions shall adhere to the requirements of the Master Repurchase Agreement. (12) BID REQUIREMENT.--The investment policy shall provide that the board determine the approximate maturity date based on cash-flow needs and market conditions, analyze and select one or more optimal types of investment, and competitively bid the security in question when feasible and appropriate. Except as otherwise required by law, the most economically advantageous bid must be selected. (13) INTERNAL CONTROLS.--The investment policy shall provide for a system of internal controls and operational procedures. The board shall establish a system of internal controls which shall be in writing and made a part of the board's operational procedures. The policy shall provide for review of such controls by independent certified public accountants as part of any financial audit periodically required of the board's unit of local government. The internal controls should be designed to prevent losses of funds which might arise from fraud, error, misrepresentation by third parties, or imprudent actions by the board or employees of the unit of local government. (14) CONTINUING EDUCATION.--The investment policy shall provide for the continuing education of the board members in matters relating to investments and the board's responsibilities. (15) REPORTI NG. -- The investment pol icy shall provide for appropriate annual or more frequent reporting of investment activities. To that end, the board shall prepare periodic reports for submission to the governing body of the unit of local government which shall include investments in the portfolio by class or type, book value, income earned, and market value as of the report date. Such reports shall be available to the public. (16) FILING OF INVESTMENT POLlCY.--Upon adoption by the board, the investment policy shall be promptly filed with the Department of Management Services and the plan's sponsor and consulting actuary. The effective date of the investment policy, and any amendment thereto, shall be the 31 st calendar day following the filing date with the plan sponsor. (17) VALUATION OF ILLIQUID INVESTMENTS.--The investment policy shall provide for the valuation of illiquid investments for which a generally recognized market is not available or for which there is no consistent or generally accepted pricing mechanism. If those investments are utilized, the investment policy must include the criteria set forth in s. 215.47(6), except that submission to the Investment Advisory Council is not required. The investment policy shall require that, for each actuarial valuation, the board must verify the determination of the fair market value for those investments and ascertain that the determination complies with all applicable state and federal requirements. The investment policy shall require that the board disclose to the Department of Management Services and the plan's sponsor each such investment for which the fair market value is not provided. 175.071 FIREFIGHTER PENSIONS 175.071 General powers and duties of board of trustees. --For any municipality, special fire control district, chapter plan, local law municipality, local law special fire control district, or local law plan under this chapter: (1) The board of trustees may: (a) Invest and reinvest the assets of the firefighters' pension trust fund in annuity and life insurance contracts of life insurance companies in amounts sufficient to provide, in whole or in part, the benefits to which all of the participants in the firefighters' pension trust fund shall be entitled under the provisions of this chapter and pay the initial and subsequent premiums thereon. (b) Invest and reinvest the assets of the firefighters' pension trust fund in: 1. Time or savings accounts of a national bank, a state bank insured by the Bank Insurance Fund, or a savings, building, and loan association insured by the Savings Association Insurance Fund which is administered by the Federal Deposit Insurance Corporation or a state or federal chartered credit union whose share accounts are insured by the National Credit Union Share Insurance Fund. 2. Obligations of the United States or obligations guaranteed as to principal and interest by the government of the United States. 3. Bonds issued by the State of Israel. 4. Bonds, stocks, or other evidences of indebtedness issued or guaranteed by a corporation organized under the laws of the United States, any state or organized territory of the United States, or the District of Columbia, provided: a. The corporation is listed on anyone or more of the recognized national stock exchanges or on the National Market System of the NASDAQ Stock Market and, in the case of bonds only, holds a rating in one of the three highest classifications by a major rating service; and b. The board of trustees shall not invest more than 5 percent of its assets in the common stock or capital stock of anyone issuing company, nor shall the aggregate investment in anyone issuing company exceed 5 percent of the outstanding capital stock of that company or the aggregate of its investments under this subparagraph at cost exceed 50 percent of the assets of the fund. This paragraph shall apply to all boards of trustees and participants. However, in the event that a municipality or special fire control district has a duly enacted pension plan pursuant to, and in compliance with, s. 175.351, and the trustees thereof desire to vary the investment procedures herein, the trustees of such plan shall request a variance of the investment procedures as outlined herein only through a municipal ordinance, special act of the Legislature, or resolution by the governing body of the special fire control district; where a special act, or a municipality by ordinance adopted prior to July 1, 1998, permits a greater than 50-percent equity investment, such municipality shall not be required to comply with the aggregate equity investment provisions of this paragraph. Notwithstanding any other provision of law to the contrary, nothing in this section may be construed to take away any preexisting legal authority to make equity investments that exceed the requirements of this paragraph. The board of trustees may invest up to 10 percent of plan assets in foreign securities. (c) Issue drafts upon the firefighters' pension trust fund pursuant to this act and rules and regulations prescribed by the board of trustees. All such drafts shall be consecutively numbered, be signed by the chair and secretary, and state upon their faces the purpose for which the drafts are drawn. The treasurer or depository of each municipality or special fire control district shall retain such drafts when paid, as permanent vouchers for disbursements made, and no money shall be otherwise drawn from the fund. (d) Convert into cash any securities of the fund. (e) Keep a complete record of all receipts and disbursements and of the board's acts and proceedings. (2) Any and all acts and decisions shall be effectuated by vote of a majority of the members of the board; however, no trustee shall take part in any action in connection with the trustee's own participation in the fund, and no unfair discrimination shall be shown to any individual firefighter participating in the fund. (3) The board's action on all claims for retirement under this act shall be final, provided, however, that the rules and regulations of the board have been complied with. (4) The secretary of the board of trustees shall keep a record of all persons receiving retirement payments under the provisions of this chapter, in which shall be noted the time when the pension is allowed and when the pension shall cease to be paid. In this record, the secretary shall keep a list of all firefighters employed by the municipality or special fire control district. The record shall show the name, address, and time of employment of such firefighters and when they cease to be employed by the municipality or special fire control district. (5) The sole and exclusive administration of, and the responsibilities for, the proper operation of the firefighters' pension trust fund and for making effective the provisions of this chapter are vested in the board of trustees; however, nothing herein shall empower a board of trustees to amend the provisions of a retirement plan without the approval of the municipality or special fire control district. The board of trustees shall keep in convenient form such data as shall be necessary for an actuarial valuation of the firefighters' pension trust fund and for checking the actual experience of the fund. (6)( a) At least once every 3 years, the board of trustees shall retain a professionally qualified independent consultant who shall evaluate the performance of any existing professional money manager and shall make recommendations to the board of trustees regarding the selection of money managers for the next investment term. These recommendations shall be considered by the board of trustees at its next regularly scheduled meeting. The date, time, place, and subject of this meeting shall be advertised in the same manner as for any meeting of the board. (b) For purposes of this subsection, the term "professionally qualified independent consultant" means a consultant who, based on education and experience, is professionally qualified to evaluate the performance of professional money managers, and who, at a minimum: 1. Provides his or her services on a flat-fee basis. 2. Is not associated in any manner with the money manager for the pension fund. 3. Makes calculations according to the American Banking Institute method of calculating time- weighted rates of return. All calculations must be made net of fees. 4. Has 3 or more years of experience working in the public sector. (7) To assist the board in meeting its responsibilities under this chapter, the board, if it so elects, may: (a) Employ independent legal counsel at the pension fund's expense. (b) Employ an independent actuary, as defined in s. 175.032(7), at the pension fund's expense. (c) Employ such independent professional, technical, or other advisers as it deems necessary at the pension fund's expense. If the board chooses to use the municipality's or special district's legal counselor actuary, or chooses to use any of the municipality's or special district's other professional, technical, or other advisers, it must do so only under terms and conditions acceptable to the board. 185.06 MUNICIPAL POLICE PENSIONS 185.06 General powers and duties of board of trustees.--For any municipality, chapter plan, local law municipality, or local law plan under this chapter: (1) The board of trustees may: (a) Invest and reinvest the assets of the retirement trust fund in annuity and life insurance contracts of life insurance companies in amounts sufficient to provide, in whole or in part, the benefits to which all of the participants in the municipal police officers' retirement trust fund shall be entitled under the provisions of this chapter, and pay the initial and subsequent premiums thereon. (b) Invest and reinvest the assets of the retirement trust fund in: 1. Time or savings accounts of a national bank, a state bank insured by the Bank Insurance Fund, or a savings and loan association insured by the Savings Association Insurance Fund which is administered by the Federal Deposit Insurance Corporation or a state or federal chartered credit union whose share accounts are insured by the National Credit Union Share Insurance Fund. 2. Obligations of the United States or obligations guaranteed as to principal and interest by the United States. 3. Bonds issued by the State of Israel. 4. Bonds, stocks, or other evidences of indebtedness issued or guaranteed by a corporation organized under the laws of the United States, any state or organized territory of the United States, or the District of Columbia, provided: a. The corporation is listed on anyone or more of the recognized national stock exchanges or on the National Market System of the NASDAQ Stock Market and, in the case of bonds only, holds a rating in one of the three highest classifications by a major rating service; and b. The board of trustees shall not invest more than 5 percent of its assets in the common stock or capital stock of anyone issuing company, nor shall the aggregate investment in anyone issuing company exceed 5 percent of the outstanding capital stock of the company or the aggregate of its investments under this subparagraph at cost exceed 50 percent of the fund's assets. This paragraph shall apply to all boards of trustees and participants. However, in the event that a municipality has a duly enacted pension plan pursuant to, and in compliance with, s. 185.35 and the trustees thereof desire to vary the investment procedures herein, the trustees of such plan shall request a variance of the investment procedures as outlined herein only through a municipal ordinance or special act of the Legislature; where a special act, or a municipality by ordinance adopted prior to July 1, 1998, permits a greater than 50-percent equity investment, such municipality shall not be required to comply with the aggregate equity investment provisions of this paragraph. Notwithstanding any other provision of law to the contrary, nothing in this section may be construed to take away any preexisting legal authority to make equity investments that exceed the requirements of this paragraph. The board of trustees may invest up to 10 percent of plan assets in foreign securities. (c) Issue drafts upon the municipal police officers' retirement trust fund pursuant to this act and rules and regulations prescribed by the board of trustees. All such drafts shall be consecutively numbered, be signed by the chair and secretary, and state upon their faces the purposes for which the drafts are drawn. The city treasurer or other depository shall retain such drafts when paid, as permanent vouchers for disbursements made, and no money shall otherwise be drawn from the fund. (d) Finally decide all claims to relief under the board's rules and regulations and pursuant to the provisions of this act. (e) Convert into cash any securities of the fund. (f) Keep a complete record of all receipts and disbursements and of the board's acts and proceedings. (2) Any and all acts and decisions shall be effectuated by vote of a majority of the members of the board; however, no trustee shall take part in any action in connection with his or her own participation in the fund, and no unfair discrimination shall be shown to any individual employee participating in the fund. (3) The secretary of the board of trustees shall keep a record of all persons receiving retirement payments under the provisions of this chapter, in which shall be noted the time when the pension is allowed and when the pension shall cease to be paid. In this record, the secretary shall keep a list of all police officers employed by the municipality. The record shall show the name, address, and time of employment of such police officer and when he or she ceases to be employed by the municipality. (4) The sole and exclusive administration of, and the responsibilities for, the proper operation of the retirement trust fund and for making effective the provisions of this chapter are vested in the board of trustees; however, nothing herein shall empower a board of trustees to amend the provisions of a retirement plan without the approval of the municipality. The board of trustees shall keep in convenient form such data as shall be necessary for an actuarial valuation of the retirement trust fund and for checking the actual experience of the fund. (5)(a) At least once every 3 years, the board of trustees shall retain a professionally qualified independent consultant who shall evaluate the performance of any existing professional money manager and shall make recommendations to the board of trustees regarding the selection of money managers for the next investment term. These recommendations shall be considered by the board of trustees at its next regularly scheduled meeting. The date, time, place, and subject of this meeting shall be advertised in the same manner as for any meeting of the board. (b) For the purpose of this subsection, the term "professionally qualified independent consultant" means a consultant who, based on education and experience, is professionally qualified to evaluate the performance of professional money managers, and who, at a minimum: 1. Provides his or her services on a flat-fee basis. 2. Is not associated in any manner with the money manager for the pension fund. 3. Makes calculations according to the American Banking Institute method of calculating time- weighted rates of return. All calculations must be made net of fees. 4. Has 3 or more years of experience working in the public sector. (6) To assist the board in meeting its responsibilities under this chapter, the board, if it so elects, may: (a) Employ independent legal counsel at the pension fund's expense. (b) Employ an independent actuary, as defined in s. 185.02(8), at the pension fund's expense. (c) Employ such independent professional, technical, or other advisers as it deems necessary at the pension fund's expense. If the board chooses to use the municipality's or special district's legal counselor actuary, or chooses to use any of the municipality's other professional, technical, or other advisers, it must do so only under terms and conditions acceptable to the board. 215.47 FINANCIAL MATTERS: GENERAL PROVISIONS 215.47 Investments; authorized securities; loan of securities. --Subject to the limitations and conditions of the State Constitution or of the trust agreement relating to a trust fund, moneys available for investments under ss. 215.44-215.53 may be invested as follows: (1) Without limitation in: (a) Bonds, notes, or other obligations of the United States or those guaranteed by the United States or for which the credit of the United States is pledged for the payment of the principal and interest or dividends thereof. (b) State bonds pledging the full faith and credit of the state and revenue bonds additionally secured by the full faith and credit of the state. (c) Bonds of the several counties or districts in the state containing a pledge of the full faith and credit of the county or district involved. (d) Bonds issued or administered by the State Board of Administration secured solely by a pledge of all or part of the 2-cent constitutional fuel tax accruing under the provisions of s. 16, Art. IX of the State Constitution of 1885, as amended, or of s. 9, Art. XII of the 1968 revised State Constitution. (e) Bonds issued by the State Board of Education pursuant to ss. 18 and 19, Art. XII of the State Constitution of 1885, as amended, or to s. 9, Art. XII of the 1968 revised State Constitution, as amended. (f) Bonds issued by the Florida Outdoor Recreational Development Council pursuant to s. 17, Art. IX of the State Constitution of 1885, as amended. (g) Bonds issued by the Florida State Improvement Commission, Florida Development Commission, 1 Division of Bond Finance of the 2Department of General Services, or Division of Bond Finance of the State Board of Administration. (h) Savings accounts in, or certificates of deposit of, any bank, savings bank, or savings and loan association incorporated under the laws of this state or organized under the laws of the United States doing business and situated in this state, the accounts of which are insured by the Federal Government or an agency thereof, in an amount that does not exceed 15 percent of the net worth of the institution, or a lesser amount as determined by rule by the State Board of Administration, provided such savings accounts and certificates of deposit are secured in the manner prescribed in chapter 280. (i) Notes, bonds, and other obligations of agencies of the United States. (j) Commercial paper of prime quality of the highest letter and numerical rating as provided for by at least one nationally recognized rating service. (k) Time drafts or bills of exchange drawn on and accepted by a commercial bank, otherwise known as banker's acceptances, which are accepted by a member bank of the Federal Reserve System having total deposits of not less than $400 million. (l) Negotiable certificates of deposit issued by domestic or foreign financial institutions in United States dollars. (m) Short-term obligations not authorized elsewhere in this section to be purchased individually or in pooled accounts or other collective investment funds, for the purpose of providing liquidity to any fund or portfolio. (n) Securities of, or other interests in, any open-end or closed-end management type investment company or investment trust registered under the Investment Company Act of 1940, 15 u.s.c. ss. 80a-1 et seq., as amended from time to time, provided that the portfolio of such investment company or investment trust is limited to obligations of the United States Government or any agency or instrumentality thereof and to repurchase agreements fully collateralized by such United States Government obligations and provided that such investment company or investment trust takes delivery of such collateral either directly or through an authorized custodian. (2) With no more than 25 percent of any fund in: (a) Bonds, notes, or obligations of any municipality or political subdivision or any agency or authority of this state, if such obligations are rated in anyone of the three highest ratings by two nationally recognized rating services. However, if only one nationally recognized rating service shall rate such obligations, then such rating service must have rated such obligations in anyone of the two highest classifications heretofore mentioned. (b) Notes secured by first mortgages on Florida real property, insured or guaranteed by the Federal Housing Administration or the United States Department of Veterans Affairs. (c) Investments collateralized by first mortgages covering single-family Florida residences, provided such mortgages do not exceed $60,000, do not exceed 80 percent of value, are not delinquent, and are originated by a lender regulated by the state or Federal Government and the aggregate of the collateral furnished is at least 150 percent of the aggregate investment under this subsection. The mortgages used for collateral shall be segregated by the lending institution so that such segregation may be confirmed by independent audit. In the event any such mortgage used as collateral becomes more than 3 months delinquent, the lender shall immediately substitute therefor a mortgage of equal or greater value. (d) Mortgage securities which represent participation in or are collateralized by mortgage loans secured by real property. Such securities must be issued by an agency of or enterprise sponsored by the United States Government, including, but not limited to, the Government National Mortgage Association, the Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation. (e) Group annuity contracts of the pension investment type with insurers licensed to do business in this state, except that amounts invested by the board with anyone insurer shall not exceed 3 percent of its assets. (f) Certain interests in real property and related personal property, including mortgages and related instruments on commercial or industrial real property, with provisions for equity or income participation or with provisions for convertibility to equity ownership; and interests in collective investment funds. Associated expenditures for acquisition and operation of assets purchased under this provision or of investments in private equity or other private investment partnerships or limited liability companies shall be included as a part of the cost of the investment. 1. The title to real property acquired under this paragraph shall be vested in the name of the respective fund. 2. For purposes of taxation of property owned by any fund, the provisions of s. 196.199(2)(b) do not apply. 3. Real property acquired under the provisions of this paragraph shall not be considered state lands or public lands and property as defined in chapter 253, and the provisions of that chapter do not apply to such real property. (g) Fixed-income obligations not otherwise authorized by this section issued by foreign governments or political subdivisions or agencies thereof, supranational agencies, foreign corporations, or foreign commercial entities, if the obligations are rated investment grade by at least one nationally recognized rating service. (h) A portion of the funds available for investment pursuant to this subsection may be invested in rated or unrated bonds, notes, or instruments backed by the full faith and credit of the government of Israel. (i) Obligations of agencies of the government of the United States, provided such obligations have been included in and authorized by the Florida Retirement System Defined Benefit Plan Investment Policy Statement established in s. 215.475. (j) United States dollar-denominated obligations issued by foreign governments, or political subdivisions or agencies thereof, supranational agencies, foreign corporations, or foreign commercial entities. (3) With no more than 80 percent of any fund in common stock, preferred stock, and interest- bearing obligations of a corporation having an option to convert into common stock, provided: (a) The corporation is organized under the laws of the United States, any state or organized territory of the United States, or the District of Columbia; or (b) The corporation is listed on anyone or more of the recognized national stock exchanges in the United States and conforms with the periodic reporting requirements under the Securities Exchange Act of 1934. (c) Not more than 75 percent of the fund may be in internally managed common stock. The board shall not invest more than 10 percent of the equity assets of any fund in the common stock, preferred stock, and interest-bearing obligations having an option to convert into common stock, of anyone issuing corporation; and the board shall not invest more than 3 percent of the equity assets of any fund in such securities of anyone issuing corporation except to the extent a higher percentage of the same issue is included in a nationally recognized market index, based on market values, at least as broad as the Standard and Poor's Composite Index of 500 Companies, or except upon a specific finding by the board that such higher percentage is in the best interest of the fund. (4) With no more than 80 percent of any fund, in interest-bearing obligations with a fixed maturity of any corporation or commercial entity within the United States. (5) With no more than 20 percent of any fund in corporate obligations and securities of any kind of a foreign corporation or a foreign commercial entity having its principal office located in any country other than the United States of America or its possessions or territories, not including United States dollar-denominated securities listed and traded on a United States exchange which are a part of the ordinary investment strategy of the board. (6) With no more than 5 percent of any fund to be invested as deemed appropriate by the board, notwithstanding investment limitations otherwise expressed in this section. Prior to the board engaging in any investment activity not otherwise authorized under ss. 215.44-215.53, excluding investments in publicly traded securities, options, financial futures, or similar instruments, the board shall present to the Investment Advisory Council a proposed plan for such investment. Said plan shall include, but not be limited to, the expected benefits and potential risks of such activity; methods for monitoring and measuring the performance of the investment; a complete description of the type, nature, extent and purpose of the investment, including description of issuer, security in which investment is proposed to be made, voting rights or lack thereof and control to be acquired, restrictions upon voting, transfer, and other material rights of ownership, and the existence of any contracts, arrangements, understandings, or relationships with any person or entity (naming the same) with respect to the proposed investment; and assurances that sufficient investment expertise is available to the board to properly evaluate and manage such activity. The Investment Advisory Council may obtain independent investment counsel to provide expert advice with regard to such proposed investment activity by the board, and the board shall defray such costs. (7) For the purpose of determining the above investment limitations, the value of bonds shall be the par value thereof, and the value of evidences of ownership and interest-bearing obligations having an option to convert to ownership shall be the cost thereof. (8) Investments in any securities authorized by this section may be under repurchase agreements or reverse repurchase agreements. (9) Investments made by the State Board of Administration shall be designed to maximize the financial return to the fund consistent with the risks incumbent in each investment and shall be designed to preserve an appropriate diversification of the portfolio. The board shall discharge its duties with respect to a plan solely in the interest of its participants and beneficiaries. The board in performing the above investment duties shall comply with the fiduciary standards set forth in the Employee Retirement Income Security Act of 1974 at 29 U.S.c. s. 1104(a)(1 )(A) through (C). In case of conflict with other provisions of law authorizing investments, the investment and fiduciary standards set forth in this subsection shall prevail. (10) The board is authorized to buy and sell futures and options, provided the instruments for such purpose are traded on a securities exchange or board of trade regulated by the Securities and Exchange Commission or the Commodity Futures Trading Commission, unless the board by rule authorizes a different market. (11) The board is authorized to invest in domestic or foreign notional principal contracts. (12) The State Board of Administration, consistent with sound investment policy, may pledge up to 2 percent of the assets of the Florida Retirement System Trust Fund as collateral for housing bonds issued by the State of Florida or its political subdivisions under chapter 159, part V of chapter 420, or chapter 421 as a supplemental income program for the system. With regard to any collateral program, the State Board of Administration is authorized to coordinate or retain other governmental entities of the State of Florida or private entities to administer this program, as well as receive fees for the use of the designated collateral. (13) The State Board of Administration, consistent with sound investment policy, may invest the earnings accrued and collected upon the investment of the minimum balance of funds required to be maintained in the State Transportation Trust Fund pursuant to s. 339.135(6 )(b). Such investment shall be limited as provided in s. 288.9607(7). (14) With no more than 5 percent of any fund in private equity through participation in limited partnerships and limited liability companies. (15) The State Board of Administration is authorized to invest in domestic and foreign group trusts. (16) Securities or investments purchased or held under the provisions of this section may be loaned to securities dealers or financial institutions, provided the loan is collateralized by cash or securities having a market value of at least 100 percent of the market value of the securities loaned.