06/13/1988 TRUSTEES OF THE EMPLOYEES' PENSION FUND MEETING
June 13, 1988
The City Commission, meeting as the Board of Trustees of the Employees
Pension Fund, met in regular session at the City Hall, Monday, June 13, 1988, at l:05 p.m., with the following members present:
Rita Garvey Mayor/Commissioner
James Berfield Vice Mayor/Commissioner
(Arrived at 1:07 p.m.)
Lee Regulski Commissioner
Don Winner Commissioner
William Nunamaker Commissioner
Also Present were:
Ron H. Rabun City Manager
Milton A. Galbraith, Jr. City Attorney
Cynthia Goudeau City Clerk
ITEM #2 Minutes Commissioner Regulski moved to approve the minutes of the May 31, 1988, meeting. `Motion` was duly seconded and `carried` unanimously.
ITEM #3 Investment Allocation of Pension Fund Assets
On May 25, the Investment Committee met with our advisors John Willoughby
of Florida National Bank, and Michael Beasley of Callan Associates. The primary objective was to consider asset allocation as directed by the trustees at the April 4 trustees' meeting.
The consensus of the committee is that virtually all of the negative
indicators that were present last summer have moderated significantly. Today's 2000 2100 trading range no longer looks over valued, and many professional investors have again become
bullish on stocks. The asset allocation model used internally by Florida National Bank recently increased its recommended equity exposure to 50%, with bonds (including GIC's) at 45%
and cash (including treasuries) at 5%. This is the same model which Mr. Willoughby used last fall in recommending a significant withdrawal from both the stock and GIC portfolios. Discussions
with both equity managers have confirmed their beliefs that increased equity exposure is warranted at this time.
Based on all the available data and the opinions of our advisors and managers, the committee recommends restructuring the fund's asset mix to 50% equities, 50% GIC's, consistent with
the allocation successfully employed by the fund for approximately five years prior to last August. The 50% equity exposure is the maximum permitted by the pension ordinance, and the
50% GIC portion, we believe, provides a fixed rate "anchor" to help moderate any severe fluctuations in the equity market. As indicated in the letter from Mr. Willoughby, we also feel
that the ability of our managers to raise up to 20% cash provides for limited automatic asset allocation, triggered by each manager's professional assessment of the current economic
environment.
With approval, the move toward the 50 50 asset allocation will begin by liquidating the treasury portfolio prior to September 30. Money for GIC investments will be transferred to Florida
National Bank to be managed under the terms of the existing contract. Money for equity investments will be transferred equally to Denver Investment Advisors and Aetna Capital Management,
Inc., also to be managed under the terms of our existing contracts. Moneys in the consolidated cash pool, except for approximately $1 million to be retained for cash flow requirements,
will likewise be transferred as available, without premature liquidation of existing cash pool securities.
As indicated last August, the recommendation to raise 20% cash was a temporary response to what was viewed as unusual economic conditions, and was not a fundamental change in the long term
investment strategy. It is the collective best judgement that this is the appropriate time to return to our traditional, yet conservative 50 50 investment policy.
Commissioner Regulski moved to approve an overall investment mix of 50% equities, 50% GIC's, and authorize the transfer of cash pool assets and the liquidation and reinvestment of existing
treasury securities to accomplish this objective was approved. `Motion` was duly seconded and `carried` unanimously.
ITEM #4 Discussion: Steve Zimmerman Agreement
John Nicholson, Pension Advisory Committee (PAC) member, raised a question at the last Trustee meeting regarding the Trustees authority to settle Mr. Zimmerman's claim by using Pension
funds to give service credit to Mr. Zimmerman as agreed to in the settlement. Mr. Nicholson was concerned because when an employee leaves the City, the City's contribution to their pension
is used to offset future contributions needed.
Discussion ensued regarding the Trustee's action. It was stated no one was adversely impacted as the actuarial study required will note any adjustments that may be needed and the City's
general fund will make the needed
contribution. It was emphasized that the Trustee's action was totally proper. No action was taken.
ITEM John Nicholson, PAC member, stated he has discovered some written
guidelines for PAC. Based on these guidelines the PAC has made some errors, in particular in the Lois Maroon and Larry Dean cases. The PAC will be discussing this in the near future.
ITEM #5 Meeting adjourned at 1:21 p.m.