At the regularly scheduled meeting of the Fire and Police Pension Fund Board of Directors held on the 1st day of September 2016, President Craig Joel presided. The meeting was held at the Pension Office, 6009 John Douglass Drive, Chattanooga, TN 37421.
The meeting convened at 0900 hours with board members Craig Joel, Charlie Thomason, Tommy Meeks, and Vickie Haley. Attorney Bill Robinson was also present.
Motion by Charlie Thomason and seconded by Tommy Meeks to approve the minutes of the August 18, 2016 meeting. Motion carried unanimously.
President Joel notified those in attendance that City Council appointee Less Lee resigned from the Board on August 18th, following the Pension meeting.
Attorney Bill Robinson was prepared to discuss the Fund’s Ethics Policy with the Board and the required annual agreement by Directors and staff to adhere to the policy. Tommy Meeks suggested waiting until the annual Directors meeting in Nashville to discuss the policy since three directors are absent. Other Directors in attendance agreed. Mr. Robinson also informed the Board that he and Cameron Hill have submitted a letter to the 6th Circuit Court, notifying them that the 6th Circuit established precedence in its recent ruling on the Kentucky COLA case, and that the Frazier case addresses the same question of a Board’s authority to modify future COLAs. The letter requests dismissal of the Frazier case.
Motion by Tommy Meeks and seconded by Charlie Thomason to approve the following membership items:
REMOVE FROM THE ROLLS:
Retired Fire Captain James R. Dodd, effective 08/31/2016, died 08/30/2016 (2-411)
ADD TO THE ROLLS:
Frances E. Dodd, Surviving Spouse of James R. Dodd, effective 09/01/2016 (2-411)
REFUND CONTRIBUTIONS:
Former Police Officer Mark Hennessee, terminated effective 08/26/2016, participation date of 08/05/2016 (2-413)
PAY DEATH BENEFITS:
Frances E. Dodd, designated beneficiary of James R. Dodd (2-411)
Motion carried unanimously.
The Board reviewed the bills paid since the last meeting.
The Board discussed the September 6 election. Motion by Tommy Meeks and seconded by Charlie Thomason to hold the election from 9am to 3pm due to uncontested races in both the Fire and Police Departments. Motion carried unanimously. Motion by Charlie Thomason and seconded by Tommy Meeks to hold the election meeting to tally votes at 3pm in a special called meeting. Motion carried unanimously.
Frank Hamilton reported that Chiefs Adams and Fletcher had come to the Fund Office to discuss the hiring age limit for sworn personnel passed by City ordinance in 2012. The Board discussed the hiring age limit and the additional liability placed on the Fund for hiring older sworn members and possibility to minimize the liability. Mr. Hamilton stated he would research the hiring age and report back to the Board and Chiefs as soon as practical.
Frank Hamilton stated that he recently had a discussion with Christina Salers, a securities litigation attorney with Chimicles & Tikellis, whom Phillip McClain, Kelly Simmons and Craig Joel met at a conference. The Board discussed securities litigation. President Joel tabled the discussion until a full Board could be present.
The Board discussed the GASB 67 & 68 report that Segal provided to City Finance Officer Daisy Madison on 08/30/2016. As of June 30, 2016, the Plan is 52.44% funded on a market value basis. Frank Hamilton stated that he has reviewed other public pension plans that seem to be recovering more quickly that the Fund. The primary variable that appears to be retarding the Fund’s recovery is the near 1:1 ratio of active members to retired members. Those that are experiencing a quicker recovery have substantial greater number of active employees contributing to their fund than members receiving benefits.
Mr. Hamilton recently contacted Jill Bachus of the Tennessee Consolidated Retirement System (TCRS) regarding the Actuarially Assumed Rate of Return (AAR) used by TCRS. He stated that TCRS is currently performing an actuarial experience study and TCRS will notify all public funds within the State if the TCRS discount rate changes. Mr. Hamilton suggested that the Board consider having Segal to cost at least three scenarios of lowering the AAR for the Fund.
Frank Hamilton discussed the modified versions of the 100%, 75%, and 50% Joint & Survivor options, commonly called “pop-ups.” The pop-up options provide for a member’s retirement benefit to return to the rate of a Single Life Annuity if the member’s beneficiary dies before the member. Mr. Hamilton reported that he has spoken with a representative of another Plan that includes divorces in pop-up provisions of that plan. Mr. Hamilton stated that since the Fund does not honor Qualified Domestic Relations Orders (QDRO) it is already up to the member to address any divorce settlements. He stated that he has briefly spoken to Jeff Williams at Segal regarding the inclusion of divorce in the pop-up provisions of the Plan. The Board discussed the subject matter and agreed to ask Segal to cost the change to the Plan to include divorce as a trigger for the pop-up.
The Board also briefly discussed the DROP study and the request of Charles Darling and Rhonda Darling to have the Plan include employee contributions during the DROP period included in the DROP calculation. Motion by Charlie Thomason and seconded by Tommy Meeks to ask Segal to 1) review the independent DROP Study in regards to including employee contributions in the calculation; 2) determine a cost, if any, for including divorce in the pop-up provisions; 3) study three scenarios of reducing the AAR; 4) moving amortization method immediately to Level Dollar. Motion carried unanimously.
Motion by Charlie Thomason and seconded by Tommy Meeks to adjourn at 1028 hours. Motion carried unanimously.
Notes:
Tiffany Bird repaid pension contributions and will be reinstated as Fire Engineer effective 09/03/2016, adjusted pension participation date of 05/22/2011
Police Officer Joseph Sabba – IME scheduled 09/19/2016; tentative disability hearing on 10/20/2016
Fire Captain Robert Dean Bates – IME scheduled 09/26/2016; tentative disability hearing on 10/20/2016
Future Discussions
Addressing Member exodus
Review of Investment Benchmarks
Investment Consultant RFP
Annual Directors Meeting
September 20-21, 2016
Open Board meeting at 1400 hrs on September 21, 2016
