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City of Casselberry Police Officers' and Firefighters' Pension Board of Trustees Minutes of February 12, 2013 Meeting Page 2 of 6 4. Audience Participation City Manager James "Randy" Newlon discussed changes to the firefighter contract. The current contract is to allow the City to extend raises to the firefighters and police officers, as is being done with other general employees. This caused the firefighters' contract to be current for September 30, 2012. The City is currently negotiating a new contract to be effective for FYI 3. Mr. Christiansen verified that the contract dates in the current Ordinance before the commission is October 22, 2012 for the Police Department and November 13, 2012 for the Fire Department. Mr. Newlon discussed the current environment regarding pension plans. The City is looking at restrictions on insurance premium taxes to pay for future benefit enhancements. The Plan currently measures future liabilities by the aggregate actuarial cost method. The City keeps the Plan funded by that method. The percent funded is dependent on the methodology used. While Casselberry uses the aggregate method, other plans use the entry age normal cost method. Mr. Newlon stated that if the standard on which the Plan is to be judged is the entry age based method, then continuing to set aside the premium taxes for future benefit enhancements, which are not needed and cannot be afforded, is harmful. The City is holding $1.4 million in premium taxes, which are restricted for benefit enhancements only. The Plan shows as underfunded by $1.5 million based upon the entry age normal cost method even though payments are done as required and the Plan's returns on investment are favorable. Mr. Newlon stated that a direct correlation can be found between the legislative restrictions on the use of premium taxes and the underfunding of the Plan. The City's position is for the legislature to free up these funds for broader use, to enable the Plan to remedy unfunded liabilities, and to discourage employers from doing something more drastic such as FRS actions. The City's position is that this is the one thing that needs to be unwound. Mr. Christiansen discussed that the State Legislature intends to compare all Plans statewide to one another. New legislation is proposed to require additional reporting that will provide more data to the State to accomplish this goal. Mr. Christiansen then went on to speak about SB458 which proposes to change the use of State monies, if passed. 5. Presentations A. The Bogdahn Group Mr. Michael Welker, The Bogdahn Group, presented a performance review of investment activity for the quarter ending December 31, 2012. International markets best performing for the quarter and were up 5'/2 - 6'/2 %. The domestic indices were mostly flat or down. The utilities and energy markets were the worst performing. The best performing sectors were financials and consumer discretionary. Cash flow increased by $255,000 per quarter last year, allowing the Plan to grow nicely. Allocation: Almost spot on target - slight overweight on domestic vs. international. Recommend to continue this overweight on domestic. Financial Reconciliation: On October 1, 2012, the Plan was at $11.3 million with more money