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Agenda 05-22-12 BOYNTON BEACH POLICE OFFICERS' PENSION FUND QUARTERLY BOARD MEETING Tuesday, May 22, 2012 @ 9:30 AM - Renaissance Executive Suites — Conference Room #1 1500 Gateway Blvd., Suite # 220 Boynton Beach, FL 33426 *REVISED 5 -16 -2012 AGENDA I. CALL TO ORDER — Lt. Gary Chapman, Chairman II. AGENDA APPROVAL - III. APPROVAL OF MINUTES — Quarterly Meeting 02 -14 -2012 *Special Meeting 04 -10 -2012 IV. FINANCIAL REPORTS: A) Quarterly Investment Review for March 31, 2012 1.) Russell Investment Group — Glenn Harris, Client Executive - 1) Portfolio review - 2) Asset allocation - Core Plus 2.) Burgess Chambers & Associates (BCA) — Frank Wan, Head of Research & Burgess Chambers, Pres. 1) Fund Performance review — V. CORRESPONDENCE: 1) 5 Annual Reunion — Saturday, November 3, 2012 @ 6:OOPM VI. OLD BUSINESS: 1) Fiduciary Liability Insurance - Premium paid $10,864.43, no premium Increase with deductible Decreased to $ -0- VII. NEW BUSINESS: A. Invoices for review and approval: 1) Russell Investment Gp — Quarter End 3 -31 -2012 $112,050 2) Russell Payment Services — Quarter End 3 -31 -2012 - $754.30 3) Burgess Chambers & Assoc — First Quarter 2012 - $5,000 4) Perry & Jensen, LLC — Service April 2012 - $1,258.00 B. Annuitant Replacement — Updated benefits for review: 1) Jeff Davis 2) Warren Blum C. Attorney Report — Bonni Jensen 1) Palm Beach Ethics Opinion — Reconsideration of RQO 11 -060 (4- 11 -12) 2) State Law Update — Revisions to Exemptions from Public Records (4- 13 -12) 1 3) Annual Form 1 filing - May 2012 4) State & Tax Law Update — May 2012 D) Class Action Apollo— Claim through inactive account with Salem Trust. *E) Steve Palmquist, GRS — Study of options on Plan termination. VIII. PENSION ADMINISTRATOR'S REPORT 1. Benefits as of May 1, 2012 2. Annual "Alive & Well" Statements to be mailed to all retirees June 2012 IX. COMMENTS: X. ADJOURNMENT: Next Regular Meeting Date — Tuesday, August 14, 2012, @ 9:30 a.m. — Renaissance Commons If you cannot attend, please call Barbara @ 561- 739 -7972 NOTICE IF A PERSON DECIDES TO APPEAL ANY DECISION MADE BY THE POLICE OFFICERS' PENSION BOARD WITH RESPECT TO ANY MATTER CONSIDERED AT THIS MEETING, HE /SHE WILL NEED A RECORD OF THE PROCEEDINGS AND, FOR SUCH PURPOSE, HE/SHE MAY NEED TO ENSURE THAT A VERBATIM RECORD OF THE PROCEEDING IS MADE, WHICH RECORD INCLUDES THE TESTIMONY AND EVIDENCE UPON WHICH THE APPEAL IS TO BE BASED. (F.S 286.0105) THE CITY SHALL FURNISH APPROPRIATE AUXILIARY AIDS AND SERVICES WHERE NECESSARY TO AFFORD AN INDIVIDUAL WITH A DISABILITY AN EQUAL OPPORTUNITY TO PARTICIPATE IN AND ENJOY THE BENEFITS OF A SERVICE, PROGRAM, OR ACTIVITY CONDUCTED BY THE CITY. PLEASE CONTACT CITY CLERK'S OFFICE, (561) 742 -6060 AT LEAST TWENTY -FOUR HOURS PRIOR TO THE PROGRAM OR ACTIVITY IN ORDER FOR THE CITY TO REASONABLY ACCOMMODATE YOUR REQUEST. THE BOARD (COMMITTEE) MAY ONLY CONDUCT PUBLIC BUSINESS AFTER A QUORUM HAS BEEN ESTABLISHED. IF NO QUORUM IS ESTABLISHED WITHIN TWENTY MINUTES OF THE NOTICED START TIME OF THE MEETING THE CITY CLERK OR DESIGNEE WILL SO NOTE THE FAILURE TO ESTABLISH A QUORUM AND THE MEETING SHALL BE CONCLUDED BOARD MEMBERS MAY NOT PARTICIPATE FURTHER EVEN WHEN PURPORTEDLY ACTING IN AN INFORMAL CAPACITY S: \CC \WP\JANET\POLICE PENSION FUND.doc 2 i , MINUTES OF THE BOYNTON BEACH POLICE OFFIC RS' PENSION FUND SPECIAL MEETING HELD ON TUESDAY, APRIL 10, 2012 AT 9 :30 AM IN RENAISSANCE EXECUTIVE SUITES, SUITE 220, CONFERENCE ROOM 1, 1600 GATEWAY BOULEVARD, BOYNTON BEACH, FLORIDA PRESENT: Gary Chapman, Chair Barbara LaDue, Pension Administrator Toby Athol, Secretary Bonni Jensen, Board Attorney Scott Caudell Jason Llopis Frank Ranzie 1. Call to Order — Lt. Gary Chapman, Chairman Chair Chapman called the meeting to order at 9 :32 a.m. 11. Agenda Approval Ms. LaDue distributed a revised agenda. Several items were added, including new invoices and additions under the Attorney Report. Motion Mr. Athol moved to approve the agenda, as amended. Mr. Caudell seconded the motion that unanimously passed. 111. Approval of Minutes The minutes were not available for approval. IV. Financial Reports N/A V. Correspondence N/A VI. Old Business 1) Review asset allocation — Fixed Bond substitution 1 Meeting Minutes Police Officers' Pension Fund Boynton Beach, Florida April 10, 2012 Defensive Equity — Russell Research June 2011 Mr. Harris introduced the concept of defensive equity by explaining there were different ways to taking less risk. It could be accomplished by reduced exposure to risky assets, reduced volatility of risky assets, and increased diversification. This could be applied whether investing passively or actively. Russell had been looking at indexing or benchmarking for the last couple of years. He continued to explain the dimensions of equity style, where the traditional style was, what the familiar style was, and which style was based on the size of the company in terms of cap size and valuation. That would be considered a one - dimensional view. The new style the firm was implementing would look at the indexes and look at the companies within the indexes in a different way. Two terms used are called defensive and dynamic. Defensive companies are typically more stable companies as a utility type stock. Dynamic companies would be relatively less stable, as an airline type stock. One of the differences between the two would be a defensive stock would be less sensitive to market cycles, economic cycles and credit cycles. Defensive companies would have higher retum assets. Volatility would be lower in defensive companies also. He noted if investments were made in the defensive type strategies, there would have been lower market volatility. It was also noted that in 2008, the dynamic investments lost a lot of money. Mr. Harris continued to explain the strategies and risk/retum profiles in greater detail and compared how each performed when the market was up and when the market was down. He commented that Russell was the only firm that was doing the defensive type indexing. Mr. Hams reviewed the twenty -year forecast of the portfolio simulations, as well as the strategic planning assumptions through December, 2011. Chair Chapman commented that he wanted to review the infrastructure side and expressed the long -term objective was to have the ability to pay benefits to numerous people that were just starting on the job and numerous people that were retired. Looking at infrastructure and reducing the risk, he inquired of Mr. Harris, what would be the best combination to suggest to the Board that could be considered for implementation. Would it be a piece of any one of the three types of strategies, in addition to introduction of infrastructure or the traditional asset allocation and investment? The policy range and the strategic allocation would have to be addressed. Mr. Harris advised they all have liquidity. He described it as one giant fund, with exposure to equities, some fixed income, and some real asset products; that was a key focus. It was recommended to have the Board consider developing a new investment policy that would enable one or both of the new strategies to be implemented. The core plus plan may be a better option to investigate. There was discussion on the topic. It was suggested writing something up to present at the next meeting. The Board directed Bonni Jensen to begin the process of updating the asset allocation. 3 Meeting Minutes Police Officers' Pension Fund Boynton Beach, Florida April 10, 2012 start date for the calendar year and it was suggested coordinating this with the City. There was continued discussion on the accrual of time. Different scenarios were presented and discussed. Attorney Jensen indicated that implementing the language she drafted in and of itself would save money in the pension plan. She reviewed the draft with the Board. If the beginning date was to be October 1, 2012, whatever hours were earned on September 30, as long as the amount was cashed in at retirement, up to the 300 hours of overtime could be included in the final average pay. Attorney Jensen advised there were other ways to save money. One would be to look at the accrued benefit on September 30 versus the retirement date. That would be a guaranteed retirement benefit, which would include the lump sum accumulated calculation of the benefit. This calculated benefit would not be as great for the member. Chair Chapman added that once ratification was received, the snapshot of the hours of all the existing employees would have to be determined. Ms. LaDue could get that off the payroll system. Chair Chapman advised he had retirees inquire whether or not they could pay off a DROP loan with 457 revenues. He understood if service was terminated, those monies would be eligible to be received without a tax penalty. Attorney Jensen responded that her understanding would be a withdrawal would have to be taken and then pay off the loan on a post -tax basis. Loan repayments would not be considered plan contributions. Chair Chapman advised a question had arisen regarding section 18.173 rollovers. Could the 457 money be rolled over into the plan, absent the desire to buy time. It would have to be rolled over in to the performance based opportunity and not the fixed, and the employee would have to be a member in order to do this. Attomey Jensen reviewed the section confirming this. If an employee was terminated, they could not rollover funds. 1) Disability Presumptions - Memo - Task Force Report This was a handout and was not discussed. 2) Legislative Update - Memo re: HB 1499 - HB 1499 This was a handout and was not discussed. 5 MINUTES OF THE BOYNTON BEACH POLICE OFFICERS' PENSION FUND 4L MEETING HELD ON TUESDAY, FEBRUARY 14, 2012 AT 9:30 AM IN RENAISSANCE EXECUTIVE SUITES, SUITE 220, CONFERENCE ROOM 1, 1500 GATEWAY BOULEVARD, BOYNTON BEACH, FLORIDA PRESENT: Gary Chapman, Chair Toby Athol, Secretary Jason Llopis Frank Ranzie Barbara LaDue, Pension Administrator Bonni Jensen, Board Attorney ABSENT: Scott Caudell I. Cali to Order — Lt. Gary Chapman, Chairman Chair Chapman called the meeting to order at 9:38 a.m. II. Agenda Approval Ms. LaDue advised she had additions to the agenda. Under New Business she added an actual invoice for Russell Investment Group, and the Harvard Pensions Conference. Under the Attorney Report, Legislative Update HB 1499, and the revised Ethics Opinion were added. Motion Mr. Athol moved to approve the agenda, as amended. Mr. Ranzie seconded the motion that unanimously passed. Chair Chapman congratulated Mr. Ranzie for his nomination and as a Trustee for an additional four years. III. Approval of Minutes — Meeting January 17, 2012 Ms. LaDue advised she had a correction to the minutes. On page four, second paragraph, it should read, °Ms. LaDue commented on the audit report", not 8RAW81. Motion Mr. Ranzie moved to approve the minutes as amended. Mr. Athol seconded the motion that unanimously passed. Meeting Minute-., olice Officers' Pension '- llo rir Boynton Beach, Florida t- ebruary i4, ;W1,6 W, Financial Reports: A) Davidson, Jamieson & Cristini PI . Richarc Cristini ° .IPA & Jeanine Bittinger CPA Audit Report/Financial Statements for PYE 9-30-2011 Richard Cristini began by stating this was their first assignment with the Board and he would be providing a review of a single -year statement He reviewed the standards ano practices for compiling the Auditor's Report Mr. Cristini reviewed the Statement of Plan Net Assets and the Total Receivables for the Contributions of Employer and Broker - dealers, The Employer contributions were deposited the first week of October, and as a result, the money came in on a short -term basis. The DROP loans were a little different in that a member borrowed money from the plan in accordance with the terms of the Plan, and the funds were distributed and tracked as to repayment, but it did not get on the balance sheet. Chair Chapman indicated that was an issue and he spoke to the custodian at State Street and the Frank Russell Company about trying to coordinate the balances and transactions from the custodian. Mr Cristini continued to review the numbers in the net appreciation and depreciation in fair value of investments and advised that the numbers are reflective of the last six months of the year. Those numbers were not great, where the first six month figures were great In response to the inquiry as to where the income was coming from, Mr. Cristini advised it was from realized and unrealized appreciation However, there seemed to be very little income generated from an $18 million bond account the way it was being reported. There was an inquiry as to why it was not being reported differently. Mr. Cristini advised that GASB was reviewing that with the exposure draft for reporting for stand -alone pension plans. This currently is state of the art for reporting realized and unrealized gains. Income is stated in terms of interest and dividends. Some securities were sold at a gain and some at a loss. There was continued discussion and explanation of the funds and their analysis Chair Chapman inquired if it would be the same in a 457 program. Mr. Cristini explained the income was in the realized and unrealized gains. Total investment income minus revenue generated would be funded back into the program based on the state -of- the -art measurement currently used The $15,000 income mentioned previously would be the gain which was realized when the shares of a fund were sold Mr. Cristini continued his presentation discussing deductions which were the benefit payments, disability payments, DROP payments and refunds. The total of those including administrative costs, was $3.9 million and the net increase in assets was Meeting Minutes Police Officers' Pension Fund Boynton Beach, Florida February 14, 2012 $937,000 which was the result of new money coming in for investment not from investment returns in cash. He added that hopefully the last three months and the future would be better in terms of the marketplace. He reminded everyone to keep in mind that these reports are all summarized. For more detail, one should review the actual Plan documents. There was discussion on the DROP plan, loans receivable, activity and balance that was owed to the Plan at the end of the year. There was also explanation on a breakdown of a unit -by -unit based on the loan agreements that each individual would have. If the payments were made on a timely basis, the number showed what would be collected on principal in the next five years, which would become available for investment. Mr. Cristini clarified that some numbers were not comparative because the firm did not perform the audit last year. Next year, all the numbers would be reflected in comparisons. There was brief discussion on international funds and foreign assets versus a U.S. company. Mr. Cristini also explained how the sales tax was corrected for the rent expense. If sales tax were paid, it was reimbursable. Currently the rent expense was split with the Fire Department. The total paid in sales tax amounted to approximately $720.00 and it was decided not to apply for reimbursement for that small amount. (B) Gabriel Roeder Smith & Co — Steve Palmquist & Pete Strong 1) Actuarial Valuation Report for PYE 9 -30 -2011 Steve Palmquist began by reminding everyone that at the last meeting the Board settled on changes in assumptions and those changes would be reflected in this report. He began his report by reviewing the contributions, payments, assumptions and rates of return and what that meant in terms of what the City would pay on October 1, 2012, The City would save money by paying up front, assuming the return is 7.75 %. There was a $400,000 increase that was due mainly to experience loss for the year. In 2011, there was a small negative return of -1 %. The expectation was +8 %. Mr. Palmquist continued to explain that for eleven straight years there had been actuarial losses. He presented a graph that indicated up until year 2000, when adding up the net gains and losses from 1982 to 2000, there was a net gain of close to $5 million. Since that time, there had been eleven straight years of fosses, going from +$5 million to -$22 million, so there were $27 million in experienced losses in that time. The experience through 2000 had made the City costs go down almost 8% of payroll. Since then, from 2000 to present, it went from -$8 million to +$21 million. Because of the experience losses, the City costs have gone up almost 30% of payroll. This was not from changing benefits, it was only from experience losses. In continuing review of the Meeting Minutet, Police Officers Pension Furor Boynton Beach, Florida February 14, 2012 graphs, Mr Palmquist pointed out the return was based on the smoothing method Every one of those years, except one, the return was less than expected. That woulo be a big reason for those losses. However, the salary increases for the past eight out of 111 years exceeded the assumption, including this year. Based on the experience study that was done over the past year, it was decided not to change the salary increase assumption due to the fact that Boynton Beach and most other cities are throwing C)u the pay plan and feeling their way through. If experience over the past I C years was used, the salary increase assumption would have been increased, which Nvouid have made the costs even higher Mr. Palmquist continued by discussing the distribution that was tied to the experience gain or loss, The number of -$36 million meant that until there were actuarial gains with interest that exceed $36 million, money would not be paid out under that provision The discussion continued with the City cost and the percent of payroll. Looking back at the valuation of 10/01/2000, the City cost was approximately 4.5% of payroll That was right after the big gains that were accumulated in the 90s Because of the experience losses to date, the costs had gone up to almost 30% of payroll over the time perioc Mr. Palmquist shared the revenue and expense for the last two years. The investment income was over $4.5 million in 2010 and -$399,000 this year. He explained that the total expenses would be calculated as investment expenses plus other administrative expenses, adding that number and dividing by assets, it would be about 1.08%. Usually with funds this size, the total would be a little less than 100 basis points as was Iasi year In 2011, the actual return was -$300,000, the expected was $4.3 million. The difference of -$4.7 million was split into five pieces. One-fifth would be $942,000 with the same split in the next four years There was discussion on the interpretation of what the figures meant to the costs, There was discussion on the funded ratio. This year it was 54.8%. It would have been approximately one point higher had the assumptions not been changed this year, The experience loss of $4.5 million came mostly from investments, but partially from salary increases. The accrued liability and assets caused the funded ratio to decrease this year. In 2000, almost every plan was over 100% In discussing the DROP account, 7% was being paid on the account. The fund return was zero. Because the $347,000 was credited to DROP accounts, when the actual return was -.6%, that contributed to the actuarial loss as well. In years when the return exceeded 7%, it would have an opposite effect. There was discussion regarding the percentages, contributions, and returns in previous years compared to this year Meeting Minutes Police Officers' Pension Fund Boynton Beach, Florida February 14, 2012 (C) Quarterly Investment Review for December 31, 2011 1) Russell Investment Group — Glenn Harris, Client Executive — Portfolio Review Glenn Harris, Client Executive, Russell Investment Group advised the fourth quarter was very good, similar to the first two quarters of the year. All the funds outperformed their benchmarks, with the exception of one. However, the fourth quarter still was not enough to make up for what happened in the third quarter. The third quarter was one of the worst quarters on record, worse than the financial crisis of 2008. There were positive things happening, especially in the United States. GDP growth had stabilized in the last couple of years, unemployment had been gradually coming down, there had been work -out arrangements for the housing crisis and this was a presidential election year. All of this would bring positive news. However, on the down side, there was a big fear of what would happen in the euro zone. In the last couple of months, the market had been doing well. Much of that was due to the euro zone looking to work out some issues. Mr. Harris explained a chart that showed all euro zones maturing in 2012. This would make good opportunities to invest in the U.S. Mr. Harris indicated that investments were still pretty good. All indexes were positive for the fourth quarter. However, there still was mixed results. Some of the riskier assets like emerging markets, investments outside of the U.S., and small cap stocks were down for the full year, because of what happened in the third quarter. There would not be any drastic changes in the portfolios this year. There was discussion regarding different strategies and products available and the possible outcomes of those strategies. Mr. Harris discussed whether there were other Russell products available to help bring down risk and how to diversify further. One of the key areas to discuss would be to look at the U.S. equity allocation. Generally, that would be one of the largest percentages of the overall portfolio. One thing Russell had been exploring was a product in between all active, which was what was currently used, and a passive option. Russell had been looking at indexes that are now called Stability Indexes, labeled as defensive and dynamic. They were more cap weighted. Things to consider when looking at the Russell 1000 index were the companies that made it up, the characteristics of those underlying companies in the index, and everything from return on assets, return on equity, price to book, and price to earnings. The next step would be to find the more stable companies that were in good financial shape and put more weight to those and less to those that are not as stable. This would be more of an index type strategy. There was further discussion on this and other strategies and if changing strategies would be better for a higher return. Chair Chapman advised that a special meeting would be set up in April to discuss this topic. 5 Meeting Mlnurtw� 'olice Officers Pension P unT, Boynton Beach, Florida February 14, 2012 Mr Harris advised possibly removing the Concentrated Equity Plan or bringing ii oown more and adding the defensive strategy discussed earlier. Defensive strategy woulo help in down markets, and could also help from a fee standpoint. The more added, the more expense would be incurred The goal would be to keep the expenses down There would be no reason to keep two large cap equity funds that had very similar strategies. Concentrated may offer more in the long run, but the Equity plan did better and was more stable. Mr. Harris reviewed the items discussed that he would be bringing up at the special meeting which was decided to be held on Tuesday, April 10th The last item Mr. Harris wanted to review was the non -U.S. funds, which included the International Fund, the Emerging Markets, AIM, and World Equity. Those funds were benchmarked to Russell benchmarks. As in the Equity One concentrated side, the Russell One was used On the small cap side, the Russell Two was used. On the International Funds, the funds had been benchmarked to Russell for well over a year, effective since January, 20V It was believed Russell had more transparency than NSCI, more exposure in terms of investable universe, and could cover more countries Mr Harris compared several items to NSCI Motion Mr. Athol moved to execute the revised investment policy, adding the new Russell non - U.S. equity benchmark. The motion was seconded by Mr. Ranzie and unanimously passed. 2) Burgess Chambers & Associates (BCA) — Burgess Chambers, President (a) Fund Performance Review Burgess Chambers, President of Burgess Chambers & Associates, expressed his concern with the lack of transparency with respect to income. He advised the State of Florida was gearing up with resources to review the plans. Attorney Jensen would speak about the state's position about similar plans below 80% Looking at the big picture, this plan was turning around. Mr. Chambers felt most of the products were working out fairly well. There was a modest allocation of commodities that began last year. The decision by the Board to get involved in that asset class gingerly was smart For the one year period, approximately 10% was lost. Mr Chambers continued by stating the last three year rankings were very good. The five year ranking was not good but most of the changes were marked in the years that were good. This was a differem universe than a year ago. That was the universe that was being subscribed to that was a much more difficult universe to do well in if was compiled by the Bank at NY Mellon Meeting Minutes Police Officers' Pension Fund Boynton Beach, Florida February 14, 2012 and its exclusively defined benefit pension systems around the country. The prior program, also subscribed to, was not specific to defined benefit. All in all, it was all getting better. 3) Financial Statements — For review, Oct, Nov, and Dec 2011 Motion Mr. Athol moved to pay the invoices. Mr. Ranzie seconded the motion that unanimously passed. V. Correspondence: NIA VI. Old Business: NIA VII. New Business: (A) Invoices for review and approval: 1) Russell Investment Grp — Quarter End 12 -31 -2011 - $105,307.00 2) Russell Payment Services — Quarter End 12 -31 -2011 - $842.15 3) Burgess Chambers & Assoc — Fourth Quarter 2011 - $5,000 4) Gabriel Roeder Smith & Co — Service 10 -31 -2011 - $9223.00 5) Perry & Jensen, LLC — Service Nov /Dec 2011 & Jan 2012 - $1,626.03 6) Ellen Schaffer — Annual Maintenance Jan 2012 - $1,650.00 7) Davidson, Jamieson & Cristini — Audit Progress Billing - $5,000 (B) Fiduciary Liability Renewal 4 -10- 2012/4 -10 -2013 — Review and approval of payment Motion Mr. Athol moved to renew the Fiduciary Liability Renewal. Mr. Ranzie seconded the motion that unanimously passed. (C) Attorney Report — Bonni Jensen 1) Palm Beach county Ethics Opinion dated 12 -12 -1011 Ms. Jensen provided a copy of the ethics opinion. She mentioned that in State reporting, a state report would only have to be filed for gifts. There was a quarterly reporting requirement under the State statute. If a gift was received during the quarter 7 Meeting Minats� "olice Officers '�-ensior� V unt Boynton Beach, Florida 1�ebruary "14, 201k that was worth, more than $100 and was allowed to be accepted. At nac to ue reporteo In Palm Beach County, a form would not only have to be filed with the State of Florida, but locally as weli 7o clear up confusion, Attorney Jensen stated, for an example, that if hosting a dinner the cost of the entire dinner divided by the number ut people invited not by the people attending would determine the value Those are the State rule! 'he, County rules are tougher Legislative Update 1­161499 Attorney Jensen advised HB1499 was filed late. The State allowed it to be filed on January 18 and all the bills were due on January 10 Nothing had happened on the bill since January 19 To summarize, the Bill required an actuarial evaluation even two years. It established a pension loss list The bill was intended to flag plans that were less than 80% funded. Those would have to self report to the Division of Management Services Once on that list, benefits could not be improved. The Board the City and the Union would have to get together and provide a strategy to improve the fund up to 80 %. Strategy could be puting more money in the plan, reducing benefits or some other strategy that would increase the fund. If a plan was not developed within 90 days, mediation would be required. If a plan was not developed in 180 days, the point of financial urgency would be reached. This goes in line with collective bargaining. The implementation of the next strategy would be at the beginning of the next collective bargaining session. If for some reason the status of the funding was not improved within three years of the watch list, it would be placed under 447, which would be the State instructing how the fund would be looked at. There was discussion and Attorney Jensen advised nothing had been implemented yet. She would send something at the end of the legislative session should this pass. �3 `1 Disability Task Force The Disability Tax Force concluded and issued a report that came up with 29 different recommendations. None of them applied. The one thing of interest was that municipalities should have a wellness program. This was probably targeted more to the Workers' Compensation process than the pension issues. They concluded that disability presumption diseases cost more money in fees and claims than the typical Workers' Compensation claim All of the legislation put in HB365 dealing with the presumptions are gone now. The only piece that was still active was that if the parties agreed to pension benefit changes, they are deemed to be in compliance with 175 anc 185. ;4? Revised Ethics Opinion The letter was attached to the back -up Board packet Meeting Minutes Police Officers' Pension Fund Boynton Beach, Florida February 14, 2012 (D) Harvard Pensions Conference Motion Mr. Athol moved to approve two people to attend. Mr. Ranzie seconded the motion that unanimously passed. Vil. Pension Administrator's Report: 1) Benefits as of February 1, 2012 IX. Comments: None. X. Adjournment There being no further business to discuss, Chair Chapman adjourned the meeting at 12:42 p.m. Next regular meeting date — Tuesday, May 8, 2012 at 9:30 a.m. Ellie Caruso Recording Secretary 0 YOU ARE INVITED th to the ` 5 ANNUAL REUNION. of Former and Retired Members of the i J Boynton Beach P.D. o o� When Saturday, November 3, 2012 6:00 PM to ? -0 Where Boynton Beach Gold Coast Lodge # 49, Miner Road Between Congress Avenue and High Ridge Road Accommodations A special rate of $79.00 per night has been negotiated at the Boynton Beach Courtyard by Marriott, located at 1601 N. Congress Avenue For reservations please call (866) 733 -8554 and request the Boynton Beach Police rate Rate Good for Friday - Saturday- Sunday To guarantee this rate rooms must be reserved on or before Friday, October 12, 2012 Bring your spouse — Invite a friend! O RSVP 0 O o Chief Tom Dettman or Chief Chris Vannuzzi 863- 381 -1141 561 -369 -1950 $20.00 pre -pad Donation $25.00 Donation at the door Covers all food and drinks! Please fore and ) our donation to Tom Dettman, c/o Sebring Police Department 307 North Ridgewood Drive, Sebring, FL 33870 me meet the current members and staff of the B SrD and Lodge # _ j W -___ - 400- H / U.S. Specialty Insurance Company C Houston, Texas DECLARATIONS CORPORATE FIDUCIARY LIABILITY INSURANCE (THIS IS A CLAIMS MADE AND REPORTED POLICY) Broker: 167091 Policy Number: U712 -50977 Trustee and Fiduciary insurance Services, Inc Renewal of: U711 -50709 Item 1 EMPLOYEE BENEFIT PLANS: Any Plan of the SPONSOR ORGANIZATION Listed in item 2 as Defined in Section 3(1) of ER1SA; any INSURED PLAN and any Plan Listed by Endorsement to this Policy. Item 2 SPONSOR ORGANIZATION: Item 3 Address of SPONSOR ORGANIZATION: City of Boynton Beach 1500 Gateway Boulevard, Suite 220 Boynton Beach,FL 33426 Item 4 POLICY PERIOD: Inception Date: April 10, 2012 Expiration Date: April 10, 2013 12:01 a.m. Standard Time at the Principal Address of the SPONSOR ORGANIZATION herein. Item 5 Limit of Liability: $ 2,000,000 Each CLAIM and in the Aggregate for all CLAIMS including DEFENSE COSTS. Item 6 Deductible: Item 7 Premium: Recourse Premium FL FHCF Surcharge Total Premium $0 Each CLAIM including DEFENSE COSTS. $ 10,600.00 $ 125.00 $ 139.43 $ 10,864 43 Item 8 Form numbers of endorsements attached at issuance: FL0002 ,ETRIA, FL0005, FL0006, FL0007, FL0010, FL0011, FL0018, FL0044, FL2006, FL2010, FL2014 ■ e AulMxiird Rry�rn.M.fivc Invoice Invoice for: City of Boynton Beach Police Retire Fund Ms Barbara S LaDue Pension Administrator ladueb @bbpdpension.com 1500 Gateway Blvd #220 Boynton Beach, FL 33426 Mail to: City of Boynton Beach Police Retire Fund Ms Barbara S LaDue Pension Administrator ladueb @bbpdpension com 1500 Gateway Blvd #220 Boynton Beach, FL 33426 Irillrrrllrrlrrlrrlrlrllrrr +loll Invoice Number Russell Client ID Billing Period Ending 21604 C046160O1 03/3112012 Invoice Date Payment Terms Total Amount Due 04116/2012 Net 30 Days $ 112,050.00 Specify Remittance Information ❑ Payment by check Make check payable to Russell Investments Check Amount $ ❑ Request payment by Direct Debit Authorized Signer See additional instructions on reverse side Please return upper portion with your check or direct debit request ,-6„ fmi - - nn n cummnni of vniir nnrniintk) For mnre information. please review the enclosed detail Invoice for: City of Boynton Beach Police Retire Fund Ms Barbara S LaDue Pension Administrator ladueb @bbpdpension com 1500 Gateway Blvd #220 Boynton Beach, FL 33426 (See reverse side for additional information) Direct Debit per Description of Service Fee Amount Standing Instructions or Amount Due Pa ments Received Russell Investments Investment Management Fees $ 112,050.00 $000 $ 112,050.00 Current Period Fees $ 112,050.00 $ 0.00 $ 112,050.00 Balance Forward 105,307 00 (105,307.00) 0.00 Total Amount Due $ 112,050.00 Invoice Number Invoice Date Russell Client ID Payment Terms Billing Period Ending 21604 04/16/2012 C04616001 Net 30 Days 03/31/2012 Current Period Over 30 Days Over 60 Days Over 90 Days Total Amount Due $ 112,050.00 $ 0.00 $ 0.00 $ 0.00 $ 112,050.00 Invoice for: City of Boynton Beach Police Retire Fund Ms Barbara S LaDue Pension Administrator ladueb @bbpdpension com 1500 Gateway Blvd #220 Boynton Beach, FL 33426 (See reverse side for additional information) Invoice Invoice Number 21604 Billing Period Ending 03/31/2012 Russell Investments - FEE DETAIL Investment Management Fees City of Boynton Beach Police Retirement Fund Boynton Beach Police Officers Retirement Trust Funds Investment Account Account Number QU7W Fund Name Average Rate% Fee Amount Market Value Russell Concentrated Equity Fund 5,064,281 020250 10,255 00 Russell All International 6,242,955 020250 12,642 00 Markets Fund Russell Equity I Fund 10,745,295 020250 21,759 00 Russell Multi- Manager Bond Fund 21,070,528 020250 42,668 00 Russell Real Estate Equity Fund 2,535,182 020250 5,13400 Russell Commodities Fund 1,115,345 020250 2,25900 Russell Global Real Estate Securities 1,881,233 020250 3,80900 Fund Russell Short-Term Investment Fund 5,865 020250 1200 Russell Small Cap Fund 5,055,433 020250 10,237 00 Russell World Equity Fund 6,3 12,1 9 1 020250 12,7 00 Subtotal 60,028,308 $121,55700 Russell Real Estate Equity Fund - Internal Fee Paid (9,507 00) Account Total $ 112,050.00 Total Investment Management Fees $ 112,050.00 Page 2 (� Russell Investments Russell Trust Company Payment Instructions F 1 N 91- 1116938 Instructions to request payment by direct debit TO HAVE FEES DEDUCTED FROM THE ACCOUNT THAT GENERATED THE FEES: 1 Check the box labelled "Requested payment by Direct Debit" on the front of the remittance stub 2 Sign on the "Authorized Signer" line on the front of the remittance stub 3 Return the remittance stub to Russell Investments via fax to 800 - 253 -2929 TO HAVE FEES DEDUCTED FROM OTHER ACCOUNTS: 1 Check the box labeled "Request payment by Direct Debit" on the front of the remittance stub 2 Sign on the "Authorized Signer' line on the front of the remittance stub 3 Complete the table (below) indicating the account numbers and applicable deduction amounts 4 Return the remittance stub and table to Russell Investments via fax to 800 - 253 -2929 Instructions for payment by check 1 Make check payable to Russell Investments 2 Return check and remittance stub to Russell Investments If , NW 6327 PO BOX 1450 Minneapolis, MN 55485 -6327 Instructions for payment by wire • Currency USD • Bank Wells Fargo, WA • Bank# WFBIUS6S / 121000248 • Account Name Russell Trust Company • Account #. 4122004021 Please reference Client name and invoice number For billing inquiries regarding Russell Investments services, Call Your Account Executive at 800 -455 -3782 Write Your Account Executive 1301 Second Ave, 18th Floor Seattle, WA 98101 -3800 Account Number Amount Russell investments MANAGER 4525 - - INVOICE NO. 1203074706 -9997 NW 6327 DATE 2012/04/26 PO BOX 1450 PAGE 1 OF 1 Minneapolis, MN 55485 -6327 US TOTAL CHARGES CURRENT PERIOD USD 754 30 9BYM - Police Officer Retirement Trust Police Officer Retirement Trust FOR 3 MONTH PERIOD 1/01/12 to 3/31/12 City of Boynton Beach DB Boynton Police 6 Fire Pension Fnds, 1500 Gateway Blvd,Suite #220Account ID• BOYNTON POLICE Pension Administrator Pay Type 3 Boynton Beach, FL 33426 ATTENTION Barbara L. Ladue PLEASE DETACH THIS PORTION AND RETURN WITH YOUR PAYMENT I CHARGES 1 BENEFIT PAYMENT CHECK FEES ACH Benefit Payments 275 AT 1.25 343.75 Benefit Payments 12 AT 1.25 15.00 Lump Sum Payments 9 AT 10.00 90.00 BENEFIT PAYMENT. OTHER FEES Pensioners Added 3 AT 0.50 1.50 State Tax Filing 5 AT 25.00 125.00 ** SUBTOTAL FEES ** 575.25 OUT OF POCKET CHARGES POSTAGE Advice of Deposit 143.00 Benefit Payment 6.24 Lump Sum 4.68 Confirmation Letters 1.04 UPS DELIVERY UPS CHARGES 12/30/2011 11.06 UPS CHARGES 01/30/2012 6.56 UPS charges 02/24/2012 6.47 24.09 ** SUBTOTAL OUT OF POCKET ** 179.05 CURRENT CHARGES USD INV.# 1203074706 -9997 9BYM - Police Officer Retirement Trust 2012/04/26 THE LAW OFFICES OF PERRY & JENSEN LLC ANN H. PERRY aperry@perryjensenlaw.com April 16, 2012 Via Email Boynton Beach Police Pension Fund Sgt Gary Chapman, Chairman 100 East Boynton Beach Boulevard Boynton Beach, FL 33425 BONNI SPATARA JENSEN bsjensen @perrylensenlaw.com Re: Legal Services Provided Invoice #71002 Dear Gary: Enclosed please find the Firm's invoice for services rendered for the period that ended 4/15/2012. Your current balance due is69f-9`A- ✓� If you have any questions, please do not hesitate to contact me. Sincerely yours, Bonni S. Jensen Signed in Ms. Jensen's absence to expedite delivery BSJIIg Enclosure Copy to: Barbara LaDue Via Email Only 400 EXECUTIVE CENTER DRIVE, SUITE 207•: WEST PALM BEACH FLORIDA 33401 -2922 PH: 561.686.6550 •:• Fx: 561.686.2802 - .rtftw. THE LAW OFFICES OF PERRY & JENSEN, LLC 400 Executive Center Drive Suite 207 West Palm Beach, FL 33401 -2922 Invoice submitted to: Boynton Beach Police Pension ATTN: Gary Chapman, Chairman - via email 100 E. Boynton Beach Blvd. Boynton Beach, FL 33425 Copy to Barbara LaDue - Via Email April 16, 2012 In Reference To. FOR PROFESSIONAL SERVICES RENDERED AS FOLLOWS: Client/ File No.: 0188 Invoice #71002 Professional Services Attendance at Trustee Meetings Attendance at Trustee Meetings 4/10/2012 BSJ Attend Meeting Attendance at Trustee Meetings Attendance at Trustee Meetings PH Review Post Meeting Folder Attendance at Trustee Meetings SUBTOTAL: Commission on Ethics Commission on Ethics 4/11/2012 BSJ Draft Memorandum re: Clarification of Opinion 11 -060 Commission on Ethics Commission on Ethics 4/12/2012 PH E -mail to Board of Trustees & Administrators re: Memorandum on Clarification of Opinion 11 -060 Commission on Ethics Hrs /Rate Amount 3.00 600.00 200.00 /hr 0.30 22.50 75.00 /hr 3.30 622.501 0.25 50.00 200.00 /hr 0.10 7.50 75.00 /hr Boynton Beach Police Pension SUBTOTAL DROP DROP 4/9/2012 BSJ Research Loan Repayments Review IRC Provisions on Loans Research Rollovers as repayment vehicles Research Pre Tax Plan Repayments DROP SUBTOTAL: Inv Mqr - Frank Russell Inv Mgr - Frank Russell 4/10/2012 BSJ Review Infrastructure List Inv Mgr - Frank Russell SUBTOTAL: Meeting Notices and Agendas Meeting Notices and Agendas 4/612012 PH Prepare Attorney Report, Handouts, and Notebook for upcoming Meeting - 4/10/12 Meeting Notices and Agendas SUBTOTAL: Miscellaneous Matters Miscellaneous Matters 4/11/2012 BSJ Draft Memorandum re: HB 629 Review and revise Confidentiality Form Miscellaneous Matters Miscellaneous Matters 4/13/2012 PH E -mail to Board of Trustees & Administrators re: Memorandum on HB 629 & Confidentiality Form Miscellaneous Matters Page 2 Hrs /Rate Amount [ 0.35 57.50] 1 00 200.00 200.00 /hr [ 1.00 200.001 0.10 20.00 200.00 /hr [ 0.10 20.001 1.50 112.50 75.00 /hr [ 1.50 112.501 0.35 70.00 200 00 /hr 0.10 7.50 75.00 /hr Boynton Beach Police Pension SUBTOTAL: Plan Document Plan Document 4/9/2012 BSJ Draft Language re: Chapter 2011 -216 Florida Statutes (SB 1128) Review Plan Document on AM Legal Plan Document SUBTOTAL: For professional services rendered Additional Charges Bill File 4/15/2012 Copy Charges SUBTOTAL: Total additional charges For professional services rendered Total amount of this bill Previous balance Balance due Page 3 Hrs /Rate Amount [ 045 77.50) 075 150.00 200.00 /hr [ 0.75 150.00] 7.45 $1,240.00 fit:IIIZ; [ 18.00] $18.00 7.45 $1,258.00 $1,433.70 Gabriel Roeder Smith & Company One East Broward Blvd 954 527 1616 phone GRS� Consultants & Actuaries Suite 505 954 525.0083 fax Ft Lauderdale, FL 33301 -1804 www gabnelroeder corn April 17, 2012 CONFIDENTIAL Ms. Barbara LaDue Pension Administrator Boynton Police & Fire Pension Funds Renaissance Executive Suites 1500 Gateway Blvd., #220 Boynton Beach, Florida 33426 Re: Boynton Beach Police Retirement System Dear Barbara: � r As requested, we have determined the updated benefit amount for Jeff Davis based on a new beneficiary selection. Mr. Davis is currently receiving $1,430.61 as a monthly 100% Joint and Survivor Annuity based on his original beneficiary, Teri Renee Davis, whose date of birth is December 16, 1958. Mr. Davis has applied to change the beneficiary of his pension benefit to Alice Cokefair Davis whose date of birth is July 4, 1956. The updated monthly 100% Joint and Survivor Annuity reflecting his new beneficiary selection is $1,415.14, effective with his June 1, 2012 pension check. The actuarial equivalence assumptions used to compute optional forms were an 8.0% annual rate of return, and the 1983 GA Mortality Table blending 80% male rates and 20% female rates. We welcome your questions and comments. Sincerely yours, - J. Stephen Palmquist, SA Senior Consultant and Actuary JSP /ib Circular 230 Notice: Pursuant to regulations issued by the IRS, to the extent this communication (or any attachment) concerns tax matters, it is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax - related penalties under the Internal Revenue Code or (ii) marketing or recommending to another party any tax - related matter addressed within. Each taxpayer should seek advice based on the individual's circumstances from an independent tax advisor. This communication shall not be construed to provide tax advice, legal advice or investment advice. Gabriel Roeder Smith & Company One East Broward Blvd 9.54 527 1616 phone GRS ( onsultants & Actuaries Suite 505 954 525 0083 fax Ft Lauderdale, FL 33301 -1804 www gabrielroeder com May 4, 2012 CONFIDENTIAL Ms. Barbara LaDue Pension Administrator Boynton Police & Fire Pension Funds Renaissance Executive Suites 1500 Gateway Blvd., #220 Boynton Beach, Florida 33426 Re. Boynton Beach Police Retirement System Dear Barbara: As requested, we have determined the updated benefit amount for Warren Blum based on a new beneficiary selection. Mr. Blum is currently receiving $714.47 as a monthly 100% Joint and Last Survivor Annuity based on his original beneficiary, Jacqueline Blum, whose date of birth is May 20, 1961. Mr. Davis has applied to change the beneficiary of his pension benefit to Laureen Blum whose date of birth is May 1, 1956. The updated monthly 100% Joint and Last Survivor Annuity reflecting his new beneficiary selection is $714.47, effective with his June 1, 2012 pension check. The actuarial equivalence assumptions used to compute optional forms were an 8.0% annual rate of return, and the 1983 GA Mortality Table blending 80% male rates and 20% female rates. We welcome your questions and comments. Sincerely yours, J. Stephen Palmquist, ASA Senior Consultant and Actuary JSPhb Circular 230 Notice: Pursuant to regulations issued by the IRS, to the extent tlus communication (or any attachment) concerns tax matters, it is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax - related penalties under the Internal Revenue Code or (ii) marketing or recommending to another party any tax - related matter addressed within. Each taxpayer should seek advice based on the individual's circumstances from an independent tax advisor. This communication shall not be construed to provide tax advice, legal advice or investment advice. THE LAW OFFICES OF PERRY &JENSEN LLC ANN H. PERRY BONNI SPATARA JENSEN aperry@perryjensenlaw.com bsjensen @perryjensenlaw com MEMORANDUM To: Board of Trustees Boynton Beach Police Officers' Pension Fund From: Bonni S. Jensen �9% Subject: Palm Beach County Ethics Opinion - Reconsideration of RQO 11 -060 Date: April 11, 2012 Attached is the Palm Beach County Commission on Ethics ( "PBC Commission ") Opinion clarification of RQO 11 -060 regarding pension trustees. Also enclosed is a copy of RQO 11 -060. In response to a request from the Boca Police and Firefighters Retirement System Board of Trustees, the letter clarifies 5 issues related to Pension Fund Trustees: • Appointed Pension Trustees are "officials" under the Palm Beach County Ethics Law. • Financial misuse of office provisions apply only to the misuse of office and do not affect the mere status of a relationship between a Trustee and a person or entity enumerated in the law. • The prohibited contractual relationships provisions address contracts between the municipality and an "official" in an outside business or employer capacity. Thus, a volunteer trustee is not prohibited from having dealings with a city or county vendor. • Provisions prohibiting the acceptance of travel expenses may be waived by the governing body. • The prohibition against soliciting or accepting gifts from vendors only applies to advisory board members. The appointed Trustees who are officials are volunteer officials and are not advisory board members. However, these Board members must still follow state law reporting requirements of Form 9 and file the Form 9 with the PBC Commission. The letter does not address the situation, but I also believe that "officials" who are volunteer officials need to apply the $100 per year per vendor requirement to gifts from vendors or lobbyists of the municipality or county. 400 EXECUTIVE CENTER DRIVE, SUITE 207-t. WEST PALM BEACH FLORIDA 33401 -2922 PH: 561.686.6550 •: Fx: 561.686.2802 m N '..f fOtlfbin SN Board of Trusiee!. Boynton Beach Police Officers Pension I un(a Palm Beach County Ethics Opinio=n Reconsideratior, of PQ( -06("' April 11, 2012 These clarifications apply only to non-employee Trustees Please add this item for discussion to your next meeting agenda. If you have anv questions in the meantime, please contact me H,1A11 Miscellaneous\ALL BOAR DS\2012\Letter to Robert Sugarman 3-26-12 memo wpo r 9 ,1O Commissioners �i Manuel Farach, Chair Palm Beach County Rollin N. Fiore, Vice Chair �N Edward Rodgers C om,mission on Ethics Ronald E. Harbison z t!: Daniel T. Galo oW �O ACTL March 26, 2012 Robert Sugarman, Esquire Sugarman & Susskind 100 Miracle Mile, Suite 300 Coral Gables, FL 33134 Executive Director Alan S. Johnson Re: City of Boca Raton Police & Firefighters' Retirement System Request for Reconsideration on Ethics Opinion - RQO 11 -060 Dear Mr. Sugarman, I am in receipt of your letter of March 15, 2012 regarding the above Commission on Ethics decision. In general terms, I would like to respond to a few of the legal interpretations you submitted for COE review. First, regarding the status of appointed trustees, the §2 -442 definition of official is as follows: Official or employee means any official or employee of the county or the municipalities located within the county, whether paid or unpaigi, The term "employee'; includes but, is not limited to all ,managers, department head5 personnel of.the county or the municipafitle's located within'the county. The term also includes contract' personnel and contract administrators, performing a govern merit function, and chief executive officer who is . not part of the local governing body. The term "officiail" shall mean members of the board of county commissioners, a mayor, members of local municipal governing bodies, and members appointed by the board of county commissioners, members of local municipal governing bodies or mayors or chief executive officers that are not members of local municipal governing body, as applicable, to serve on any advisory, quasi Judicial, or any other board of the county, state, or any other regional, local, municipal, or corporate entity. (emphasis added) The term "official" is not limited to elected officials. Any person appointed by a municipal body "to serve on any board of the county, state, or any other regional, local, municipal, or corporate entity" Is an official as defined by the code. As indicated In RQO 11 -060, your Trustees are appointed by a municipal governing body: Second, the code provisions dealing with financial misuse of office only apply to misuse of the position. If an official has a conflict as described in §2- 443(a)(b) or (c), it is the use of their position that triggers a code violation. An official may not use their official position to benefit certain enumerated persons or entities. If it involves an issue coming before the board, an official must abstain and not participate. The mere status of a relationship with no official action does not trigger anything under these sections. Third, §24430), the code provision dealing with prohibited contractual relationships, deals with an official who has contracts with the municipality he or she serves, directly or through their outside business or employer. it does not encompass relationships with customers or,cli.ents of the official who may have contracts with the municipality. It is true that some exceptions and waivers under this provision apply to advisory board members only and may be significant to your clients. 2633 Vista Parkway, West Palm Beach, FL 33411 561.233.0724 FAX: 561.233.0735 Hotline: 877.766.5920 E -mail: ethics ®palmbeachcountyethics.com Website: palmbeachcountyethics.com Fourth, §2- 443(f) prohibitions regarding accepting travei expenses from vendors or lobbyists of th i anicipality may be waived by the governing bode This section applies .o official and by extensior ,, ,�dvisor� boarr members Lastly, regarding the gift law, the vendor /lobbyist prohibition in §2- 444(b) against soliciting or accepting a gift valued at more than $100, annually in the aggregate, only applies to advisory board members soliciting accepting gifts from vendors or lobbyists who lobby their board or the department under the board's authority The code does not extend this prohibition to volunteer officials who a�e not advisory board members ,N-ile tr,. may have been an oversight In drafting, the language of the code is clew Likewise, under §2- 444(c), no advisor, board member may knowingly solicit a gift of any value from a vendor or lobbyist who lobbies his or her board or the municipal department subject to the board's authority if the gift is for the personal benefit of the board member, his or her family or another board member Again, this prohibition does not apply to volunteer official who are not advisory board members The gift law reporting requirements exclude state reporting individuals as per §2- 444(f)(1) btate reporting individuals must comply with state law and the code only requires a copy of the state form be sent to the COE fact, the state reporting requirements are more stringent than the code provisions, applicable to non state reporting individuals, which contain numerous exclusions not afforded to state reporting persons s rrr- understanding that your clients are state reporting individuals. Insofar as your request for reconsideration of RQO 11 -060, specifically the issue of whether the Board of Trustees is an advisory board, the matter will be placed on the May agenda for discussion On the one hand, §175.061(4)(Florida Statutes) states that the Board of Trustees shall be a legal entity with, in addition, to other powers and responsibilities contained herein, the power to bring and defend lawsuits of every kind, nature ono description. Of additional significance, the municipality does not share vendors, supplies, staff or pay employees o' the pension plans. Pension plan employees are not eligible for City benefits such as the retirement system of health insurance. In this context, the pension board is a separate entity and not sufficiently connected to the Cite to constitute an advisory board as defined in §2 -442 of the Palm Beach County Code of Ethics. On the other hand, as you pointed out in your letter request, it Is established by municipal ordinance, as defined is §175.032, Florida Statutes. Nevertheless, while established by municipal ordinance, these entities are created b4 state statute and while local law plans are not required to follow the uniform requirements established in chapters 175 and 185, they must at the very least meet the minimum benefits and standards as provided by state law As you requested, this issue will be placed before the COE for reconsideration on May 3, 2012 in the meantime, welcome any additional input from you on this issue As always, should you have any further questions o, concer feel free to contact me Ian S hnson, uecu e Director A51/gal 2633 Vista Parkway, West Palm Beach, FL 33411 561.233.0724 FAX: 561.233.0735 Hotline: 877,766.5920 E -mail: ethics @palmbeachcountyethics.com wo- haite. inn ImhParhrn-lintvPthirc nnm 9* IEecs September 6, 2011 Bob Sugarman, Esquire Sugarman & Susskind 100 Miracle Mile, Suite 300 Coral Gables, FL 33134 Re: RQO11 -060 Gift Law /Travel Expenses Dear Mr. Sugarman, Executive Director Alan S. Johnson The Palm Beach County Commission on Ethics (COE) considered your request for an advisory opinion, and rendered its opinion at a public meeting on September 1, 2011. YOU ASKED in your submission dated July 18, 2011 whether Trustees of the City of Boca Raton Police and Firefighters' Retirement System (BRPFRS) are subject to the jurisdiction of the Palm Beach County Commission on Ethics and Code of Ethics. To the extent that trustees are subject to the code, what are their duties and responsibilities regarding BRPFRS related seminars and conferences? IN SUM, while the BRPFRS Is not an "advisory board" as defined under the Code of Ethics, trustees appointed by the Boca Raton City Council are considered "officials." Five of the S BRPFRS Trustees are employees of Boca Raton. Their decisions impact the city budget and they are paid a city salary while engaged in BRPFRS activities during working hours. Therefore, the Commission on Ethics finds there to be sufficient nexus between a trustee's public employment and the BRPFRS to place them, as public employees, within the jurisdiction of the sections of the Code of Ethics dealing specifically with financial and corrupt misuse of office issues. For trustees who are either "officials" (appointed by the Boca Raton City Council) or public employees (elected by fellow employees), code sections involving acceptance of travel expenses apply only where the travel expenses or gifts involve vendors, contractors, bidders, proposers, service providers who do business with the City of Boca Raton. Likewise, the $100 gift limitation involving the solicitation or acceptance of gifts only applies to vendors or lobbyists who lobby, sell or lease to the City. These regulations do not extend to those doing business exclusively with the BRPFRS, which is not a board created by the City. However, any non - prohibited gift accepted by a City of Boca Raton employee or official in excess of $100 is reportable pursuant to the annual reporting requirements of the Code of Ethics. Lastly, no gift of any value may be accepted by a trustee who is a public official or public employee in exchange for the performance or non - performance of an official act or legal duty. THE FACTS as we understand them are as follows: Comndssioners � Edward Rodgers, Chair � Palm-- Bach County Manuel Farach, Vice Chair Robin N. Fiore onald E. C ommission ®n E thics RBnice E. Harbison 2633 Vista Parkway, West Palm Beach, FL 33411 561.233.0724 FAX: 561.233.0735 Hotline: 877.766.5920 E -mail: ethics @palmbeachcountyethics.com Website: palmbeachcountyethics.com The City of Boca Raton Police and Firefighters' Retirement System (BRPFRS) was established by Chapte 12, Article IV of the Boca Raton Code and Chapters 1.75 anc 185 (.tf the Florida statutes, ,c proviG� retirement benefits to the police officers and firefighters emploved by and retired from ;he City of Boc= Raton (the City). Eight trustees serve the BRPFRS; `our are city residents appointeo by he C'm count and four are city employees (two police officers and two firefighters) who are elected by their -, workers. Currently, five of the trustees are city employees section 112.661(4), clorida Statute: requires trustees of public pension funds to complete continuing education requirement s ra.,. policy of the BRPFRS to pay any registration fee and travel expenses incurred in association with thest conferences. City employees are paid by the City for time spent car, BRPFRS matters during regula working hours Opal Financial Group ( "Opal ") is a private business that coordinates institutional investment conference throughout North America and Europe. These events are designed for High - Net -Worth Individuals anc executives in Corporate Pension Funds, Endowments, Public Funds, Family Offices, Foundations, last Hartley Funds, Financial Planning Firms, 401 (k) Plans, Investment Consultancies, Hedge cundr Investment Banks, Brokerage Firms, Law Firms and Accounting Farms. There is no fee to attend thr public fund conferences for any pension board member nationwide, An Opal representative confirmec that conference sponsors and potential service providers cover the cost of the conference so that Public Pension Board Trustees may attend free of charge. Opal itself does not have contracts with or provide goods or services to the City of Boca Raton, however, sponsors of Opal events other simila conferences may be vendors of the city A city - council appointed trustee, who is not an employee, volunteers to serve as chair of several of the conferences Opal presents. As chair, he or she presides over the conference and reviews the conference program. While not directly compensated for the role as chairman, Opal reimburses or pays trave, expenses to attend the conference Effective July 1, 2011, local government sponsors of defined benefit pension plans, in this case, the City may not reduce contributions required to fund the normal cost of the plan. Senate Bill 1128, whict made a series of changes to Florida's local government defined benefit retirement plans, requires that the employer is responsible for funding the "normal cost" even if plan investment losses require that the employer contribute a greater percentage per employee THE LEGAL BASIS for this opinion is found in the following relevant sections of the revised Palm Beacr County Code of Ethics: Section 2 -442 defines Advisory board to mean "any advisory or quasi - judicial board created by the board of county commissioners, by local municipal governing bodies, or by the mayors who serve as chief executive officers.., of local municipal governing bodies." While the BRPFRS is governed by local ordinance, the board is authorized by state statute. it is not "created by" the local municipal governing body and is, therefore, not an advisory board. Section 2 -442 defines "officials" as "... members appointed by the board of county commissioners members of local municipal governing bodies or mayors or chief executive officers that are no members of (a) local municipal governing body, as applicable, to serve on any advisory quasi - judicial, u, any other board of the county, state or any other regional, local, municipal, or corporate entity." City appointees are therefore officials and are subject to the Code of Ethics in as much as they represent the interests of the legislative body that appointed them, the City Council of Boca Raton Howevei 2633 Vista Parkway, West Palm Beach, FL 33411 561.233.0724 FAX• 561.233.073K Hotline: 877.766.5920 E -mail: ethics ®palmbeachcountyethics.com Website: palmbeachcountyethics.com employee trustees, elected by employees and not appointed by the City Council, are not subject to the Code of Ethics as officials. Employee members of the board are subject to the requirements of the code of ethics as employees of the City. While the BRPFRS is a separate and semi - autonomous entity from the city, should the plan be underfunded, the city is partially responsible for remedying the deficit under the requirements of Senate Bill 1128. in addition, time spent on BRPFRS matters during normal business hours is compensated by the City. The fiscal responsibility incurred by the trustee's public employer coupled with the payment of City salary for BRPFRS matters provides a sufficient nexus between the public employment and outside trust activity to incur limited jurisdiction over the BRPFRS Trustees who are also employees of the City. Section 2 -443 Prohibited Conduct (a) Misuse of public office or employment. An official or employee shall not use his or her official position or office, or take or fall to take any action, or influence others to take or fail to take any action, in a manner which he or she knows or should know with the exercise of reasonable care will result in a special financial benefit, not shared with similarly situated members of the general public, for any of the following persons or entities: (1) Himself or herself; (2) A member of his or her household, including a domestic partner and his or her dependents, or the employer or business of any of these people; (3) A sibling or step - sibling, child or step - child, parent or step - parent, niece or nephew, uncle or aunt, or grandparent or grandchild of either himself or herself, or of his or her spouse or domestic partner, or the employer or business of any of these people; (4) An outside employer or business of his or hers, or of his or her spouse or domestic partner, or someone who works for such outside employer or business; (5) A customer or client of the official or employee; (6) A substantial debtor or creditor of his or hers, or of his or her spouse or domestic partner- - "substantial" for these purposes shall mean at least ten thousand dollars ($10,000) and shall not include forms of indebtedness, such as a mortgage and note, or a loan between the official or employee and a financial institution; (7) A nongovernmental civic group, union, social, charitable, or religious organization of which he or she (or his or her spouse or domestic partner) is an officer or director. Trustees appointed by the Boca Raton City Council are considered "officials" and may not take, fail to take or influence others to take or fail to take any action that would result in a special financial benefit to any of the above persons or entities. Likewise, under §2- 443(c) these officials may not vote on any matter that would result in a special financial benefit to those same individuals and other entities. As for those Boca Raton employees who are not "officials" as defined by the code (those trustees elected by their co- workers), they too may not use their official position to obtain a special financial benefit for those persons and entities listed above, that are not shared with similarly situated members of the general public. In this instance, employee- trustees are eligible to sit on the board as a result of their employee status and decisions they make as trustees have a financial effect on their public employer. Section 2- 443(d) prohibits officials and employees from entering into contracts with the City of Boca Raton, unless one of several exceptions applies. Trustees are not prohibited, by the Code of Ethics, from 2633 Vista Parkway, West Palm Beach, FL 33411 561.233.0724 FAY- Hotline: 877.766.5920 E -mail: ethics ®palmbeachcountyethics.com Website: palmbeachcountyethics.com entering into contracts to provide goods or services to the BRPFRS by the code 'The COf carnet opir„ as to any other rules regulations or state statutes that may limit �,rri � con-rarp Section 2- 443(f) Accepting travel expenses No official or employee shall accept, directly or indirectly, any travel expenses including, but not limited to, transportation, lodging, meals, registration fees, and incidentals from any county or municipal contractor, vendor, service provider, bidder or proposer as applicable. The board of county commissioners of local municipal governing body as applicable may waive the requirements of this subsection by a majority vote of the board or local municipal governing body. The provisions of this subsection shall not apply to travel expenses paid by other governmental entities or by organizations of which the county or municipality as applicable rs o member if the travel is related to that membership Trustees of the BRPFRS (officials and employees) cannot accept travel expenses from a "contractor vendor, service provider, bidder or proposer" of the City without obtaining a waiver from the City, Council. There is no similar prohibition involving contractors, vendors, etc of the BRPFRS who are not also doing business with the City. Trustees must keep in mind that complimentary registration at educational conferences is funded by sponsorship dollars and the situation presented by the trustee who chairs the conference is no different. Should a vendor of the City also be a sponsor of one of these educational conferences, reimbursement of travel expenses would be considered an indirect payment of those expenses by the City vendor. In that case, trustees must apply for a waiver from the Cite Council in order to attend the conference. Section 2 -444. Gift Law Section 2- 444(g) defines a gift as the transfer of anything of economic value, including hospitality, food and drink. Section 2- 244(a) prohibits a public employee from soliciting or accepting, directly or indirectly, "a gift with a value of greater than one hundred dollars $100 in the aggregate for the calendar year from any person or business entity that. Js a vendor, lobbyist or any principal or employer of a lobbyist who lobbies, sells or leases to the .. municipality " Section 2 -442 defines a vendor as a person or entity who sells or leases goods or real or personal property to the City or a person or entity with a pending bid proposal or an offer to sell or lease goods or real or personal property. There is no such prohibition for "officials" who are not members of an advisory board or elected members of the county or a municipal body. Since the BRPFRS is not an "advisory board" as defined under the code, this prohibition only extends to vendors or lobbyists who lobby, sell or lease to the City. Likewise, the prohibition against soliciting anything of value from a vendor or lobbyist does not apply to vendors or lobbyists of BRPFRS. Lastly, permissible gifts of a value in excess of $100 must be reported pursuant tc §2- 444(f) of the code Notwithstanding that the prohibitions of §2- 443(a) may not apply to vendors and lobbyists of BRPFRS City employees and officials are still subject to §2- 444(e) in the performance of an official act or Iega! duty related to their status as a City employee or official. Section 2- 444(e) states as follows: No person or entity shall offer, give, or agree to give an official or employee a gift, and no officia or employee shall accept or agree to accept a gift from a person or entity, because of (1) An official public action taken or to be taken, or which could be taken; (2) A legal duty performed or to be performed or which could be performed; or 2633 Vista Parkway, West Palm Beach, FL 33411 561.233.0724 FAX: 561.233.0735 Hotline: 877.766.5920 E -mail: ethics0palmbeachcountyethics .com Website: palmbeachcountyethics.com (3) A legal duty violated or to be violated, or which could be violated by any official or employee. Based on the facts you have submitted, there may be vendors of the BRPFRS who are present at the conference that are not vendors of the City. Keeping in mind the misuse of office section discussed above, and the prohibition against accepting anything of value as a quid pro quo for the performance of your job, trustees are not prohibited from accepting gifts of any value from non - vendors, lobbyists, principals or employers of lobbyists who do not lobby, sell or lease to the City, but must report the gift should its value exceed $100. Continuing education travel expenses provided by vendors of the City, properly waived under §2- 443(f), or travel expenses paid by the pension plan, are exempted under §2- 444(g)(1)h., from the reporting requirements of the gift law so long as attendance is related to an official or employee's duties and responsibilities as a BRPFRS Trustee. IN SUMMARY, employees and officials of the City of -Boca Raton are required to comply with the Palm Beach County Code of Ethics. Although the BRPFS is not an advisory board under the code, trustees appointed by the City Council are considered officials. Employees /trustees who are elected by other employees still maintain their status as City employees and must comply with the Code of Ethics when acting in an official capacity for the City. Limitations and prohibitions relating to the solicitation or acceptance of gifts only apply to vendors, lobbyists, principals and employers of lobbyists who lobby, lease or sell to the City, however, no gift may be accepted in exchange for the past, present or future performance of their official duties as employees or officials of the City. Travel reimbursement from vendors of the City may be accepted provided the trustee obtains a waiver from the City Council. Any gifts, not otherwise prohibited, in excess of $100 must be reported on an annual gift report. Travel reimbursement associated with educational or governmental conferences or seminars, properly waived if required, does not need to be reported. This opinion construes the Palm Beach County Code of Ethics Ordinance, but is not applicable to any conflict under state law. Inquiries regarding possible conflicts under state law should be directed to the State of Florida Commission on Ethics. Please feel free 'tp- gontact me at (561) 233 -0724 should you have any further questions in this matter. Sin�erely f Alan S. Johnson, Executive Director ASJ /mr /gal 2633 Vista Parkway, West Palm Beach, FL 33411 561.233.0724 FAX: 561.233.0735 Hotline: 877.766.5920 E - mail: ethics @palmbeachcountyethics.com Website: palmbeachcountyethics.com THE LAW OFFICES OF PERRY &z JENSEN, LLC ANN H. PERRY aperry@perrylensenlaw com MEMORANDUM To: Board of Trustees Boynton Beach Police Officers' Pension Fund From: Bonni S. Jensen BONNI SPATARA JENSEN bsjensen @perryiensenlaw.com Subject: State Law Update - Revisions to Exemptions from Public Records Date: April 13, 2012 Effective October 1, 2012, the provisions of Florida Statutes §119.071 are amended. A new provision of the law defines "telephone numbers" (which were already exempt) to include: the numbers associated with the home phone, personal cell phones, personal pagers and other telephone numbers associated with personal communication devices. Additionally, the new law expands the exemptions from public records information regarding personnel to include dates of birth for: • Current and former sworn or civilian law enforcement personnel, their spouses and children; • Current and former firefighters, their spouses and children: • Current and former justices and judges of the state courts, their spouses and children; • Current and former state attorneys, their spouses and children; • Current and former general and special magistrates, judges of compensation claims and administrative law judges, their spouses and children; • Current and former human resource, labor or employees relations directors, assistant directors, managers or assistant managers of any local government agency or water management district which duties include hiring and firing employees, labor contract negotiations, administration or other personnel - related duties, their spouses and children; • Current and former code enforcement officers, their spouses and children; • Current and former guardians ad litem, their spouses and children; • Current and former juvenile probation officers and related personnel, their spouses and children; and • Current and former public defenders and conflict counsel, their spouses and children. 400 EXECUTIVE CENTER DRIVE, SUITE 207•: WEST PALM BEACH, FLORIDA 33401 -2922 PH: 561.686.6550 •:• Fx: 561.686.2802 .,Rnw.s.,.•n Board of T rusteer Boynton Beach Police Officers' Pension i-onc: State Law Update - Revisions to Exemptions from Public Records April 13, 2012 I recommend two actions as a result of this law 1 Make sure that members of staff for the pension fund are aware of the expansion of the exemption of the public records law to include the date of birth informatior and the definition of telephone number to include all phone numbers; and 2 Update the request for confidentiality form to include date of birth Please add this item for discussion to your next meeting agenda. If you have anv questions, please contact me REQUEST FOR CONFIDENTIALITY To: From: (Name of Pension or other Entity) Name of Employee or Retiree Street Address City State Zip Code Today's Date: Pursuant to Florida Statute §119.071(4), 1 hereby request the to maintain the confidentiality of all of my personal information which is protected by that statute, including but not limited to my home address, telephone number, date of birth, and photograph as well as those of my spouse and my children. Signed: Witnessed By: (Witness #1) (Witness #2) H All MiscellaneousTORMSICONFID 2012 wpd ENROLLEL CSIHB 629, Engrossec pulslalw' 11 21 An ac relating to puht Ic records; amendLr.g ; 3 119 '0 1, F,S.; nciudina a ate s or h , t w - th,n t�ct 41 types of personal identifying Information ct spec -.�e( 5 agency personne' and the spouses am r idren , E„ t 6 personnel that are exempT from pun-1-1 record 7 requirements under s. 81 an exempt -on for persona; iaentifvTrya informatio- � 9, active ,)i former aw enforcemer.t personne� ana th, 10 spouses and children thereof revis,z­_; the exempt;-T 11 for personal identafyinq and _ocation Znformatior: 1 ,2 1 1 justices of the Supreme our dirt r~ r: c -,f 131 appeaa fudges, cir_cuyr court ;judges, and county c,_r 141 judges and the spouses ano - - hi'dreT 't suc� ust ce 15 and ;edges, to _ncluce `ormer of the Supreme 16 Court, district court of appear iudae , -, crrcua, 17 judges and county court judges, ano the spouses Ana 18 children thereof; providing for - etroacti.ve I 191 application of the exemptions, providing for future 20 legislative review ano repeal -hF exemptions; 21' definarnq the term "telephone iurnberr- provacinc: 221 statement of publ c necessir v c3rrw_, ng are of few° �� 23; date 241 251 Be It Enacted by the Legislature of `he ' - , *ate F_ orida 261 2 7, Section Paragraph (o; of subsectson ; 4 , -,f sect-! on 281 119.071, Florida Statutes, is amended to read: Page 1 of 9 CODING: Words stRGke R are deletions; words underlined are additions hb0629 -03 -e� F L O R I D A H O U S E O F R E P R E S E N T A T I V E S ENROLLED CSIHB 629, Engrossed 1 2012 Legislature 29 119.071 General exemptions from inspection or copying of 30 public records. - 31 (4) AGENCY PERSONNEL INFORMATION. - 32 (d)1. For purposes of this paragraph, the term "telephone 33 numbers" includes home telephone numbers, personal cellular 34 telephone numbers, personal pager telephone numbers, and 35 telephone numbers associated with personal communications 36 devices. 37 2.a. The home addresses, telephone numbers, social 38 security numbers, dates of birth, and photographs of active or 39 former sworn or civilian law enforcement personnel, including 40 correctional and correctional probation officers, personnel of 41 the Department of Children and Family Services whose duties 42 include the investigation of abuse, neglect, exploitation, 43 fraud, theft, or other criminal activities, personnel of the 44 Department of Health whose duties are to support the 45 investigation of child abuse or neglect, and personnel of the 46 Department of Revenue or local governments whose 47 responsibilities include revenue collection and enforcement or 48 child support enforcement; the home addresses, telephone 49 numbers, social security numbers, photographs, dates of birth, 50 and places of employment of the spouses and children of such 51 personnel; and the names and locations of schools and day care 52 facilities attended by the children of such personnel are exempt 53 from s. 119.07(1). 54 b. The home addresses, telephone numbers, dates of birth, 55 and photographs of firefighters certified in compliance with s. 56 633.35; the home addresses, telephone numbers, photographs, Page 2 of 9 CODING: Words str+skea are deletions; words underlined are additions. hb0629 -03 -er ENROLI_EC CSIHB 629, 8ngrossec 5 d ates of birth, and places of empi oyment >i r he spoi_se r' _(�gislatuf 581 childrer :)y such firefighters; anc: "Ile "­ames and 'Aocar ter; 59 schools ana day care fact ii_ties attendea oy the .,tai1dr - ;rt 601 firefighters are exempt- from .19 C; +_ 611 Tn.e home addresses, dates o birth and terepnoncc 62 numbers of current or former -,ustj-ces of :he Supreme Co.r 631 district court of appeal ;edges, circuit -•ourt - fudges, .t1d 64 county court - judges, me nome addresses elephone riumne r s 65 dates of birth, and places of employment -, f the spouse= C 661 childrer of c urrent or forme iustzces an,i -,udges; ann . re - tames 67( and locations of schools and day rare fa( ities attcende( i- he 68 children of current o r for -, ustices and - ivages arc �-xemp` 69 from s. 119,0701,. 70 d. one home addresses, telephone numbers, socia�c, 71 numbers, da of birth, and photographs of current nr frrnF 72 state attorneys, assistant state attorneys, statewide 731 prosecutors. or assistant statewide prosecutors; the dome 74 addresses, _elephone numbers socrai secv.i zty :,umber: 75 photographs, dates of birth, and places ct employment -,t thr 76 spouses and children of current or former state attorr.ev� -3 77 assistant state attorneys, statewide prosecutors, cr ass.5ta,` 78 statewide ;prosecutors; and the names and ocations of 791 and day care facilities attended ny the craildren of r-,_, ­Pnt 801 former state attorneys, assistant stage attorneys, starewide 811 prosecutors or assistant statewide prosecutors ire exe=',t ,rom 82 s. 119.07;1, and s. 24(a), Fart. of `he State Constltjt­ 83 e. `;'he home addresses, date of birtn, and t_elepnonc­ 84 numbers of general magistrates, speci_ai ragistrates, udr.;es r' Page 3 of 9 CODING Words stFiGkee are deletions, words underlined are additions nb0629 -03 -e, F L O R I D A H O U S E O F R E P R E S E N T A T I V E S ENROLLED CS /HB 629, Engrossed 1 2012 Legislature 85 compensation claims, administrative law judges of the Division 86 of Administrative Hearings, and child support enforcement 87 hearing officers; the home addresses, telephone numbers, dates 88 of birth, and places of employment of the spouses and children 89 of general magistrates, special magistrates, judges of 90 compensation claims, administrative law judges of the Division 91 of Administrative Hearings, and child support enforcement 92 hearing officers; and the names and locations of schools and day 93 care facilities attended by the children of general magistrates, 94 special magistrates, judges of compensation claims, 95 administrative law judges of the Division of Administrative 96 Hearings, and child support enforcement hearing officers are 97 exempt from s. 119.07(1) and s. 24(a), Art. I of the State 98 Constitution if the general magistrate, special magistrate, 99 judge of compensation claims, administrative law judge of the 100 Division of Administrative Hearings, or child support hearing 101 officer provides a written statement that the general 102 magistrate, special magistrate, judge of compensation claims, 103 administrative law judge of the Division of Administrative 104 Hearings, or child support hearing officer has made reasonable 105 efforts to protect such information from being accessible 106 through other means available to the public. This stib- 10 , , l 5 i.. s sub : t to the n as G.. a. Su Re r t :�u�..iY c:t a. uyruNa w.i j �. v �. vNi vv v v a.�u c 108 3n aee erdanee -5 3—s . 119. x5, and shall stand repealed e-__. 109 , 110 reenaetf by the Legislatur ill f. The home addresses, telephone numbers, dates of birth, 112 and photographs of current or former human resource, labor Page 4 of 9 CODING: Words striGkeR are deletions; words underlined are additions. hb0629 -03 -er ENROLLEI CS /HB 629, Engrosses, epslatur 113 relations. �, r. employee relations aj_rect o _;, ass istan,, ", [ • ' , ., 114 managers, or assistant managers ct anv cca I crovernme-r _uert• 115 or water management dist r i c'E whose ( - ,ut ; e- i ncluoe 116 firing employees, .labor contract negotiarican, adm;nisr :r._ o 117 other personnel - related duties; the riames home addressF= 118 telephone numbers, dates of bir th, and places of empicl me::° 119 the spouses and children of such personnel ; anc the name a 120 locations of schools and day care tac- 1_ l i e s attendee, 17 -- r� 121 children o� such personne, are exempt frog = :!Cl 122 24(a), Ari of the State Constitr:tio -, 123 g. The home addresses, telephone cumbers, da of 124 and photographs of current or former_ code enforcement 125 the names, home addresses, telephone numbers, dates o f ni rt`' 126 and places of employment of the spouses and children ~uc 127 personnel; and the names and locations , ,t schools and ca ,Ir, 1281 facilities attended by the cnildrer ;,f suet: personne; exempt 12 9 j from s. _ i 9 , 07 (1) and s 24 (a � , Art F ` he State 1301 Constitution 131 h, The home addresses, telephone numbers, paace= 132! employment, dates of birth, and photographs of current - Former 133 guardians ad litem, as defined --n s 39.82O; the names, Some 134, addresses, telephone numbers, dat of birth, and Maces 135E employment of the spouses and children ,,t s«ch person: and we 136 names and locations of schoo -s and day care facilities aTI 137; by the children of such persons are exemp' from 5 -nc 138,', s, 24(a) Art ? of 'he State Cons ti, tjtici - !f the auard'ar 139 litem provides a written statement that *ne guardian �a. - :F: 140; has made reasonable efforts to protecr _ �_nformati,) -- —o Page 5 of 9 CODING: Words stFi4eR are deletions; words underlined are additions ib0629 -03 -ei F L O R I D A H O U S E O F R E P R E S E N T A T I V E S ENROLLED CS /HB 629, Engrossed 1 2012 Legislature 141 being accessible through other means available to the public. 142 This sub s paragraph- is sidbj eet to the —Gpen Geverfiffien Sunset 143 Review T t in aeeerrel with s. 119.15 and —shall: stand -�- jaea _- r �-. l 144 en Geteb -2, 2915, ianless — reviewed and saved fr=m repeal 145 h r g r- eenaet art ter; —the 1 egi_ ;lature . 146 i. The home addresses, telephone numbers, dates of birth, 147 and photographs of current or former juvenile probation 148 officers, juvenile probation supervisors, detention 149 superintendents, assistant detention superintendents, juvenile 150 justice detention officers I and II, juvenile justice detention 151 officer supervisors, juvenile justice residential officers, 152 juvenile justice residential officer supervisors I and II, 153 juvenile justice counselors, juvenile justice counselor 154 supervisors, human services counselor administrators, senior 155 human services counselor administrators, rehabilitation 156 therapists, and social services counselors of the Department of 157 Juvenile Justice; the names, home addresses, telephone numbers, 158 dates of birth, and places of employment of spouses and children 159 of such personnel; and the names and locations of schools and 160 day care facilities attended by the children of such personnel 161 are exempt from s. 119.07(1) and s. 24(a), Art. I of the State 162 Constitution. 163 j. The home addresses, telephone numbers, dates of birth, 164 and photographs of current or former public defenders, assistant 165 public defenders, criminal conflict and civil regional counsel, 166 and assistant criminal conflict and civil regional counsel; the 167 home addresses, telephone numbers, dates of birth, and places of 168 employment of the spouses and children of such defenders or Page 6of9 CODING: Words etkkee are deletions; words underlined are additions. hb0629 -03 -er ENROLLED. CS /HB 629, Engrosses 1 eglslatur> 169 counsel; and the names and locat -ions of ��cnoolr and 170 facilities attended by the ch-1 idren of suc=r defenders 171 are exempt from s, i i 9. 0`� (i ; an4 s ?4 i . Art ')f 11,f �.tt 172 Constitution, 1 '7 3 Geverftent S- inset= review Aet in aeeer —donee wi.t=lg 1 7 4 _ , i r 1761 3.-2— r�ri agency that is the cusr_odlan of the ,nform,3 1 ^� 177 specified it subparagraph 2. --17-- and tha* nct ~ - rye emr, ~ye 178 the officer, employee, Dust ;udge, ,, nther perso" ,ems ! = ea 179 in subparagraph 2. ---.- shad maintain the Exempt s1at:;s 180 information only i.f the officer, empj ogee ;ust - ce ­,idge ner 181 person, or employing agency- of the designated employeE tm.t 182 written request for maintenance of the exemption tr, the 183 custodial agency. N 184! 4. The exemptions in t his paragraph apply to inform 185 held by an agency before, on, or afte the effective date of the 186 exemption. 187 5. This paragraph is subject t o the Open Government Sunset 1881 Review Act in accordance with s. 119.15, and shall sta 189 repealed on October 2, 201 unless reviewe4 and sa vea from 190 repeal through reenactment by the Legislature. 191 Section 2. (1) It .is fin of the Legislatu t hat 192 the dates of birth of agency perso enumerated in U 193 119.071(4) (a), Florida Statutes, and of the spouses ana ch ildr en 194 of such personnel be in cluded wit - the types of iden tification. 195 and location information for such agency pe an she I* spouses and c hildren ther -t hat are exempt from p ublic record Page 7 of 9 CODING: Words striGl4en are deletions; words underlined are additions ib0629 -03 -P' F L O R I D A H O U S E O F R E P R E S E N T A T I V E S ENROLLED CS /HB 629, Engrossed 1 2012 Legislature 1971 requirements under s. 119.071(4)(d), Florida Statutes. It is the 198 finding of the Legislature that date of birth information can be 199 used as a tool to perpetuate fraud against an individual and to 200 acquire sensitive personal, financial, medical, and familial 201 information, the release of which could cause great financial 202 harm to an individual. It is also the finding of the Legislature 203 that, with respect to the existing exemptions from public record 204 requirements for the telephone numbers of agency personnel 205 enumerated in s. 119.071(4)(d), Florida Statutes, and the 206 telephone numbers of the spouses and children of such personnel, 207 the term "telephone number" should be defined and clarified to 208 include personal pager numbers. Personal pager numbers are 209 another means by which any of the agency personnel enumerated in 210 s. 119.071(4)(4), Florida Statutes, and the spouses and children 211 of such personnel, could potentially be identified, located, and 212 put at risk. 213 (2) It is the further finding of the Legislature that 214 specified identification and location information for former 215 justices of the Supreme Court, district court of appeal judges, 216 circuit court judges, and county court judges, and for the 217 spouses and children of such former justices and judges, should 218 be exempt from public record requirements. In the course of 219 making rulings, entering judgments, imposing sentences on the 220 convicted, or reviewing cases from other courts, justices and 221 judges frequently do not create good will with litigants, the 222 accused, the convicted, and their associates and families, thus 223 making the justices and judges, and their spouses and children, 224 targets for acts of revenge. This risk continues after justices Page 8 of 9 CODING: Words stFiGk8R are deletions; words underlined are additions. hb0629 -03 -er ENROLLS[.) (-'S/HB 629, Engrossec, 225� and judges complete their public service. Disqruntiea 226 individuals may wait to commit an _act _of __r_evenqe__unt3__,'the 2271 employme of a justice or judge enos_. if such identifying and 2281 -Loca information were released, the safety of formel 229' justices anc judges and their spouses ano___c_hiidren. couia__oe 1 230 seriously - Accordinqiy, ___t is finding 231 Legislature that, in addition to the existing exemption _cost 232 public record requirements identifying an. 233 234 235 236 2 37 iocation information for currenL, justices of the Supreme Court, district court of appeal judges, circuit tour - L judges, dric county court judges, ano for their spouses ana chiidren, _ , 5 __a public necessity that such identifying and Location information for such former justices and _Iudges_and their spouses ano 2381 children be made exempt from pubi-ic record requirement 2391 Sect-o-, Tn as a ct shal i--3Ke E­1 fp October_i zD, Page 9 of 9 CODING, Words StFiGkGR are deletions; words underlined are additions, r)b0629-03-e, THE LAW OFFICES OF PERRY & JENSEN, LLC ANN H. PERRY BONNI SPATARA JENSEN aperry@perryjensenlaw.com MEMORANDUM bsjensen @perryjensenlaw.com TO: Board of Trustees BOYNTON BEACH MUNICIPAL POLICE OFFICERS' PENSION FUND FROM: Bonni S. Jensen Fund Legal Counsel DATE: May, 2012 RE: ANNUAL FORM 1 FILING Attached is Commission on Ethics (CE) Form 1 "Statement of Financial Interests" which must be filed by Trustees with the Supervisor of Elections for the county in which you reside, prior to July 1, 2012. The instructions for filing and completing the form are also attached. Please note that it is recommended that current or former law enforcement officers and firefighters do not use their home addresses on the form; if you do not have a post office box, you may use your work address. You may also complete the form online using your keyboard to fill in the information, tabbing from one section to the next. However, you must print the completed form, sign and date it, then send it to the Supervisor of Elections for the county in which you reside There is no current system available to file online. It is important that you timely file this form because the penalty for failure to timely file is $25.00 per day, to a maximum of $1,500.00. 1 suggest that you file this form by certified mail, return receipt requested, and keep a photo copy of the form for your files. Several Trustees have had to show proof of filing in the past, so it is my practice to always get a receipt for such documents. As a reminder, the Florida Commission on Ethics last year issued an Ethics Opinion regarding the proper reporting for intangible property under Part D of Form 1. The Opinion letter addressed the reporting for six different types of intangible personal property as follows: Assets held in an Individual Retirement Account ( "IRA ") - The IRA account itself is not considered intangible property. However each individual investment in the IRA which exceeds the reporting threshold' should be 'The individual Form 1 filer chooses the reporting threshold: either "dollar value" or "percentage threshold." For intangible personal property the dollar value threshold is $10,000 and the percentage threshold is 10 %. 400 EXECUTIVE CENTER DRIVE, SUITE 207:• WEST PALM BEACH, FLORIDA 33401 -2922 PH: 561.686.6550 ^ Fx:561.686.2802 q Vjk7V0 jj> 13 Board of Trustees Annual Form � Filing May, 2012 Page 2 of 2 reported. Mutual funds are considered one investment 2 Assets held in a 401(k) - The 401(k) account itself is not considered intangible property. However each individual investment in the 401(k) which exceeds the reporting threshold should be reported Mutual funds are considered one investment 3. Funds invested in the FRS Investment Plan -The FRS Investment Plan itself is not considered intangible property. However each individual investment in the FRS Investment Plan which exceeds the reporting threshold should be reported. Mutual funds are considered one investment The opinion indicates that a Form 1 filer does not need to report as intangible property the "investment" in the FRS Defined Benefit program. This same logic would apply to local pension plans. The defined benefit program "investment" does not need to be reported as intangible property, but a defined contribution plan's investments would need to be reported 4. Assets held in the Florida Pre -Paid College Plan - Both the Florida Pre -Paid College Plan and the Florida College Investment Plan need to be reported as intangible property if the values of the accounts exceed the individual reporting threshold. For the Florida Pre -Paid College Plan, the threshold is determined by looking to the balance in the account. For the Florida College Investment Plan, only individual investments in excess of the threshold limits need to be reported 5. Assets held in a 457 Plan /Deferred Compensation Plan ( "°457 ") - The 457 account itself is not considered intangible property. However each Individual investment in the 457 which exceeds the reporting threshold should be reported. Mutual funds are considered one investment 6. Assets in the Florida Deferred Retirement Option Program ( "DROP ") - The DROP account itself is considered intangible property. This same analysis would apply to a local DROP If you have any questions or if I may be of any assistance to you at all, please do not hesitate to contact me or one of my assistants. BSJ /lg E -Copy Administrator FORM 1 STATEMENT OF 2011 Please print y your name, mailing FINANCIAL INTERESTS address, age name, and position below: LAST NAME -- FIRST NAME -- MIDDLE NAME FOR OFFICE USE ONLY- MAILING ADDRESS ID Code CITY ZIP COUNTY ID No NAME OF AGENCY Conf Code NAME OF OFFICE OR POSITION HELD OR SOUGHT P Req Code You are not limited to the space on the lines on this form Attach additional sheets, If necessary. CHECK ONLY IF ❑ CANDIDATE OR ❑ NEW EMPLOYEE OR APPOINTEE * * ** BOTH PARTS OF THIS SECTION MUST BE COMPLETED * * ** DISCLOSURE PERIOD: THIS STATEMENT REFLECTS YOUR FINANCIAL INTERESTS FOR THE PRECEDING TAX YEAR, WHETHER BASED ON A CALENDAR YEAR OR ON A FISCAL YEAR PLEASE STATE BELOW WHETHER THIS STATEMENT IS FOR THE PRECEDING TAX YEAR ENDING EITHER (must check one) ❑ DECEMBER 31, 2011 OR ❑ SPECIFY TAX YEAR IF OTHER THAN THE CALENDAR YEAR MANNER OF CALCULATING REPORTABLE INTERESTS: THE LEGISLATURE ALLOWS FILERS THE OPTION OF USING REPORTING THRESHOLDS THAT ARE ABSOLUTE DOLLAR VALUES, WHICH REQUIRES FEWER CALCULATIONS, OR USING COMPARATIVE THRESHOLDS, WHICH ARE USUALLY BASED ON PERCENTAGE VALUES (see Instructions for further details) PLEASE STATE BELOW WHETHER THIS STATEMENT REFLECTS EITHER (must check one) ❑ COMPARATIVE PERCENTAGE THRESHOLDS OR ❑ DOLLAR VALUE THRESHOLDS PART A -- PRIMARY SOURCES OF INCOME [Mayor sources of Income to the reporting person - See Instructions p 4] (If you have nothing to report, you must write "none" or "n /a ") NAME OF SOURCE SOURCE'S DESCRIPTION OF THE SOURCE'S OF INCOME ADDRESS PRINCIPAL BUSINESS ACTIVITY PART B -- SECONDARY SOURCES OF INCOME [Major customers, clients, and other sources of Income to businesses owned by the reporting person - See Instructions p 41 (If you have nothing to report , you must write "none" or "n /a ") NAME OF NAME OF MAJOR SOURCES ADDRESS PRINCIPAL BUSINESS BUSINESS ENTITY OF BUSINESS' INCOME OF SOURCE ACTIVITY OF SOURCE PART C -- REAL PROPERTY [Land, buildings owned by the reporting person - See Instructions p 41 (If you have nothing to report, you must write "none" or "nla ") FILING INSTRUCTIONS for when and where to file this form are located at the bottom of page 2. INSTRUCTIONS on who must file this form and how to fill it out begin on page 3 OTHER FORMS you may need to file are described on page 6- CE FORM 1 - Effective January 1 2012 Refer to Rule 34 -8 202(1), FA C (Continued on reverse side) PAGE 1 WART D — INTANGIBLE PERSONAL PROPERTY ia cks :,ei ' ertificate: 'If you have nothina .o report you must write ' ,- t . r n TYPE O F lN1ANGIBLE _jSINL-SS EN , i O UJHII n il-iE P Y RE_ATES PART E — LIABILITIES [Major debts - See instructions p 51 r (If you have nothing to report, you must write "none" or "nia NAME OF CREDITOR A DDRESS OF CREDITOR PART F — INTERESTS IN SPECIFIED BUSINESSES [Ownership or positions i certain types of businesses See instructions r ' (If you have nothing to report, you must write "none" or "n/a") i BUSINESS ENl If ti # 1 L BU SINESS ENTITY # I BUSINESS ENT' - 7 # 3 NAME OF BUSINESS ENTITY ADDRESS OF BUSINESS ENTIT`r PRINCIPAL BUSINESS ACTIVITY POSITION HELD WITH ENTITti I OWN MORE THAN A 5% NATURE OF MY OWNERSHIP INTEREST IF ANY OF PARTS A THROUGH F ARE CONTINUED ON A SEPARATE SHEET, PLEASE CHECK HERE ❑ SIGNATURE (required): DATE SIGNED (required): WHAT TO FILE: After completing all parts of this form Including signing and dating it. send back only the first sheet (pages 1 and 2) for filing If you have nothing to report in a particular section, you must write "none' or Wa" in that section(s) NOTE: MULTIPLE FILING UNNECESSARY: Generally, a person who has filed Form 1 for a calendar or fiscal year is not required to file a second Form 1 for the same year However, a candidate who previously filed Form 1 because of another public position must at least file a copy of his or her original Form 1 when qualifying FILING INSTRUCTIONS: WHERE TO FILE: If you were marled the form by the (,ommission on Ethics or a County Supervisor of Elections for your annual disclosure filing return the form to that location Local officers/employees file with the bupervisw of Elections ofthe county in which they permanently reside (If you do not permanently reside it Florida file with the Supervisor of the county where your agency has its headquarters State officers or specified state employees file with the Commission on Ethics, P O Drawer 15709, Tallahassee, FL 32317 -5709 physical address 3600 Maclay Boulevard South Suite 201 Tallahassee Fl 32312 Candidates file this lorm togethe wit then qualifying paper, To determine what category youi position falls .ender see the "Whc Must File" instructions or gage � Facsimiles will not be accepted. WHEN TO FILE; Initially each local officerlernployee state s officer, and specified state employee must file within 30 days of the date of his or her appointment or of the beginning of employment t Appointees who must be confirmed by the Senate must file prior to confirmation, even if that is less than 30 days from the date of their appointment t Candidates for publicly- elected local office mus' Ne at the same time they file their qualifying papers Thereafter +oval officers /employees state officers and specified state employees are required to file by July 1 st following each calendar , vear it which they hold their positions Finally al the end of office , employment t , local officer /employee state officer anc specified state employee is required to file �, I final disclosure form (Form 11`r within 60 days of leaving office or employment However filing a CE orm F (Final Statement of FinanciaE interests) does not relieve the filer or" filing (,E Form ' if he or she was ii their position nr December st 20 CE FORM 1 - Effective January 1 201 -eter in R,de 34-9 202 ; A�'�1 INSTRUCTIONS FOR COMPLETING FORM 1 WHO MUST FILE FORM 1: All persons who fall within the categories of "state officers," "local officers /employees," "specified state employees," as well as candidates for elective local office, are required to file Form 1 Positions within these categories are listed below Persons required to file full financial disclosure (Form 6) and officers of the judicial branch do not file Form 1 (see Form 6 for a list of persons who must file that form) STATE OFFICERS Include the following positions for state officials county or municipal pollution control director, county or municipal environ- 1) Elected public officials not serving in a political subdivision of the mental control director, county or municipal administrator with power to grant state and any person appointed to fill a vacancy in such office, unless or deny a land development permit, chief of police, fire chief, municipal clerk, required to file full disclosure on Form 6 appointed district school superintendent, community college president, district 2) Appointed members of each board, commission, authority, or council medical examiner, purchasing agent (regardless of title) having the authority having statewide jurisdiction, excluding members of solely advisory bodies, to make any purchase exceeding $20,000 for the local governmental unit but Including judicial nominating commission members, Directors of the 5) Officers and employees of entitles serving as chief administrative officer Florida Black Business Investment Board, Enterprise Florida, Scripps Florida of a political subdivision Funding Corporation, Workforce Florida, and Space Florida, Members of the 6) Members of governing boards of charter schools operated by a city or Council on the Social Status of Black Men and Boys, and Governors and other public entity senior managers of Citizens Property Insurance Corporation and Florida SPECIFIED STATE EMPLOYEES Include the follovng positions Workers' Compensation Joint Underwriting Association for state employees 3) The Commissioner of Education, members of the State Board of 1) Employees in the office of the Governor or of a Cabinet member who Education, the Board of Governors, and the local Boards of Trustees and are exempt from the Career Service System, excluding secretarial, clerical, Presidents of state universities and similar positions LOCAL OFFICERVEMPLOYEES include the following positions 2) The following positions in each state department, commission, for officers and employees of local government board, or council Secretary, Assistant or Deputy Secretary, Executive 1) Persons elected to office In any political subdivision (such as munici- Director, Assistant or Deputy Executive Director, and anyone having the palities, counties, and special districts) and any person appointed to fill a power normally conferred upon such persons, regardless of title vacancy in such office, unless required to file full disclosure on Form 6 3) The following positions in each state department or division Director, 2) Appointed members of the following boards, councils, commissions, Assistant or Deputy Director, Bureau Chief, Assistant Bureau Chief, and any authorities, or other bodies of any county, municipality, school district, inde- person having the power normally conferred upon such persons, regardless pendent special district, or other political subdivision the governing body of title of the subdivision, a community college or junior college district board of 4) Assistant State Attorneys, Assistant Public Defenders, Public trustees, a board having the power to enforce local code provisions, a board Counsel, full -time state employees serving as counsel or assistant counsel of adjustment, a planning or zoning board having the power to recommend, to a state agency, administrative law fudges, and hearing officers create, or modify land planning or zoning within the political subdivision, 5) The Superintendent or Director of a state mental health Institute estab- except for citizen advisory committees, technical coordinating committees, lished for training and research in the mental health field, or any major state and similar groups who only have the power to make recommendations to institution or facility established for corrections, training, treatment, or reha- planning or zoning boards, a pension board or retirement board empowered bilitation to Invest pension or retirement funds or to determine entitlement to or amount 6) State agency Business Managers, Finance and Accounting Directors, of a pension or other retirement benefit Personnel Officers, Grant Coordinators, and purchasing agents (regardless 3) Any other appointed member of a local government board who is of title) with power to make a purchase exceeding $20,000 required to file a statement of financial interests by the appointing authority or 7) The following positions in legislative branch agencies each employ - the enabling legislation, ordinance, or resolution creating the board ee (other than those employed in maintenance, clerical, secretarial, or similar 4) Persons holding any of these positions in local government Mayor, positions and legislative assistants exempted by the presiding officer of their county or city manager, chief administrative employee of a county, municipal- house), and each employee of the Commission on Ethics ity, or other political subdivision, county or municipal attorney, chief county or municipal building Inspector, county or municipal water resources coordinator, INSTRUCTIONS FOR COMPLETING FORM 1: INTRODUCTORY INFORMATION (At Top of Form) If your name, mailing address, public agency, and position are already printed on the form, you do not need to provide this Informa- tion unless it should be changed. To change any of this information, write the correct information on the form, then contact your agency's financial disclosure coordinator. Your coordinator is identified in the financial disclosure portal on the Commission on Ethics website: www.othics.state.fl.us. NAME OF AGENCY: This should be the name of the governmental unit which you serve or served, by which you are or were employed, or for which you are a candidate For example, "City of Tallahassee," "Leon County," or "Department of Transportation " OFFICE OR POSITION HELD OR SOUGHT: Use the title of the office or position you hold, are seeking, or held during the disclosure period (in some cases you may not hold that position now, but you still would be required to file to disclose your interests during the last year you held that position) For example, "City Council Member," "County Administrator" "Purchasing Agent," or "Bureau Chief " If you are a candidate for office or are a new employee or appointee, check the appropriate box MAILING ADDRESS. If your home address appears on the form but you prefer another address be shown, change the address as described above If you are an active or former officer or employee listed in Section 119 071(4)(d), F S , whose home address is exempt from disclosure, the Commission is required to maintain the confidentiality of your home address if you submit a written request for conrrdentiality. Persons listed in Section 119 071(4)(d), F S , are encouraged to provide an address other than their home address DISCLOSURE PERIOD: The tax year for most individuals is the calendar year (January 1 through December 31) If that is the case for you, then your financial interests should be reported for the calendar year 2011, just check the box and you do not need to add any information in this part of the form However, if you file your IRS tax return based on a tax year that is not the calendar year, you should specify the dates of your tax year in this portion of the form and check the appropriate box This is the time frame or "disclosure period" for your report MANNER OF CALCULATING REPORTABLE INTERESTS: As noted in this portion of the form, the Legislature has given filers the option of report- ing based on either thresholds that are comparative (usually, based on percentage values) Q thresholds that are based on absolute dollar values The instructions on the following pages specifically describe the different thresholds Simply check the box that reflects the choice you have made You must use the type of threshold you have chosen for each part of the form In other words, if you choose to report based on absolute dollar value thresholds, you cannot use a percentage threshold on any part of the form (CONTINUED on page 4) c: &' CE FORM 1 - Effective January 1 2012 Refer to Rule 34 -8 202(1), F A C PAGE 3 rPRT A -- PRIMARY SOURCES OF INCOME 1wner , ies' ,.deco e :1, uenefiaa cis rrt �cres , ,, . _, - � ., ios,� . z ;,�. i [Required by Sec 112 3145(3) diI c (or r Ha Stat a�� ° •ee oercew (, - 'nr eta j�set � :ap-ti 1OCK Part A is intended to require Lie disclosure of your principal sources 's oritlir - )cl 111t "t, income during the disclosure penocl ''ou do not have to disclose the an-IOUr I', �;' sh I I I r� of Income received The sources should be listed in descendlno orde " anc' with the largest source first Please list in this part o the foie, 0)e lame ,e,veomore peicurl i'j; oryou,„ address, and principal business activity of each source of your nconrn which i�er frrr, ,not husiness enlft arcs (depending on whether you have chosen to report based ,r oerrentago- �cewed fart trtar� _ >s �ncr) r -,r� „.F, thresholds or on dollar value thresholds either ,'itv 11,umiq Ile l,F•, exceeded five percent (5 of the gross Income received oy you your own name or by any other person for your benefit or use during the disclosure period or exceeded $2 500 00 (of gross income received during the disclosure period by you in your own namF w by any other person for v„ use of benefit You need not list your public salary received from serving in the position(s) which requires you to file this form, but this amount should be Included when calculating your gross Income for the disclosure period The Income of your spouse need not be disclosed However, If there is joint Income to you and your spouse from property held by the entireties (such as interest or dividends from a bank account or stocks held by the entireties) you should Include all of that Income when calculating your gross income and disclose the source of that income If It exceeded the threshold Gross income" means the same as It does for income tax purposes Including all Income from whatever source derived, such as compensation for services, gross Income from business gains from property dealings Interest rents, dividends, pensions, social security distributive share of partnership gross Income and alimony but not child support Examples -- it you were employed by a company that manufactures computers and received more than 5% of your gross Income (salary, commissions etc ) from the company (or, alternatively $2,500) then you should list the name of the company Its address and its principal business activity (computer manufacturing; -- If you were a partner in a law firm and your distributive share o• partnership gross Income exceeded 5% of your gross Income (or alternatively, $2,500), then you should list the name of the firm its address, and Its principal business activity (practice of law; -- If you were the sole proprietor of a retail gift business and your gross Income from the business exceeded 5% of your total gross Income (or alternatively, $2,500), then you should list the name of the business its address and its principal business activity (retail gift sales) -- If you received Income from Investments In stocks and bonds, you are required to list only each Individual company frorn which you derived more than 5% of your gross income (or, alternatively $2 500) rather than aggregating ail of your Investment Income - -- If more than 5% of your gross Income (or alternatively, $2,500) was gain from the sale of property (not just the selling price) then you should list as a source of Income the name of the purchaser, the purchaser's address, and the purchasers principal business activity If the purchaser's Identity Is unknown, such as where securities listed on an exchange are sold through a brokerage firm, the source of income should be listed simply as 'sale of (name of company5 stock for example - -- if more than 5% of your gross Income (or, alternatively $2,500) was In the form of Interest from one particular financial institution (aggregating Interest from all CD s, accounts etc at that Institution) list the name of the Institution Its address, and Its principal business activity PART B — SECONDARY SOURCES OF INCOME [Required by Sec 112 3145(3)(a)2 or (b)2, Fla Stat This part Is intended to require the disclosure of major customers clients and other sources of Income to businesses in which VOL own at Interest You will not have anything to report unless -,'v+ aft, r.. d?� rd'ue 1 wneo (either d ° ndirectiy in the torn _rt or - iullabie o beneficial interest iunng the disclosure period more ra' , ve ;ercen' (5%t, of the totar assets or capital stock of , :, sires entity r,J 'Orporatror partnership hmteo partnership r iopnetorshtp point yr, nti�rE rr - homq business 'r •irl� ana ,,nerved ,lore than $5 JuC of yocr gross dur ng oerind tn;rn' hat artity If your Inteie „ t , no gross Inc orne exceeded 'ne appropriate thresnolds listed above then fo tt�ai business entity you rust list every source of income to the business er tity which exceeded ten percent (10 %) of the business entity s gross income _imputed or the basis of the business entity's most recently completed `sc, i Inc- .oixre r 'fdare 'ire sour ,� � rirrnclpa� business activ+' t-xamr i ce. r.,, are the sole proprietor ct a dry cleaning business, from which you rec,eared more than 10% of your gross income (an amount that was more that S1 500) (or alternatively more than $5.000 if you are using dollar value thresholds) If only one customer a uniform rental company provided more than 10% of your dry cleaning business vnu must list the name of the uniform rental company its address and its onnclpal busrrte�,s - ictivity (uniform rentals (,t a c j 20% partner in a partnership that owns a shopping real and your partnership Income exceeded the thresholds listed above Yot. should lis` each tenant of the mall that provided more than 10% of the oartne °rt gross Income the tenanf s address and prmcmal businesi actiwl an orange grove and sell all your oranges to i, marketing ,00perative You should list the cooperative its address and its principa busrne5� 3etivity if your Income me' the thresholds PART C --- REAL PROPERTY (Requireil t Sec 112 2145(3)(atS i , � -tar i ,r, this pat prease list the location or description of all real property (land snd buildings n Florida In which you owned directly or indirectly at any time during the previous tax year In excess of five percent (5 %) of the property s value Thy , , threshold Is the same whether you are using percentage thresholds i,r dollar thresholds You are not required to list your residences and vacation +tomes nor are VOL required to state the value of the property , >n the fore ,[dire), wnership Includes situatiol s where you are a oeneficiary c' [mist tha owns the property as well as situations where you are more than a 5 ° partner in a partnership or stockholder in a corporation that own: the property f he value of the property may be determined by the most recently assessed value for 'ax purpose: r the absence of . - pore current apprars,1 ne ocdi,ou or description of the property snould oe sufficient to ,, nable anyone who looks at the form is identify the property Although a , egal description of the property will do such a lengthy description rs not required Using simpler descriptions such as duplex 115 Terrace Avenue Tallahassee or 40 acres located at the Intersection of Hwy 60 and 1 - 95 Lake - ,ounty s sufficient in some cases the property tax Identification number of , he property will help In Identifying It 12” ac ranch on Hwv 902 Hendry ,ounty fax II I # 131 -45863 ti irjoFF on paoe (a) If you are reporting based on percentage threshold CE FORM 1 Effective January 1 ?012 RAf- m Rula 34 -8 202,1 It r F4 Examples — You own 1/3 of a partnership or small corporation that owns both a vacant lot and a 12% Interest in an office building You should disclose the lot, but are not required to disclose the office building (because your 1/3 of the 12% Interest —which equals 4% —does not exceed the 5% threshold) — If you are a beneficiary of a trust that owns real property and your Interest depends on the duration of an Individual's life, the value of your Interest should be determined by applying the appropriate actuarial table to the value of the property Itself, regardless of the actual yield of the property PART D - INTANGIBLE PERSONAL PROPERTY [Required by Sec 112 3145(3)(a)3 or (b)3, Fla Stat ] Provide a general description of any Intangible personal property that, at any time during the disclosure period, was worth more than (1) ten percent (10 %) of your total assets (if you are using percentage thresholds), or (2) $10,000 (if you are using dollar value thresholds), and state the business entity to which the property related Intangible per- sonal property Includes such things as money, stocks, bonds, certificates of deposit, Interests In partnerships, beneficial Interests in a trust, promissory notes owed to you, accounts receivable by you, assets held in IRA's, and bank accounts Such things as automobiles, houses, jewelry, and paintings are not intangible property Intangibles relating to the same business entity should be aggregated, for example, two certificates of deposit and a savings account with the same bank Where property is owned by husband and wife as tenants by the entirety (which usually will be the case), the property should be valued at 100% Calculations In order to decide whether the intangible property exceeds 10% of your total assets, you will need to total the value of all of your assets (including real property, intangible property, and tangible personal property such as automobiles, jewelry, furniture, etc ) When making this calculation, do not subtract any liabilities (debts) that may relate to the property —add only the fair market value of the property Multiply the total figure by 10% to arrive at the disclosure threshold List only the intangibles that exceed this threshold amount Jointly owned property should be valued according to the percentage of your joint ownership, with the exception of property owned by husband and wife as tenants by the entirety, which should be valued at 100% None of your calculations or the value of the property have to be disclosed on the form If you are using dollar value thresholds, you do not need to make any of these calculations Examples for persons using comparative (percentage) thresholds — You own 50% of the stock of a small corporation that Is worth $100,000, according to generally accepted methods of valuing small businesses The estimated fair market value of your home and other property (bank accounts, automobile, furniture, etc) Is $200,000 As your total assets are worth $250,000, you must disclose Intangibles worth over $25,000 Since the value of the stock exceeds this threshold, you should list "stock" and the name of the corporation If your accounts with a particular bank exceed $25,000, you should list "bank accounts" and bank's name — When you retired, your professional firm bought out your partner- ship interest by giving you a promissory note, the present value of which Is $100,000 You also have a certificate of deposit from a bank worth $75,000 and an investment portfolio worth $300,000, consisting of $100,000 of IBM bonds and a variety of other Investments worth between $5,000 and $50,000 each The fair market value of your remaining assets (condominium, automobile, and other personal prop- erty) Is $225,000 Since your total assets are worth $700,000, you must list each Intangible worth more than $70,000 Therefore, you would list "promissory note" and the name of your former partnership, "certificate of deposit" and the name of the bank, "bonds" and "IBM " but none of the rest of your investments PART E - LIABILITIES [Required by Sec 112 3145(3)(a)4 or (b)4, Fla Stat ] In this part of the form, list the name and address of each private or governmental creditor to whom you were Indebted for a liability in any amount that, at any time during the disclosure period, exceeded (1) your net worth (if you are using percentage thresholds), Q (2) $10,000 (If you are using dollar value thresholds) You are not required to list the amount of any Indebtedness or your net worth You do not have to disclose any of the following credit card and retail Installment accounts, taxes owed (unless reduced to a judgment), indebted- ness on a life Insurance policy owed to the company of Issuance, contingent liabilities, and accrued Income taxes on net unrealized appreciation (an accounting concept) A "contingent liability" is one that will become an actual liability only when one or more future events occur or fall to occur, such as where you are liable only as a guarantor, surety, or endorser on a promissory note If you are a "co- maker" and have signed as being jointly liable or jointly and severally liable, then this Is not a contingent liability, if you are using the $10,000 threshold and the total amount of the debt (not just the percentage of your liability) exceeds $10,000, such debts should be reported, Calculations for persons using comparative (percentage) thresholds In order to decide whether the debt exceeds your net worth, you will need to total all of your liabilities (Including promissory notes, mortgages, credit card debts, lines of credit, judgments against you, etc ) Subtract this amount from the value of all your assets as calculated above for Part D This is your "net worth " You must list on the form each creditor to whom your debt exceeded this amount unless it is one of the types of Indebtedness listed In the para- graph above (credit card and retail Installment accounts, etc ) Joint liabilities with others for which you are "jointly and severally liable," meaning that you may be liable for either your part or the whole of the obligation, should be Included In your calculations based upon your percentage of liability, with the following exception joint and several liability with your spouse for a debt which relates to property owned by both of you as "tenants by the entirety" (usually the case) should be included In your calculations by valuing the asset at 100% of Its value and the liability at 100% of the amount owed Examples for persons using comparative (percentage) thresholds — You owe $15,000 to a bank for student loans, $5,000 for credit card debts, and $60,000 (with your spouse) to a savings and loan for a home mortgage Your home (owned by you and your spouse) is worth $80,000 and your other property is worth $20,000 Since your net worth is $20,000 ($100,000 minus $80,000), you must report only the name and address of the savings and loan — You and your 50% business partner have a $100,000 business loan from a bank, for which you both are jointly and severally liable The value of the business, taking Into account the loan as a liability of the business, Is $50,000 Your other assets are worth $25,000, and you owe $5,000 on a credit card Your total assets will be $50,000 (half of a business worth $50,000 plus $25,000 of other assets) Your liabilities, for purposes of calculating your net worth, will be only $5,000, because the full amount of the business loan already was Included in valuing the business Therefore, your net worth Is $45,000 Since your 50% share of the $100,000 business loan exceeds this net worth figure, you must list the bank PART F - INTERESTS IN SPECIFIED BUSINESSES [Required by Sec 112 3145(5), Fla Stat ] The types of businesses covered in this disclosure are only state and federally chartered banks, state and federal savings and loan associations, cemetery companies, Insurance companies (Including Insurance agencies), mortgage companies, credit unions, small loan companies, alcoholic bever- age licensees, pari - mutuel wagering companies, utility companies, entities controlled by the Public Service Commission, and entities granted a franchise to operate by either a city or a county government (CONTINUED on page 6) C&- CE FORM 1 - Effective January 1 2012 Refer to Rule 34-8 202(1) F A C PAGE 5 You are required to disclose 'r this part of the forrr the fac' that vrn owned during the disclosure perior, an interest in or heir n—, r °' tions with particular types of businesses listed above Ili, are reour3 P: make this disclosure if you own o' owned neither directly o' mdirect,� t, t form of an equitable or beneficial interest) at any tune during the +tiscrusu,t period more than five percent (5 %) of the total assets or capita, strc i, it one of the types of business entities granted a privilege tc iperate 'r r iofioa that are listed above You also must complete this par of the rn(m 'c these types Of, businesses for whirt rrtc a : , ever, dt ­v try - tr fl4r `tSUrF pP.rin'`= an Officer jreCif partnr ' - rl - ,malej f ",p „ I , . )r, , r' ia ,eta such „ p<�sitIU s �i €eiest vpe; ,,r businesses ,,st (verttcalry frn e�cr business the nani. c' the ,r ° ;ells � ,add;es nr orincipa' busines i 't•vit%, a ut rite posit 'I• (li ,<, lr'.1, ,I_ v 7 it . 9�,l � r,ai to =.= .t� '1e scrnen ao<,v• , s , •ate ° , part a r� ins ihr- . rt_7a it Instructions , PENALTIPc A failure to make any required disclosure constitutes grounds fur anti ,nay Ue liunished by one or o ure of the following dis- qualification from being on the ballot, impeachment, removal or suspension froin office or emplovmeot demotion reduction rr salary reprimand or a civil penalty not exceeding $1 fi 000 (Se( " , I ,1 )rida Statutes] Also, if the annual form is not filed by September 1st a fine of $25 for each day late will be imposed, up to a maximum penalty of $1,500. [Section 112.3145, F.S. ]. OTHER FORMS YOU MAY NEED TO FILE. IN ORDER TO COMPLY WITH THE ETHICS LAWS In addition to filing Form 1 you may be required to file one r. more of the special purpose forms listed below depending on your particular position business activities, or interests As it is your duty to obtain and file any of the special purpose forms which may be applicable to you you should carefully read the brief description of each form to determine whether it apvhe4 Form 1 F — Final Statement of Financial Interests: Required of local officers, state officers, and speci- fied state employees within 60 days after leaving office or employment This form is used to report financial interests between January 1 st of the last year of office or employment and the last day of office or employ ment [Sec 112 3145(2)(b) Fla Stat J Form 1X — Amended Statement of Financial Interests To be used by local officers, state officers, and speci- fied state employees to correct mistakes on previously filed Corr ° [Sec 112 3145(9), Fla Stat i Form 2 — Quarterly Client Disclosure: Required of local officers, state officers, and specified state employees to disclose the names of clients represented for compensation by them selves or a partner or associate before agencies at the same level of government as they serve The form should be filed by the end of the calendar quarter (March 31 ,June 30, Sept 30 Dec 31) following the calendar quarter in which a reportable representation was made [Se, 112 3145(4), Fla Stat J Form 3A — Statement of Interest in Competitive Bid for Public Business: Required of public officers ano public employees prior to or at the time of submission of a bid for public business which otherwise would violate Sec 112 313(3) ui 112 313( Fla Stat [Sec 112 313(12)(b) Fla Stat Form 4A — Disclosure of Business Transaction, Relationship, or Interest Required of public officers an(! employees to disclose certain business transactions relationships o interests which otherwise would violate Sec 112 313(3) o° 112 313(7 Fla Stat [Sec 112 313(12' and (12)(e) Fla Stat . Form 8A — Memorandum of Voting Conflict for State Officers: Required to be filed by a state officer within i G days after having voted on a measure which inured to his or her specia; private gain (or loss) or to the special gain (or toss) of a relative bust ness associate, or one by whom he or she is retained or employed Each appointed state officer who seeks to influence the decision on such a treasure prior to the meeting must file the form before undertaking that action [Sec 1 12 3143 Fla Stat ; Form 8B — Memorandum of Voting onflict for County, Municipal, and Other Local Public Officers: Required to be filed (within 15 days of abstention) by each local officer who must abstain from voting on a measure which ,vould inure to his or her special private gain (or loss) or the special gait 'nr loss; of a relative, business associate or one by whom he or she is retained of employed Each appointed local official who seeks to infiu- ence the decision on such a measure prior to the meeting must file the form before undertaking that action [Sec 112 3143, Fla Stat Form 9 --- Quarterly Gift Disclosure: Re (l, local officers, state officers, specified state employees, and state Procurement employees to report gifts over 5100 in value The forrr ; hould oe filed by the end of the calendar quarter (March 31 June 30 September 30 or December 31) following the calendar auarter Sri whi& the gift was 'ecerved [Sec 112 3148 Fla Stat Form 10 — Annual Disclosure of Gifts from Governmental Entities and Direct Support Organizations and Honorarium Event Related Expenses: Required of local officers, state officers, specified state employees, and state procurement employees to report gifts 'ver $ r value received from certain agencies and direct suppor, .)rganizations also to be utilized by these persons to report honorarnun event - related expenses paid by certain persons and entities The fora' should be filed by .July 1 following the calendar year in which the gift <) honorarium event - related expense was received (Set 12 5148 am 41 ,) '314 - :!a Stat' s E AVAILABILITY OF FORMS; FOR MORE INFORMATION Copies of these forms are available from the Supervisor of Elections in your county, from the Commission on Ethics Post Office Drawe 15709, Tallahassee, Florida 32317 -5709, telephone (850 488 -7864 and at the Commission's web site www ethics state fl . Questions aoout any of these Corms or the ethics laws may oe addressed to the Commission on Ethics Post Office Drawer 15 Tallahassee rinrida 3231 -5709 teleohone- f8l 188 7884 CE FORM 1 Effective January I 'M'- R rn P„ ,e 94 C 202 ^ r THE LAW OFFICES OF PERRY & JENSEN LLC ANN H. PERRY BONNI SPATARA JENSEN aperry@perryjensenlaw.com bsjensen @perryjensentaw.com j @perryjensenlaw.com MEMORANDUM To: Board of Trustees Boynton Beach Municipal Police Officers' Pension Fund From: Bonni S. Jensen Subject: State and Tax Law Updates Date: May, 2012 Both the IRS and the State legislature have taken actions which could impact your pension plan. The IRS has issued a private letter ruling on Retire /Rehire policies and is addressing the Normal Retirement Age issue again. And the State legislature, in addition to the change in the public records law, passed a bill to automatically cancel the designation of the spouse as a beneficiary upon divorce or annulment of the marriage. INTERNAL REVENUE CODE ISSUES In a Private Letter Ruling ( "PLR ") published November 25, 2011, the IRS determined that if an employee "retires" in order to qualify for a benefit, with the explicit understanding with the employer that the employee is not separating from service, then the employee is not legitimately retired. The IRS ruled this in a case involving certain early retirement subsidies that were being eliminated and so many employees "retired" to take advantage of the benefits. The employer allowed the employees to do so and then rehired them into their same position the next day. According to the PLR, such retirements violate Internal Revenue Code §401(a) and could result in disqualification or penalties to a plan. PLAN OF ACTION: Ensure that retirements are in compliance with this PLR or implement changes to the Pension Plans in accordance with the in- service distribution regulations discussed below. The Retire /Rehire issue is related to the IRS's ongoing review of Normal Retirement Age in the governmental sector, which the IRS is still actively considering. Notice 2012 -29 was released in April of 2012 inviting public comment on: (A) The IRS clarification that governmental plans which do not offer in- service 400 EXECUTIVE CENTER DRIVE, SUITE 207•:• WEST PALM BEACH FLORIDA 33401 - 2922 PH: 561.686.6550 •. Fx: 561.686.2802 !l >tl �T/fp MN.. Board of Trustees Boynton Beach Municipal Police Officers Pensior F State and Tax Law Updates May, 2012 Page 2 of 4 distributions do not need to have a definition of normal retirement age and do not need to have a definition referencing specifically age; and (B) Allows the age 50 safe harbor for in- service distributions to public safety officers who participate in larger plans whose members are not all public safety officers and who do not all have a normal retirement age of 50. Importantly, the effective date for the application of this regulation has been extended until the later of January 1, 2015 or the close of the first regular legislative session of the body with the authority to amend the plan PLAN OF ACTION: • Continue to monitor effective date for governmental plans • Discussion with Board regarding comments on the Regulation STATE LAW At the end of April, the Governor signed HB 401 into law. The law effective July 1, 2012 provides that dissolution or annulment of marriage voids the election of a former spouse as a designated beneficiary. Though this is not specifically a pension issue, it does impact the operations of the Pension Fund and needs to be addressed as a part of the Board processes. Additionally, the City should be made aware of the change The bill amends the Florida Statutes by creating a new §732.703. This section voids the designation of the spouse as the death beneficiary/joint annuitant ( "beneficiary") as of the date of divorce. This law applies to: 1. Employee benefit plans (except the Florida Retirement System); 2. Life insurance policies or annuities within an employee; 3. 1 RAs; 4. Payable on death accounts; 5. Security accounts registered in a transfer on death form; or 6. Life insurance policies or annuities held outside an employee benefit plan And does not apply: 1 To the extent federal law provides otherwise; 2. If the designation of beneficiary is signed after the dissolution or annulment and expressly provides that benefit will be paid to the former spouse: 3 To a will or trust; Board of Trustees Boynton Beach Municipal Police Officers' Pension Fund State and Tax Law Updates May, 2012 Page 3 of 4 4. If the order of dissolution or annulment requires the former spouse to remain the beneficiary; 5. If under the order of dissolution or annulment the decedent could not have unilaterally terminated the ownership of the asset; 6. If the designation of the spouse as beneficiary is irrevocable; 7. If the instrument directing the disposition of the assets is governed by the laws of another state; 8. To an asset in two or more names where the death of one co -owner vests ownership in the survivor; 9. If the decedent remarries the former spouse; or 10. To state administered retirement plans. The law also provides for some limitation on liability for improper payments under the law, unless the employee benefit plan pays in violation of an order directed to the employee benefit plan and served as required by law. The employee benefit plan is not liable for making a payment in violation of the new statute (FS 732.703) if the beneficiary designation does not explicitly specify the relationship. 2. If the designation of beneficiary clearly identifies the beneficiary as the former spouse, then the employee benefit fund has no liability for paying the former spouse if the death certificate identifies the participant as married to that spouse at the time of his or her death. Alternatively, if the designation of beneficiary clearly identifies the beneficiary as the former spouse, then the employee benefit fund has no liability for paying the secondary beneficiary if the death certificate identifies the participant as not married or is married to another person at the time of his or her death. 3. If the death certificate is silent as to the decedent's marital status at the time of death, then the employee benefit fund is not liable for making the payment to the spouse as the primary beneficiary if the primary beneficiary/spouse completes an affidavit swearing or affirming that the parties were legally married to each other on the date of death. Alternatively, if the death certificate is silent as to the decedent's marital status at the time of death, then the employee benefit fund is not liable for making the payment to the secondary beneficiary if the secondary beneficiary completes an affidavit swearing or affirming that the primary beneficiary and the decedent were not legally married to each other on the date of death. See attached draft Affidavits. The verbiage of the affidavits is set forth in the new law. Board of Trustees Boynton Beach Municipal Police Officers' Pensior 1-- irw State and Tax t-aw Dpdate�- May, 2012 Page 4 of 4 The limitations on liability apply even though the employee benefit fund may have known that the person to whom the asset is transferred is different from the person who owns the asset per the designation of beneficiary or the person who would own It if the designation were void by operation of the new law. The new law does not affectthe ownership of interests in assets between the former spouse and any other person who may own it by operation of the new law, including the rights of any purchaser, creditor, Insurance company, financial institutions. trustee, administrator or other third party This law applies to all deaths occurring on or after July 1, 2012 regardless of when the designation was made. PLAN OF ACTION. • Renew efforts to make sure that all beneficiary designations are up to date. • Implement use of affidavits for payment of all death benefits effective July 1, 2012. • Develop procedures for gathering records to determine participant's marital status on date of death ® Ensure that the City and all service providers are aware of the new law • Follow up on regulation interpreting the statute, if any. Please add these items to your next meeting agenda for discussion H.1AII Miscellaneous\ALL BOARDS\20121MEMO state law and IRS (All Funds) wpd PENSION FUND AFFIDAVIT STATE OF COUNTY OF Before me, the undersigned authority, personally appeared (type or print affiant's name) ( "Affiant "), who swore or affirmed that: 1. (Type or print name of decedent) ( "Decedent ") died on (type or print the date of the Decedent's death) 2. Affiant is a "primary beneficiary" as that term is defined in Section 732.703, Florida Statutes. Affiant and Decedent were married on (type or print the date of marriage), and were legally married to one another on the date of the Decedent's death. (Affiant) Sworn to or affirmed before me by the affiant who is personally known to me or who has produced as identification this day of , 2012. Signature of Officer Signature, Notary Public In accordance with the provisions of Florida Statutes, §117.04(4)(1), Notary name must printed typed or stamped below Notary's signature; seal must be stamped next to signature or below printed name: Printed, typed or stamped name of Notary BSJng HAA11 Miscellaneous %FORMS1Aftidavits.wpd PENSION FUND STATE OF COUNTY OF A FFIDAV IT Before me, the undersigned authority, personally appeared (type or print affiant's name) ( "Affiant "), who swore or affirmed that. 1 (Type or print name of decedent) ( "Decedent ") died on (type or print the date of the Decedent's death,, 2. Affiant is a "secondary beneficiary" as that term is defined In Section 732.703, Florida Statutes. On the date of the Decedent's death, the Decedent was not legally married to the spouse designated as the "primary beneficiary" as that term is defined in Section 732.703, Florida Statutes. Sworn to or affirmed before me by the affiant who is personally known to me or who has produced 2012, as identification this day of _ Signature of Officer Signature, Notary Public In accordance with the provisions of Florida Statute4 §11704(4)(1), Notary name must printed, typed stamped below Notary's signature; seal must be stampea next to signature or below printed name Printed, typed or stamped name of Notary BSJ /lg H:Wl MiscellaneousTORMSL4ffidavits wpd Barbara Ladue From: Barbara Ladue [lad ueb @bbpd pension .com] Sent: Monday, April 23, 2012 8:56 AM To: 'Wanda Gordon' Subject: Boynton Police - Class Action - Apollo Attachments: SKMBT_C55012042308490 pdf Wanda. For your records, the Boynton Beach Police Pension Fund has decided that no claim should be filed on their behalf for the Apollo Class Action Thank you. Barb La Due From: fax compson.com [ mailto1ax @compson.com Sent: Monday, April 23, 2012 8:50 AM To: lad ueb(abbbpdpension.com Subject: Message from KMBT_C550 CLASS ACTION PENDING Your account had activity involving the Security during the Class Period named below Name of Security: Apollo CUSIP /Ticker 037604105 Class Period: 2/27/2004 thru 12/20/2004 For more detailed information regarding this class action lawsuit: Call: 888- 665 -1127 Visit website: WWW .ApollaSecuritiesLitigation.com To be included in this class action, paperwork would need to be completed and filed. Please indicate by setting your initials next to your choice below: A) Salem Trust Company should research and file the necessary paperwork for inclusion into this class action claim. If you choose this option, Salem Trust will complete the research and file the claim form on your behalf. Salem Trust will monitor the class action and process the settlement proceeds if and when settlement proceeds are received. Please forward any proceeds to the following address. Please include a check for $300 payable to Salem Trust Company for processing B) _ Salem Trust Company should research the claim and send the resulting paperwork to the following address: If you choose this option, Salem Trust will complete the research and send it to the above address. Salem Trust will not file the claim on your behalf. Salem Trust will not monitor or process settlement proceeds. Please include a check for $250 payable to Salem Trust Company for research C) Salem Trust Company should DO NOTHING in this regard If you choose this option, Salem Trust will not provide any research nor will they file a claim on your behalf. 1 epresentauA ('s plc Ut i t (orporatluII ,.t othe Begat emitv ,nl ■)c1 prede((s.on, ,`sign , release, rehnclulsi "tl( an, 1 rill( ,lckl1O\yledl?e that F lu n e »' , -chit ,n,1('- n 't �( '• rtf.ni �, I,i' 1 his release shall I , t t-u f,r(c cite, unt( ,,rni ui!11 '1 1'11'11 ( I nt itt( becomes effect]v e I (We) hereby acknowledge that by submitting .t (lauu, 1 , ,ac; \ olunlann teleasc and want an _i h1 t, brut on claim in any foreign proceedings against the Settling Defendants ,Ind Released Partie and 1 -.( 'nett affiliates or subsidiaries that arise our ell, relate n of 'Ir( 'ltase(1 Up, ! ' allegation trinsa* tl',ilti 1'1(' occurrences in this Action and that I (we) have not dune so and well not Enter your taxpayer identification number hel,■v \ tall 1 ttroy id, this 1Ilornlai ,i, ,tc lain, m u rejected Social Security Number 1 axpaver Identification Number (for Individuals) 'tor estates, [lusts. corporations , 1 (We) certify that 1 an (we are NO 1 subject <<- nackup u under the prov isulns ,l tics tioll 3406(a)(1)(c) of the Internal Revenue (,ode because (a, 1 ;In). ' \ \e are, exempt from backup vv ithholding, n! t (We) have not been notified by the I R S that 1 am (we are subject to backup withholding a' , result of a i,,ilut( to report all interest or dividends, or (c; th( 1 RS has notified me that I ant (we are' I(1nec ubiec backup withholding NOTE If you have been notified b\ the I R S that )ou are subject to backup withholding, pleas( strike out pi( language that you are not subject to backup withholding in the certification above UNDER THE PENALTIES OF PER) , 1 (WE) CERJ I1 °Y 1 1 1 - 1 1 ALE 01 [U 1 I N FORMA 1 1( I N (WE) PROVIDED 15 TRUE, CORRECT AND OM Lf- (Date) (Si your name here' (Account Number) 'Type or print your name here; (Date) (joint owner sign your name here` 1,1111 twncr Pp( print tour u,nm( h(r( (Account Name) Capacit of person signing, Beneficial Purchaser Executor of Administrator Include proof of capacity (Corporate Resolution, ( our[ document, etc 1 Barbara Ladue From: Chapman, Gary [ChapmanG @bbfl us] Sent: Thursday, April 19, 2012 4 PM To: Barbara Ladue Subject: FW FW Fwd FW Boynton Beach Police - Apollo Class Action - Due 4/20/12 Hello Barb, we are not filing on this claim Respond to Salem in kind Thanks From: Bonni S. Jensen [ma ilto :bsjensen @perryjensen law .com] Sent: Thursday, April 19, 2012 2:39 PM To: Chapman, Gary Cc: Barbara Ladue; Pension Law Team Subject: Re: FW: Fwd: FW: Boynton Beach Police - Apollo Class Action - Due 4/20/12 Gary, Based on your calculations, I agree with your assessment not to file. The cost far exceeds the Fund's total losses. TO SEND MAIL TO MY ENTIRE TEAM, PLEASE RESPOND TO THEPENSIONTEAM(cTPERRYJENSENLA W.COM Bonni S. Jensen <bsiensen a�perrvjensenlaw.com> Law Offices of Perry & Jensen, LLC 400 Executive Center Drive, Suite 207 West Palm Beach, Florida 33401 Telephone: (561)686 -6550 Facsimile: (561)686 -2802 CONFIDENTIALITY NOTICE: This communication is confidential, may be privileged and is meant only for the intended recipient. If you are not the intended recipient, please notify the sender ASAP and delete this message from your system. IRS CIRCULAR 230 NOTICE: To the extent that this message or any attachment concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law. On 4/18/2012 9:44 AM, Chapman, Gary wrote: Hello Barb, It appears that our exposure was as follows 63941 15 63926 49 -1466 Buy Sell Loss naseo on 'rns , `.Nouic :7 Ilie, 4 IF and recommendatior CSC or jul tt i'- po , '10" agenc" Via', n E'ea, discusslor Buy BOYNTON POL 7062035379 59- 2182058 ;� i,6Ci4 i , 'a� ; I, }s Y � - jCO , BOYNTON POL x'062035379 59 2182058 3/60410,' 6/25/200 - s4 .0000 - 7 . 8 9 BOYNTON POI_ /062035379 59- 2182058 3/604 -, 8/2012004 1 ') fJ000 30�' BOYNTON POL 7062035379 59- 2182058 3 %604 ? 0 -, ?0012004 8 ', 0000 " i700r Sell 7062035379 01/24/2005 105 418 815 000000- 11 63,926 49 BOYNTON POL -DHJ 01/27/2005 SEL SALOMON SMITH BARNEY From: Barbara Ladue [ ma i Ito: lad ueb(&bbpd pension. com Sent: Wednesday, April 18, 2012 8:06 AM To: Chapman, Gary Subject: FW: FW: Fwd: FW: Boynton Beach Police - Apollo Class Action - Due 4/20/12 Ga, v Here is the response let tnF know how You N,r rni (.� tarot eef. Thanks Barb La Due From: Dru McClelland [ mailto:DMcClelland(ausfas.com Sent: Tuesday, April 17, 2012 2:46 PM To: Barbara Ladue Cc: Wanda Gordon Subject: Re: FW: Fwd: FW: Boynton Beach Police - Apollo Class Action Due 4/20/12 r - r Barbara, I usually do not gather information outside the class action period to give to clients. As this information is not needed for us to file However since it was only one sell I was able to get the information for you. Please realize this is a one time thing. 7062035379 01/24/2005 105 418 815.000000- 11 63,926 49 BOYNTON POL -DH) 01/27/2005 SEL SALOMON SMITH BARNEY Dru 'lease ncte m email address has (hancE(i Dru M. McClelland Operation Specialist/ Fixed Income USF Affiliate Services, Inc. GreatBanc /Salem Trust 801 Warrenville Rd. Suite 500 Lisle, IL 60532 630 -810 -4181 630- 810 -4503 fax DMcClelland @usfas.com new email >>> "Barbara Ladue" < ladueb @bbpdpension.com 4/17/2012 10:23 AM >>> Dru Could you please provide us with the selling price on these Apollo assets so we may make an informed decision to proceed Thankyou Barb La Due From: Chapman, Gary [ mailto:ChapmanG @bbfl.us Sent: Tuesday, April 17, 2012 10:17 AM To: Barbara Ladue Subject: RE: Fwd: FW: Boynton Beach Police - Apollo Class Action - Due 4/20/12 Hello Barb, it appears our exposure was approximately 65K I would like to know what our selling price was, surely Salem would have that information Please see if you can get that selling price Thanks, From: Barbara Ladue [ mailto : lad ueb(?i)bbpdpension.com Sent: Tuesday, April 17, 2012 9:49 AM To: Chapman, oars Subject: FW• Fwd F-W Boynton Beach Police 4i3oilr. Uas MCtw:-t , I(I ' (hecke(i out the Wei) `,Ite h1o, it nlr! nc f iI c ltt( -Io r,Ui t`! thee! resoon : -1 me 1, r mv+ 1lhanks Iiat b La Due From: Wanda Gordon [ mai Ito: Wanda. Gordon Ca)salemtrust.com Sent: Tuesday, April 17, 2012 9:04 AM To: Barbara Ladue Subject: Re: Fwd: FW: Boynton Beach Police - Apollo Class Action - Due 4/20/12 Hello Barbara, I forwarded your questions to my ops department and below is the response I received. Thank you, Wanda Gordon Trust Associate Salem Trust Company 455 Fairway Drive, Ste 103 Deerfield Beach, FL 33441 Phone: 954- 725 -4490 Fax: 954- 725 -4493 w anda.gordonCiusalemtrust.com >>> Dru McClelland 4/17/2012 9:01 AM >> Wanda, Below is the information I can give you for Boynton Bch Police. I see they only had buys during the period. I do not know if their claim will be approved or if they will get any money. It is not mine to determine BOYNTON POL 7062035379 59- 2182058 37604105 f 2/27/2004 '0000 "0006 BOYNTON POL 7062035379 59- 2182058 37604105 6/25/2004 345.0000 87.8900 BOYNTON POL 7062035379 59- 2182058 37604105 8/20/2004 470,0000 530C BOYNTON POL 7062035379 59- 2182058 37604105 12/20/2004 815.0000 J.0000 Please note my email address has changed Dru M. McClelland Operation Speci alist /Fixed Income USF Affiliate Services, Inc. GreatBanc /Salem Trust 801 Warrenville Rd. Suite 500 Lisle, IL 60532 630 - 810 -4181 630 -810 -4503 fax DMcClelland @usfas.com new email >>> "Barbara Ladue" < IaduebC�bbpdpension.com > 4/17/2012 8:36 AM >>> Wanda. I checked with Gary Chapman, Chair of the Board, and he has the questions below as to how we will proceed. Your response to these questions willpoint us in the right direction. Thanks for your advice Barb La Due From: Chapman, Gary [ mailto:ChapmanG @bbfl.us Sent: Monday, April 16, 2012 3:23 PM To: Barbara Ladue Cc: Pension Law Team Subject: RE: Boynton Beach Police - Apollo Class Action - Due 4/20/12 Hello Barb, I would suggest that you follow the same procedure as we did in November of last year with Salem, which by the way was also with such short notice Call Salem and determine our exposure in total dollars How many shares did we own? What did we pay for the shares? What did we sell them for? What is the difference? A Minus would = exposure If our exposure exceeds their processing costs then complete the document and forward for processing So short answer is if we owned enough shares during the class action period that exceeds the $300 00 processing fee we will go with option A else with option C as so stated on "Salem's Class Action Pending" form Thanks, Gary From: Barbara Laoue ; � ailtc:iaauebCcub 1&, -�i Sent: Monday, April 1f ��a ?; T ", To: Chapman,, Gar, Subject: FW, Boynton Beaco Police '-60011' � ia4 Iwticsi riie -+ ,'r1 �'o(" It-', me know totnorr,w/ Iio �o ,.v oIt iiki t, ),. +hank', Barb La Due From: Wanda Gordon [ mai Ito: Wanda. Gordon(c)salemtrust,com Sent: Monday, April 16, 2012 1:43 PM To: Barbara Ladue Subject: Boynton Beach Police - Apollo Class Action - Due 4/20/12 Hello Barbara, Due to the short notice that we have to file this class action, I thought that I would send you an advance copy of this letter via email. Once you have had a chance to review these documents please feel free to contact me should you have any questions Thank you, Wanda Gordon Trust Associate Salem Trust Company 455 Fairway Drive, Ste 103 Deerfield Beach, FL 33441 Phone: 954- 725 -4490 Fax: 954-725-4493 ��Landa. ordon a- salemtr April 16, 2012 Barbara LaDue /Pension Administrator Renaissance Executive Suites 1500 Gateway Blvd. , Suite 220 Boynton Beach, FL 33426 Re: Class Action Processing - Apollo Dear Barbara: We have been notified there is a class action lawsuit pending involving a security that was held during the time period that your account was active. Because your account with Salem Trust Company is no longer active, this matter requires special handling. Attached are the details regarding that class action. We offer three options as to how this matter can be handled. A) We research the information and file the necessary paperwork for inclusion into this class action claim. B) We research the information and send the resulting paperwork to your designee. C) We DO NOTHING in this regard. Please indicate how you wish us to proceed with this class action by setting your initials next to the option you choose and signing the acknowledgement on the second page of the attachment. If you indicated choices A or B, please enclose a check payable to Salem Trust Company for the processing and /or research fee. IMPORTANT NOTICE: If we are not in receipt of the attachments (and processing fee, if applicable) by close of business on 4/20/12 we will NOT be able to file on your behalf. If you have any questions, please contact your closest service office: Deerfield Beach 877 - 382 -5268 Tampa 877 - 382 -6767 Thank you, Wanda Gordon Trust Associate > > r) 7� 0 � V) ;Z, z FA fTi ry TT ro ro 0 rn j Z ID LP w -7 7 V) U.) as > > ul IV -.0 r 00 00 rv > xs rn m C) G 0 (D a) QOOj --rt ri (A M C:) 00 00 0001 r)w Orr Q. 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L .. - r _ .. v _ . _ e S() 00 N0010 v1 0) O AV A 00 tO H A 00 W A H V C) V1 rN N/ AtDV WO0110 -.(D -a VOON V VOwH00WO00v,00OFVNOV AtnO NJLJVInHNIO n -• OHOM m N A in vi H A O H A W ko m VI I• m m w W-4w N Ln 01 < OMHw0AOwV,VJ )0)O00O0000 —i - 0M00OwN01Ov7HWV(.0000 L� NN01 V1O(v OO(D O0)00 tONlOHH VV, -P- 1 ,0 O0VA00O w N 1- +O CT) Aw PENS1_ F T DE OF Boynton Beach Boynton Beach Police & Fire Pension Funds 1500 Gateway Blvd., Suite # 220 Boynton Beach, Fl. 33426 Pension Administration 561/739 -7972 FAX: 561/731 -2997 Email ladueb@bbpdpension.com June 2012 Retirees of the Boynton Beach Police Officers' Pension Plan: It is that time of the year again............ Enclosed is "ALIVE AND WELL STATEMENT" for your completion, notary and return to the Pension Administrator. The Police Officers' Pension Board requires the statement be returned as soon as possible so as to not disrupt your monthly pension benefit. Please return the completed statement prior to August 7, 2012 so that your September 1 st benefit will be processed in a timely manner. Please complete with Notary Public and mail to: Barbara La Due Pension Administrator Boynton Beach Police Officers' Pension Fund 1500 Gateway Blvd., Suite #220 Boynton Beach, FL 33426 Please call me at 561/739 -7972 if you have any questions or concerns. Thank you. Barbara La Due Pension Administrator ALIVE DOC ALIVE AND WELL STATEMENT I , alive on this day of from the City of Boynton Beach. State of County of hereby certify under penalties of perjury, I am 2012, and lawfully receiving pension benefits X (Signature) (Print Name) (Address) (City, State & Zip Code)) (Phone/Cell) (Email) BEFORE ME, the undersigned authority, personally appeared , whom is personally known to me or has produced as identification and who did take an oath and, after being duly cautioned and sworn, deposes and says that he /she has signed the foregoing document for the reasons therein contained. SWORN TO AND SUBSCRIBED before me this day of , 20 My Commission Expires: Notary Public 06 -2012 A w O z - z h h o W N - 1 W Z M ��- O W °Y A T m a o W a o w w —�w ' o, z" I zo O W z z O a) a) a O cd �. cd a) bJJ N C�j O O CA O C vC O s• O O U �� CA N bOA b1J C�j C�j N Cj O s. U = p 'n cn ' N cj O bJJ. N 'In ' Cj O �l C O C�j a) CA CA C o Cj CA C6 � a� CA C�j O C�j CII) Cj )-0 C o o x CA ° w o ° CA � c ° a' `� �•� � • il `� O 61 + a =0 C�j — ,j o ' °• � ' vl � � °• � E y c H ° �. �••' a� a� s . a) s . 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Also in this issue: 7 Four ways to add value in fixed income now 10 Why intelligent conversations matter 12 Q &A The lop challenges facing investors i. - —nrr 3 The art of learning By Bob Collie, F IA, Chief Researc h Strategist, An 'i 0 3s u - 1 11191 <il 4 Are your actions consistent with your beliefs? By Kc vin Term r, CFA, Managing Drrec tor, Co psi 'u ri There is no way to directly mensal e what <in ivestoi le hev"s to br ti ue, WE' cannot"obser ve" beliefs However, it is pass f ile to look it the at bons an investor takes and, from those actions, infer a set et in plied behaf This mu( k" desc I Ibex, how This might he done and the insights 11 cd yield for ;mu orctat 7 Four ways to add value in fixed income now By (o'Io'd Fit; lminct, CFA, CAIA, FRM, AIF` f rilnln M it Even though there may be challenges ahto,c for th0 11 11)«amt mar kets, when the road is fraught with risk, active m [lagers r hale r s find opportunities Gerard Fitzpatrick outline', fr tr appi0, f es drslc;ned to add value through fixed Income Investments, dr p110 rt t 1 eats 1 0 Why intelligent conversations matter By IanT>net CtA, Director, Roseau h and Ca unit aee r issr i I rilrlr ment<itioe Servo« Compliance with regulations and dlsclosr10 ,s only t ,,, Mart of nvestr1 protection —the real value comes from a te'HHgent 01 satrons This means that investors need to understand the Ix was-, mod s ,ii cl air cn trves of the blokes znd investment fir ms rnaracti of 1 he1. t 12 The top challenges facing investors W,th Mir Han F homas, Chief Investment 01fr er Anierrr <0 1,1>1 iaki n,' In this Interview, Michael Thomas disease sover<al tr Issues con( erning Institutional investors activt and passivt iii u ragemoni, risk management and changes In the Ingest maul Ind str v I' I 14 Medieval Italy and the foundations of the modern world By Mar v Fjelstad, Research Analyst Russell loveslments 1/ Russell Communique ANNINIIII■ 411111=11111/ ■ The art of learning .. Dear Readers, Fiji When it comes to the learning process, humans are not so different from dogs and other mammals if the results of our actions —the rewards or the punishments —are immediate and consistent, we learn faster and we learn better Bob Collie That is one of the reasons why it is so difficult to become a really skillful investor. the impact of investment decisions is not felt immediately, and the lessons of experience are often ambiguous at best So we need to work a little bit harder to reinforce the good decisions and to learn from the bad ones Doing so calls for clear thinking, and that is what this issue of Communique sets out to provide In our lead article, Kevin Turner looks at the connection between the decisions investors make and the beliefs they hold where do these typically diverge, and what can be done to make sure there's a sound belief structure underpinning an investment program? Gerard Fitzpatrick outlines four ways to find value in fixed income now — despite threats in the current market environment Ian Toner draws some lessons from the scandals around Wall Street the connection between incentives and behavior, and the steps investors can take to help protect their own interests In the QEJA column, Michael Thomas addresses top -of -mind issues for institutional investors Those who enjoy our "Great Moments in Financial History" column will be delighted to hear that a compendium of all 30 previously published columns, along with 10 new ones, will soon be available by request There are five millennia worth of lessons in there — something for even the slowest of learners to relish Thank you for reading, ,_ / e Bob Collie FIA, Chief Research Strategist, Americas Institutional p/ 3 STRATEGY W06M I V Are your actions consistent your wit beliefs? s By Kevin Turner, CFA, Managing Director, Consulting 4 Kevin Turner There is no way to directly measure what an investor believes to be true, we can: rt "observe " beliefs However, it Is possible to look at the actions an investor takes ,:ucl, those actions, Infer a set of Implied beliefs This is an exercise we have recently a d� for a number of our clients This practice can be worthwhile After all, when investment results are disappoirl n inevitable from time to time), it's one thing to know that the portfolio exposures o' i result of deliberate decisions based on a rational set of considered beliefs —and th decisions will be defensible over time It is quite something else to find that the e> )1i were unintended —i e , due merely to happenstance or accident This is a critical I` I given that unintended exposures, when they lead to disappointing results, are suHel intense scrutiny and immediate (sometimes knee-jerk) pressure to rectify the situ Iti often at the worst possible time Implied beliefs underpin all aspects of institutional investment programs —from higl i governance functions, to the actual investment decisions being made, and all the to the form of reporting and the metrics to which investors give the closest attentlim Exhibit 1: Let's conduct a "beliefs exercise" > Goal is to determine the beliefs framework implied by a behavior or investment port I u • If actual beliefs are consistent with those implied, then this leads to an affirmation by stakeholders • If beliefs are Inconsistent, then discussion Is required to discern the true belief set Are changes required to align with beliefs? Let's look at a topical question are interest rates likely to increase? This is an especi,.11y important question for defined benefit pension plans at present, given the widespreac need to reduce the asset - liability mismatch —but there is also a general reluctance arro ul sponsors to Invest significant sums in longer - duration fixed income if there is a likelil d that rates will rise A recent Russell Research piece discussed this important topic If yields change exactly as priced into the forward curve, then all bonds will deliver the same level of return Pension plan liabilities (if calculated using a mark -to- marker approach) will likewise change by that same amount Therefore, when investors are Russell Investments 1/ Russell Communique RUSSELL INVESTMENTS considering a portfolio position (for number does matter in forming a judgment example, a long- or short - duration of the effectiveness of the manager, but a position relative to their liabilities), they lot of investment reporting seems to have should be comparing their yield curve been based around the premise that this expectations not to the current yield relative performance number was the only curve, but to the future yield curve that thing that mattered (Or, equivalently, that is implied by forward rates' the only thing the investment committee The forward curve currently prices in a cared about was whether the investment rise in rates over the next few years The managers were outperforming their market implied belief behind many investors' segments ) actions (i e , continuing to hold shorter- In contrast, the Russell Pension Funding duration portfolios) is that rates will rise by Report Card® was designed to provide more than, or will rise faster than, what is metrics that help defined benefit plan priced into the forward curve However, the sponsors analyze trends and make actual belief is often that rates will merely necessary corrections For nonprofit rise relative to their current levels This is a organizations' investment committees, the different belief Russell Spending Report CardTM provides high -level metrics based on long -term spending rates and asset growth rates (net of spending) Another example of actions and beliefs sometimes being at odds is provided by a look at reporting It has been said that "you cannot eat excess returns," the point What's more, reporting should not merely being that although a -10% return on a look back Investors should know how their global equity portfolio may be a creditable portfolios are positioned for the future Collie, Bob "The performance by the investment manager if and how much risk is being taken In last implications for bone) the broad- market return was -15 %, you've quarter's Communique, David Phillips paces of changes n interest rates " Russell still lost 10% of your money, and that's a discussed the Russell Hazard Report, a Practice Note, January bad thing Now, that relative performance custom, high -level report designed to show 2012 Exhibit 2: Forward LIBOR Swap Curves 35 3 2 _w 5 . . 2 >- 1 5 -.�. 3 year fwd 2 year fwd 1 1 year fwd ,• Current 05 0 0 5 10 15 20 25 30 Maturity (years) As of February 29, 2012 Data is historical and is not a guarantee of future results Forecasting represents predictions of market prices and /or volume patterns utilizing varying analytical data It is not representative of a projection of the stock market, or of any specific investment p / 5 decision makers where risk resides and to the investors' actual beliefs Exhibit 4 lists illustrate how their investments impact their some other areas that can be covered as larger organizations How an investment part of a beliefs exercise, while Exhibit 5 committee spends its time signals its implied illustrates the advantage of this approach. beliefs about the relative materiality of the it's always good to have a sound foundation discussion topics on a given agenda for what you do, but it's when outcomes These are all examples of reports that focus are disappointing that this really matters attention not on benchmark - relative returns the most This is why it can be a good thing but on bigger picture metrics directly tied to to take a cold, hard look at whether the investor objectives We have highlighted just key decisions you make every day are truly a few situations where the inferred beliefs consistent with what you believe about the of investors are sometimes not the same as nvestment world Exhibit 3: Russell report cards for pension plans and non -profit organizations Russell Pension Funding Report Card" XYZ Company As of December 31 2011 �..o — — s°o�o•so. s = P Exhibit 4: Do your beliefs support...? > A fully funded defined benefit plan with 70% invested in equities > Reporting that only focuses on the past > Heavy biases to domestic equity > The investment committee choosing money managers > A defined benefit plan with no long bonds > The same approach to active and passive management across every asset class > Holding cash Exhibit 5: Consider the outcomes! Exposures add value Exposures detract value Portfolio exposures in line with beliefs Satisfied Disappointed Portfolio exposures contrary to beliefs Relieved # @$ °lo! ?! Russell Investments // Russell Communique p / 6 STRATEGY TIMING IMPLEMENTATION RUSSELL INVESTMENTS NMI 11111111 Four ways to add value in fixed income now By Gerard Fitzpatrick, CFA, CAIA, FRM, Al FS, Portfolio Manager Gerard Fitzpatrick Many investors are concerned about macro -level threats in the markets, such as the European debt crisis, inflation and housing- related debt Those threats are real However, it's my view that when the road is fraught with risk, active managers can help guide you toward opportunities such as those described here This is especially true in fixed income markets, because in fixed income, surprises tend to be bad news rather than good, the downside of a given investment is more uncertain than the upside So fixed income active management is primarily concerned with managing that downside —there is a strong natural bias to risk management 1. Overweight credit. The credit sector offers investors embedded liquidity and risk premia above Treasuries It gives investors an opportunity to earn positive excess returns, given that credit bonds typically out -yield Treasuries For example, as shown in Exhibit 1, if a credit bond yields 3 9 and a Treasury bond yields 2 2 0 /ci, there's a potential extra return of up to 1 7 Exhibit 1: Higher yields available in credit assets across the curve -1Q 2012 50 40 30 20 USD composite credit A -rated curve 10 Treasuries 0 0 �o s ;§ as as o� Li �e 0 od e Source Bloomberg, first quarter 2012 p/7 mow Security selection can help to ensure that recent relative outperformance of "BB" the losses from defaults are not greater rated credit compared to investment - than the spread offered (e g , 1 7 %) If you grade credit In particular, after the 2008 decide to maintain a strategic overweight recession, several bonds were downgraded to credit, it's important to employ strong to "BB" ratings with "inflated" yields Such managers who can effectively oversee the assets subsequently outperformed both size of allocations, select robust positions Treasuries and investment -grade credit across the credit sector and manage the Fresh supplies of higher - yielding "BB" risk of default or downgrades within the rated securities continue to flow from portfolio Importantly, it should be noted the investment -grade sector, due to that the credit risk premium offered is downgrades across different sectors driven more by the "uncertainty" of credit and issuers To make the most of current losses, rather than by the percent of credit opportunities, investors should consider losses actually expected allowing for a strategic weighting to 2. Overweight "BB" rated securities. such securities, with tactical sizing and positioning across multiple sectors Because investment- grade -only investors determined by skilled active managers It cannot hold "BB" rated securities, they are can be a bit like getting a good deal when forced to sell any assets downgraded to buying a house in a forced sale "BB ", even if they are at a discount to "fair market" pricing Though these discounted 3. Overweight out -of -index securities. securities have higher credit risks and Securities excluded from the Barclays market risks, they can give investors a U S Aggregate Bond Index are also often chance to earn returns exceeding those attractively priced relative to securities in of more "fairly priced, " Investment the index with similar risk characteristics, grade assets Exhibit 2 highlights the given that a large buying base is excluded Exhibit 2: Outperformance of "BB" assets supported by discounted prices following downgrade from investment -grade status 35 800 30 700 5 25 600 20 15 500 1 "i,e 400 v o 5 300 v 0 5 ° 200 c -5 Ln 10 100 5 0 Oq oq oq dq �� ^� ^� � ,, < <N ^N < � O • N■ O >x U 5 investment grade credit U S "BB" rated credit U 5 "BB' rated issuances (Barclays Capital U S (Barclays Capital U S (Barclays Capital U S Aggregate Credit Index) BB rated High Yield Index( BB rated High Yield Index) Source Barclays Capital, January 2009 — March 2012 Russell Investments // Russell Communique p 8 i RUSSELL INVESTMENTS . from making fair bids for such assets In the their portfolio allocations to keep them current markets, floating -rate non - agency aligned with their liquidity needs and risk mortgage- backed securities are a good management objectives example 4. Adopt an active management approach. Similar to "BB" rated assets, out -of -index securities also give investors opportunities If you are concerned with the overall outlook to earn higher positive returns than those for fixed income markets, why passively available from Treasuries, because some accept such expected losses and avoid global investors are not permitted to managing negative threats? invest in them Because of this restriction Skillful active management can add value on demand, the prices of out -of -index irrespective of total index performance In securities are often discounted to attractive particular, a focused "diversified specialist" levels vis a vis their actual levels of credit approach to active management that deploys risk and market risk clear, principled tactics from within a careful Out -of -index securities are less liquid, risk- management structure can add value — so while additional returns are typically giving investors both opportunity and better offered through the liquidity premium, downside protection investors should manage the sizes of p/9 Why intelligent conversations matter By Ian Toner, CFA, Director, Research and Communications — Russell Implementation Services Ian Toner As many of our clients confront these emerging challenges, we at Russell address their implications every day as well. The introduction of Dodd -Frank has made this even more important With the introduction of a wide range of new reporting and disclosure requirements, we've begun to see a potential danger It is that mere compliance with the letter of the law and merely perfunctory completion of standard disclosures may mean the things that really matter are being overlooked What are the things that really matter? The three that drive investment- company behavior the business model of the firm involved, the culture that develops around the people working within that business model, and the controls required to make sure the people working within that specific culture and that specific business model act appropriately Compliance and disclosure rules tend to focus on the third of those factors —the control structures that need to be in place — largely because doing so can be measured You can measure "failed trades per quarter," and you can validate responses to the question, "How many customer complaints have been upheld in the last year ?" But what drives those behaviors is really the business model of the company concerned, and the culture created by the people working within that business model These things are, of course, hard to measure Take brokerage companies, for example Some simply buy and sell for clients, are paid only with commissions, and never trade with the company's own money This agency model provides for the clear alignment of interest between the broker and the client, and you'll generally find that the senior people in this type of firm have advanced due to the caliber of their customer -focus skills. Other brokers — principal traders —can trade with their own money, and employ groups of traders who are focused on making a high return on the company's trading capital, rather than on customer service Russell Investments // Russell Communique p / 10 RUSSELL INVESTMENTS I I Russell takes the former approach —but We believe real value derives from ensuring both models have their place What's that we (and our clients) understand the important to note is that these two business models of the firms with which models differ, they have different types of we engage (whether as providers or as people in them, with different behaviors competitors) With a real understanding of within different cultures Regulations how each firm involved makes its money, and disclosures that fit one model won't of the nature of its incentive structures, and necessarily work with the other, and we the ways those structures might encourage shouldn't expect them to inappropriate behaviors, and of how inappropriate behaviors might be identified, we have more of the insights we need to To reflect all of this, we've begun to take protect ourselves and our clients an approach, both as a purchaser and We believe this approach has real value as a provider, which we call "Intelligent for our business, and we hope our clients Conversations " Complying with regulations will take similar approaches and disclosures is essential, of course —but that's only the start Exhibit 1: Drivers of conversations How do you What are your make money? incentives, ? Business model How do you How do you control the prove your conflicts? results? p / 11 STRATEGY IMPLEMENTATION The top challenges facin g investors By Michael Thomas, Chief Investment Officer Americas Institutional Michael Thomas It's no longer a question of active or passive Rather It's a question of how and when to employ active and passive strategies together in a portfolio "How" has become much more Interesting with the creation of a range of smart beta solutions derivatives, ETFs and so on that provide market exposure but are neither traditional active management nor traditional passive management As for "when," this has also moved to the forefront, as investors have become less tolerant of riding the alpha cycle While easier said than done, there is a growing expectation that we consider the environment we are in and how the prospects for various strategies change over time This has been an area of focus for our reseal ch efforts recently Over the last 10 years or so, our industry has developed an unhealthy obsession with tracking error Managing tracking error is not managing risk, or at least not the most Important risk The 40% decline in equity markets that we suffered in 2008 and 2009 and recent declines in interest rates drove that point home, particularly for those investors who mark -to- market both assets and liabilities Unfortunately, most reporting to trustees still focuses exclusively on benchmark- relative risk and return Until the focus changes to the investor's primary definition of risk, investors are setting themselves up for disappointment One of the first things I did in my role was place an emphasis on upgrading reporting to better capture what matters most to investors The suite of reporting tools that we have now — including the pension funding report card, the nonprofit spending report card and the hazard report that David Phillips talked about in the last issue of Communique— reflects a much broader idea of risk than the traditional reporting that is still the norm in much of the industry Russell Investments /1 Russell Communique u / 12 RUSSELL INVESTMENTS MNINININMI 1111•111111W We are seeing more change in the way we It can be either Innovation needs to do are managing assets than at any point during something that helps investors, not just be the 17 years I have been at Russell. done for its own sake The first change is a move towards multi - An example of some really positive asset portfolios rather than asset class innovation —and perhaps the most sleeves This gives us the opportunity to significant development over the last employ strategies that don't fit neatly into few years —has been the realization that an asset class bucket and to optimize at the volatility can be predicted with more total portfolio level rather than the asset accuracy than returns This insight may class segment level turn our approach to asset allocation on The second change is the complementary its head Imagine that instead of targeting use of both active and passive strategies weights to certain asset classes and letting the volatility fall out of that mix, we manage The third is to allow our portfolio managers to a targeted volatility range and solve for the discretion to be a bit more tactical and the weights that give us the best chance of opportunistic than they have been in the past achieving that volatility objective Finally, we have spent a considerable What makes this particularly interesting is amount of time figuring out the balance that average returns do not differ materially between scale and customization Every between high and low volatility regimes— investor is unique, but in most cases, it at least historically If this continues to is cost prohibitive to build a completely ii be the case, we have to ask ourselves if custom solution Therefore, we have created it really makes sense to have the same a series of commingled, multi -asset building exposure to risky assets in both high and blocks that can cover the roughly 70°/0 low volatility environments that is in common between investors and then add specific exposures on the wings It's been less than a year since we published to achieve customization In this way, we our paper on volatility- responsive asset can preserve much of the economies you allocation, but it has definitely struck a get from scale while allowing our portfolio chord Others in our industry have picked managers the ability to customize solutions up on the idea of varying exposures based for the unique needs of each client on ambient risk and have advanced the research even further p / 13 , ....... .... 1 1 Medieval Italy and the foundations of the modern world , 4 By Mary Fielstad, Senior Research Analyst When we think of Italy and inventions essential to the modern world, what comes to mind is Mary F elstad the Renaissance Galileo and his telescope; Leonardo da Vinci and his marvelous sketches of flying machines, or possibly, Brunelleschi and his scientific approach to linear perspective, essential to art, architecture and engineering We don't think of medieval Italy, and we don't think about accounting Yet one of the inventions most crucial to the formation of the modern world happened in medieval not Renaissance —Italy Without it, the modern company or corporation could not exist, and the stock market, as we know it, could not have come into being Double -entry bookkeeping was invented in Italy, most probably in the 13th century The first known set of books to use double -entry bookkeeping in the form we still employ today dates to Amatino Manucci, a partner in a Florentine merchant group circa 1300 Double -entry bookkeeping was later codified in a mathematics textbook written by Luca Facioli and published in 1494 Italy experienced a golden age of commerce, trade and merchant activity during the High Middle Ages, ca 1000 to 1300 Italy was ideally situated to manage trade with the East, for Its silks, spices and other exotic goods Consequently, Italian merchants and ship owners controlled the import /export business of the time Pre - Renaissance Italy was abuzz with the business of business, the city- states were dominated by an upper - middle class —the merchant class whose primary focus was making money The Renaissance, for all its glory, marked the beginning of the end for Italian commercial growth and domination There were many reasons for this new routes to the East discovered by the Portuguese, the discovery of the New World, which shifted the focus of trade and From "Luca Pacioli," commerce away from the Mediterranean, the rise of the Ottoman Turks in the East, who cut University of St off a great number of the old traditional trade routes across Asia Some scholars, however, Andrews, Scotland see in the Renaissance itself a major cause of Italy's declining importance in commerce The School of Mathematics Renaissance brought about a revolution in education and curricula when the sons of the and Statistics http // great Italian merchant- bankers began to study Greek, Latin and classical texts, the hearts www- history mcs st andrews ac uk/ and minds of youth were led to a higher plane, away from the mundane aspects of trading, Biographies /Pacioli html money and double -entry bookkeeping Russell Investments // Russell Communique R / 14 RUSSELL INVESTMENTS • } te■ Amer Nothing contained in this material is intended to constitute legal, tax, securities or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type The general information contained rn this publication should not be acted upon without obtaining specific legal, tax and investment advice from a licensed professional These views are subject to change at any time based upon mar ket or other conditions and are c urn ent as 0' the date at the heq_ immmq of the dor ument Where noted, the opinions expressed 01 this material are not necessarily those held by Russell Investment Group, its affiliates or subsidiaries While all matei ial is deemed to he reliable, accur acy and completeness cannot he quaranteeo The information, analysis and opinions expressed herein are for general information only and are not intended to provide spec rfrr advicr nr recommendations for any individual or entity Please remember that all investments carry some level of risk, including the potential loss of pr inupal Hun sled Although stops can he taken to help r educe r isk it cannot be completely r emoved They do not typically grow at an oven rare 0' r r'turn and may experienc e negative car owth As with any type of portfolio strut tut rng, attempting to reduce risk and increase retui n could, at c er tarn times, unintentionally reduce returns Although steps can be taken to help reduce risk, 0 cannot be completely 1 moved Diversifrration does not assure a profit and does not protect against loss In declining mar ket Indexes are unmanaged and cannot be invested in directly Returns represent past performance are not a cjuarantee X11 future per for mane r and are not rnc1rc alive of any specific investment J he tt ademar ks, 501 VI( e mar ks and copyr athts 1 elated to the Russell indexes and other mate sit, as noted trr the property of their esper tive owners Copy r rr3ht © Russell Investments 2012 All r r eser ved This material is propr ietar y and may not he let 1 uduced, transferred or distributed 01 any for nt without prior written per mission front Russell Investments It is delivered on an "o it" basis without war ranty Russell Investment Croup rs a Washington USA corporation which operates through subsidrare wor e, (100100 Ruse' Invest rrents and rs a subsidiary of The Nor thwester n Mutual l ife Insurance Company 1 Russell logo is a trademark and service mark of Russell Investments Dare of first rse Apr , I 2012 C 0 0 C Q CA CO a4 0 0 'u- 0 0 0 0 0 0 0 0 O C+/ O > 1 C.. 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U N -10 0 a QJ (O c ( p C6 O - p Y W c N O N m C Q i CO C (9 W m C1) 4) N G L i G ° as , Z a 3 a c - _ co o E o I . p v Li O c .' — 0) CJ C u 0 O To Q v ( aO+ 0 U ti0 E (9 (O a- �' - c ti (O N N Q O U 4- ' O (a c O° O S N n y .0 ( c u c => Q N W u i..-.9 U 0 • U c (a c c zs c N CU a) 4-. N O i J c o 0 +J c U i (D In O' G C V) = d d o S N cc cc cc cc cc cc cc N 0 N c) x E N O N O --9. o m cdp N N Q N O N ,.p_ U O o ?o >0)0 a± L(1 'O C U_ 4 N U E 0 �+ E o U ) • , = - W c N p �. - 4.0 c as • v 0 c m c m a) °o ° N pN 0 c ° • c cr �� N U V O N L w O U O O Cr - ▪ O 2 O a a s _c) C.) '- 4 ) (1) N N y Q O N Q 1 — > > • N T 2 o = 2 i■im Q) - o (O O c Q N Ws 0 V o y • 5 CD co cc L a v o 7, V W � a' 2 73 ai 7 Y CIO O E c E N c 0 N in O o \° OO �_ I W I - cU in ko E Y w W ro _ o 2 U e C Russell Trust Company Commingled Funcs As of April 2, 2012 © 14.1 c Russell Multi -Asset Core Fund i C The Russell Multi -Asset Core Fund seeks Russell fund target allocations ( %) C to outperform a blended benchmark 90.0% equity/10.0% fixed income* (Multi Asset Core Composite Index) over C a market cycle. Strategy Fixed income C The Russell Multi -Asset Core Fund 10.00% seeks favorable returns and offers a con- C venient way to diversify a portfolio by © combining funds and separate accounts investing in U.S. and non -U.S. stocks, Real assets c bonds, global commodities and global 15 00% real estate into one fund. It holds a . C dynamic mix of underlying Russell funds .,+ , and /or separate accounts. �`, For decades, Russell Investments has C been a strong proponent of disciplined strategic asset allocation and rebalanc- ' ing strategies. We also believe that © unstable movements in the market have the potential to create opportunities. By C identifying short-term mispricing, and making small tactical adjustments to the Global equity e Russell Multi -Asset Core Fund, we 75.00% C believe there is potential to enhance returns while continuing to manage risks. C *Note: The Russell Multi -Asset Core Fund is a dynamic, diversified portfolio designed to capture market op- Risk management structure portunities. The underlying allocations to various asset classes will shift over time, but the overall strategic allocation will remain 90% equity /10% fixed income. C Russell's investment approach incorpo- o rates multiple levels of diversification into the Russell Multi -Asset Core Fund. It C includes underlying Russell funds offering a mix of multiple investment strategies and asset classes. This diversification is e designed to lower an investment portfo- lio's overall volatility, while enhancing C return potential. Combining complementary investment styles within asset classes can work to C moderate the impact when individual styles go in and out of favor. The fund is e also strategically designed to include Rus- sell funds and /or separate accounts with C multiple advisors to complement one C another and fulfill specific roles designed around their core competencies. C O M Russell M C www.russell.com /institutional II Investments 0 e C Russell Multi -Asset Core Fund As of April 2, 2012 IIIMIIIIMAV # Effective April 2, 2012 the Russell Global Equity developing markets involve exposure to economic related companies are subject to various risks Fund changed its name to the Russell Multi -Asset structures that are generally less diverse and including governmental regulations, high interest Core Fund and changes were made to the underlying mature, and to political systems which have less sta- costs associated with capital construction programs, allocations /investments. bility than those of more developed countries. costs associated with compliance and changes in Russell Trust Company Funds are investment funds Large capitalization (large cap) investments involve environmental regulation, economic slowdown and of the Russell Trust Company Commingled stocks of companies generaily having a market cap- surplus capacity, competition from other providers of Employee Benefit Funds Trust. They are not funds of italization between $10 billion and $200 billion. The services and other factors. Investment in non -U.S. Russell Investment Company, nor a mutual fund reg- value of securities will rise and fat in response to the and emerging market securities is subject to the risk istered under the Investment Company Act of 1940. activities of the company that issued them, general of currency fluctuations and to economic and political Please remember that all investments carry some market conditions and /or economic conditions. risks associated with such foreign countries. level of risk, including the potential loss of principal Small capitalization (small cap) investments involve Specific sector investing such as real estate can be invested. They do not typicallygrow at an even rate of stocks of companies with smaller levels of market subject to different and greater risks than more diver - return and may experience negative growth. As with capitalization (generally less than $2 billion) than sified investments. Declines in the value of real any type of portfolio structuring, attempting to reduce larger company stocks (large cap). Small cap invest- estate, economic conditions, property taxes, tax risk and increase return could, at certain times. unin- ments are subject to considerable price fluctuations laws and interest rates all present potential risks to tentionally reduce returns. and are more volatile than large company stocks. real estate investments. Fund investments in non - Diversification and strategic asset allocation do not Investors should consider the additional risks U.S. markets can involve risks of currency fluctua- assure or rofit protect against loss in declining involved in small cap investments. tion, political and economic instability, different p p 9 9 accounting standards and foreign taxation. markets. Bond investors should carefully consider risks such Strategic asset allocation changes overtime will be as interest rate, credit, repurchase and reverse Copyrright© Russell l Ine t 2012. aAll otbs ca t in the com osite index. repurchase transaction risks. Greater risk, such as e v proprietary y n p p increased volatility, limited liquidity, prepayment, reproduced, transferred, or distributed in any form The Russell Multi -Asset Core Fund invests in under- non - payment and increased default risk is inherent without prior written permission from Russell Invest - lying funds of the Commingled Employee Benefit in portfolios that invest in high yield ( "j , unk ") bonds or ments. It is delivered on an "as is" basis without Funds Trust and /or separate accounts managed by mortgage backed securities, especially mortgage warranty. Russell Trust Company. The strategic allocations to backed securities with exposure to sub -prime Russell Investment Group, a Washington USA cor- the underlying funds and separate accounts may be mortgages. poration, operates through subsidiaries worldwide, changed by Russell Trust Company at any time in its Commodity futures and forward contract prices are sole discretion (prior allocations are available upon y including Russell Investments, and is a subsidiary of p request). highly volatile. Trading is conducted with low margin The Northwestern Mutual Life Insurance Company. Please note that actual allocations over time may deposits which creates the potential for high lever- The Russell logo is a trademark and service mark of age. Commodity strategies contain certain risks that Russell Investments. vary from the strategic allocations based on tactical allocation decisions made by the portfolio manager, prospective investors should evaluate and under- First used April 2012 which allow the weightings of each asset class to be stand prior to making a decision to invest. USI- 12615-07-12 changed to take advantage of potential opportunities Investments in commodities may be affected by as overall market movements, and other factors such s market and economic conditions change. Prior allocations are available upon request, as weather, exchange rates, and international eco- nomic and political developments. Other risks may A fund of funds exposes an investor to the underlying include, but are not limited to; interest rate risk, fund specific risks in direct proportion to the under- counter party risk, liquidity risk and leverage risk. lying funds' allocation. Potential investors should have a thorough under - Global equity involves risk associated with invest- standing of these risks prior to making a decision to ments primarily in equity securities of companies invest in these strategies. located around the world, including the United Investments in infrastructure - related companies States. International securities can involve risks have greater exposure to the potential adverse eco- relating to political and economic instability or regu- nomic, regulatory, political and other changes latory conditions. Investments in emerging or affecting such entities. Investment in infrastructure- Q Russell "' Investments c c c e c c c r e c c c c c c C ^ rf co c E c E c(+ c c (^' `j N W W a a LL e e V c a a, a, a) a) u_ o co, W (f) • h- D c C cn o 4 c7 't. N: 9 c ! 0 ill 1: I CV' N CV Q N 0 1S a l i ici 1 C ae cc, ig co CO N LL O ^ � . 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N c cc / dt of > c ti 3 W O a N ' ^ N w OC' 6' a ro , C w > L ° ? r T, roL 5LL 11 N ` 7 OS a m __ ' A 3 f f` V ro t!1 0 E i" 0 3 N ` .E . ..._ �y p LL .0 m y vi ¢ m '- I ' I � u w_ 0 o j N m 7 Q c 7-O V d� 2 L - II j o 8% _ > O c N e 97 N'O g O c m t v, m t in � . — U a, N ..7. T O a) o ce ° > Q N�U W O to l� & = m - d— N E N ro> w Q ti A o - ¢ E ) V r 0 > a) 2. c © Russell V /IJ Investments e Russell Trust Company a 5 Real Estate Equity Fund (RTC -REEF) cr e Performance Report - First Quarter 2012 U Strategy Multi- advisor, multi -fund investment approach applied to private core and enhanced core real estate funds. c.4 Focus on high current income. Manage risk through property type / regional diversification and generally limit portfolio leverage to 30 %. Benchmark NCREIF Fund Index Open -End Diversified Core Equity - Equal Weight (NFI - ODCE -EQ): 18 private © diversified open -end real estate funds owning 1,844 properties valued at approximately $78.2 billion net investor equity. Objectives' Outperform the Benchmark plus 50 basis points over a full market cycle, portfolio diversification, inflation hedge, and investor liquidity. Performance (Gross of Fees) As of March 31, 2012 25% 15.49% 14.63% 15% C 5% 2.61% 2.82% 2.88% 3.15% 6.28% 6.01% 6.43% 6.33% -5% -1 31% -0.82% -1 5% -25% Three Months One Year Three Years Five Years Ten Years Since Inception (4/1/1984) RTC REEF •NFI - ODCE -EQ e Market Commentary The US economy moderated during 10 2012, with GDP growing at an annualized rate of 2.2% compared to 3.0% and 1.8% in 4Q 2011 and 30 2011, respectively. However, a key factor for commercial real estate, Asonoviiimr AV co o✓ c P` RUSSELL INVESTMENTS RTC REEF Investments' Market Value Total Gross Returns Real Estate Fund Investments 3/31/2012 % of Total Three One ($ Millions) Assets Months Year Morgan Stanley Prime Property Fund $ 180.1 25.6% 2.95% 16.51% JP Morgan Strategic Property Fund $ 151.0 21.5% 2.72% 15.08% INVESCO Core Real Estate USA $ 149.2 21.2% 1.77% 14.59% Clarion Lion Properties Fund $ 111.7 15.9% 2.63% 14.63% Prudential Property Investment Separate $ 57.8 8.2% 3.28% 16.48% Account BlackRock Granite Property Fund $ 31.8 4.5% 2.72% 15.26% Total Real Estate Fund Investments $ 681.6 96.9% Cash & Short Term Investments`' $ 21.9 3.1% Total RTC -REEF Investments $ 703.5 100.0% 2.61% 15.49% Benchmark: NFI -ODCE EQ - -- - -- 2.82% 14.63% Cash distributions from underlying funds during the quarter included a $5.7 million redemption payment from BlackRock Granite Property Fund and $3.6 million in income /dividend distributions. One new investor contributed $7.0 million into RTC -REEF during Q1 2012. Investor redemption requests totaling $12.8 million were redeemed in full. RTC -REEF had no exit pool at quarter -end Investor Capital Flows During the Quarter Balance Sheet ($ Mil) ($ Mil) Capital Contributions $ 7.0 Assets: Redemption Payments $ 12.8 Real Estate Fund Investments $ 681.6 Number of Investors End of Quarter 64 Cash and Short-Term Investments 21.9 Exit Pool End of Quarter $ 0.0 Receivables 17.4 Total Assets $ 720.9 Portfolio Statistics Liabilities: RTC -REEF Investments 6 Redemption Accrual $ 0.0 Properties Held by Investments 942 Investments Purchased 12.8 Net Value of Investments $ 43.0 billion Other Payables 1.7 Portfolio Leverage 28.2% Total Liabilities $14.5 Total Net Assets $ 706.4 CD CO / AMY AV © RUSSELL INVESTMENTS job growth, improved during the quarter with the unemployment rate dropping to 8.2 %. Consumer sentiment also improved with spending and confidence increasing slightly during the quarter. a> © The positive macro fundamentals coupled with continued improvement in commercial real estate cc fundamentals supported solid performance for the sector. The NFI- ODCE -EQ (the Benchmark) reported a -° gross total return of 2.82 %, comprised of 1.36% income and 1.46% appreciation. Reflecting the general u_ improving trend in real estate fundamentals, Benchmark occupancy was 88.9% at quarter -end, compared to 89.9% for the prior quarter. Benchmark leverage was 24.0% at quarter -end, compared to 25.4% the prior quarter. a (1) Transaction volume activity is on track to exceed last year's total with closed sales exceeding $50 billion during the quarter as demand for income - producing assets remains high. Debt markets are gaining traction C' as commercial banks and CMBS programs are taking positive steps to increase lending. Lending on speculative development is almost non - existent, which has sharply curtailed the level of new supply. Apartments are the only sector that is seeing meaningful new construction. All but a few of the Benchmark funds have reasonably good liquidity with most funds reporting a one -two © quarter lag in drawing investor commitments. That said, some of the biggest funds in the Benchmark have © deposit queues in excess of $2 billion and with waiting periods of up to 18 months before new commitments are drawn. 0 © Quarterly Highlights G► RTC -REEF produced a total gross return of 2.61 % for First Quarter 2012, comprised of 1.28% income and ® 1.33% appreciation, underperforming the Benchmark by 21 basis points. INVESCO was the primary contributor to the underperformance for the quarter with a negative 28 basis point adjustment related to debt mark to market. The fund was also impacted by smaller valuation adjustments in its apartment portfolio and lower overall leverage. Two of RTC - REEF's six underlying funds outperformed the Benchmark ® by margins of 14 and 46 basis points. The remaining four funds, including INVESCO, underperformed the © Benchmark by margins ranging from 10 — 105 basis points. For the one -year period ended 3/31/2012, RTC - REEF's total gross return of 15.49% outperformed the Benchmark by 86 basis points. A slight overweight to apartments and higher portfolio leverage positively © contributed to RTC - REEF's outperformance. Leverage RTC - REEF's leverage of 28.2% at 3/31/2012 was in line with the general guideline limit of 30% but above the Benchmark leverage of 24.0 %. RTC - REEF's leverage ratio is expected to remain at or below the guideline limit as underlying funds take a more conservative approach to debt. Fund Selection and Weights RTC REEF is making progress toward its target portfolio allocation. Subsequent to quarter -end, an �) additional $10 million investment was made to Clarion Lion Property Fund. RTC - REEF's full redemption request from Blackrock Granite Fund is expected to be funded by year -end 2012. As additional capital is contributed to the Fund, allocations will increase to higher- ranked funds such as Morgan Stanley PPF, Clarion Lion Fund, and UBS Trumbull Property Fund. 0 0 0 0 p cc (/, w RUSSELL INVESTMENTS Property Type Composition Industrial Apartments 14.4% 24.5% 1 Self Storage 2.2% Other Retail 0.5% 17.2% Hotels 2.7% Office 38.5% Regional Composition Midwest E.N. Central 5.7% W.N. Central 1.7% West East Pacific 35.3% Northeast 19.4% Mountain 5.1% Mideast 14.2% • nak S outh S outheast 8.5% PP Southwest 10.1% oo co -4111/ If RUSSELL INVESTMENTS Notes /* Fund targets are excess return and risk goals developed by Russell Investments Strategy and Research management to help �✓ measure our skill in managing managers and the general success of our funds against their stated objectives. Targets for multi- a) manager funds are based on targets received from underlying managers, historical data and the Russell's qualitative assessments of the prospects for managers in a multi- manager portfolio and various other factors. We believe our methodology is reasonable for -0 A� its purpose, but targets are not intended to predict the performance of Russell funds and we expect that actual performance will �•r vary considerably. Additional information regarding Russell's basis for fund targets is available on request. 2 Periods over one year are annualized. Fees will reduce the overall performance of the Fund. Past performance should not be c _ a viewed as a representation of future results. Indexes are unmanaged and cannot be invested in directly. c) • 3 Advisors /Investments listed are current as of 3/31/2012. Russell has the right to engage or terminate an advisor /investment at any c n time and without notice. ° Cash balance of 3.1% at 3/31/2012 is reserved for payment of 2Q 2012 investor redemptions. 5 Fees will reduce the overall performance of the Fund. Past performance should not be viewed as a representation of future results. Indexes are unmanaged and cannot be invested in directly. Russell Trust Company Real Estate Equity Fund Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be Q acted upon without obtaining specific legal, tax, and investment advice from a licensed professional. There is no guarantee that any stated expectations /projections will be met. © The Russell Real Estate Equity Fund is an investment fund of the Commingled Employee Benefit Funds Trust established by Russell Trust Company. It is not a fund of Russell Investment Company, nor a mutual fund registered under the Investment Company Act of 1940. © Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns. Diversification does not assure a profit or guarantee against loss in declining markets. The advisors are current as of 3/31/2012. Russell has the right to engage or terminate an advisor at any time and without notice. Specific sector investing such as real estate can be subject to different and greater risks than more diversified investments. Declines in the value of real estate, economic conditions, property taxes, tax laws and interest rates all present potential risks to real estate investments. Fund investments in non -U.S. markets can involve risks of currency fluctuation, political and economic instability, different accounting standards and foreign taxation. NFI- ODCE -EQ is a peer group index that includes private open -end real estate funds offered primarily to institutional investors. NFI- ODCE -EQ is produced and governed by the National Council of Real Estate Investment Fiduciaries (NCREIF). A subjective appraisal process is used to value unrealized gains (losses) of capital. Copyright© Russell Investments 2012. All rights reserved. This material is proprietary and may not be reproduced, transferred, or distributed in any form without prior written permission from Russell Investments. It is delivered on an as is" basis without warranty. Russell Investment Group, a Washington USA corporation, operates through subsidiaries worldwide, including Russell Investments, ® and is a subsidiary of The Northwestern Mutual Life Insurance Company. The Russell logo is a trademark and service mark of Russell Investments. First used: May 2012 USI- 13269 -05 -13 c e e e e rn cc c A 14 4 :""' 9441 Barbara Ladue From: Chapman, Gary [ChapmanG @bbfl.us] Sent: Tuesday, May 15, 2012 1 16 PM To: Barbara Ladue Subject: Agenda Item Hello Barb, please include under new business Steve Palmquest GRS — Plan actuary study on 185.37, 185 38 and 112. To determine the different options and impact of the pension plan termination, closure, and mergers in reference to PBSO — proposal As requested by the finance Director Barry Atwater Lieutenant Gary Chapman Investigative Services Boynton Beach Police Department 100 East Boynton Beach Blvd Boynton Beach Fl 33435 (561) 742 -6135 1 GR s Gabriel Roeder Smith & Company One East Broward Blvd 954 527.1616 phone Consultants & Actuaries Suite 505 954 525 0083 fax Ft Lauderdale, FL 33301 -1804 wwwgabnelroedercom r41,1 May 16, 2012 4,2 Ms. Barbara LaDue Pension Administrator Boynton Police & Fire Pension Funds Renaissance Executive Suites 1500 Gateway Blvd., #220 Boynton Beach, Florida 33426 Re: City of Boynton Beach Municipal Police Officers' Retirement Fund Dear Barbara: We understand the City is considering transferring its police services to Palm Beach County. Should the City decide to do this, the Board will have options to consider regarding the Retirement Fund. Below we have provided an overview of these options and a proposal to conduct a projection study illustrating the impact of each option, along with a descnption of the process and proposed fees and timing. Retirement Fund Options Should the City decide to transfer its police services to Palm Beach County, a choice would need to be made between the following options with regard to the Retirement Fund: ➢ The Retirement Fund could remain available to current participants. Current active members would be given a choice of either to remain in and continue accruing benefits in the Retirement Fund or elect to transfer to the Florida Retirement System and either take a refund of their accumulated contributions or, if vested, elect to seceive a vested deferred monthly benefit. The Fund would be closed to new entrants, as all future police officers would enter the Florida Retirement System. ➢ The Retirement Fund could be closed down, and all active members would transfer to the Florida Retirement System. If the Retirement Fund is closed down, the Board would then have to decide whether it wants to (A) terminate the Retirement Fund and liquidate all assets (and distribute those assets to Fund members), or (B) freeze benefit accruals and continue to pay benefits earned through the freeze date as they become due. Choice A could only occur if the City makes up the difference between the Retirement Fund assets and the present value of all accrued benefits. Actuarial Services Proposal To assist the Board with its decision of how to proceed with the Retirement Fund if the City transfers its police services to Palm Beach County, we recommend an analysis of 30 -year projections under each of the following five scenarios: A. A baseline projection of the current Retirement Fund, assuming police services are not transferred to Palm Beach County, using the current actuarial methods and assumptions (from the most recent actuarial valuation report — October 1, 2011). Ms. Barbara LaDue May 16, 2012 Page 2 B. A projection of the Retirement Fund assuming police services are transferred to Palm Beach County and all non - vested members elect to transfer to the Florida Retirement System and take a refund of their accumulated contributions. All vested members would be assumed to remain in the Retirement Fund and continue earning benefits. The current actuarial methods and assumptions would be used in this scenario. C. Same as scenario B, but using revised actuarial methods and assumptions to better model the closed status of the Retirement Fund. We recommend use of the Aggregate funding method and a lower discount rate (such as 6.0 %) to reflect the shorter -term nature of the Retirement Fund after it is closed to new members. The Aggregate funding method targets full funding of benefits by the time the last active member is expected to retire, which should be the goal of a closed pension plan. D. An estimate of the impact of terminating the Retirement Fund and liquidating and distributing all assets to plan members, and the shortfall that would exist and require immediate funding. E. A projection of the Retirement Fund assuming it is closed down and all benefits are frozen (no future accruals). All members would join the Florida Retirement System, where they would earn future retirement benefit accruals, but the Retirement Fund would continue to be funded and the frozen benefits in the Retirement Fund would continue to be paid when they become due. For this scenario, we recommend use of the same revised actuarial methods and assumptions as in scenario C — the Aggregate funding method and a lower discount rate (6.0 %) — to reflect the short-term nature of the Retirement Fund after it is closed down. Proposed Fees Our fees for this projection study will be based upon our standard hourly rates, but will not exceed $8,950. The fee includes a meeting with the Pension Board to present the key financial results of the projection study. Timing We will plan to complete this projection study no later than five weeks following your direction to proceed. Please do not hesitate to contact us should you have any questions or require additional information. We look forward to continuing to assist the Boynton Beach Police Officers' Retirement Fund. Sincerely yours, p, J. Stephen Palmquist, ASA, MAAA Peter N. Strong, ASA, MAAA Senior Consultant & Actuary Consultant & Actuary JSP /ps Gabriel Roeder Smith & Company Boynton Beach Police Officers Pension Fund Termination versus Transfer Termination • Governed by Florida Statutes §185.37 • All Participants accrued benefits are vested • City terminates and makes fund actuarially sound • Board determines date of distribution and asset value to be distributed (taking into account the expenses of termination) • Board determines method of distribution - payment in cash - substituted trust fund - purchase of annuities - other • Asset values are distnbuted based upon actuarially computed single sum value of retirement income but not less than accumulated contributions less any benefits paid • If there is asset value remaining after distribution to members, then the remaining amount is repaid to the State of Florida up to total amount of 175/185 monies paid into Fund. If there is not enough to repay to the State, then the State and the City divide the rest based upon their proportional contritribution • Employees are not eligible to purchaseBoynton Beach service in FRS • Employees would be new participants in FRS system from date of transfer • Employees receive benefits at termination Transfer of Governmental Function - Merger with Sheriffs Office • Governed by Honda Statutes §185.38 • Upon Transfer of governmental function, Participants may elect to continue to participate in the City Plan or the FRS • If all participants elect to leave City Plan, then Plan shall be terminated • If some participants remain in the City Plan, then the state premium taxes shall continue to be paid until the Plan is fully funded • The Plan shall remain in effect until the final benefit payment has been made to the last participant or beneficiary. • FRS Service may purchased at 2 0% benefit accrual rate, if member is not entitled to pension benefit from the City of Boynton Beach • Vested participants must wait until early or normal retirement for payment of benefits Transfer to FRS or other Pension Plan • Governed by Florida Statutes §185.38 and Section 121 051(2)(b) • If the 185 Plan is terminated, then all members move into FRS as new enrollees • Upon transfer to FRS if Plan is not terminated, Participants must elect whether to move to FRS and then subsequently may elect to continue to participate in the City Plan or the FRS • If all participants elect to leave City Plan, then Plan shall be terminated • Even if some participants remain in the City Plan, no state premium taxes shall be paid to the Plan See Section 185 03(2) • The Plan shall remain in effect until the final benefit payment has been made to the last participant or beneficiary • FRS Service may purchased at 2 0% benefit accrual rate. • Vested participants must wait until early or normal retirement for payment of benefits H \BB Police 01881Transfer to SOltermination v transfer Page 1 Statutes & Constitution :View Statutes : Online Sunshine Page 1 of 2 Select Year: 2011 [ Go The 2011 Florida Statutes Title XII Chapter 185 View Entire Chapter MUNICIPALITIES MUNICIPAL POLICE PENSIONS 185.37 Termination of plan and distribution of fund. —For any municipality, chapter plan, local law municipality, or local law plan under this chapter, the plan may be terminated by the municipality. Upon termination of the plan by the municipality for any reason, or because of a transfer, merger, or consolidation of governmental units, services, or functions as provided in chapter 121, or upon written notice to the board of trustees by the municipality that contributions under the plan are being permanently discontinued, the rights of all employees to benefits accrued to the date of such termination or discontinuance and the amounts credited to the employees' accounts are nonforfeitable. The fund shall be distributed in accordance with the following procedures: (1) The board of trustees shall determine the date of distribution and the asset value required to fund all the nonforfeitable benefits, after taking into account the expenses of such distribution. The board shall inform the municipality if additional assets are required, in which event the municipality shall continue to financially support the plan until all nonforfeitable benefits have been funded. (2) The board of trustees shall determine the method of distribution of the asset value, whether distribution shalt be by payment in cash, by the maintenance of another or substituted trust fund, by the purchase of insured annuities, or otherwise, for each police officer entitled to benefits under the plan, as specified in subsection (3). (3) The board of trustees shall distribute the asset value as of the date of termination in the manner set forth in this subsection, on the basis that the amount required to provide any given retirement income is the actuarially computed single -sum value of such retirement income, except that if the method of distribution determined under subsection (2) involves the purchase of an insured annuity, the amount required to provide the given retirement income is the single premium payable for such annuity. The actuarial single -sum value may not be less than the employee's accumulated contributions to the plan, with interest if provided by the plan, less the value of any plan benefits previously paid to the employee. (4) If there is asset value remaining after the full distribution specified in subsection (3), and after payment of any expenses incurred with such distribution, such excess shall be returned to the municipality, less return to the state of the state's contributions, provided that, if the excess is less than the total contributions made by the municipality and the state to date of termination of the plan, such excess shall be divided proportionately to the total contributions made by the municipality and the state. (5) The board of trustees shall distribute, in accordance with the manner of distribution determined under subsection (2), the amounts determined under subsection (3). If, after 24 months after the date the plan terminated or the date the board received written notice that the contributions thereunder were being permanently discontinued, the municipality or the board http: / /www.leg.state.fl.us/ Statutes /index.cfm? App_ mode = Display _Statute& Search_String... 5/18/2012 ot trustees of the 'nu.ntma\ pohce,+f,o^" ' heme. — ` o ' ` w /~n ' .�' provisions in this the Department o' Managan^v' +,,'''' Aa\ p`ter/ `h. / ' ~'.`an '' '! fund in accordance h This section History. s 8. ch 6`u' ' ph 61 ``v ` 1 m 6 -`v^, ` '. . xo w /t' 99 1,` 13, cn 20O9'97 Copyright © 1995-2012 The phnda Legistature • Privacy Statement • Contact us --- ---- — --- — ----- ---- — -- -----'-------- --'--'--- . . . . .. ^ ,`--.— - "u_--� o^--- �/`vn^, Statutes & Constitution :View Statutes : Online Sunshine Page 1 of 1 Select Year: 2011 Go The 2011 Florida Statutes Title XII Chapter 185 View Entire Chapter MUNICIPALITIES MUNICIPAL POLICE PENSIONS 185.38 Transfer to another state retirement system; benefits payable. —For any municipality, chapter plan, local law municipality, or local law plan under this chapter: (1) Any police officer who has a vested right to benefits under a pension plan created pursuant to the provisions of this chapter and who elects to participate in another state retirement system may not receive a benefit under the provisions of the latter retirement system for any year's service for which benefits are paid under the provisions of the pension plan created pursuant to this chapter. (2) When every active participant in any pension plan created pursuant to this chapter elects to transfer to another state retirement system, the pension plan created pursuant to this chapter shall be terminated and the assets distributed in accordance with s. 185.37. If some participants in a pension plan created pursuant to this chapter elect to transfer to another state retirement system and other participants elect to remain in the existing plan created pursuant to this chapter, the plan created pursuant to this chapter shall continue to receive state premium tax moneys until fully funded. If the plan is fully funded at a particular valuation date and not fully funded at a later valuation date, the plan shall resume receipt of state premium tax moneys until the plan is once again determined to be fully funded. "Fully funded" means that the present value of all benefits, accrued and projected, is less than the available assets and the present value of future member contributions and future plan sponsor contributions on an actuarial entry age cost funding basis. Effective May 31, 1998, for plans discussed herein, the plan shall remain in effect until the final benefit payment has been made to the last participant or beneficiary and shall then be terminated in accordance with s. 185.37. History. —s. 25, ch. 86 -42; s. 77, ch. 99 -1; s. 8, ch. 2002 -66. Copyright © 1995 -2012 The Florida Legislature • Privacy Statement • Contact Us http: / /www.leg. state.fl.us/ Statutes /index.cfm? App_ mode = Display _Statute &Search_String... 5/18/2012