Agenda 02-25-13 CITY OF BOYNTON BEACH
BOARD OF TRUSTEES GENERAL EMPLOYEES' PENSION PLAN
Quarterly Board Meeting
Monday February 25, 2013
Location: Commission Chambers, City Hall
100 E. Boynton Beach Blvd.
Boynton Beach, FL 33435
Plan Administrator: (561) 624 -3277
Time: 1:30 PM
AGENDA
I. Call to Order
II. Approval of Agenda
III. Presentations
A. Audited Financial Statement Report as of October 1, 2012 — Presented by James
Burdick, Cherry, Bekaert & Holland, L.L.P.
B. Actuarial Valuation Report as of October 1, 2012- Presented by Pete Strong, GRS
IV. Investment Report
A. Southeastern Advisory Services: Jeff Swanson (Investment Consultant)
1. Quarterly Investment Performance Report
2. DePrince, Race & Zollo — Investment Manager Agreement
3. ConvergEx Group- Transition Manager Agreement
V. Approval of Minutes
A. Regular Meeting November 26, 2012
B. Special Meeting January 9, 2013
VI. Correspondence
A. Letter from former Trustee Mark Hurley dated January 11, 2013 re; advising the Board
to lower the Plan's "Assumed Actuarial Rate of Return ".
VII. Old Business
No Old Business
VIII. New Business
A. Attorney Report
1. 2013 IRS Mileage Rate
2. DROP and SB 1128 Ordinance Amendment
B. Administrative Report
1. Warrant for Invoices
2. Benefit Approvals
3. Trustee Election
4. Fiduciary Liability Insurance
C. Board Issues
IX. Public Comments
X. Adjournment
NEXT QUARTERLY MEETING DATE: Tuesday May 28, 2013 at 1:30 p.m.
If a person decides to appeal any decision made by this Board with respect to any matter considered at this meeting, he /she
will need a record of the proceedings, and that, for such purpose, he /she may need to ensure that a verbatim record of the
proceedings is made, which record includes the testimony and evidence upon which the appeal is to be based. (F.S.
286.0105)
Notice: 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 the City Clerk's office at (561) 742 -6060 at least 24 hours prior to the program or activity in order for the
City to reasonably accommodate your request.
GR Gabriel S Roeder Smith & Company
Consultants & Actuaries
CITY OF BOYNTON BEACH PENSION PLAN FOR GENERAL EMPLOYEES
ACTUARIAL VALUATION REPORT AS OF OCTOBER 1, 2012
ANNUAL EMPLOYER CONTRIBUTION IS DETERMINED BY THIS VALUATION FOR THE
PLAN YEAR ENDING SEPTEMBER 30, 2014
Gabriel Raeder Smith & Company One East Broward Blvd. 454.527.1616 phone
GRS Consultants � Actuaries Suite 505 454.525.008:3 fax
Ft. Lauderdale, FL 33301 -1804 www,gahrielroeder.com
February 20, 2013
Board of Trustees
City of Boynton Beach Pension Plan
for General Employees
Boynton Beach, Florida
Dear Board Members:
The results of the October 1, 2012 Annual Actuarial Valuation of the City of Boynton Beach Pension Plan
for General Employees are presented in this report.
This report was prepared at the request of the Board and is intended for use by the Retirement System and
those designated or approved by the Board. This report may be provided to parties other than the System
only in its entirety and only with the pennission of the Board.
The purpose of the valuation is to measure the System's funding progress, to determine the employer
contribution rate for the fiscal year ending September 30, 2014, and to determine the actuarial information
for Governmental Accounting Standards Board (GASB) Statement No. 25 and No. 27.
This report should not be relied on for any purpose other than the purpose described above.
The findings included in this report are based on data or other information through September 30, 2012.
Future actuarial measurements may differ significantly from the current measurements presented in this
report due to such factors as the following: plan experience differing from that anticipated by the economic
or demographic assumptions; changes in economic or demographic assumptions; increases or decreases
expected as part of the natural operation of the methodology used for these measurements (such as the end
of an amortization period or additional cost or contribution requirements based on the plan's funded status);
and changes in plan provisions or applicable law.
The valuation was based upon information furnished by the Plan Administrator concerning retirement
System benefits, financial transactions, plan provisions and active members, terminated members, retirees
and beneficiaries. We checked for internal and year -to -year consistency, but did not otherwise audit the
data. We are not responsible for the accuracy or completeness of the information provided by the plan
Administrator. This report was prepared using certain assumptions prescribed by the Board as described in
Section B.
The undersigned actuaries are members of the American Academy of Actuaries and meet the Qualification
Standards of the American Academy of Actuaries to render the actuarial opinions contained herein. The
signing actuaries are independent of the plan sponsor.
This report has been prepared by actuaries who have substantial experience valuing public employee
retirement systems. To the best of our knowledge the information contained in this report is accurate and
fairly presents the actuarial position of the Retirement System as of the valuation date. All calculations have
been made in conformity with generally accepted actuarial principles and practices, with the Actuarial
Standards of Practice issued by the Actuarial Standards Board and with applicable statutes.
Board of Trustees
City of Boynton Beach Pension Plan for General Employees
Page 2
This actuarial valuation and/or cost determination was prepared and completed by me or under my direct
supervision, and I acknowledge responsibility for the results. To the best of my knowledge, the results are
complete and accurate. In my opinion, the techniques and assumptions used are reasonable, meet the
requirements and intent of Part V 11, Chapter 112, Florida Statutes, and are based on generally accepted
actuarial principles and practices. There is no benefit or expense to be provided by the plan and /or paid
from the plan's assets for which Iiabilities or current costs have not been established or otherwise taken into
account in the valuation. All known events or trends which may require a material increase in plan costs or
required contribution rates have been taken into account in the valuation.
Respectfully submitted,
GABRIEL, ROEDER, SMITH AND COMPANY
71 A
Pete N. Strong, ASA, MA AA, FCA J.VffreW. Amrose, MAAA
Enrolled Actuary No. 11 -0 75 Enrolled Actuary No. 11 -06599
Gabriel Roeder Smith & Company
TABLE OF CONTENTS
Section Title Page
A Discussion of Valuation Results 1
B Valuation Results
L Participant Data 4
2. Annual Required Contribution 5
3. Actuarial Value of Benefits and Assets 6
4. Calculation of Employer Normal Costs 7
5. Liquidation of the Unfunded Actuarial
Accrued Liability 8
6. Actuarial Gains and Losses 9
7. Actual Compared to Expected Decrements 13
8. Cumulative Gains and Losses (13 check) 14
9. Recent History of Valuation Results 15
10. Recent History of Required Contributions 16
11. Actuarial Assumptions and Cost Method 17
12. Glossary of Tenns 21
C Pension Fund Information
1. Summary of Assets 24
2. Summary of Fund's Income and Disbursements 25
3. Actuarial Value of Assets 27
4. Investment Rate of Return 28
D Financial Accounting Information
1. FASB No. 35 29
2. GASB No. 25 30
3. GASB No. 27 32
E Miscellaneous Information
1. Reconciliation of Membership Data 34
2. Age and Service Distribution 35
F Summary of Plan Provisions 37
GRS
SECTION A
DISCUSSION OF VALUATION RESULTS
GRS
1
DISCUSSION OF VALUATION RESULTS
Comparison of Required Employer Contributions
A comparison of the required employer contribution developed in this and the last actuarial
valuation is shown below. The required contribution dollar amounts shown below are estimates only. The
contribution policy of the City is to contribute the dollar amount determined by multiplying the required
percentage of payroll determined as of the valuation date by the projected pensionable payroll for the year.
For FYE 9/30/14 For FYE 9/30/13
Based On Based On
10/01/2012 10/01/2011 Increase
Valuation Valuation (Decrease)
if contributed on if contributed on
10/1/2013 10/1/2012
Required Employer Contribution $ 6,780,773 $ 6,630,714 $ 150,059
As % of Covered Payroll 31.35 % 27.80 % 3.55 %
The employer contribution listed above is for the City's fiscal year ending September 30, 2014 and
has been calculated as though payment is made in a single lump sum on October 1, 2013. Alternatively, if
the employer contribution is paid in biweekly payments beginning October 1, 2013, the required payment is
$7,053,302, or 32.61% of payroll. The actual City contribution for 2012 was $4,502,590, an amount which
met the minimum required payment of $4,502,590.
Revisions in Benefits
There have been no changes in benefits since the last valuation.
Revisions in Actuarial Assumptions and Methods
The amortization of the unfunded liability is now based on a 0.01% payroll growth assumption due
to the 10 -year average payroll growth cap required under the Florida Statutes. This is a change from 0.77%
last year. This change caused the annual required contribution to increase by 0.66% of covered payroll.
GRS
2
The Actuarial Standard of Practice (ASOP) with regard to the mortality assumption (ASOP No.
35 Section 4.1.1) states "The disclosure of the mortality assumption should contain sufficient detail to
permit another qualified actuary to understand the provision made for future mortality improvement. If
the actuary assumes zero mortality improvement after the measurement date, the actuary should state that
no provision was made for future mortality improvement. " There is currently no margin for future
mortality improvement in the current mortality assumption. We recommend an update to the mortality
assumption to reflect increased longevity and to reflect future mortality improvements.
We also recommend that the Board consider reducing the assumed rate of investment return,
based on the current expected long -term expected return on the Plan's assets. The current assumption is
8.0% net of investment expenses.
Actuarial Experience
There was a net actuarial experience loss of $644,791 for the year, which means actual experience
was less favorable than expected. The loss is primarily due to less than expected investment return (4.46%
actual versus 8.0% expected based on the actuarial value of assets). The investment return on the market
value of assets was 17.8 %. This loss was mostly offset by a gain on liabilities due to salary increases being
less than expected. Average salary increases were (2.0 %), versus 53% expected.
The actuarial experience loss resulted in an increase in the required employer contributions of 033%
of covered payroll.
Funded Ratio
The funded ratio this year is 74.5% compared to 74.2% last year. The funded ratio is equal to the
actuarial value of assets divided by the actuarial accrued (past service) liability.
Relationship to Market Value
If Market Value had been the basis for the valuation, the City contribution rate for the fiscal year
ending September 30, 2014 would have been 32.69% and the funded ratio would have been 72.6 %. This
funded ratio (on a market value basis) is up from 63.8% last year. In the absence of other gains and losses,
the City contribution rate should increase to that level over the next couple years.
GRS
Analysis of Chance in Employer Contribution
The components of change in the required contribution as a percent of payroll are as follows:
Contribution rate last year 27.80 %
Experience (Gain) / Loss 033
Change is Assumptions and Methods 0.00
Change in Normal Cost Rate 0.04
Change in Payment on UAAL 2.50
Change in Payroll Growth Assumption for UAAL Amortization 0.66
Change in Administrative Expense 0.02
Contribution rate this year 3 11. 3 15 %
According to the Florida Administrative Code, the payroll growth assumption may not exceed
the average payroll growth over the last ten years. The ten year average rate this year was equal to 0.01%
compared to the assumed rate of 3.5 %. Since the actual payroll growth was less than the assumption, the
amortization payment on the UAL increased significantly.
Required Contributions in Later Years
It is important to keep in mind that under the asset smoothing methods, asset gains and losses are
recognized over five years. As of September 30, 2012, the actuarial value of assets exceeded the market
value by $2,598,926. Once all the losses through September 30, 2012 are fully recognized in the actuarial
asset values, the contribution rate will increase by roughly 13% of payroll unless there are offsetting
gains. It is also worth noting that under the funding method, gains and losses are amortized over 15
years.
Conclusion
The remainder of this Report includes detailed actuarial valuation results, financial information,
miscellaneous information and statistics, and a summary of plan provisions.
GRS
SECTION B
VALUATION RESULTS
GRS
4
PARTICIPANT DATA
October 1, 2012 October 1, 2011
ACTIVE MEMBERS
Number 387 395
Covered Annual Payroll $ 20,956,556 $ 22,183,119
Average Annual Payroll $ 54,151 $ 56,160
Average Age 47.3 46.9
Average Past Service 11.1 11.3
Average Age at Hire 36.2 35.6
RETIREES & BENEFICIARIES & DROP
Number 327 305
Annual Benefits $ 7,498,867 $ 6,837,671
Average Annual Benefit $ 22,932 $ 22,419
Average Age 68.5 68.4
DISABILITY RETIREES
Number 2 2
Annual Benefits $ 23,645 $ 23,645
Average Annual Benefit $ 11,823 $ 11,823
Average Age 69.9 68.9
TERMINATED VESTED MEMBERS
Number 42 43
Annual Benefits $ 690,051 $ 613,693
Average Annual Benefit $ 16,430 $ 14,272
Average Age 51.3 51.2
GRS
5
ANNUAL REQUIRED CONTRIBUTION (ARC)
A. Valuation Date October 1, 2012 October 1, 2012 October 1, 2011
B. ARC to Be Paid During
Fiscal Year Ending 9/30/2014 9/30/2014 9/30/2013
C. Assumed Date of Employer Contrib. 10/1/2013 Biweekly 10/1/2012
D. Annual Payment to Amortize
Unfunded Actuarial Liability $ 4,913,085 $ 4,913,085 $ 4,425,067
E. Employer Normal Cost 1,657,079 1,657,079 1,740,948
F. ARC if Paid on the Valuation
Date: D +E 6,570,164 6,570,164 6,166,015
G. ARC Adjusted for Frequency of 6,570,164 6,832,971 6,166,015
Payments
H. ARC as % of Covered Payroll 31.35 % 32.61 % 27.80 %
L Assumed Rate of Increase in Covered
Payroll to Contribution Year N/A % N/A % N/A %
J. Covered Payroll for Contribution Year 21,629,261 * 21,629,261 * 23,851,490
K. ARC for Contribution Year: H Y J 6,780,773 7,053,302 6,630,714
L. ARC as % of Covered Payroll in
Contribution Year: K - J 31.35 % 32.61 % 27.80 %
*Estimated payroll for the contribution year, per the City's Finance Department.
GRS
6
ACTUARIAL VALUE OF BENEFITS AND ASSETS
A. Valuation Date October 1, 2012 October 1, 2011
B. Actuarial Present Value of All Projected
Benefits for
1. Active Members
a. Service Retirement Benefits $ 76,136;358 $ 81,453,045
b. Vesting Benefits 4,773,084 5,403,701
c. Disability Benefits - -
d. Preretirement Death Benefits 2,502,109 2,652,703
e. Return of Member Contributions 93,482 72,461
f Total 83,505,033 89,581,910
2. Inactive Members
a. Service Retirees & Beneficiaries 69,966,886 63,966,757
b. Disability Retirees 226,036 230,314
c. Terminated Vested Members 4,653,885 3,620,457
d. Total 74,846,807 67,817,528
3. Total for All Members 158,351,840 157,399,438
C. Actuarial Accrued (Past Service)
Liability per GASB No. 25 135,449,481 132,394,009
D. Actuarial Value of Accumulated Plan
Benefits per FASB No. 35
1. Based on Plan's Interest Rate 121,199,854 114,654,060
2. Based on the FRS Interest Rate (7.75 %) 124,223,141 117,573,732
E. Plan Assets
1. Market Value 98,308,638 84,478,635
2. Actuarial Value 100,907,564 98,246,139
F. Unfunded Actuarial Accrued Liability 34,541,917 34,147,870
G. Actuarial Present Value of Projected
Covered Payroll 162,969,342 178,321,130
H. Actuarial Present Value of Projected
Member Contributions 11,407,853 12,482,479
L Funded Ratio: E2 /C 74.5% 74.2%
GRS
7
CALCULATION OF EMPLOYER NORMAL COST
A. Valuation Date October 1, 2012 October 1, 2011
B. Normal Cost for
1. Service Retirement Benefits $ 2,483,488 $ 2,608,147
2. Vesting Benefits 302,125 333,655
3. Disability Benefits - -
4. Preretirement Death Benefits 105,871 110,644
5. Return of Member Contributions 97,382 101,834
6. Total for Future Benefits 2,988,866 3,154,280
7. Assumed Amount for Administrative
Expenses 135,172 139,486
8. Total NonnalCost 3,124,038 3,293,766
C. Expected Member Contribution 1,466,959 1,552,818
D. Employer Normal Cost: B8 -C 1,657,079 1,740,948
E. Employer Normal Cost as % of
Covered Payroll 7.91 % 7.85 %
GRS
8
LIQUIDATION OF THE UNFUNDED ACTUARIAL ACCRUED LIABILITY
Original UAAL Current UAAL
Date Years
Established Source Amount Remaining Amount Payment
10 /1 /11 Method Change; All Bases Combined 29,268,350 9 28,908,710 4,283,410
10 /1 /11 Exp. Loss 4,879,520 14 4,988,416 559,963
10/1/12 Exp. Loss 644,791 15 644,791 69,712
$ 34,792,661 $ 34,541,917 $ 4,913,085
Amortization Schedule
The UAAL is being amortized as a level percent of payroll over the number of years remaining in the
amortization period. The expected amortization schedule is as follows:
Amortization Schedule
Year Expected UAAL
2012 $ 34,541,917
2013 31,999,143
2014 29,252,412
2015 26,285,412
2016 23,080,522
2017 19,618,709
2022 2,306,291
2027 -
GRS
9
ACTUARIAL GAINS AND LOSSES
The assumptions used to anticipate mortality, employment turnover, investment income, expenses,
salary increases, and other factors have been based on long range trends and expectations. Actual experience
can vary from these expectations. The variance is measured by the gain and loss for the period involved. If
significant long term experience reveals consistent deviation from what has been expected and that deviation
is expected to continue, the assumptions should be modified. The net actuarial gain (loss) for the past year is
computed as follows:
1. Last Year's UAAL $ 34,147,870
2. Last Year's Employer Normal Cost 1,740,948
3. Last Year's Contributions 4,502,590
4. Interest at the Assumed Rate on:
a. 1 and 2 for one year 2,871,105
b. 3 from dates paid 360,207
c. a - b 2,510,898
5. This Year's Expected UAAL
1 + 2 - 3 + 4c 33,897,126
6. This Year's Actual UAAL (Before any changes
in benefits or assumptions) 34,541,917
7. Net Actuarial Gain (Loss): (5) - (6) (644,791)
8. Gain (Loss) due to investments (3,619,011)
9. Gain (Loss) due to other sources 2,974,220
GRS
10
Actuarial Gain ( +) or Loss ( -)
$20 $20
$15 $15
$10 $10
$5 $5
$0 $0
IX
�- -$10 -$10
-$15 -$15
-$20 -$20
-$25 -$25
-$30 -$30
9/94 9/95 9/96 9/97 9/98 9/99 9100 9/01 9/02 9/03 9/04 9/05 9/06 9/07 9/08 9/09 9/10 9/11 9/12
Plan Year End
Gain or Loss Cumulative
GRS
11
The fund earnings and salary increase assumptions have considerable impact on the cost of the Plan so
it is important that they are in line with the actual experience. The following table shows the actual fund
earnings and salary increase rates compared to the assumed rates for the last several years:
Investment Return Salary Increases
Year Ending Actual Assumed Actual Assumed
12/31/1988 10.8 % 8.0 % 6.7 % 6.5 %
12/31/1989 17.4 8.0 8.8 6.5
9/30/1990 * (2.3) 8.0 11.0 6.5
9/30/1991 9.9 8.0 10.3 7.5
9/30/1992 9.5 8.0 5.3 79
9/30/1993 11.0 8.0 2.5 7.9
9/30/1994 8.0 8.0 5.8 7.9
9/30/1995 9.3 8.0 3.6 7.9
9/30/1996 9.4 8.0 2.4 7.4
9/30/1997 13.3 8.0 4.3 7.4
9/30/1998 14.5 8.0 8.0 7.4
9/30/1999 13.2 8.0 4.8 7.4
9/30/2000 12.3 8.0 10.8 7.3
9/30/2001 3.9 8.0 8.0 5.6
9/30/2002 0.2 8.0 4.4 5.6
9/30/2003 0.8 8.0 7.1 5.6
9/30/2004 0.5 8.0 8.1 5.6
9/30/2005 6.2 8.0 4.5 5.6
9/30/2006 9.7 8.0 14.8 5.6
9/30/2007 9.3 8.0 5.8 5.6
9/30/2008 4.6 8.0 5.7 5.4
9/30/2009 0.1 8.0 4.8 5.4
9/30/2010 4.3 8.0 (0.7) 5.4
9/30/2011 2.8 8.0 3.9 5.3
9/30/2012 4.5 8.0 (2.0) 5.3
Averages 7.3 % - -- 5.9 % - --
* 9 months
The actual investment return rates shown above are based on the actuarial value of assets. The actual
salary increase rates shown above are the increases received by those active members who were included in
the actuarial valuation both at the beginning and the end of each period.
GRS
12
History of Investment Return Based on Actuarial Value of Assets
20% 20
15% 15%
10% 10%
5% 5%
0% 0%
-5% -5%
)s` )P �Ob q �0� q �0� "
Plan Year End
t Actual t Assume d
History of Salary Increases
16° 0 16%
14 °o 14%
12°0 12%
10 10%
8 °'0 8%
6 6%
4 4%
2°�o 2%
0 °'0 0%
-2% -2%
-4% -4'o
Plan Year End Compared to Previous Year
Actual 4 Assumed
GRS
13
Actual (A) Compared to Expected (E) Decrements
Among Active Employees
Number
Added Service & Active
During DROP Disability Terminations Members
Year Year Retirement Retirement Death Vested Other Totals End of
Ended A E A E A E A E A A A E Year
9/30/2002 41 48 15 8 0 0 1 0 6 26 32 53 542
9/30/2003 40 45 11 11 0 0 0 1 9 25 34 44 537
9/30/2004 50 77 39 10 0 0 1 1 7 30 37 39 510
9/30/2005 54 53 12 9 0 0 1 1 11 29 40 37 511
9/30/2006 70 56 9 11 0 0 1 1 17 29 46 36 525
9/30/2007 65 50 10 11 0 0 2 1 15 23 38 40 540
9/30/2008 35 49 10 11 0 0 1 1 14 24 38 41 526
9/30/2009 18 34 13 15 0 0 1 1 3 17 20 34 510
9/30/2010 10 41 21 21 0 0 2 1 7 11 18 34 479
9/30/2011 8 92 34 15 0 0 1 111, 22 55 20 395
9/30/2012 36 44 16 14 0 0 1 1 9 18 27 14 387
9/30/2013 13 1 20
11 Yr Totals * 427 589 190 136 0 0 14 10 131 254 385 392
" Totals are through current Plan Year only
GRS
14
Cumulative Gains and Losses (13 Check)
Cumulative Actuarial Gains (Losses)
Balance at
Year Ending Beginning Gain (Loss) Balance at
9/30 of Year Interest for Year 13th Check End of Year
2001 (5,127,867) 0 (5,127,867)
2002 (5,127,867) (410,229) (4,227,408) 0 (9,765,504)
2003 (9,765,504) (781,240) (5,398,187) 0 (15,944,932)
2004 (15,944,932) (1,275,595) (4,994,196) 229,585 (22,444,306)
2005 (22,444,306) (1,795,544) (1,174,319) 0 (25,414,170)
2006 (25,414,170) (2,033,134) (2,594,867) 0 (30,042,170)
2007 (30,042,170) (2,403,374) 1,095,313 0 (31,350,231)
2008 (31,350,231) (2,508,018) (4,187,334) 0 (38,045,583)
2009 (38,045,583) (3,043,647) (7,545,634) 0 (48,634,864)
2010 (48,634,864) (3,890,789) 390,808 0 (52,134,845)
2011 (52,134,845) (4,170,788) (4,879,520) 0 (61,185,153)
2012 (61,185,153) (4,894,812) (644,791) 0 (66,724,756)
Note: The 13 "' check provision was enacted by Ordinance No. 02 -026.
The first year that the 13 "' check was based on is the year ended 9/30/2001.
r" ID
15
E
Z
a N `O 't � -- 7t O\ M O � � O\ O\ O\ -- N 7t `O --
N Vl M l� O 00 Vl Ol �--� Vl l� M 7t 00 00 �--� N �--� �--� M M V') 7 t 00 Ol
_O 00 00 00 00 01 01 00 00 r \O \O r r r r r r l— l— l— l—
CL
w
Ol AO 00 M 7 t � 7 t \O O N
a M 7 t al 7 t O 00 r- a al 7 t N I!t vn N vn AO AO It I!t
O \O M M 00 00 M 00 O M M 7 t O N V') 00 l� \O
O N V ll DD O Ol
I�
� O
a \O O 7 M O N 00 �� -- M N 7t � 00 \O 00
'Z O O N vn M O O M N N 7t wl� Ol N Ol 7t � N 7t 7 N 7t O
O ++ -!t O oo � � O M O O\ N O\ O\ -!t -- N 7t 00 7t O oo O a\ — N a\
CC v� N N N M M -t 't v') \O \O \O \O \O \O [l- � 00 Ol Ol Ol O
w
O �
�y N O N Ol 7t N `O Vl \O 7t 7t 00 � Vl Ol N — M N Ol M r-
oc 7t N O 7t — N — — 00 7t Ol 00 7t M M 7t O V') 00 7t 00 V')
. N O -!t — Ol O AO Ol N 7t Ol O Ol Ol Ol N l— Ol AO o0 — — — O
O N N M N M M M N O
— — — — — — — — — — — — — N N N N N N N N N N N N
� O
ICI S. a
x
w
v
x
d N v> oc d N 7t O M v 00 00 O 7t 7t \O 00 \O oc O O\
�n l� l� oo a a a O --� N — — — — rl- — O rq rq rq `O r- 0o \ m m
�--� �--� �--� �--� �--� �--� �--� �--� N N N N N N N N M M
C.'
O
Z 00 00 N O 7t Ol wl� \O O Ol \O Ol N O Ol v') r-
l— o0 o0 l— Vl 7t 7t M 7t N -- r- Ol o0
C.
N M 7t W� \O l- oo a\ O N M 7t wl� \O l- oo a\ O N
d d Ol Ol Ol Ol Ol Ol Ol Ol O O O O O O O O
GRS
N
O
z
16
RECENT HISTORY OF REQUIRED AND ACTUAL CONTRIBUTIONS
Valuation Applies to Fiscal
Required Employer Contribution
Year Ending
%, of Actual
Amount Payroll Contribution
1/1/89 9/30/90 $ 1,184,478 10.50 % $ 1,184,478
1/1/90 9/30/91 1,249,624 10.50 1,291,072
10/1/90 9/30/91 1,503,350 11.17 1,503,350
10/1/91 9/30/92 1,551,773 10.93 1,551,773
10/1/92 9/30/93 1,611,251 11.49 1,611,251
10/1/93 9/30/94 1,539,169 10.91 1,539,169
10/1/94 9/30/95 1,505,804 10.20 1,505,804
10/1/95 9/30/96 1,339,622 8.95 1,339,622
10/1/96 9/30/97 1,168,158 7.81 1,180,810
10/1/97 9/30/98 1,069,863 7.02 1,069,863
10/1/98 9/30/99 952,994 5.68 952,994
10/1/99 9/30/00 686,732 3.82 686,732
10 /1 /00 9/30/01 595,970 3.03 595,970
10 /1 /01 9/30/02 1,039,900 4.88 1,039,900
10/1/02 9/30/03 1,542,574 7.37 1,542,574
10/1/03 9/30/04 2,243,356 10.20 2,243,356
10/1/04 9/30/05 2,851,454 13.44 2,851,454
1011105 9/30/06 2,805,595 12.91 2,805,595
10/1/06 9/30/07 3,584,452 14.37 3,584,452
10/1/07 9/30/08 3,909,961 14.70 3,909,961
10/1/08 9/30/09 4,800,411 17.24 4,800,411
10/1/09 9/30/10 5,415,919 19.22 5,415,919
10/1/09 9/30/11 4,694,544 18.43 4,694,545
10 /1 /10 9/30/12 4,502,590 19.40 4,502,590
10 /1 /11 9/30/13 6,630,714 27.80 na
10/1/12 9/30/14 6,780,773 31.35 na
GRS
17
ACTUARIAL ASSUMPTIONS AND COST METHOD
Valuation Methods
Actuarial Cost Method - Normal cost and the allocation of benefit values between service rendered
before and after the valuation date were determined using an Individual Entry -Age Actuarial Cost
Method having the following characteristics:
(i) the annual normal cost for each individual active member, payable from the date of employment
to the date of retirement, is sufficient to accumulate the value of the member's benefit at the time
of retirement,
(ii) each annual normal cost is a constant percentage of the member's year by year projected covered
pay.
Actuarial gains /(losses), as they occur, reduce (increase) the Unfunded Actuarial Accrued Liability.
Financing of Unfunded Actuarial Accrued Liabilities - Unfunded Actuarial Accrued Liabilities (full
funding credit if assets exceed liabilities) were amortized as a level (principal & interest combined)
percent of payroll. The actual payroll growth average over the last 10 years was 0.01% compared to the
assumed rate of 3.5 %. Florida administrative code requires using the lesser of the two rates for purposes
of amortizing unfunded liabilities as a level percent of pay.
Actuarial Value of Assets - The Actuarial Value of Assets phase in the difference between the expected
investment earnings and actual investment earnings at the rate of 20% per year. The Actuarial Value of
Assets will be further adjusted to the extent necessary to fall within the corridor whose lower limit is 80%
of the Market Value of plan assets and whose upper limit is 120% of the Market Value of plan assets.
During periods when investment performance exceeds the assumed rate, Actuarial Value of Assets will
tend to be less than Market Value. During periods when investment performance is less than assumed
rate, Actuarial Value of Assets will tend to be greater than Market Value.
Valuation Assumptions
The actuarial assumptions used in the valuation are shown in this Section.
Economic Assumptions
The investment return rate assumed in the valuation is 8.0% per year, compounded annually (net after
investment expenses).
The Wage Inflation Rate assumed in this valuation was 3.5% per year. The Wage Inflation Rate is
defined to be the portion of total pay increases for an individual that are due to macroeconomic forces
including productivity, price inflation, and labor market conditions. The wage inflation rate does not
include pay changes related to individual merit and seniority effects.
The assumed real rate of return over wage inflation is defined to be the portion of total investment
return that is more than the assumed wage inflation rate. Considering other economic assumptions, the
8.0% investment return rate translates to an assumed real rate of return over wage inflation of 4.5 %.
GRS
18
The assumed rate of salary increases are shown in the table below. Part of the assumption is for merit
and /or seniority increase, and 3.5% recognizes wage inflation, including price inflation, productivity
increases, and other macroeconomic forces. This assumption is used to project a member's current salary
to the salaries upon which benefits will be based. Projected retirement benefits are increased by 10% to
allow for the inclusion in average final compensation of lump sum payments of unused leave.
Annual Rates of Salary
Attributable to: Increase For Sample Ages
20 30 40 _50 60
Merit & Seniority 4.3% 3.2" � 2.6 "0 1 6 0.7
General Increase in
Wage Level Due to:
Inflation 3.5 3.5 3.5 3.5 3.5
Total 7.8% 6.7"/" 6.1% 5.1% 4.2
Demographic Assumptions
The mortality table was the 1983 Group Annuity Mortality Table for males (with ages set back 6 years for
females). This table does not include any margin for future mortality improvements.
This assumption is used to measure the probabilities of each benefit payment being made after retirement.
For active members, the probabilities of dying before retirement were based upon the same mortality table as
members dying after retirement.
The rates of retirement used to measure the probability of eligible members retiring during the next year are
shown below.
Year of Rate
Attainment
of NRD 80%
NRD + 1 30
NRD +2 30
NRD + 3 30
NRD + 4 30
NRD + 5 100
Assumed rate is 5% for each year eligible for Early Retirement.
GRS
19
Rates of separation from active membership were as shown below (rates do not apply to members
eligible to retire and do not include separation on account of death or disability). This assumption
measures the probabilities of members remaining in employment.
Sample Years of Percent Separating within
Ages Service Next Year
ALL 0 34.0%
1 213
2 12.8
3 8.5
4 6.0
25 5 & Over 5.1
30 5.1
35 5.1
40 5.1
45 3.0
50 1.3
55 1.3
60 13
"IX3
20
Miscellaneous and Technical Assumptions
Administrative & Investment The investment return assumption is intended to be the return net of
Expenses investment expenses. Annual administrative expenses are assumed to
be the same as last year's actual non - investment expenses. Assumed
administrative expenses are added to the Normal Cost.
Benefit Service Exact fractional service is used to determine the amount of benefit
payable.
Decrement Operation Mortality decrements operate during retirement eligibility.
Decrement Timing Decrements of all types are assumed to occur at the beginning of the
year.
Eligibility Testing Eligibility for benefits is detennined based upon the age nearest
birthday and service nearest whole year on the date the decrement is
assumed to occur.
Forfeitures For vested separations from service, it is assumed that 0% of members
separating will withdraw their contributions and forfeit an employer
financed benefit. It was further assumed that the liability at
termination is the greater of the vested deferred benefit (if any) or the
member's accumulated contributions.
Incidence of Contributions Employer contributions are assumed to be made at the beginning of
the fiscal year. Member contributions are assumed to be received
continuously throughout the year based upon the computed percent of
payroll shown in this report, and the actual payroll payable at the time
contributions are made.
Liability Load Projected benefits are loaded by 10.0% to recognize the effect of
unused leave pay on final average earnings.
Normal Form of Benefit A life annuity is the normal form of benefit.
Pay Increase Timing Beginning of fiscal year. This is equivalent to assuming that reported
pays represent amounts paid to members during the year ended on the
valuation date.
Service Credit Accruals It is assumed that members accrue one year of service credit per year.
"1X3
21
GLOSSARY
Actuarial Accrued Liability The difference between the Actuarial Present Value of Future Benefits,
(AAL) and the Actuarial Present Value of Future Normal Costs.
Actuarial Assumptions Assumptions about future plan experience that affect costs or liabilities,
such as: mortality, withdrawal, disablement, and retirement; future
increases in salary; future rates of investment earnings; future investment
and administrative expenses; characteristics of members not specified in
the data, such as marital status; characteristics of future members, future
elections made by members; and other items.
Actuarial Cost Method A procedure for allocating the Actuarial Present Value of Future Benefits
between the Actuarial Present Value of Future Normal Costs and the
Actuarial Accrued Liability.
Actuarial Equi>>alent Of equal Actuarial Present Value, determined as of a given date and based
on a given set of Actuarial Assumptions.
Actuarial Present Value The amount of funds required to provide a payment or series of payments
(APP) in the future. It is determined by discounting the future payments with an
assumed interest rate and with the assumed probability each payment will
be made.
Actuarial Present Value of The Actuarial Present Value of amounts which are expected to be paid at
Future Benefits (APVFB) various future times to active members, retired members, beneficiaries
receiving benefits, and inactive, non retired members entitled to either a
refund or a future retirement benefit. Expressed another way, it is the value
that would have to be invested on the valuation date so that the amount
invested plus investment earnings would provide sufficient assets to pay
all projected benefits and expenses when due.
Actuarial Valuation The determination, as of a valuation date, of the Normal Cost, Actuarial
Accrued Liability, Actuarial Value of Assets, and related Actuarial Present
Values for a plan. An Actuarial Valuation for a govermnental retirement
system typically also includes calculations of items needed for compliance
with GASB No. 25, such as the Funded Ratio and the Annual Required
Contribution (ARC).
Actuarial Value ofAssets The value of the assets as of a given date, used by the actuary for
valuation purposes. This may be the market or fair value of plan assets
or a smoothed value in order to reduce the year -to -year volatility of
calculated results, such as the funded ratio and the actuarially required
contribution (ARC).
Amortization Method A method for determining the Amortization Payment. The most common
methods used are level dollar and level percentage of payroll. Under the
Level Dollar method, the Amortization Payment is one of a stream of
payments, all equal, whose Actuarial Present Value is equal to the UAAL.
Under the Level Percentage of Pay method, the Amortization Payment is
one of a stream of increasing payments, whose Actuarial Present Value is
equal to the UAAL. Under the Level Percentage of Pay method, the stream
of payments increases at the rate at which total covered payroll of all
active members is assumed to increase.
C` ID
22
Amortization Payment That portion of the plan contribution or ARC which is designed to pay
interest on and to amortize the Unfunded Actuarial Accrued Liability.
Amortization Period The period used in calculating the Amortization Payment.
Annual Required The employer's periodic required contributions, expressed as a dollar
Contribution (ARC) amount or a percentage of covered plan compensation, determined under
GASB No. 25. The ARC consists of the Employer Normal Cost and
Amortization Payment.
Closed Amortization Period A specific number of years that is reduced by one each year, and declines
to zero with the passage of time. For example if the amortization period is
initially set at 30 years, it is 29 years at the end of one year, 28 years at the
end of two years, etc.
Employer Normal Cost The portion of the Normal Cost to be paid by the employer. This is
equal to the Normal Cost less expected member contributions.
Equivalent Single For plans that do not establish separate amortization bases (separate
Amortization Period components of the UAAL), this is the same as the Amortization Period.
For plans that do establish separate amortization bases, this is the period
over which the UAAL would be amortized if all amortization bases were
combined upon the current UAAL payment.
Experience Gain/Loss A measure of the difference between actual experience and that expected
based upon a set of Actuarial Assumptions, during the period between two
actuarial valuations. To the extent that actual experience differs from that
assumed, Unfunded Actuarial Accrued Liabilities emerge which may be
larger or smaller than projected. Gains are due to favorable experience,
e.g., the assets earn more than projected, salaries do not increase as fast as
assumed, members retire later than assumed, etc. Favorable experience
means actual results produce actuarial liabilities not as large as projected
by the actuarial assumptions. On the other hand, losses are the result of
unfavorable experience, i.e., actual results that produce Unfunded
Actuarial Accrued Liabilities which are larger than projected.
Funded Ratio The ratio of the Actuarial Value of Assets to the Actuarial Accrued
Liability.
GASB Governmental Accounting Standards Board.
GASB No. 25 and These are the governmental accounting standards that set the accounting
GASB No. 27 rules for public retirement systems and the employers that sponsor or
contribute to them. Statement No. 27 sets the accounting rules for the
employers that sponsor or contribute to public retirement systems, while
Statement No. 25 sets the rules for the systems themselves.
Normal Cost The annual cost assigned, under the Actuarial Cost Method, to the current
plan year.
G1lS
2 3 1
Open Amortization Period An open amortization period is one which is used to determine the
Amortization Payment but which does not change over time. In other
words, if the initial period is set as 30 years, the same 30 -year period is
used in determining the Amortization Period each year. In theory, if an
Open Amortization Period is used to amortize the Unfunded Actuarial
Accrued Liability, the UAAL will never completely disappear, but will
become smaller each year, either as a dollar amount or in relation to
covered payroll.
Unfunded Actuarial Accrued The difference between the Actuarial Accrued Liability and Actuarial
Liability Value of Assets.
Valuation Date The date as of which the Actuarial Present Value of Future Benefits are
determined. The benefits expected to be paid in the future are discounted
to this date.
GRS
SECTION C
PENSION FUND INFORMATION
GRS
24
STATEMENT OF PLAN ASSETS
September 30
Item 2012 2011
A. Cash and Cash Equivalents (Operating Cash) $ - $ -
B. Receivables:
1. Member Contributions $ 55,901 $ 59,479
2. Employer Contributions - 180,559
3. Investment Income and Other Receivables 477,074 662,009
4. Prepaid Expenses 5,192 347,297
5. Total Receivables $ 538,167 $ 1,249,344
C. Investments
1. Short Tenn Investments $ 2,296,451 $ 2,930,362
2. Domestic Equities 65,695,660 52,456,927
3. International Equities - -
4. Domestic Fixed Income 27,503,908 25,995,654
5. International Fixed Income 63,414 82,708
6. Real Estate 8,007,371 6,215,909
7. Private Equity - -
8. Total Investments $ 103,566,804 $ 87,681,560
D. Liabilities
1. Benefits Payable $ - $ -
2. Accrued Expenses and Other Payables - -
3. Accounts Payable (43,509) (81,132)
4. Due to Brokers - -
5. Total Liabilities $ (43,509) $ (81,132)
E. Total Market Value of Assets Available for Benefits $ 104,061,462 $ 88,849,772
F. Reserves
1. Elective Benefits (392,521) (455,719)
2. DROP Accounts (5,360,303) (3,915,418)
3. Total Reserves $ (5,752,824) $ (4,371,137)
G. Market Value Net of Reserves $ 98,308,638 $ 84,478,635
H. Allocation of Investments
I. Short Term Investments 2.2% 3.3%
2. Domestic Equities 63.4% 59.9%
3. International Equities 0.0% 0.0%
4. Domestic Fixed Income 26.6% 29.6%
5. International Fixed Income 0.1% 0.1%
6. Real Estate 7.7% 7.1%
7. Private Equity 0.0% 0.0%
8. Total Investments 100.0% 100.0%
GRS
25
RECONCILIATION OF PLAN ASSETS
September 30
Item 2012 2011
A. Market Value of Assets at Beginning of Year $ 88,849,772 $ 88,916,323
B. Revenues and Expenditures
1. Contributions
a. Employee Contributions $ 1,511,257 $ 1,811,372
b. Employer Contributions 4,502,590 4,694,545
c. State Contributions - -
d. Other Income - -
e. Total $ 6,013,847 $ 6,505,917
2. Investment Income
a. Interest, Dividends, and Other Income $ 2,811,371 $ 2,571,340
b. Realized/Unrealized Gains (Losses) 13,392,219 (2,593,303)
c. Investment Expenses (465,689) (439,208)
d. Net Investment Income $ 15,737,901 $ (461,171)
3. Benefits and Refunds
a. Refunds $ (410,291) $ (602,225)
b. Regular Monthly Benefits (5,760,421) (5,006,405)
c. DROP Distribution (234,174) (363,181)
d. Total $ (6,404,886) $ (5,971,811)
4. Administrative and Miscellaneous Expenses $ (135,172) $ (139,486)
C. Market Value of Assets at End of Year $ 104,061,462 $ 88,849,772
D. Reserves
1. Elective Benefits $ (392,521) $ (455,719)
2. DROP Accounts (5,360,303) (3,915,418)
3. Total Reserves $ (5,752,824) $ (4,371,137)
E Market Value Net of Reserves $ 98,308,638 $ 84,478,635
GRS
26
RECONCILIATION OF DROP ACCOUNTS
Value at beginning of year $ 3
Payments credited to accounts + 1,339,788
Investment Earnings credited + 339,271
Withdrawals from accounts - 234,174
Value at end of year 5,360,303
GRS
27
cz
o0 v kr) o 0 0
c 0 oa r-
m o0 0 0 0
0 0� �n r� � 0 0 0 • �
o0 a; W') oc m o 0 0
C o 00 m r�
o
� � Vl OQ
M 00 O1 v'a 00 kn OV C1 O O O
C O 00 M M
00 �.o
W 69 69 69 z
N r- 00 v) l- 00 O N \O N
Gzl r-i
CV 1p [-- 00 00 01 CV v'a 00 v'a CV O\ O M C*) O O N r-- 00 't � N P�
It N M 00 I O 00 M M `O r-i \O l- It \O \O 01 = 01 rA
C O 00 W') r-- r-i v� v� AO 00 VO A N V
O 00 O M M 01 W r� °
N O O 00 rr-i 00 r-i r-i r-i M VO -1 M P.
ll v'� O N
`-' `-' `� `� O N 00 cC
69 69 69 69 °
O
r-i
o o l —
l 0 0 o O
oc v'a l� m 00 CA \O \O 00 \O 00 — m =
\O � N N r-- O r-i 00 M O N N r-- N r-i r-- r-i r-i M O v) N O
I� M r - M lc � lc r - r M N r 00 N � V') 00 V V
�n Ov vO It r-i 00 A6 t- W) 00 W) O1 O1 r-- Ov Ov r-- r-- N
00 't r-i d\ `O \O N 00 M M \O N r-i r-i l- r-i r-i v� \O
C M 00 01 m It 01 It VD 't 00 r-i AO AO O AO O\ It N r--
N 01 00 00 - `-� `-� `~-� O O r- O M m ,m-i U
O
4-y
69 69 69 69 °
cz
O � �
O > N
d U ro
F4 U W cz cz C�
° U > O
A o ca W y v 0 00
o b
en
tD
s..
°� °' � ca W °' W oo 86 o
W p 1:, a �e o - o x 05
'" cz 0 w 0 0 U C cz
ter' o ct a ct
to 0
O
oa °aZ �UU on� i ons iz
ca
q q
� � O � r-� N cn � ,--� N c+i � v `o � � r N m � �n `o � � v � e
>���W W W Ww Q��
GRS
28
INVESTMENT RATE OF RETURN
Investment Rate of Return
Year Ended Market Value Actuarial Value
12/31/88 NA 10.8 %
12/31/89 NA 17.4
9/30/90 (9 mos.) NA (2.3)
9/30/91 NA 9.9
9/30/92 NA 9.5
9/30/93 NA 11.0
9/30/94 NA 8.0
9/30/95 NA 9.3
9/30/96 NA 9.4
9/30/97 24.6 %, 13.3
9/30/98 8.6 14.5
9/30/99 11.5 13.2
9/30/00 9.8 12.3
9/30/01 (9.4) 3.9
9/30/02 (6.4) 0.2
9/30/03 14.8 0.8
9/30/04 6.9 0.5
9/30/05 10.5 6.2
9/30/06 6.8 9.7
9/30/07 14.3 9.3
9/30/08 (15.0) 4.6
9/30/09 (03) 0.1
9/30/10 8.5 43
9/30/11 (0.5) 2.8
9/30/12 17.8 4.5
Average Returns:
Last Five Years 1.5 % 3.2 %
Last Ten Years 6.0 % 4.2 %
All Years 5.9 % 73 %
GRS
SECTION D
FINANCIAL ACCOUNTING INFORMATION
GRS
29
FASB NO. 35 INFORMATION
A. Valuation Date October 1, 2012 October 1, 2011
B. Actuarial Present Value of Accumulated
Plan Benefits
I. Vested Benefits
a. Members Currently Receiving Payments $ 70,192,922 $ 64,197,071
b. Terminated Vested Members 4,653,885 3,620,457
c. Other Members 45,326,494 45,510,690
d. Total 120,173,301 113,328,218
2. Non - Vested Benefits 1,026,553 1,325,842
3. Total Actuarial Present Value of Accumulated
Plan Benefits: Id + 2 121,199,854 114,654,060
4. Accumulated Contributions of Active Members 12,450,870 12,524,528
C. Changes in the Actuarial Present Value of
Accumulated Plan Benefits
1. Total Value at Beginning of Year 114,654,060 106,514,955
2. Increase (Decrease) During the Period
Attributable to:
a. Plan Amendment 0 0
b. Change in Actuarial Assumptions 0 0
c. Latest Member Data, Benefits Accumulated
and Decrease in the Discount Period 14,056,294 14,974,656
d. Benefits Paid (7,510,500) (6,835,551)
e. Net Increase 6,545,794 8,139,105
3. Total Value at End of Period 121,199,854 114,654,060
D. Market Value of Assets 98,308,638 84,478,635
E. Actuarial Present Value of Accumulated
Plan Benefits at FRS rate (7.75 %)
1. Vested Benefits 123,143,620 116,173,930
2. Non- Vested Benefits 1,079,521 1,399,802
3. Total 124,223,141 117,573,732
F. Funded Ratio (using FRS rate of 7.75%): D / E3 79.1 % 71.9 %
G. Actuarial Assumptions - See page entitled
Actuarial Assumptions and Methods
GRS
30
O
W) 't 0o AO r- O al r Cl r r- N M N N C O v') al 00
y S r- - \c \c N -- vn vn !t v (= \O -- - N M d M M 't
M N \O v) AO !t !t 00 l- vn -- 01 N -- N N o1 M l-
t N - - oo !t a oo !t M of M 7t o 00 7t 00
eC o o 110 01 N 7t 01 O 01 W') o1 01 N � o1 �c 00 — — — o
a N cn cn cn v o0 0 0 - - -� 116 r� 00 N o
0
U
rA
0
O
r- 7 t al v O a al 7t 7t 7t v M kn 7t 00 7t N W')
a oo `O oo M o\ N oo v')* o\ N v'* kn `O 4 4 `O 4 4
l� 00 00 a\ a\ O O O O a\ o0 oo r- r- r- r- � � � � �
� � O
N
QI a oo M 7t � 7t kn � � a\ 00 (= M N O a\ v') v') r- 00 N
7t 01 7t O o0 r- d 01 lzt N 7 t v') - N v') - \O - \c 7t 7t
�..� .--i O "O M M 00 00 M 00 O M M -!t O N W 00 l- \c .--i kn
^
\O 4 M N �..i M r M O N Vr t 00 O of t
w � �
w � W
O� rs
W �
W ^ M \O v) O AO AO v) M v) 00 0o a N O O v t O
S�, v t 7t O N � 7t v o\ � \c O o1 C1 0\ v
x U DD -- d M lr 00 N N N M d\ \O r- M
d ^ o0 o N kn r- a o; v M o0 oo 4 N - v N kn
N M M M M 7 t 7 t 7 t V') \O \O r- 00 00 0l O r1l m m
� � W
U a
rs
O
y M O N 00 r- r- -- M N 7 t � o\ Vl l� N N kn 00 \O 00
O v (= M N N 't kn o\ N o\ 7t � N 7t 7 N7t O
r- O M O a N a o\ ll --� Nll� 00 ll� O oo O a --� N a
N \O o1 M \c N M (= N N N N \O M a\ 7 O \O oo O
_ N N N M M 7t 7t W') � AO AO AO AO AO r- r- 00 al of o1 O
b9
O N M 7t v') `O r- oo a\ O --
N M me `O oo all
O dl dl dl dV dl dl dl dl O O O O O O
O O O O O O O O O O O O O O O O O O O O O O
GRS
31
SCHEDULE OF EMPLOYER CONTRIBUTIONS
(GASB Statement No. 25)
Year Ended Annual Required Actual Percentage
September 30 Contribution Contribution Contributed
1991 $ 1,503,350 $ 1,503,350 100.0 %
1992 1,551,773 1,551,773 100.0
1993 1,611,251 1,611,251 100.0
1994 1,539,169 1,539,169 100.0
1995 1,505,804 1,505,804 100.0
1996 1,339,622 1,339,622 100.0
1997 1,168,158 1,180,810 101.1
1998 1,069,863 1,069,863 100.0
1999 952,994 952,994 100.0
2000 686,732 686,732 100.0
2001 595,970 595,970 100.0
2002 1,039,900 1,039,900 100.0
2003 1,542,574 1,542,574 100.0
2004 2,243,356 2,243,256 100.0
2005 2,851,454 2,851,454 100.0
2006 2,805,595 2,805,595 100.0
2007 3,584,452 3,584,452 100.0
2008 3,909,961 3,909,961 100.0
2009 4,800,411 4,800,411 100.0
2010 5,415,919 5,415,919 100.0
2011 4,694,544 4,694,545 100.0
2012 4 4,502,590 100.0
GRS
32
ANNUAL PENSION COST AND NET PENSION OBLIGATION
(GASB STATEMENT NO. 27)
Employer FYE September 30 2013 2012 2011
Annual Required Contribution (ARC)* $ 6,630,714 $ 4,502,590 $ 4,694,544
Interest on Net Pension Obligation (NPO) (271) (299) (330)
Adjustment to ARC (602) (648) (721)
Annual Pension Cost (APC) 6,631,045 4,502,939 4,694,935
Contributions made ** 4,502,590 4,694,545
Increase (decrease) in NPO ** 349 390
NPO at beginning of year (3,390) (3,739) (4,129)
NPO at end of year ** (3,390) (3,739)
* * To be determined
THREE YEAR TREND INFORMATION
Fiscal Annual Pension Actual Percentage of Net Pension
Year Ending Cost (APC) Contribution APC Contributed Obligation
9/30/2010 $ 5,416,350 $ 5,415,919 100.0 % $ (4,129)
9/30/2011 4,694,935 4,694,545 100.0 (3,739)
9/30/2012 4,502,939 4,502,590 100.0 (3,390)
"1\0
REQUIRED SUPPLEMENTARY INFORMATION
GASB Statement No. 25 and No. 27
The information presented in the required supplementary schedules was determined as part of the
actuarial valuations at the dates indicated. Additional information as of the latest actuarial valuation:
Valuation date October 1, 2012
Contribution Rates:
Employer 31.35%
Plan Members 7.00% of compensation
Actuarial Cost Method Entry Age
Amortization Method Level percent, closed
Remaining amortization period 15 years
Asset valuation method 5 year smoothed market
Actuarial assurnptions:
Investment rate of return 8.0%
Projected salary increases 4.2% to 7.8 %, depending
on service
Includes inflation and other general increases at 3.5%
Cost -of- living adjustments NA
GRS
SECTION E
MISCELLANEOUS INFORMATION
GRS
34
RECONCILIATION OF MEMBERSHIP DATA
From 10 /1 /11 From 10 /1 /10
To 10/1/12 To 10 /1 /11
A. Active Members
1. Number Included in Last Valuation 395 479
2. New Members Included in Current Valuation 36 8
3. Non- Vested Employment Terminations (18) (22)
4. Vested Employment Terminations (9) (33)
5. DROP Participation (8) (15)
6. Service Retirements (8) (19)
7. Disability Retirements 0 0
8. Deaths (1) (3)
9. Number Included in This Valuation 387 395
B. Terminated Vested Members
1. Number Included in Last Valuation 43 24
2. Additions from Active Members 10 33
3. Lump Sum Payments /Refund of Contributions (6) (10)
4. Payments Commenced (8) (4)
5. Deaths (1) 0
6. Other - -New Beneficiaries and Prior Omissions 4 0
7. Number Included in This Valuation 42 43
C. DROP Plan Members
1. Number Included in Last Valuation 43 35
2. Additions from Active Members 8 15
3. Retirements (6) (7)
4. Deaths Resulting in No Further Payments 0 0
5. Other -- Previous Retirements (9) 0
6. Number Included in This Valuation 36 43
D. Service Retirees, Disability Retirees and Beneficiaries
1. Number Included in Last Valuation 264 240
2. Additions from Active Members 8 19
3. Additions from Terminated Vested Members 8 4
4. Additions from DROP Plan 6 7
5. Deaths Resulting in No Further Payments (2) (8)
6. Deaths Resulting in New Survivor Benefits 0 1
7. End of Certain Period - No Further Payments 0 0
8. Other -- Previous Retirements 9 1
9. Number Included in This Valuation 293 264
GRS
35
ACTIVES - DISTRIBUTION OF SERVICE & SALARY
Years of Service to Valuation Date
Age Group 0 -1 1 -2 2 -3 3 -4 4 -5 5 -9 10 -14 15 -19 20 -24 25 -29 35 & Up Totals
15 -19 NO. 0 0 0 0 0 0 0 0 0 0 0 0
TOT PAY 0 0 0 0 0 0 0 0 0 0 0 0
VG PAY 0 0 0 0 0 0 0 0 0 0 0 0
20 -24 NO. 2 1 0 1 0 0 0 0 0 0 0 4
TOT PAY 67,624 42,520 0 26,346 0 0 0 0 0 0 0 136,490
VG PAY 33,812 42,520 0 26,346 0 0 0 0 0 0 0 34,123
25 -29 NO. 6 1 0 0 1 13 0 0 0 0 0 21
TOT PAY 272,178 40,084 0 0 54,003 505,059 0 0 0 0 0 871,324
VG PAY 45,363 40,084 0 0 54,003 38,851 0 0 0 0 0 41,492
30 -34 NO. 6 0 0 2 0 7 5 0 0 0 0 20
TOT PAY 287,470 0 0 62,647 0 370,847 248,925 0 0 0 0 969,889
VG PAY 47,912 0 0 31,324 0 52,978 49,785 0 0 0 0 48,494
35 -39 NO. 3 1 1 2 3 14 19 5 0 0 0 48
TOT PAY 138,668 80,001 35,547 88,656 156,899 607,219 925,148 259,101 0 0 0 2,291,239
VG PAY 46,223 80,001 35,547 44,328 52,300 43,373 48,692 51,820 0 0 0 47,734
40 -44 NO. 4 0 1 2 5 10 12 9 5 0 0 48
TOT PAY 226,535 0 39,944 135,928 215,920 536,880 643,611 463,402 264,439 0 0 2,526,659
VG PAY 56,634 0 39,944 67,964 43,184 53,688 53,634 51,489 52,888 0 0 52,639
45 -49 NO. 10 1 0 0 7 14 17 12 8 4 0 73
TOT PAY 430,992 50,444 0 0 431,641 609,135 891,902 825,553 456,852 242,992 0 3,939,511
AVG PAY 43,099 50,444 0 0 61,663 43,510 52,465 68,796 57,107 60,748 0 53,966
50 -54 NO. 1 0 0 2 4 19 18 14 12 7 0 77
TOT PAY 38,675 0 0 131,976 161,638 907,711 1,173,501 752,378 782,402 506,191 0 4,454,472
VG PAY 38,675 0 0 65,988 40,410 47,774 65,195 53,741 65,200 72,313 0 57,850
55 -59 NO. 2 1 0 1 1 12 18 10 7 2 0 54
TOT PAY 100,095 35342 0 26,819 62,202 681,903 978,762 578,384 458,624 172,410 0 3,094,541
VG PAY 50,047 35342 0 26,819 62,202 56,825 54,376 57,838 65,518 86,205 0 57,306
60 -64 NO. 1 0 0 0 1 12 9 5 3 1 0 32
TOT PAY 70,719 0 0 0 31,262 513,668 511,672 309,184 152,066 78,648 0 1,667,219
VG PAY 70,719 0 0 0 31,262 42,806 56.852 61,837 50,689 78,648 0 52,101
65 -99 NO. 1 0 0 0 1 6 1 1 0 0 0 10
TOT PAY 35,432 0 0 0 102,920 295,765 51.100 48,627 0 0 0 533,844
VG PAY 35,43 0 0 0 1 02,920 49,294 51,100 48,627 0 0 0 53,384
TOT NO. 36 5 2 10 23 107 99 56 35 14 0 387
TOT AMT 1,668,388 248,391 75,491 472,372 1,216,485 5,028,187 5,424,621 3,236,629 2,114,383 1,000,241 0 20,485,188
VG AMT 46,344 49,678 37,746 47,237 52,891 46,992 54,794 57,797 60,411 71,446 0 52,933
GRS
36
INACTIVES — DISTRIBUTION OF AGES & ANNUAL BENEFITS
Deceased with
Terminated Vested Disabled Retired Beneficiary
Total Total Total Total
Age Number Benefits Number Benefits Number Benefits Number Benefits
Under 20 - - - - - - - -
20 -24 - - - - - - - -
25 -29 - - - - - - - -
30 -34 3 28,233 - - - - - -
35 -39 3 42,855 - - - - - -
40 -44 - - - - 2 87,747 - -
45 -49 6 126,645 - - 7 288,136 1 14,056
50 -54 17 328,652 - - 16 603,057 1 6,184
55 -59 9 89,854 - - 33 1,086,514 2 39,295
60 -64 4 73,812 - - 53 1,648,261 2 27,522
65 -69 - - 1 17,928 72 1,619,487 - -
70 -74 - - 1 5,717 52 953,544 3 16,346
75 -79 - - - - 34 492,740 3 40,913
80 -84 - - - - 24 283,925 3 42,656
85 -89 - - - - 13 179,186 2 11,961
90 -94 - - - - 4 57,337 - -
95 -99 - - - - - - - -
100 & Over - - - - - - - -
Total 42 690,051 2 23,645 310 7,299,934 17 198,933
Average Age 51 70 68 71
Liability 4,653,885 226,036 68,306,870 1,660,016
GRS
SECTION F
SUMMARY OF PLAN PROVISIONS
GRS
37
SUMMARY OF PLAN PROVISIONS
A. Ordinances
Plan established under the Code of Ordinances for the City of Boynton Beach, Florida, Chapter
18, Article II, and was most recently amended under Ordinance No. 10 -028 passed and adopted on
its second reading on November 3, 2010. The Plan is also governed by certain provisions of Part
VII, Chapter 112, Florida Statutes and the Internal Revenue Code.
B. Effective Date
April 1, 1968
C. Plan Year
October 1 through September 30
D. Type of Plan
Qualified, governmental defined benefit retirement plan; for GASB purposes it is a single employer
plan.
E. Eligibility Requirements
All general employees who work at least 30 hours per week are eligible to participate on the first
day of employment.
F. Credited Service
Service in the employment of the City is measured as years and months and is computed to the
nearest whole month. No service is credited for any periods of employment for which the member
received a refund of their contributions.
G. Compensation
Gross earnings including overtime, but excluding bonuses and flexible benefits.
H. Final Average Monthly Compensation (FAMC)
The average of Compensation over the highest 60 consecutive months during the last 120 months of
Credited Service; includes lump sum payouts of accumulated sick pay upon termination or
retirement.
L Normal Retirement
Eligibility: A member may retire on the first day of the month coincident with or next
following the earliest of
(1) age 62 and 5 years of Credited Service, or
(2) age 55 and 25 years of Credited Service, or
(3) 30 years of Credited Service regardless of age.
GRS
3g
Benefit: 3% of FAMC multiplied by years of Credited Service with a maximum equal to
75% of FAMC.
Normal Form
of Benefit: Single life annuity; other options are also available.
COLA: In lieu of receiving a COLA, a supplemental benefit may be paid in years that
investment return exceeds the assumed rate of return. The amount that investment
return exceeds the assumed return will be divided equally among all participants.
The supplemental benefit will not be paid if the Plan has experienced cumulative
losses from all sources after October 1, 2001.
J. Early Retirement
Eligibility: A member who has less than 30 years of Credited Service may elect to retire earlier
than the Normal Retirement Eligibility upon the earlier o£
(1) age 55 and 10 years of Credited Service, or
(2) age 52 and 25 years of Credited Service.
Benefit: The Normal Retirement Benefit is reduced by 3% for each year by which the Early
Retirement date precedes the Nonnal Retirement date.
Normal Form
of Benefit: Single life annuity; other options are also available.
COLA: In lieu of receiving a COLA, a supplemental benefit may be paid in years that
investment return exceeds the assumed rate of return. The amount that investment
return exceeds the assumed return will be divided equally among all participants.
The supplemental benefit will not be paid if the Plan has experienced cumulative
losses from all sources after October 1, 2001.
K Delayed Retirement
Same as Normal Retirement taking into account compensation earned and service credited until the
date of actual retirement.
L. Service Connected Disability
Eligibility: Any member who becomes totally and permanently disabled and is unable to
perforn all the material duties of their occupation as a result from an act occurring
in the performance of service for the City is eligible for a disability benefit.
Benefit: The accrued Normal Retirement Benefit taking into account compensation earned
and service credited as of the date of disability. The benefit is payable on the
member's Normal Retirement date.
Nonnal Form
of Benefit: Single life annuity; other options are also available.
COLA: In lieu of receiving a COLA, a supplemental benefit may be paid in years that
investment return exceeds the assumed rate of return. The amount that investment
return exceeds the assumed return will be divided equally among all participants.
The supplemental benefit will not be paid if the Plan has experienced cummulative
losses from all sources after October 1, 2001.
GRS
1 9
M. Non - Service Connected Disability
Eligibility: Any member who becomes totally and permanently disabled and is unable to
perform all the material duties of their occupation is eligible for a disability benefit.
Benefit: The accrued Normal Retirement Benefit taking into account compensation earned
and service credited as of the date of disability. The benefit is payable on the
member's Normal Retirement date.
Normal Form
of Benefit: Single life annuity; other options are also available.
COLA: In lieu of receiving a COLA, a supplemental benefit may be paid in years that
investment return exceeds the assumed rate of return. The amount that investment
return exceeds the assumed return will be divided equally among all participants.
The supplemental benefit will not be paid if the Plan has experienced cumulative
losses from all sources after October 1, 2001.
N. Death in the Line of Duty
Eligibility: Any member with 5 or more years of Credited Service whose death is determined
to be the result of a service incurred injury is eligible for survivor benefits.
Benefit: Beneficiary will have the choice of receiving either an immediate lump sum
payment or a monthly survivor benefit.
The immediate lump sum payment will be the greater of a refund of the member's
contributions with interest at the annual rate of 5 %, or the lump sum value of the
member's accrued Normal Retirement Benefit payable at the earliest retirement
date.
The monthly survivor benefit will be equal to the accrued Normal Retirement
Benefit taking into account compensation earned and service credited as of the date
of death with payments starting at the earliest retirement date. If the "earliest date"
precedes the member's Normal Retirement Date, then the accrued benefit will be
subject to the Early Retirement reduction.
Normal Form
of Benefit: Optional lump suin or a monthly benefit payable for the life of the beneficiary.
COLA: In lieu of receiving a COLA, a supplemental benefit may be paid in years that
investment return exceeds the assumed rate of return. The amount that investment
return exceeds the assumed return will be divided equally among all participants.
The supplemental benefit will not be paid if the Plan has experienced cumulative
losses from all sources after October 1, 2001.
The beneficiary of a plan member with less than 5 years of Credited Service at the
time of death will receive a refund of the member's accumulated contributions with
interest at 5.0 %.
G1lS
40
O. Other Pre - Retirement Death
Eligibility: Members are eligible for survivor benefits after the completion of 5 or more years
of Credited Service.
Benefit: Beneficiary will have the choice of receiving either an immediate lump suwn
payment or a monthly survivor benefit.
The immediate lump sum payment will be the greater of a refund of the member's
contributions with interest at the annual rate of 5 %, or the lump sum value of the
member's accrued Nonnal Retirement Benefit payable at the earliest retirement
date.
The monthly survivor benefit will be equal to the accrued Normal Retirement
Benefit taking into account compensation earned and service credited as of the date
of death with payments starting at the earliest retirement date. If the "earliest date"
precedes the member's Normal Retirement Date, then the accrued benefit will be
subject to the Early Retirement reduction.
Normal Form
of Benefit: Optional lump sum or a monthly benefit payable for the life of the beneficiary.
COLA: In lieu of receiving a COLA, a supplemental benefit may be paid in years that
investment return exceeds the assumed rate of return. The amount that investment
return exceeds the assumed return will be divided equally among all participants.
The supplemental benefit will not be paid if the Plan has experienced cumulative
losses from all sources after October 1, 2001.
The beneficiary of a plan member with less than 5 years of Credited Service at the
time of death will receive a refund of the member's accuumulated contributions with
interest.
P. Post Retirement Death
Benefit determined by the form of benefit elected upon retirement.
Q. Optional Forms
In lieu of electing the Normal Forn of benefit, the optional form of benefit available to all retirees is
the 66 2/3% Joint and Survivor Annuity option. A Social Security option is also available for
members retiring prior to the time they are eligible for Social Security retirement benefits. Upon
approval of the Plan Administrator, other options are also available as long as actuarial equivalence
is maintained.
R. Vested Termination
Eligibility: A member has earned a non - forfeitable right to Plan benefits after the completion
of 5 years of Credited Service if they elect to leave their accumulated contributions
in the fund.
G1lS
41
Benefit: The benefit is the member's accrued Normal Retirement Benefit as of the date of
termination. The benefit begins at either age 62, at age 55 if the member had or
would have had 25 or more years of Credited Service on or before attaining age 55,
or at the age at which the member would have had 25 years of Credited Service
(had employment continued) if this age is between ages 55 and 62.
Normal Form
of Benefit: Single life annuity; other options are also available.
COLA: In lieu of receiving a COLA, a supplemental benefit may be paid in years that
investment return exceeds the assumed rate of return. The amount that investment
return exceeds the assumed return will be divided equally among all participants.
The supplemental benefit will not be paid if the Plan has experienced cumulative
losses from all sources after October 1, 2001.
Members terminating employment with less than 5 years of Credited Service will receive a refund of
their own accumulated contributions with interest.
S. Refunds
Eligibility: All members terminating employment with less than 5 years of Credited Service
are eligible. Optionally, vested members (those with 5 or more years of Credited
Service) may elect a refund in lieu of the vested benefits otherwise due.
Benefit: Refund of the member's contributions with interest. Interest is currently credited at
5% per annwm.
T. Member Contributions
7% of Compensation
U. Employer Contributions
The amount determined by the actuary needed to fund the plan properly according to State laws.
V. Cost of Living Increases
In lieu of receiving a COLA, a supplemental benefit may be paid in years that investment return
exceeds the assumed rate of return. The amount that investment return exceeds the assumed return
will be divided equally among all participants. The supplemental benefit will not be paid if the Plan
has experienced cumulative losses from all sources after October 1, 2001.
W. Changes from Previous Valuation
There are no changes from the previous valuation.
X. 13 Check
As described under the COLA subsections, in lieu of COLA increases a thirteenth check will be paid
to retirees on each July 1s following a fiscal year in which the net investment return exceeds the
assumed rate of investment return and the Plan has experienced a cumulative gain.
GRS
42
Y. Deferred Retirement Option Plan
Eligibility: Plan members who have met one of the following criteria are eligible for the
DROP:
(1) age 62 and 5 years of Credited Service, or
(2) age 55 and 25 years of Credited Service, or
(3) 30 years of Credited Service regardless of age.
Members must make a written election to participate in the DROP within the first
30 years of employment.
Benefit: The member's Credited Service and FAMC are frozen upon entry into the DROP.
The monthly retirement benefit as described under Normal Retirement is calculated
based upon the frozen Credited Service and FAMC.
Maximum
DROP Period: 5 years
Interest
Credited: The member's DROP account is credited at an interest rate based upon the option
chosen by the member. Members must elect from 1 of the 3 following options:
1. Gain or loss at the same rate earned by the Plan, or
2. Guaranteed rate of 7 %, or
3. A percentage of the DROP credited at the same rate earned by the Plan and
the remaining percentage credited with earnings at a guaranteed rate of 7 %.
Normal Form
of Benefit: Options include a lump sum or an annuity.
COLA: In lieu of receiving a COLA, a supplemental benefit may be paid in years that
investment return exceeds the assumed rate of return. The amount that investment
return exceeds the assumed return will be divided equally among all participants.
The supplemental benefit will not be paid if the Plan has experienced cumulative
losses from all sources after October 1, 2001.
Z. Other Ancillary Benefits
There are no ancillary retirement type benefits not required by statutes but which might be deemed a
City of Boynton Beach Employees' Pension Plan liability if continued beyond the availability of
funding by the current funding source.
G1lS
INVESTMENT MANAGER AGREEMENT
EMPLOYEES' PENSION PLAN
OF THE CITY OF BOYNTON BEACH, FLORIDA
and
DEPRINCE, RACE & ZOLLO, INC.
THIS AGREEMENT is entered into this day of 2013, by
and between the BOARD OF TRUSTEES OF THE EMPLOYEES' PENSION PLAN OF
THE CITY OF BOYNTON BEACH, FLORIDA ( "Trustees ") and DEPRINCE, RACE &
ZOLLO, INC. ( "Manager ").
W ITNESSETH:
WHEREAS, the City Commission of the City of Boynton Beach, Florida has enacted
a pension plan, providing for the creation and operation of the Employees' Pension Plan
of the City of Boynton Beach, Florida ( "the Plan "); and
WHEREAS, the Pension Plan provides that the Trustees are solely responsible for
administering for the Plan; and
WHEREAS, the Pension Plan provides that the Trustees are required to engage the
services of professional investment counsel to assist and advise the Trustees in the
performance of their duties; and
WHEREAS, the Trustees desire that the Manager serve as investment manager/
professional money manager with respectto certain of the assets held bythe Plan, and the
Manager is willing to so serve.
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
it is covenanted and agreed as follows:
Page 1 of 10
1. Appointment of Investment Manager The Trustees appoint the Manager
as Investment Manager with respect to those assets of the Plan assigned to the Manager
by the Trustees, including income and earnings attributable to such assets (collectively
referred to as "Investment Assets "). The Investment Manager hereby accepts this and
agrees to supervise and direct the investment of the Investment Account Assets in
accordance with the Investment Guidelines set forth in paragraph 5 hereof (the "Investment
Objectives ").
2. Fee Schedule For services under this Agreement, the Manager shall be
entitled to receive from the Trustees a fee as set forth in the fee schedule attached as
Exhibit A. Such fee shall be payable quarterly in arrears on the last day of such quarter,
at one fourth (1 /4th) the annual fee and shall be computed upon the fair market value of
the Investment Assets as of the last day of the quarter. If the services to be rendered under
this Agreement shall commence on a day other than the first day of a quarter, or end on
a day other than the end of a calendar quarter, the fee shall be prorated based on the
number of days in the quarter.
3. Investment Adviser The Manager hereby represents and warrants that
it is duly registered as an investment adviser under the Investment Advisers Act of 1940.
The Manager agrees to immediately notify the Trustees, in writing, in the event of any
change in its investment adviser registration. Attached as Exhibit B is proof of the
Manager's authority to do business in the State of Florida.
Page 2 of 10
4. Fiduciary Responsibility The Manager holds itself out to be an expert in
the field of investment counseling, and has sought the position of investment manager for
the Investment Assets which are the subject of this Agreement. The Manager represents
that it has the skill and learning commonly possessed by prudent members of the
investment counseling profession in good standing. The Manager hereby acknowledges
that it is a fiduciary with respect to the Trustees and the Plan. Attached hereto as Exhibit
C is a copy of the Manager's current SEC form ADV. The Manager agrees to immediately
provide the Trustees with all material changes to its Form ADV.
5. Investment Guidelines Attached hereto and made a part hereof as Exhibit
D is a copy of the investment provisions of the Pension Plan and the Board's Investment
Policy Guidelines. The Manager shall provide continuous supervision and management of
the Investment Assets in accordance with the investment guidelines. If the Manager
determines, at any time, that any of the investment guidelines in the attached Exhibit is
inappropriate, the Manager shall promptly notify the Trustees in writing. Except as
otherwise provided in Exhibit D, the Manager shall manage the investment of the
Investment Assets under its control in its complete discretion. The Trustees shall notify the
Manager in writing of any changes in its general investment guidelines. The specific
investment guidelines for Manager may be amended from time to time by agreement of the
parties, in writing.
6. Discretionary Authority Except as otherwise provided in Section 5 hereof
(Investment Guidelines), the Trustees hereby expressly grant to the Manager full and
complete discretion and authority with respect to managing the investment of the
Investment Assets, including, without limitation, authority to purchase, sell, exchange,
Page 3 of 10
convert, trade, and generally to deal in securities and other property comprising the
Investment Assets. Manager has no authority to direct the custodian to make any
payment(s) to the Manager.
7. Brokers
(a) The Manager shall have the absolute authority and discretion to place
orders on behalf of the Plan with such brokers or dealers whom the Manager may select,
provided that the Manager shall place an order with a broker or dealer only if, in the
Manager's judgment, and subject to the Manager's fiduciary responsibility to the Trustees
and the Plan, best execution for the Plan may thereby be obtained within the meaning of
ERISA Technical Release No. 86 -1 (i.e., competitive commission cost, as well as the
quality and reliability of the execution) a copy of which is attached hereto as Exhibit E. An
accounting of commissions paid to brokers and dealers shall be provided to the Trustees
quarterly.
(b) The Trustees may express their preference, in writing, that the
Manager utilize the services of certain brokers or dealers so as to use the commission to
pay for performance evaluation or other services to the Trustees. However, the Manager
shall not follow such an expression of preference unless the designated broker(s) or
dealer(s) can provide best execution in respect of securities transactions within the
meaning of ERISA Technical Release No. 86 -1. In determining whether a designated
broker or dealer can provide best execution for the Plan, the Manager shall consider only
the quality and reliability of executions by such broker or dealer, its financial responsibility,
its responsiveness to the Manager, research and brokerage services provided in
accordance with Section 28(e) of the Securities Exchange Act of 1934, as amended, and
Page 4 of 10
Department of Labor interpretations, the commission rate offered in connection with
securities transactions on behalf of the Plan and similar factors. In no instance shall the
Manager follow such an expression of preference if it conflicts with the Manager's fiduciary
responsibility to act prudently with respect to the decision concerning who will execute the
transaction.
8. Custodianship of Securities The Board will provide for the custody of the
Investment Assets.
9. Proxies The Manager shall have the exclusive authority and responsibility
with regard to the voting of proxies and monitoring those other items requiring action by the
Trustees with respect to the Investment Assets, including, but not limited to, stock
dividends, rights offerings, calls or redemption of bonds. The Manager shall not be directed
by any other person or entity with regard to the voting of proxies or taking action with
regard to the other items mentioned herein, unless such direction is given to the Manager
in writing by the Trustees. The Manager hereby represents and warrants that it has
established a procedure for reconciling proxies with holdings and that reasonable steps will
be undertaken to insure that proxies are received and voted. Proxy voting by the Manager
shall be consistent with the proxy voting policy which is attached as Exhibit F.
10. Reports The Manager shall provide the Trustees with a monthly statement
on the Investment Assets. This statement shall be provided to the Trustees, the
administrative manager and the performance monitor. Additionally, the Manager shall
provide a quarterly investment report which shall be presented to the Trustees by a
representative of the Manager on a reasonable basis but at least annually. The quarterly
Page 5 of 10
reports shall include, but shall not be limited to the following matters, which shall be
specifically presented in writing in the investment report:
(a) A schedule setting forth the present market values in comparison with
cost values, thereby showing the gains and losses of each investment;
(b) A detailed list of the transactions effected between each quarterly
report;
(c) A detailed listing of the commissions paid on each transaction in total,
and on a per trade basis, indicating the name of the broker or dealer;
(d) A report listing the vote on all proxies showing the date each proxy
was voted, the issue as to which each proxy was voted, and how each proxy was voted.
In addition, if a proxy was not voted, the Manager shall provide a written statement
indicating the reason that a particular proxy was not voted;
(e) Such other reports and analysis as the Manager deems appropriate,
or as the Trustees request.
11. Confidential Information The Manager shall maintain and protect in
strictest confidence any and all data, information, or documents of, and concerning the
finances, business, and affairs of, the Plan which it acquires in its performance of this
Agreement. The Manager and the Plan agree that none of the aforesaid data, information
or documents, and none of the reports and analyses prepared by the Manager as provided
in Section 10 hereof (Reports), shall be disclosed to anyone except the Trustees, legal
counsel to the Trustees and the Trustees' selected performance monitor, except as
otherwise agreed upon in writing or as required by law.
Page 6 of 10
12. Fidelity Bond The Manager agrees to obtain and maintain at least a Five
Million Dollar ($5,000,000.00) fidelity bond. Attached hereto as Exhibit G is a copy of the
Manager's current fidelity bond and binder. The Manager agrees to immediately notify the
Trustees, in writing, in the event any substantive change in coverage of said bond or if said
bond is terminated, canceled or discontinued, in whole or in part.
13. Errors and Omissions Insurance The Manager agrees to obtain and
maintain at least Ten Million Dollars ($10,000,000.00) of errors and omissions insurance.
Attached hereto as Exhibit H is a copy of the Manager's current errors and omissions
insurance policy. The Manager agrees to immediately notify the Trustees, in writing, in the
event any substantive change in coverage of said insurance or if said insurance is
terminated, canceled or discontinued, in whole or in part.
14. Liability The Trustees, jointly and severally, shall not be liable for any acts
or omissions of the Manager, and shall be under no obligation or duty to invest, reinvest,
manage, control, or dispose of the Investment Assets. The Manager specifically
acknowledge fiduciary responsibility to the Plan and its participants and beneficiaries. The
Manager shall not be liable for any act or omission of any other fiduciary with respect to
the Plan. The fiduciary responsibility of the Manager includes the supervision, counseling,
management and control of the Investment Assets within the meaning of applicable law
and providing investment advice to the Trustees. The Manager shall be liable for any
negligence, malfeasance, or bad faith in the performance of its duties, and for any losses
or damage caused or suffered by its failure to perform its duties in accordance with
fiduciary standards, or by its failure to comply with the provisions of the Investment
Advisers Act of 1940, or by its failure to comply with the provisions of this Agreement. The
Page 7 of 10
Manager shall not be liable for any negligence, malfeasance, or bad faith on the part of the
Trustees in the performance of its duties, and for any losses or damage caused or suffered
by its failure to comply with the provision of this Agreement. In no event shall the Trustees,
Plan or manager be entitled to recover consequential, special, incidental, and /or punitive
damages.
15. Notices All written communications from the Manager to Trustees shall be
addressed to:
Board of Trustees
Employees' Pension Plan of the
City of Boynton Beach Florida
4360 Northlake Boulevard, Suite 206
Palm Beach Gardens, FL 33410
Copies of such notices shall also be sent to Plan Counsel:
Bonni S. Jensen, Esquire
The Law Offices of Perry & Jensen, LLC
400 Executive Center Drive, Suite 207
West Palm Beach, Florida 33401 -2922
All written communications from the Trustees to the Manager shall be addressed
to:
DEPRINCE, RACE & ZOLLO, INC.
ATTN: Chief Financial Officer
250 Park Avenue South, Suite 250
Winter Park, FL 32789
16. Assignability This Agreement may not be assigned without the prior
written consent of the Trustees.
17. Entire Agreement This Agreement, with attached Exhibits, constitutes
the entire agreement between the parties hereto.
Page 8 of 10
18. Modification This Agreement may be modified or revised only by vote of
the Board and a written amendment signed by the Trustees' Chairman and Secretary and
the Manager.
19. Prior Agreements This Agreement supersedes all prior agreements with
the Manager, oral or written.
20. Applicable law This Agreement shall be interpreted in accordance with
the laws of the State of Florida.
22. Venue In any action to enforce the provisions of this agreement, venue
shall be in Palm Beach County, Florida.
23. Termination This Agreement may be terminated by the Trustees with 30
days written notice to the Manager. Manager may terminate this agreement with 90 days
written notice to the Trustees.
24. Attorney Fees If the Trustees engage an attorney, accountant, or other
advisor to enforce the terms of this Agreement, whether by administrative action, legal
action, litigation, or otherwise, and should the Pension Plan prevail or obtain any relief or
remedy as a result of such action, then the Manager shall pay to the Pension Plan its
reasonable attorney's fees.
Page 9 of 10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their
respective authorized representatives on the dates indicated below.
BOARD OF TRUSTEES OF THE DEPRINCE, RACE & ZOLLO, INC.
EMPLOYEES' PENSION PLAN OF
THE CITY OF BOYNTON BEACH
FLORIDA
As Chair By:
As Secretary Title
Date Date
WITNESS: WITNESS:
As to Trustees As to Investment Manager
BSJ /pah
January 14, 2013
HABB GE 1297 \Vendors \Manager(s) \DRZ \2013 IMA.wpd
Page 10 of 10
Exhibit A FEES
Investment Manager Agreement
Employees' Pension Plan of the City of Boynton Beach,
Florida
and
DEPRINCE, RACE & ZOLLO, INC.
0.50% (50 basis points) for all assets under management
HABB GE 1297 \Vendors \Manager(s) \DRZ \Exhbit A.wpd
SWORN STATEMENT UNDER SECTION 287.133(3)(a)
FLORIDA STATUES, ON PUBLIC ENTITY CRIMES
THIS FORM MUST BE SIGNED IN THE PRESENCE OF A NOTARY PUBLIC OR OTHER
OFFICER AUTHORIZED TO ADMINISTER OATHS.
1. This sworn statement is submitted with the engagement agreement between
DEPRINCE, RACE & ZOLLO, INC., and THE BOARD OF TRUSTEES OF THE
EMPLOYEES' PENSION PLAN OF THE CITY OF BOYNTON BEACH FLORIDA.
2. This sworn statement is submitted by DEPRINCE, RACE & ZOLLO, INC., whose
business address is 250 Park Avenue South, Suite #250, Winter Park, FL 32789,
and whose Federal Employer Identification Number (FEIN) is:
3. 1 understand that a "public entity crime" as defined in §287.133(1)(g), Florida
Statutes means a violation of any state or federal law by a person with respect to
and directly related to the transaction of business with any public entity in Florida
or with an agency or political subdivision of any other state orwith the United States,
including, but not limited to, any bid or contract for goods or services to be provided
to any public entity or an agency or policy subdivision and involving antitrust, fraud,
theft, bribery, collusion, racketeering, conspiracy, or material misrepresentation.
4. 1 understand that "convicted" or "conviction" as defined in ¶287.133(1)(b), Florida
Statutes means a finding of guilt or a conviction of a public entity crime, with or
without an adjudication of guilt, in any federal or state trial court of record relating
to charges brought by indictment or information after July 1, 1989, as a result of a
jury verdict, non -jury trial, or entry of a plea of guilty or polo contendere.
5. 1 understand that "affiliate" as defined in ¶287.133(1)(a), Florida Statutes means:
A. A predecessor or successor of a person convicted of a public entity crime;
or
B. An entity under the control of any natural person who is active in the
management of the entity and who has been convicted of a public entity
crime. The term "affiliate" includes those officers, directors, executives,
partners, shareholders, employees, members, and agents, who are active
in the management of an affiliate. The ownership by one person of shares
constituting a controlling interest in another person, or a pooling of
equipment or income among persons when not for fair market value under
an arm's length agreement, shall be a prima facie case that one person
controls another person. A person who knowingly enters into a joint venture
with a person who has been convicted of a public entity crime in Florida
during the preceding 36 months shall be considered an affiliate.
6. 1 understand that a "person" as defined in ¶287.133(1)(e), Florida Statutes means
any natural person or entity organized under the laws of any state or of the United
States with the legal power to enter into a binding contract and which bids or applies
to bid on contracts for the provision of goods or services let by a public entity, or
which otherwise transacts or applies to transact business with a public entity. The
term "person" includes those officers, directors, executives, partners, shareholders,
employees, members, and agents who are active in management of an entity.
7. Neither the entity submitting this sworn statement, nor any officers, directors,
executives, partners, shareholders, employees, members, or agents who are active
in the management of , the entity, nor any affiliate of the
entity, have been convicted of a public entity crime subsequent to July 1, 1989.
DePrince, Race & Zollo, Inc.
By:
(Please Print Name & Title)
Date:
STATE OF
COUNTY OF
Sworn to (or affirmed) and subscribed before me this day of
2013 by
who produced as identification or who is personally known
to me.
Notary Public
Commission No.:
Commission Expires:
BSJ:pah
January 14, 2013
H:\BB GE 1297\ Vendors \Manager(s) \DRZ \287.133.wpd
\� §
\ £ § \
k E O
/ § \
ƒ/ 2 0
�® E E
\E o ±
2 k \ f
/' 7 /
2 / \
7/ 2 u
2/ u /
/ ) 0
§E ƒ %
�7 2
/ o ) :
&Q / U
Z L� W /
LU 0 .= f o : /
L; LU /
2 / 0 § k Q
$2 �� o� u \ Mn \
LU fu f u / t
& LU c k I D % •• E
kR �k m� � u \
Lu �� C_ C: o - 72
z� 20 ■3 m « E w �£ o
w u � w t o N
L %U °�3 f /£ ±
z u o = e
O / k \ ) ƒ
■ « m u u & U &
L w £ N _ & \
o » ®_ / °§ §
/fu / ƒ �/ OL
U E 2 2. E= 2
u E u
4 » > >, % o £
/
u E�
0- / W
u o e
:§ / /
u ?
\3 \
\E/ 0 \? 5
offƒ t/ S/ /
N / X 0 § / d
2u /� 52 fu
/ 2) \ \ § k & E
Ce : 0) c: \
& °2 /� /� °
/f/ \ �° ƒ
OL @ ° :E ®
oE\ // \2
/ ffu A
R
E
§ f / §
W > /
� E – u�£ a–
/ �f /7y y$§
_ \%
0 / ƒ \ f £ ƒ /
° CL u > §
0) 0 k ) ± �¥
_ _ – �k t g
5 &Beo– uo5
¢ � W -0 4 G
± E�$ \± )�
a � & •> E c
ƒ \ / § f 2 / /
7 0 °�° 2=�
�� °»§t 70 Oƒ
mu gem =&
2 > u N� a x 2� G
u
§: � 0-6 5 � 2 7 \�
§ u u o a E –
/\ ��k�\ 0/± ?
f\ \ \ ® O\ \mot 6
o w – e
OL ��B ® ® u
> 2/ 2u2 \2 OL- J
> 2 E 7 \ &
u E > \ R: – LU
° ° u
§
m /ƒ / § >\/ > LU
LU
// k
2 /k \22//
u - o , o = u _0
oE- ° / � //
\ u / 2 g e$ o I e>
� \ 5/ 3 \ Eu
5 D – =. > u»
3 0 � $ u % 3 /
1-4 / § E = / / 2 7 =
p _ _�0 0§ \6
�o / /\ \k� may/
%5 ® 0) Lo O2u�
q\ I /�2\/ u - 0 £�
g� E o £c §
�u aeon u gy m/
/ u o f \ f y u� u
/ & 2)k / 41 /� \�
u u� –�� g � 4 f
§ f ƒ\ 5 e u u N
± / 7 ƒ c: » > R E u
2 5// / u 0 m
c–
/ / / f _} 2 /
/ \ k § / / \ § / ( 7
\ § o / u = � $ ) U =
° § ° E y / 2 ° § R 5 \
N E »% _ – u y f f fu g
ro � 0 - 0 _ yea )
§ § @n e 7 «>/ 2 _
u ° § % \ / 3 / / j
�/ /ƒ�u fu k -04
& R_ u= R – u f a o\ «
u / / E F 2 fu � o %
& =o .�¥� $
o\ \ƒ /\ / /u� 3 j
Meeting Minutes
General Employees' Pension Fund
Boynton Beach, Florida NOVEMBER 26, 2012
MINUTES OF THE GENERAL EMPLOYEES' PENSION PLAN QUARTERLY BOARD
MEETING HELD ON MONDAY NOVEMBER 26 AT 1:30 PM IN COMMISSION
CHAMBERS, CITY HALL, BOYNTON BEACH, FLORIDA
Trustees: Michael Low Others: Jeff Swanson, Southeastern Advisory (1:35 p.m.)
Cathy McDeavitt Bonni Jensen, Perry & Jensen, LLC
Lisa Jensen Dixie Martinez, Resource Centers
Laurie Fasolo Joe Lawrence, Alliance Bernstein
Virginia Shea Members of Public
I. OPENINGS:
A. Call to Order — Michael Low, acting as Chairman. Mayor Woodrow Hay was
absent.
Trustee Low called the meeting to order at 1:30 p.m.
II. AGENDA APPROVAL:
A. Additions, Deletions, Corrections
No additions, deletions, or corrections to the Agenda.
Motion
Ms. Jensen moved to approve the Agenda. Ms. McDeavitt seconded the motion that
unanimously passed 5 -0.
III. INVESTMENT REPORT
A. Quarterly Investment Performance Report: (Investment Manager)
Alliance Bernstein: Joe Lawrence
Joe Lawrence appeared before the Board. He provided an update of the Fund's Equity
portfolio performance as of quarter ending September 30, 2012. He noted that he
understands that the Board will be discussing today replacing Alliance Bernstein with another
equity manager. He reported that he understands that they have not delivered in the last 3
and 5 years but he noted that in the long term they have been able to achieve the expected
returns. He thanked the Board and noted that it had been a privilege for him to work with them
for the last 12 years. He reported that despite slowing growth, earnings are on a pace to reach
1
Meeting Minutes
General Employees' Pension Fund
Boynton Beach, Florida NOVEMBER 26, 2012
new highs. He explained that company balance sheets are strong and valuations are
attractive, particularly in today's low interest -rate environment. He reviewed their performance
summary for the last 5, 3, and 1 years. He summarized the portfolio positioning.
B. Southeastern Advisory Services: Jeff Swanson (Investment Consultant)
1. Quarterly Investment Performance Report
2. Large Cap Value Search
Mr. Swanson reported that for Fiscal Year End the Plan earned a return of 18.0% and for
quarter ending September 30, 2012 the Plan's return was 5.0 %. He reviewed the allocation
of assets for the quarter; Domestic Equity 52.3 %, International Equity 11.4 %, Real Estate
7.8 %, Fixed Income 26.2% and Cash 2.3 %. He reported that the total value of the plan as of
September 30, 2012 including the R &D account was $104,044,285. He reported that for the
quarter the Total Fund -Gross of Fees was 5.0% versus the index at 4.8 %; Total Domestic
Equity was at 6.1 % versus the index at 6.2 %; Total International Equities were at 5.8% versus
the index at 6.9 %; Total Real Estate was at 3.6% versus the index at 2.8% and Total Fixed
Income was at 3.3% versus the index at 1.6 %. Mr. Swanson reviewed each manager
individually. He reported that it has been a very good year. He reported that there are two
managers who have been under review. Alliance Bernstein has been under review since
2010. He reported that it would be reasonable for the Board to look at alternative managers
at this time to replace Alliance Bernstein. He reported that Artio International Equity has been
under review for the last year. He explained that their underperformance has been due to
emerging markets. He explained that emerging markets have not been doing well lately. In
his opinion timing may be poor at this time to replace them. He recommended staying the
course with Artio. He will continue to monitor and evaluate their performance.
Mr. Swanson presented the Board with a Large Cap Value Manager Review, which had the
following firms: Ceredex Value Advisors, minimum account size $10 MM, fees 65 basis points;
Deprince, Race & Zollo, minimum account size $5 MM, fees 60 basis points; Wedge Capital
Management, minimum account size $10 MM, fees 50 basis points and Westwood
Management Corp., minimum account size $5 MM, fees 75/80 basis points. He compared
these managers' performance to Alliance Bernstein's performance. He reviewed each
manager in detail. The Board asked several questions to which he answered accordingly. He
recommended inviting more than one manager to present. The Board had a brief discussion
regarding the managers presented to them. The Board agreed to invite three managers to
present at a Special Pension Board meeting.
Motion
Ms. McDeavitt moved to invite Cederex Value Advisors, Deprince, Race & Zollo, and Wedge
Capital to present at a Special Pension Board meeting to be scheduled by Ms. Martinez. Ms.
Shea seconded the motion that unanimously passed 5 -0.
Ms. Martinez will schedule a Special pension Board meeting in January. Mr. Swanson
2
Meeting Minutes
General Employees' Pension Fund
Boynton Beach, Florida NOVEMBER 26, 2012
recommended a 30 minute presentation per manager. The Board thanked Mr. Swanson for a
great year.
IV. APPROVAL OF MINUTES
A. Regular meeting August 27, 2012.
Motion
Ms. McDeavitt moved to approve the minutes of the regular meeting on August 27, 2012.
Ms. Shea seconded the motion that unanimously passed 5 -0.
V. CORRESPONDENCE
A. Letter from GRS dated October 15, 2012 from Steve Palmquist.
Ms. Dixie Martinez reported that Mr. Palmquist will be retiring December 31, 2012. He has
recommended Mr. Pete Strong to be the new representative.
The Board received and filed the letter from GRS dated October 15, 2012.
VI. OLD BUSINESS
There was no old business.
VII. NEW BUSINESS
A. Attorney Report:
1. Summary Plan Description 2012
Ms. Bonni Jensen reported that the Summary Plan Description (SPD) needs to be updated
every two years. She reported that the changes to the SPD are minor, she basically cleaned
up some of the language and updated it with the information to reflect the most recent
ordinance and collective barganing agreements that are in effect. Ms. Martinez will distribute a
copy of the 2012 SPD to all active members of the Plan.
Motion
Ms. Jensen moved to accept the 2012 Summary Plan Description as amended. Ms. Fasolo
seconded the motion that unanimously passed 5 -0.
2. DROP Participant transferred to Part Time Position.
3
Meeting Minutes
General Employees' Pension Fund
Boynton Beach, Florida NOVEMBER 26, 2012
Ms. Jensen explained that as the Board will remember at the last Pension Board meeting they
had discussed a question that had been brought up regarding a full time employee who is in
the DROP Plan and whose employment position may be reclassified to part time. The
question is what the impact to this particular participant would be if this happened. She
explained that the plan does have a provision for re- employment of members but nothing that
addresses a conversion from full time to part time. She explained that this is a situation that
we have not dealt with before and the DROP provisions provide specifically that no payment
may be made from the DROP until the employee actually separates from service with the City.
Ms. Martinez reported that the City has not made a determination as to whether or not they
will be going ahead with this as of yet.
Ms. Jensen reported that under the Plan they will need a termination of employment in order
to begin the DROP payment to the participant. If the member does not terminate employment
then the provisions for not terminating employment kick in. She reported that it is cleaner and
clearer if members terminate employment before being rehired. Ms. Jensen reported that
Sec. 18 -125. Re- employment of members receiving benefits or full vested who leave the city
states that "The city may at its option employ any person receiving benefits under this
chapter, except for disability benefits." She explained that the Board could ask that language
be added to this provision to say that "including DROP members except that they must
terminate employment in order to be retired and start collecting their benefits." The Board
agreed that additional language should be included. Ms. Jensen will take the Board's
direction; she will draft an Ordinance amendment so that the Board can review prior to
submitting it to the City.
B. Administrator Report
1. Warrant for Invoices
The Board reviewed the Disbursements presented for approval by the administrator.
Motion
Ms. Jensen moved to approve the invoices that were presented by the administrator. Ms.
Shea seconded the motion that unanimously passed 5 -0.
2. Benefit Approval
The Board reviewed the Benefit Approvals presented for approval by the administrator.
4
Meeting Minutes
General Employees' Pension Fund
Boynton Beach, Florida NOVEMBER 26, 2012
Motion
Ms. Jensen moved to approve the Applications to Leave the DROP Plan included in the
Benefit Approval presented by the Administrator. Ms. Fasolo seconded the motion that
unanimously passed 4 -0.
Trustee McDeavitt abstained from voting due to the fact that her Application to Leave the
DROP was presented to be approved.
Motion
Ms. Jensen moved to approve the remaining applications included in the Benefit Approval
presented by the Administrator. Ms. Fasolo seconded the motion that unanimously passed 5-
0.
3. Trustee Election
Ms. Martinez reported that the terms for Ms. Virginia Shea and Laurie Fasolo expire
December 31, 2012. She reported that an election had been conducted and that Ms. Fasolo
had been re- elected by default to serve a new term expiring on December 31, 2016. She
reported that Ms. Shea could not re run for her position as she had entered the DROP Plan.
She reported that Mark Hurley had been elected by default to serve on the Board for the term
expiring December 31, 2016.
Motion
Ms. Shea moved to certify the election results. Ms. McDeavitt seconded the motion that
unanimously passed 5 -0.
4. 2013 Meeting Schedule
The Board reviewed the 2013 Meeting Schedule presented for approval by the administrator.
The Board approved holding the quarterly meetings as follows: Monday February 25 at 1:30
pm, Tuesday May 28 at 1:30 pm, Monday August 26 at 1:30 pm and Monday November 25 at
1:30 pm.
5. Cherry, Bekaert & Holland Engagement Letter (Auditor)
The Board reviewed the Cherry, Bekaert & Holland engagement letter presented for approval
by the administrator.
5
Meeting Minutes
General Employees' Pension Fund
Boynton Beach, Florida NOVEMBER 26, 2012
Motion
Ms. Jensen moved to approve the Cherry, Bekaert & Holland engagement letter. Ms. Fasolo
seconded the motion that unanimously passed 5 -0.
C. Board Issues
The Board thanked Trustee Shea for her service to the Board of Trustees.
VIII. PUBLIC COMMENTS
No Public Comments
IX. ADJOURNMENT
There being no other business and the next meeting having been previously scheduled for
Monday, February 25 at 1:30 p.m., the Trustees adjourned the meeting at 2:46 p.m.
MINUTES APPROVED: February 25, 2013
Woodrow Hay, Chair
Boynton Beach General Employees' Pension
Board
Dixie Martinez, Administrator
Boynton Beach General Employees' Pension
Board
6
Meeting Minutes
General Employees' Pension Fund
Boynton Beach, Florida JANUARY 9, 2013
MINUTES OF THE GENERAL EMPLOYEES' PENSION PLAN SPECIAL BOARD
MEETING HELD ON WEDNESDAY JANUARY 9, 2013 AT 1:30 PM IN COMMISSION
CHAMBERS, CITY HALL, BOYNTON BEACH, FLORIDA
Trustees: Woodrow Hay, Chair Others: Jeff Swanson, Southeastern Advisory
Michael Low Bonni Jensen, Perry & Jensen, LLC
Cathy McDeavitt Dixie Martinez, Resource Centers
Laurie Fasolo David McElroy, Ceredex Value Advisors
Lisa Jensen Steve Loncar, Ceredex Value Advisors
Lori Laverriere Victor Zollo, Deprince, Race & Zollo, Inc.
Harry Radovich, Deprince, Race & Zollo, Inc.
Brian Casey, Deprince, Race & Zollo, Inc.
Richard Wells, Wedge Capital Management
John Norman, Wedge Capital Management
Members of Public
I. OPENINGS:
A. Call to Order — Mayor Woodrow Hay.
Chair Woodrow Hay called the meeting to order at 1:32 p.m.
II. AGENDA APPROVAL:
A. Additions, Deletions, Corrections
No additions, deletions, or corrections to the Agenda.
Motion
Ms. Laverriere moved to approve the Agenda. Ms. McDeavitt seconded the motion that
unanimously passed 6 -0.
III. NEW BUSINESS
A. INTERVIEW OF Domestic Large Cap Value Managers:
o 1:30 p.m. Cederex Value Advisors —David McElroy & Steve Loncar
Mr. David McElroy and Mr. Steve Loncar introduced themselves to the Board. Mr. McElroy
reported that the firm's Value Equity investing roots trace back to 1989. He reported that they
have $8.1 billion in assets under management. He noted that their headquarter is in Orlando,
Florida. Mr. Loncar provided an overview of the firm and reviewed their investment team. He
1
Meeting Minutes
General Employees' Pension Fund
Boynton Beach, Florida JANUARY 9, 2013
reviewed the firm's investment philosophy and investment process. He reviewed the
characteristics of their Large Cap Value portfolio. The Board asked several questions to
which they answered accordingly. Mr. Loncar reviewed their proposed management fee
schedule; first 10 MM 67.5 basis points; next $40 MM 40.5 basis points; over $50 MM 22.5
basis points. He reported that they would be willing to work with the Board on their fees. Mr.
McElroy and Mr. Steve Loncar thanked the Board for inviting them to present at this meeting.
o 2:15 p.m. DRZ —Victor Zollo, Harry Radovich & Brian Casey
Mr. Victor Zollo, Mr. Harry Radovich and Mr. Brian Casey introduced themselves to the Board.
Mr. Zollo reported that Mr. Casey was the co- founder of the FPPTA. He reviewed the firms'
investment philosophy and investment process. He reported that they have $6.6 billion in
assets under management. He reported that they are independently owned. Mr. Radovich
reviewed the characteristics of their Large Cap Value portfolio. He explained how the firm
makes its buy /sell decisions. He reviewed their top 10 holdings and the sector allocations.
Mr. Casey explained how the firm adds value through activity. The Board asked several
questions to which they answered accordingly. Mr. Zollo reviewed their proposed
management fee schedule; 60 basis points on all amounts, minimum account size $5 MM. Mr.
Zollo's explained what sets them apart from Cederex Value Advisors. They thanked the
Board for inviting them to present at this meeting.
o 3:30 p.m. Wedge Capital Management — Richard Wells & John
Norman.
Mr. Richard Wells and Mr. John Norman introduced themselves to the Board. Mr. Wells
reported that the firm was founded in 1984. He reported that they have $9.2 billion in assets
under management. Mr. Norman provided an overview of the firm and reviewed their
investment team. He reviewed the firm's investment philosophy and the firm's systematic
investment process. He reviewed the firm's top holdings and the sector allocations. Mr.
Wells reviewed the firm's performance as of December 31, 2012. He talked about the firms
Large Cap Value risk /reward profile since inception and ending September 30, 2012. The
Board asked several questions to which they answered accordingly. Mr. Wells reviewed their
proposed management fee schedule; 50 basis points per year on the first $10 MM; 40 basis
points per year on the next $75 MM; 30 basis points per year on all over $100 MM. They
thanked the Board for inviting them to present at this meeting.
Mr. Swanson reported that three excellent firms have made presentations to the Board today.
He explained his thoughts on each investment manager that presented today. Mr. Swanson
recommended that the Board make a decision today. The Board had a lengthy discussion
regarding the presentations.
Motion
Ms. Laverriere moved to negotiate with DRZ to see if they will be willing to match the lowest
2
Meeting Minutes
General Employees' Pension Fund
Boynton Beach, Florida JANUARY 9, 2013
fee presented (Wedge 50 basis points) and if successful to negotiate an agreement. Ms.
Fasolo seconded the motion that unanimously passed 6 -0.
Mr. Swanson will forward the contracts to Ms. Bonni Jensen for her review and well as the
Addendum to the Investment Policy. Mr. Swanson explained to the Board that he will also
have a transition manager agreement ready for execution at the next quarterly meeting.
B. Wells Fargo Signature Cards
Ms. Dixie Martinez reported that due to the recent changes to the Board of Trustees and the
retirement of Finance Director Barrett Atwood, the signature cards with Wells Fargo need to
be updated. She reported that the new signature cards are ready for execution.
Trustee Laurie Fasolo reported that she had been invited to attend the FPPTA's 13 Annual
CPPT Continuing Education Wall Street Program in New York City. She reported that she
needs the authorization from the Board to attend the upcoming continuing education program
as this will be an expense to the Plan.
Motion
Ms. McDeavitt moved to authorize the expense for Ms. Fasolo's attendance to the 13
Annual CPPT Continuing Education Wall Street Program in New York City. Ms. Jensen
seconded the motion that unanimously passed 6 -0.
IV. ADJOURNMENT
There being no other business and the next meeting having been previously scheduled for
Monday, February 25 at 1:30 p.m., the Trustees adjourned the meeting at 3:25 p.m.
MINUTES APPROVED: February 25, 2013
Woodrow Hay, Chair
Boynton Beach General Employees' Pension
Board
Dixie Martinez, Administrator
Boynton Beach General Employees' Pension
Board
3
I 2t .. =1
1gww'(0wcvgeX,(O ti
ConvergEx ,(UtiO,, SOltlHOI')S
Group
Now t +ate',, NY "I Q 0V)
February 25, 2013
Employees' Pension Plan of the City of Boynton Beach
4360 Northlake Blvd Ste 206
Palm Beach Gardens, FL 33410
Re: Transition Management Agreement
Dear Client,
ConvergEx Execution Solutions LLC ( "ConvergEx ") is pleased to provide Employees' Pension Plan of the City
of Boynton Beach (the "Client ") with transition management services in connection with Client's decisions from
time to time to liquidate or restructure some of the assets of the employee benefit plan(s) (the "Plan ") of which
Client is a named fiduciary (collectively, the "Transitions" and each, a "Transition "). By agreeing to the terms
and conditions contained herein, Client hereby appoints ConvergEx as the manager for each relevant Transition
( "Transition Manager ") in accordance with the terms set forth below ( "the Agreement ").
With respect to each Transition, Client agrees, on its own behalf and on behalf of the Plan, that it will advise
ConvergEx in writing of the names and contact details of each custodian, investment manager and other fiduciary
and /or agent of the Plan (the "Participants ") involved in the Transition. Client will inform all of the Participants
in the transition process of ConvergEx's role in each Transition. Client agrees to promptly forward to ConvergEx
copies of the communications it sends to each of the Participants. Client understands and agrees, on its own
behalf and on behalf of the Plan, that ConvergEx will not commence any Transition until Client or its Participants
provide all documentation and information required by ConvergEx in good form, including but not limited to (a) a
certified list of assets from the relevant custodian, which, among other things, identifies any assets that are not
immediately transferable (because, for example, settlement is pending or the assets are out on loan) and, (b) if
applicable, list(s) from appropriate investment manager(s) of assets to be purchased and /or sold on behalf of the
Plan.
In our role as Transition Manager, ConvergEx will faithfully administer each Transition and will execute, or will
direct its affiliates to execute, the instructions received from Client or the Participants to buy or sell individual
securities or portfolios and provide services ancillary thereto within the parameters set by Client or such
Participant(s). ConvergEx, itself and /or through its affiliates, will provide Client execution and ancillary services
related to each Transition to effect each Transition in a timely and cost- efficient manner. Client agrees that
ConvergEx, for its role in the Transition, may collect brokerage commissions and other fees from the Plan as set
forth in Exhibit A, such fees being subject to negotiation with respect to each Transition from time to time. Client
and the Plan will be fully and unconditionally liable for the timely settlement of each and every transaction
TMA - Pension (Public) - FD (Non- FRISA) - Standing - v 4-1-12
effected by ConvergEx or its affiliates during the course of each Transition pursuant to the instructions of Client
or the Participants.
In order for ConvergEx to provide Transition services, Client hereby authorizes and directs ConvergEx or its
affiliates to do, or instruct third parties to do, the following on behalf of the Client or the Plan: (1) execute,
purchase or otherwise acquire, exchange, transfer, borrow, lend, sell or otherwise dispose of and generally deal in
and with, any and all forms of securities, currency and other assets to effect the transactions necessary to complete
the Transition; (ii) transfer or disburse all forms of cash, securities, currencies or other assets between accounts in
the name of Client, the Plan or accounts in the name of any other person or entity; and (iii) transfer or disburse all
forms of cash, securities, currencies or other assets to or from accounts in the name of the Client, the Plan or other
accounts to foreign currency dealers to settle currency transactions executed during the Transition.
In addition to the foregoing authorization, ConvergEx is also authorized to make, or instruct custodians or other
third parties to make, deliveries of securities, cash, currencies and other property and payment of funds to other
third parties as ConvergEx may order and direct to effect the Transition. Pursuant to such order, direction or
instruction, ConvergEx or such other third parties may: (1) transfer any securities, cash, currencies or other
property in an account into the name of the Client, the Plan or any other person or entity and deliver the same to
the Client or any other person or entity on ConvergEx's order in that form or in bearer form; (ii) pay and deliver
to Client, the Plan or any other person or entity on ConvergEx's order any cash or check or funds in the name of
the Client or in the name of any other person or entity; and (iii) may accept any such securities, cash, currencies or
other property or funds for the account of the Client, the Plan or any other person or entity.
ConvergEx agrees that it will act as a fiduciary to the Plan, provided however, that it will only act as a fiduciary
during the course of and with respect to each Transition and the services it provides in connection with a
Transition. Except to the extent ConvergEx expressly agrees otherwise in writing, ConvergEx will act
exclusively as a broker in effecting the Transitions. Client agrees that ConvergEx: (1) will not provide any
investment advice including advice with respect to the suitability or merit of any particular strategy, investment,
purchase or sale decision, security, asset or asset class; (2) will not be responsible for handling corporate actions
or proxy voting with respect to securities in any portfolio during a Transition; (3) will not provide investment
advice regarding the appropriate asset allocation for the Plan; and (4) will not act with investment discretion with
respect to any Plan assets and instead will act on the direction of Client, its investment managers and/or other
Participants. Client and /or the Participants, and not ConvergEx, will be responsible for ensuring that Plan assets
being transitioned do not include any assets that are not freely transferable on the date(s) of the Transition.
In the course of analyzing a Transition, ConvergEx may identify opportunities to effect agency cross transactions
with other clients of ConvergEx or its affiliates. In such cases, ConvergEx or its affiliates will execute the cross
transactions at a price at or between the independent best bid and asked quotations for the security at that time.
The Client hereby authorizes ConvergEx to use its SEC registered alternative trading systems including, without
limitation, ConvergEx Cross, VortEx, or Millennium to execute transactions during the course of a Transition.
The Client acknowledges that it has been informed of ConvergEx's cross - trading techniques, and hereby agrees
that ConvergEx or its affiliates may receive compensation from such other clients in connection with such cross
transactions.
2
TMA - Pension (Public) - FD (Non- FRISA) - Standing - v 4-1-12
Client, on behalf of itself and the Plan, agrees that ConvergFx will have no responsibility to inquire into the
authority of any Participant to give any instructions or information or to enter into any transactions hereunder on
behalf of the Plan. Client represents and warrants, on behalf of itself and the Plan, that (1) both Client and the
Plan have full power and authority to enter into this Agreement and each Transition and transaction contemplated
hereby; (ii) engaging in each Transition is in full compliance with the terms of the documents governing the Plan
and with Applicable Laws; (iii) it has determined that ConvergEx's services are necessary to the Plan and that the
cost of ConvergEx's services is reasonable and properly payable by the Plan; and (iv) it has determined that
ConvergFx and its affiliates are capable of obtaining best execution for the transactions necessary to effect each
Transition. In all matters and things herein, as well as in all other things necessary or incidental to the furtherance
or conduct of the Transition, ConvergFx is authorized to follow the instructions of Client or a Participant in every
respect (including instructions to provide information about Client to third parties). Client, on behalf of itself and
the Plan, acknowledges that ConvergFx and its affiliates may provide services or act as agent to other clients
where such clients may have an interest in the investments, related investments or assets underlying the
investments that conflict with the Plan's interests.
Client agrees that all transactions contemplated hereby shall be subject to applicable laws, and to governmental,
regulatory, self- regulatory organization, exchange and clearinghouse rules, and customs and usages in effect from
time to time ( "Applicable Laws "). ConvergFx acknowledges its duty to seek to obtain best execution in
connection with the Transition. Client agrees that, whenever possible, ConvergFx or an affiliate may effect any
transactions, including foreign exchange transactions, in connection with the Transition on a net basis or by
routing orders for handling and /or execution by one or more third parties, including The Bank of New York
Mellon and other ConvergFx affiliates, and that such third parties, may effect such transactions as agent or on a
principal or riskless principal basis and may do so on a "net" basis at a price inclusive of their mark -up /down,
commission equivalent or spread . In connection with any transaction executed by ConvergFx on a net basis,
Client understands and agrees that the net price will be the transaction price reported on Client's trade
confirmation and will be in lieu of a commission for such ConvergFx affiliate or third party. In connection with
any transaction effected by ConvergFx through a third - party, including ConvergFx affiliates, where such third
party effected the transaction on a net basis, Client understands and agrees that the net price will be the transaction
price reported on Client's trade confirmation and that the commission or commission equivalent charged by
ConvergFx and reported on Client's official transaction confirmation shall be in addition to any such third -party
mark -up /down, commission equivalent or spread included in the transaction price. Any spread earned by the
Bank of New York Mellon and /or other affiliates will be in addition to the commission earned by ConvergFx as
Transition Manager. Client acknowledges that neither ConvergFx nor its affiliates engage in market - making,
investment banking or `at risk' proprietary trading. The Client agrees that ConvergFx and such affiliates may, in
the ordinary course of their businesses and in connection with a Transition, receive remuneration from each other
and third parties in connection with transactions, such as payment for order flow. ConvergFx agrees to provide
information regarding any commission or other form of remuneration it or its affiliates receives in connection
with a Transition to the Client upon request.
Certain types of securities, like American Depositary Receipts or American Depositary Shares (collectively,
"ADRs ") and Exchange Traded Funds ( "ETFs "), are comprised of one or more underlying securities. Those
3
TMA - Pension (Public) - FD (Non- FRISA) - Standing - v 4-1-12
underlying securities often are traded in various markets, and mechanisms exist to exchange them for the ADRs
or ETFs and vice versa. Client should remember the following:
(1) with respect to orders for an ADR or an ordinary share, Client directs that when ConvergFx believes it is
advantageous to Client and consistent with best execution principles and its fiduciary duties, ConvergFx will
effect the trade by buying or selling (a) the ordinary share and then exchanging it for the ADR, as opposed to
buying or selling the ADR shares directly or (b) the ADR share and then exchanging it for the ordinary share, as
opposed to buying or selling the ordinary share directly. Client directs us to trade ADRs in this manner
notwithstanding that it may result in Client paying certain additional fees to ConvergFx for, among other things,
processing the conversions or redemptions, pre - releasing shares, borrowing or lending securities or cash, foreign
exchange, taxes, clearing and settlement fees, and other costs. Client acknowledges that ConvergFx or its
affiliates may earn revenue on some or all of these additional fees, including spreads on securities transactions
traded on a net basis in accordance with the preceding paragraph. Costs associated with ADR/ordinary exchanges
can also include local market fees (such as stamp duties, exchange fees, securities borrow fees, etc.), swap book
fees, internal netting and ADR cable fees, service fees and any amounts (such as cash or non -cash payable) in
connection with any corporate action or books closing, books re- opening or books re- closing; and
with respect to orders for ETFs, Client directs that when ConvergFx believes it is advantageous to Client and
consistent with best execution principles and its fiduciary duties, ConvergFx will effect the trade by buying or
selling the underlying securities composing the FTF and then converting them to or redeeming them for the FTF
shares, as opposed to buying or selling the FTF shares directly. Client directs us to trade ETFs in this manner
notwithstanding that it may result in Client paying certain additional fees to ConvergFx for, among other things,
processing the conversions or redemptions, pre - releasing shares, borrowing or lending securities or cash, foreign
exchange, taxes, clearing and settlement fees, and other costs. Client acknowledges that ConvergFx or its
affiliates may earn revenue on some or all of these additional fees, including spreads on securities transactions
traded on a net basis in accordance with the preceding paragraph. Client represents and warrants that it will not
hold 80% or more of the outstanding FTF shares of the issuing fund and will not treat such purchase as eligible
for tax -free treatment under Section 351 of the Internal Revenue Code of 1986, as amended.
Upon the occurrence of Client's or the Plan's bankruptcy, insolvency, breach of this Agreement, or failure to pay
debts or to fulfill its obligations on a timely basis ( each an "Event of Default "), or in the event ConvergFx, in its
reasonable discretion, considers it necessary for its protection, ConvergFx shall have the right (but not the
obligation) to cancel any unexecuted orders, liquidate any outstanding positions, or take such other or further
action as ConvergFx deems necessary or appropriate for its or its affiliates protection relating to a Transition.
Any such action may be made in the reasonable discretion of ConvergFx and its affiliates, without notice to or
demand of Client or the Plan, and at such times and places as ConvergFx may reasonably determine.
Client and the Plan shall reimburse, indemnify, and hold harmless ConvergFx and its affiliates from and against
any and all losses, liabilities, penalties, taxes, judgments, fines, fees, costs, proceedings, claims, actions,
investigations, damages, fines and expenses (including without limitation legal fees and costs of counsel whether
the dispute or proceeding involves ConvergFx or not) (collectively, "Losses ") as they are incurred, arising out of
or relating to, directly or indirectly (1) an Event of Default, (ii) any acts or omissions of Client, the Plan, any
Participant or any other agent of Client or the Plan (iii) breach of the Client's or the Plan's obligations hereunder
4
TMA - Pension (Public) - FD (Non- FRISA) - Standing - v 4-1-12
or in connection with any Transition, and /or (iv) the exercise or pursuit by ConvergLx or any of its affiliates of its
rights or remedies hereunder. The rights of ConvergLx and its affiliates provided above shall be in addition to any
other right or remedy available to ConvergLx and its affiliates at law, by statute or in equity or under Applicable
Laws.
Unless otherwise expressly provided by Applicable Laws, ConvergLx and its affiliates shall not be responsible or
liable for any Losses resulting directly or indirectly from: (1) any act, omission, error, negligence or misconduct
of Client, the Plan, a Participant, any other agent of Client or the Plan, or of any exchange or clearinghouse, or
any other third party not directly controlled by ConvergLx; (ii) failure of transmission or communication
facilities; (iii) any other cause(s) or event(s) beyond ConvergLx's control or actions required to comply with
Applicable Laws; (iv) any government restrictions, military operations or terrorist activities; and /or (v)
ConvergLx's reliance on any instructions, notices, or communications that it reasonably believes to be from any
individual, representative or Participant authorized to act on behalf of Client or the Plan(and Client waives any
and all defenses that any such individual was not authorized to act on behalf of Client). To the extent permitted by
Applicable Laws, neither ConvergLx nor its affiliates will be responsible for any Losses, except for Losses arising
from ConvergLx's or its affiliates negligence, fraud or willful misconduct. In no event will ConvergLx or its
affiliates be liable for indirect, consequential, incidental, exemplary punitive or special damages or any loss of
profits, revenue or other commercial losses whether foreseeable or not. Other than as provided in this Agreement,
neither ConvergLx nor its affiliates makes any representation or warranty, expressed or implied, as to the services
provided herein.
The interpretation and enforcement of this Agreement shall be governed by the laws of the State of New York,
without regard to its principles of conflict of laws. This Agreement contains the entire agreement between the
parties and supersedes any prior or contemporaneous agreements between the parties with respect to each
Transition. This Agreement does not alter, amend or modify any other agreement the Client may have with The
Bank of New York Mellon Corporation or its subsidiaries. No provision of this Agreement shall in any respect be
amended or deemed to be waived unless such amendment or waiver is signed by the party against whom such
amendment or waiver is to be enforced. Neither party may assign its rights under this Agreement without the
other party's prior written consent and any purported assignment in violation of this provision shall be void;
provided, however, that ConvergLx may assign this Agreement to an affiliate capable of performing ConvergLx's
obligations hereunder upon written notice to Client.
We ask that you review this Agreement and indicate your acknowledgment and approval by signing a copy of this
letter and returning it to _4ttnLtcuconvergex.com at ConvergLx. You may terminate this Agreement immediately
upon written notice to ConvergLx in the event of ConvergLx's material breach of this Agreement or, for any other
reason, upon 5 days prior written notice to ConvergLx. ConvergLx may terminate this Agreement immediately
upon written notice in the event of Client's material breach of this Agreement or, for any other reason, upon 30
days prior written notice to Client. In any event, the fiduciary relationship created by this Agreement will
terminate immediately at the conclusion of each Transition or upon the termination of this Agreement. Any
transactions executed pursuant to this Agreement prior to the receipt of such notice by ConvergLx will remain
valid and binding.
5
TMA - Pension (Public) - FD (Non- FRISA) - Standing - v 4-1-12
We look forward to working with you on this Transition. if you have any questions regarding the transition
process, please contact Global Transition Management at 1- 866 - 374 -8726.
Very truly yours,
ConvergEx Execution Solutions LLC
By:
Managing Director, Global Transition Management
AGREED AND ACCEPTED:
Employees' Pension Plan of the City of Boynton Beach
By:
Name:
Title:
6
TMA - Pension (Public) - FD (Non- FRISA) - Standing - v 4-1-12
EXHIBIT A
OBJECTIVES
LIQUIDATE AMOUNT- FUND AMOUNT-
*As of value date
FEES
ConvergEx will charge the following:
ASSET TYPE COMMISSION RATE*
International Equity
Domestic Equity
*The commission schedule together with the Agreement includes all of ConvergEx's charges. There are no additional management
fees for ConvergEx's services. As noted in the Agreement, third parties, including affiliates, may charge fees that will be included in
the trade price.
ConvergEx Execution Solutions LLC:
By:
Managing Director, Global Transition Management
AGREED AND ACCEPTED
Employees' Pension Plan of the City of Boynton Beach
By:
Name:
Title:
TMA - Pension (Public) - FD (Non- FRISA) - Standing - v 4-1-12 7
Global Transition Management
Helping asset owners implement investment decisions
Transition . - - nt Pre Analysis
Contents
I Bid Summary
II Liquidity
III Risk
IV In -Kind Detail
V Stock Detail
January, 2013 ConvergExL"j
Group
1- 866 - 374 -8726
gtma,convergex.com
ConvergEx Group
ConvergEx ri
Grou
1/15/2013
Boynton Beach General Employees - BidSummary
Portfolio Value
Side Shares Market Value % Weight % ADV
Legacy - Equities 597,640 $ 19,228,336 49.60% 0.1%
Legacy Cash $ 154,633 0.40%
Target - Equities 587,800 $ 19,215,027 49.57% 0.4%
Target Cash $ 167,942 0.43%
Total 1,185,440 $ 38,765,938 100.00% 0.3%
Shares Market Value % Weight Commii on in Commission
Round Trip Transfer in Kind 142,900 $ 4,468,862 11.62% 0.00 $ -
Open Market Trades 1,042,540 $ 33,974,501 88.38% 1.50 $ 5,096.18
Total Transition Amount 1,185,440 $ 38,443,363 100.00% $ 5,096.18
Breakdown of Costs
e Comm. ❑ Taxes and Fees
Est Cost (BPS)* Amount 9 1%
Commissions 1.50 $ 5,096 ❑ Bid /Ask Spread • Price Impact
12% 4%
Taxes and Fees 0.11 $ 379
Bid Ask Paid 2.10 $ 7,118 �,
Price Impact 0.65 $ 2,200
D Opp.Cost
Expected Cost 4.35 $ 14,794 74 _ goo
7 � _ in terms of assets traded /crossed
Expected Cost: -7.6 bps Expected Cost
Value BPS of Target
$ (14,794) (7.63)
-29.9 bps 14.7 bps Opportunity Cost - One Standard Dev.
Value BPS of Target
$ 43,205 22.29
Implementation Shortfall Boundaries
Amount BPS
Lower $ (58,000) -29.92
Upper $ 28,411 14.66
-95 -75 -55 -35 -15 5 25 45 65
Basis Points
—One Standard Dev Two Standard Dev.
Converg Ex Group
�� Im
ConverrExu Grou
Liquidity Analysis
Daily Liquidity Market Cap Breakdown
# of
Totting Timeframe % of Portfolio Value Range Names $ Value % of Total Buy Value Sell Value
one day or less 100 °a 1 -5 Billion 29 $ 5,015,769 13eo $ 3,711,370 $ 1,304,399
2 days 0 °0 5 - 10 Billion 25 $ 3,972,241 10 °-0 $ 1,473,018 $ 2,499,223
3 -5 days 0 °-0 10 - 20 Billion 37 $ 6,287,257 16 0 $ 3,285,844 $ 3,001,413
More Iluan 5 days w o 20 - 100 Billion 61 $ 13,429,627 35% $ 8,428,657 $ 5,000,970
Over 100 Billion 27 $ 9,738,468 25% $ 2,316,138 $ 7,422,330
Daily Trading Horizon Market Cap Breakdown ■ Buy value ■ Sell value
$40 $9
$35 $8
$30 $7
g $25 $6
$20 z
$5
$a
$15
$3
$lo
$5 $1
$- g-
1 day 2 days 3 days 4 days > 4 days 1 - 5 Billion 5 - 10 Billion 10 - 20 Billion 20 - 1.00 Billion Over 100 Billion
Liquidity Breakdown
Top 10 Stocks by Transaction Cost
$40
$35
Marginal Cont. to
$30 Side Name Shares %of ADV $Value Impact BPS
S Hewlett- Packard Co 23,300 0.08% $ 385,149 0.07
o $25 S Bank of America Corp 35,700 0.02% $ 412335 0.07
$2o S Cifigroup Inc 16,100 0.04 ° 0 $ 685,377 0.06
B Koninklijke Philips 11,700 1.80 °b $ 326,54 0.06
$15 B. Statoil ASA 12,700 1.63'. $ 326,644 0.05
B Tidewater Inc 6;200 1.61 °b $ 285,014 0.05
$10 S Pfizerhpc 30,200 0.10'. $ 803,924 0.05
B Sealed Air Corp 16,300 0.54 °0 $ 297,964 0.04
$5 S Wells Fargo & Co 17,600 0.07 °ro $ 617,936 0.04
0% o% 0% o% B Steel Dynamics Inc 19,000 0.81 °0 $ 387?80 0.0
$-
l00% 4
0% -5% 5% -10% 10% -20% 20% -50% > 50%
10 Most Illiquid Stocks Top 10 Stocks by Transaction Cost
- 0.001%
2%
0.001%
0.001%
p%
fi
0.001%
> o
p% 0.000%
\ r%
U
0.000%
p%
z 0.000%
o%
o%
0.000%
0% 0.000%
'L3ro ?714 .
8 L IvN !y 6 0 .
�. h. O t e d ii e
y i �r c• N �s4. �r .� � o o i"
A� z c °Nr iC o '� �� -% �� SPA
7 A, • r6_ - o s' �c 6 � e �� � �J �� �o o� �� c,
s °
c° c °
ConvergEx Group
��
ConvergExL -7
Group
Country / Region Summary
Net Region
Region Target Legacy Net Latin America
United States /Canada 19,215,027 19,228,336 - 13,308 Asia
Europe /Africa
Asia Europe /Africa
Latin America
Total $ 19,215,027 $ 19,228,336 $ (13,308) F United Stites/Canada
-0 -0 -0 0
$ Millions
Net Co ntr \"
Country Target % Legacy % Net $ Millions
Canada 353,186 2°o 62,402 0% 290,784 -0 -0 0 0 0
United States 18,861,841 98 °'0 19,165,934 100% - 304,093
Total $ 19,215,027 $ 19,228,336 $ (13,308)
Currency Sun nlarV 3 Equivalent
Currency Buy Sell Net
Canada
CA 353,186 62 290,784
USD 18,861,841 19,165,934 - 304,093
Con —gEx Group
Converr,ExLa
Grou
P
Risk
Summary Statistics Asset Contribution to Tracking Error
10 Highest Cont. to 10 Lowest Cont. to
Tracking Tracking
Annual Tracking Error 3.52% Name Error Name Error
Trading Horizon TE 022% Delta Air Lies Inc 0.123°,, Freeport- McMoRan - 0.887oo
R` 0.93 Altria Group Inc 0.074 Steel Dynamics Inc - 0.886
Correl. Coefficient 097 Pfizer Inc 0.056 °o Nabors Industries Ltd - 0.845
Beta (Target Dependent) 1.09 WellPoint Inc 0.055°,, Cimarex Energy Co - 0.734
Lorillard Inc 0.048 Guess? Inc - 0.723
Validus Holdings Ltd 0.041 Huntsman Corp - 0.721
Buy Sell Time Warner Cable hie 0.025 Helmerich & Payne hie - 0.700
Annual Volatility 12.L °. 12.41 Vertex 0.012oo Penn West Petroleum Ltd - 0.664%
Daily Volatility 0.77 °o 0.78 Merck & Co Inc O.Ol lo-o Timken Co -0.658%
Walt Disney Co /The 0.004°% Encana Corp - 0.623o-o
Relative Performance - Target - Legacy - - - - - -- RUSSELL 3000 INDEX
125
120
115
110 - - -- - - -'.� ✓`-
105
100
95
90
85
N N N N N N N N N N N N
�. m a ro y aF'i .• o �
O z, q
Expected Implementation Cost 30 Day Moving Tracking Error (Daily)
0.40%
Expected Cost: -7.63 bps 0.35%
0.30 % - q `� • .
0.25 %
0.20%
0.15
0.10%
0.05
0.00%
-95 -75 -55 -35 -15 5 25 45 65 s
Basis Points w d o z
%Return Scatter 30 Day Moving Beta
1.40
3.0M% •
1.20
2.0 '/
�• • • 1.00
1.00°,0
0.80
ou
i
- +ca`„ a ,W�, - �.00°i - 1.0 1.00 2.0ow 3. 0.60
0.40
• 2.00
••
• - 3.00;% 0.20
0.00
Legacy w d ¢ vx o z c .
Coav gEx Group
"' .tu +Convey Esc
Group
Risk II
Name Net Shares Net Position $
Abbott Laboratories B 2600 85,852 Marginal Contribution to Risk, Net Weight
MCTR MCTR % Net Weight% --
- 0.0003 0.0001% - 0.51% 0
0 0 0 •
Beta Vs Net Portfolio Daily Vol. Price Impact 0. �o of
- 0.12 0.91 ° 0 0.03% • 4 ° 0 ('
•
Description Side Shares MCTR .5 •� •• •
• O
•
Abbott Laboratories B 2,600 -0.0003 'n
AbbVie Inc B 2500 - 0.0004 • • •0 0 lb
�•••
Aetna Inc S 3,100 - 0.0009
Air Products & Chemicals Inc B 2,300 - 0.0033 1 i u�. %
Alma Group Inc S 7,400 0.0007 • • •
American Electric Power Co In S 2,300 0.0000 • • •
Applied Materials Inc B 6,000 - 0.0048 - 0.80 °°
•
Archer - Daniels- Midland Co B 6,700 - 0.0013 ••
AstraZeneca PLC S 5,640 - 0.0011 J
Net Weight %
Trading Frontier, Impact vs. Risk
0.05 °b
0.04%
v 0.04%
0.03%
0.03%
0.02%
0.09% 0.14°% 0.19 "o 024 0.29 0 o 0.34 °o 0.39 -o 0.44% 0.49% 0.54% 0.59
Risk
Risk by Sector Tgt % Leg % Active Weight MCTR % MCTR Beta
Basic Materials 9.7 2.1 ° ro -7.5 - 0.007 0.056 0 'o - 3.34
Communications 1.7 0 ,-0 14.5 0 'o 12.8 ° o -0.001 - 0.016% -0.57
Consumer, Cyclical 7.7 12.1 4.5 ° o 0.003 0.011% 1.13
Consumer, Non - cyclical 12.2% 21.3 0 -o 9.0° 0 0.001 0.010 0.50
Diversified O.( I o
Energy 14.9% 12.7% -2.2 o -0.013 0.029% -5.98
Financial 17.1% 22.4 0 -o 5.200 0.002 0.010 0.90
Industrial 25.5 6.6 - 18.9 -0.005 0.097% -230
Technology 9.3 0 'o 4.5 0 -o - 4.8% -0.005 0.022% -2.05
Utilities 1.9 3.8 1.9% 0.002 0.003% 0.82
Funds r10 p -i f1 �" o 0 1 n �
Index Future if iii i i i of i t W„ J M
Total 100.0 100.0 0.0 0.223 0 '0
Risk by Country Tgt % Leg % Active Weight MCTR % MCTR Beta
Canada 1.8 0.3% - 1.5 -0.008 0.012 0 'o - 3.51
Total 100.0 100.0 0 '0 0.0% 0.223
Converg Ex Group
ConvergExtl,
Group
Inkind Detail
Total In Kind Round Trip
Number Shares $ Value
15 142,900 $ 4,468,862
Sedol Ticker Description Shares (one way) S Value
2046552 AMAT US Applied Materials Inc 19,700 231.869
2830904 BBT US BB &T Corp 6,500 197,080
2198163 CSCO US Cisco Systems Inc 15,900 333,582
2365161 GD US General Dynamics Corp 2-100 155276
2475833 JNJ US Johnson & Johnson 1.800 130,266
2190385 JPM US JPMorgan Chase & Co 7,200 333,720
2490911 KEY US KeyCorp 2.600 23,322
2575465 MDT US Medtronic Inc 4,300 189,759
2573209 MET US MetLife Inc 7100 76209
2910970 MRO US Marathon Oil Corp 1,800 57,474
2671501 PH US Parker Hannifin Corp 450 40,338
2692665 PNC US PNC Financial Services Group Inc 1-100 7L724
B03MM62 RDS /A US Royal Dutch Shell PLC 1,900 132,430
2860990 STI US SunTrust Banks Inc 1,300 37,557
2326618 XOM US Exxon Mobil Corp 2.500 223,825
ConvergEx Group
w
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o U
'a 0 0 0
7 V 0 N O �O m (J (J n m (J �O (J SJ v� �O �O Oy O (J � m � ,-. '2 � m b (J v� O � �n b b W
ao 0 0 , N .-. ,-. N N N .-. c� .-. N .-. m .-. m .-.. -. N .-. r. r. r. r. r..- .. -..-. c� N .-. N . - . r.. r.. -
J
OI
C N o 0 o p e o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o e o 0 0 0 0 0 0 0 0 0 0 0 0 0 0
O o o
O O O R C O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O
U o o o
F
nn
r (2 r O 0
—
m � � � J, oQo cioor.of.o cio f. f. f: 000QoQ0000Q000 f: or.
0
N f6 0 0 o W 0 0 0 0 0 0 . . 0 ° ° o 0 o O o 0 0 0 0 0 0 0 0 o O o 0 0 o O o 0 0 0 0 0 0 0 0
O N 00 �O O r. O\ 00 00 00 00 r. O\ 00 �O �O �O V� O O N
O O O
m� O O O
J J y
m N 0 p o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
`o .-..-..-..-..-..-..-. 0000000000000000000000000000000
r
ro ro ro ro ro ro
ro ro ro
itl ro ro T ro y ro ro ro y� ro ro ro ro ro ro y ro ro T ro ro y � ro '7 W T ro
L.
0 T.,. U
.�, b b � b ',7 b b
�v ro
U � o
U o 0 o U o o U
U U U U U U
(D L
o) o 0
LO o)
GJ o (M V iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC �y iC iC iC iC iC iC iC m iC iC iC iC iC iC iC iC iC iC iC iC iC iC
co rn rn v) ro V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V]
O o o
Ln o) v �N� c oo �o ��n mooN moo moo �o c��om ovm�ov m 0� Nm�n mm
C° N V 7 �o 00 �o
f6 o o 0
to
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
� m oo Noo �n o�n �nNmomm o mom�o r. oo �o oo ovm�NO�n oo �o r. �n min ova
a
V o o o
CL Lo Lo o
rr 7 J Q
W� 00NO z
I U - o y
CJww' w'v)", 7. Ca d'7. �1 wwCJ 'V
m oovovov�m ovm �ovN�o �o 00�or.mmov �m mti�movN�movomm�
�o m .
NNC� . NNN.NNNNNNN��NpCNO�NNNNpC c��NN
h
W , d d U z v O a
ax�Q� �ZP4CQ wawa ��z �x � a ti
oo N N N o0 0o N v� m m N m m oo �0 0o m o� oo N o� m m �n m m r o�
c��n oom oo o�000m��oN ���� mr. o�N� moo �o N Ov�m�N ovm
w
•�, o 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o U
'a o 0 0
7 V 0 N °� (J O °� °� 00 v� .. ,-. °� ,-. m m (J t� (J t� W � b m � 2 �n
a o 0 0 ' N .-. r. N N .-.. -. r. m N .-... N c� .-. N N N r. f. N .-.. -. N N N m .-. m .-. N N.- .. -..-. N r.. -..-.
J
OI
C N o o o p e o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o e o 0 0 0
co co M
0 o o : f ♦+ m N m m m m m m vi N N N N vi m r. N m N N N b m ST m N m m N m m N m
O O O
U o o o
F
nn
r (2 l� 0 4 R o o = 0 0 0 0 0 0 0 0= o= o = 0 0 0 0 0 0 0 = 0 0 0= o= o = 0 0 0 = 0 0 0
y . O SrN`^�o�sr v„- .,- .00�^. o�-o �^.o, -. oo N -.�v,N �o `n.o `R oo `�'!m �o0�`!m moo
m J, of.o f:0000ri f. f. 0 0QoQof:0 000 0000 o mQ6 f foQoof.
0
N f6 0 0 o W o o °� 0 0 0 0 0 °° o 0 0 o O o 0 0 0 0 0 o O o 0 0 o O o 0 0 0 0 0 0
Q v v v v « N�o �v,�oov V, ,-.o ,-. o N m� �m�oo �o ovovNOO
0 0 0 , -•o o��oN O m,-. om� ��v,. v, ,- . o�o\o\ ,- .o, -.om�m v,.N �
m� O O O
J J y
m N 0 p o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
N N N N N NNN N N r. r+ r. .-. r. r. r. r. r. r. —
0
s o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
r
,-• o -; -; o ° o ,-• -; N o ,-: o o ,-. o ,-: N N o ,-• o ,-• ,� ci ,-. ,-. o ,-. N ,� o ,-•
ro ro ro ro ro ro ro ro ro
ro f. ro ro ro ro
U U U U U U U U U
(D L
o) o 0
LO o)
GJ o (M V iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC
o
o co rn co M rn
> o
O O O
LO o)
M— o
N
o o O
t � �
to
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
� � mm �oomm�nm m�N�mr. N�nN�ovN �mm �o0�om moNm�o
d Lo Lo o
X 7 J Q
ro �
a A wzwxxwH����¢�HUwwv� >awwQ�za c7a �Qv�¢
o�000000mooF1oo�oNOzco
C O m
�oN ���omm�ov�o mN�oa rmmNO��o ao�n e�mom movm�
c�NNNNNNNNNNNC�NNN�c�NNNNNNN� �NNNNNNC�m�Nm�NN
h
..w
CC v
ooN mm �O ��mv,mo��o v,NM�om N ,�, ovm�o�o� �NNm o
m mmsr o,�,�� Nmov�r. �nm m�mN m NovN Ovsr m N�o
w
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o U
� � � 3 � OOOOOOOOOr.00000OOOOOOOOOOOOOr . 000OOOOOOO
'a o 0 0
7 V 0 N r b b M M'2 N o N
S 0 0 0 � .-. N m N r. -. N r. -. N m
J
OI
C N o 0 o p e o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 o o M : f ♦+ m N m N N �O vi N m N m ST N N N N �O N N N N N N N
O O O q C O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O
U o o 0
F
nn
r (2 r O O 3 R 0 0 0 0 0 0 0 0 0 0 0 0 0 0 = 0 0 0 0= o o = 0 0 0= o= o o = 0 0 0= o o
W � —
m J o N O O O O o o o g o o Q o 0 0 0 o Q o N O O Q 0 0 0 0
0
N f6 0 0 o py o 0 0 0 0 0 0 o O 0 0 0 0 O o 0 0 0 0 o O p o o O o 0 0 o O� o 0 0 0 0� o 0
O O O
m� O O O
J J y
m N 0 p o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
~ o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
e
s o 0 0 o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o 0 0 0 0 _. 0 0 0
r
ro ro ro ro ro
U U U U U
(D L
o) o 0
LO o)
GJ o (M V iC iC iC iC iC iC iC iC �y iC iC iC iC iC iC iC iC iC iC iC iC iC iC iC m iC iC iC iC iC iC iC iC iC iC iC iC iC iC
o
o rn rn va ro V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V] V]
O o o
LO o) v, �o o N r. �o o �o 0 0 M oo N o �o �o v, �o N o �o o� �n o o -2 N m o0 0� o 00
,-. ,-.
O N
f6 o o 0
t � }
to
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
d Lo Lo o
V m N O
b
A .`4�J �F QCa��.'4'w7.m.7�0�Ca �. >dv�H.�,'OU.7�CJ�dC C7U
p,�m�Uo�N Fro\ 000M�NNO oo�owN r o�omoor.mv, o\�
aaO� N �o o�mmoma o m N ! �o\omO�nNO Nm�o �nao
0
h
> O'
oo� o��nm���o m,�moo ono v,m �
w
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o U
� v �NN� N�o�NC��NONm�n �o�m�o c���mm�o��om�N�N�mNmmN
3
'a 0 0 0
� � � �Mm�omN�r. mm�o \ov,mov,Nm�ov,mm�m�mNr.�oo�o0 o\r. mr.
7 o o N o o a v, b oy N o m m m 0 oy m N m m oy m m m m oy o oy b b m v;
a o 0 0 > � . N . r.. - .. - . r.. r.. N
J
OI
C N o 0 o p e o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 o o M : f ♦+ N N m N N O N m m N N m N N N N m N m ST N N N N N N N �O
O O O R C O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O
U o o o
F
nn
r (2 r 0 4 R o o= o= o o= = 0 0 0 0 0 0 0 = 0 0 0= = 0 0 0 0 0= o o= o = 0 0 0 0 0 0
m � � � J, oo-; oQoo -; Qoof.000f.Q000QQor . o cio -; f. oQf.Q00000 f.
0
Q W o o
O O O
m � O O O
J J y
m N 0 p o 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
e
s o 0 0 0 0 0 0 0 0 0 o 0 0= o = 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
y oQoo�oor.r: cio r:Q or. r.NOO�ci00 -; �; 0000000
r
ro ro ro ro ro ro ro
v v v v v v v
L
o) o 0
LO rn
W o ch v ro ro ro ro ro ro ro ro m ro ro ro ro ro ro ro ro ro ro ro ro ro ro ro m ro ro ro ro ro ro ro ro ro ro ro ro ro ro
� o m ch �
O o o v, ov, N�mov ,��oEOO�omr.��o���o��oo�ooN�v, �o.N �o�NO o�oo
LO o) v
N m— o r- m m b b b 00 en ,-. �o N sr N In m N ,-. c In �o N 00 �o t c b m m
N V 7
N �o m �o m �n r F1
fC o o O
to
d Lo Lo o
X 7 J Q
0
Y A '
A Ca F4CaO W Od�UwvOawH' 7���' 7. P�CJdwod�wc7d0'zw " "�wOa'w'worx
o aN m N oo N N C, oo m �n m �o �o
N���NC�NC�NC�c�NNC�O�NNNNNNNN�NNNNNNNN��NNNN�
h
..w
A � Hq[ i00P���JC7
as Ca Caoxo owmawH Ca�1'zP�oHw wc7 c7�w�woP� wo
�-
}'
W
o 0 o . o O
0 0 0 0 0 0 0 0 U
f6
_A
0 0 o 0 0 0 0 0 0 0 0
.0
J V N M N N 00 t�
S O O O
J
O)
o o c p e o 0 0 0 0 0 0 0
0 0 o o o g C 0 0 0 0 0 0 0 0
f` (� O O O
F
CO
(2 0 0 3 R o M o o N o
M O O
o ~
N f�6 0 0 o p 0 0 0 0 0 0 0 0
m o o o
J J y
m N 0 p o 0 0 0 0 0 0 0
F 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0
e
s 0 0 0 0 0 0
y ciQ000000
r
ro ro
0
G
0 0
U U
(D L
o) o 0
LO rn LO
Gl o m V iC iC iC iC iC C iC iC
o
rn rn °
� o m c c ,) ) c
o o o
M - o
v (6 (D N v N m m
fC o o O R
O O O O Vi O O O
Qc
Z
o o o
U O O O h V] V] V] V] V] V]
d Lo Lo o
V m N O
�V
O S U
U
c NNNNO�c�NC�
a
h
..w
ConvemExL"i
Group
PRE -TRADE ANALYTICS REPORT DISCLOSURES
In addition to providing you, vote custodian, investment manager and/or your other fiduciay and/or agent (collectively, or as applicable, `you ") with a s munary and analysis ofthe cost estimates for your
trade(s), this pre -trade analztics report ( "Report's shall also serve as a notification of the disclosures set forth below ( "Disclosures ") regarding your relationship with Con vergEx Execution Solutions LLC
(`Broker" or "us" or "vie'). You should read this Report aid the following Disclosures carefiilly, as they contain inportat information about your trmnsition. Failure to advise us of any errors contained in this
Report within 34 hours of receipt shall operate as acceptance of die trade and its terms. Please refer to your Transition Management Agreement for the specific terns and condition of your transition.
1. Unless you instruct otherwise, implementation shortfall will be used to analyze your transition. Because we calculate expected implementation shortfall using historical data we cannot guarantee that the
actual inplennetatimn shortfall will equal our forecast of die expected costs of the transition. hmplennation shortfall is based on the expected costs of die transition, including amounts charged by affiliated and
ur affiliated parties, as well as other publicly available benchmarks. A summary report ofthe actual implementation shortfall analysis will be provided after execution of your trade(s) ( "Post -Trade Analytics
Report").
2. Information contained in this Report maybe cunpared to the information set forth in the Post -Trade Analyties Report. This Report may also provide such farther information as may be required by the rules
and regulation of the Securities and Exchange Conmussion, and any other body having jurisdiction over the transaction.
3. We may be required to act as a fiduciary with respect to your transition. Notwithstanding the foregoing, we do not and will not provide any advice with respect to the suitability or merit of any pmticiilu
strategy, investment, security, asset or asset class or the decision to purchase or sell a particular security, asset or asset class, or otherwise act with invesmient discretion or authority in connection with specific
assets, mid instead will act on your direction.
4. If you request that we effect transition transactions in Exchange Traded Funds ( "ETFs "), such transaction may be effected by us by purchasing or selling the securities underlying such ETFs in the local
motets in which such securities are traded, and converting or redeeming ETF shares. You may request that we effect transactions in ETFs and make delivery ofthe underlying securities to you in setthemau of
such transactions. ht either situation: (1) we or our affiliates may effect ETF conversions in connection with such transaction, and the cost of such services will be included in the price reflected in thus Report
or the trade confirmation for such transactions; (3) you will not rely on is to provide information concerning corporate actions, books closing or other everts, and will not rely on such information if provided;
(3) the delivery date ofETF or its underlying securities, as the case may be, is dependent on multiple factors outside our conarot (4) you represent and warrant that you will not hold 80% or more ofthe
outstanding ETF shares of the issuing fired, and will not treat such purchase a eligible for tax -free treatment under Section 351 ofthe Internal Revenue Code of 1986, as annended; (5) we may borrow or pre -
lease securities in connection with settling such transactions; and (6) you are liable for any and all amounts, charges, commissions, commission equivalents and fees, including but not limited to ETF conversion
fees, transaction taxes, service fees and any a iou is (such as cash or non -cash payable) in connection with such trading, converting or redeeming; all regardless of whether charged by us aid any otlier affiliated
or unaffiliated person.
5. You understand that we may effect foreign exchange transactions by routing orders for handling and/or execution by one or more Hurd parties, including our affiliates, and that such third parties may effect
foreign exchange transactions as agent or on a principal or riskless principal basis and may do so one a "net" basis at a price inclusive of their mark- ip. /downn, commission equivalent or spread. hn connection
with a y transaction effected by us on a net basis, you understand that the net price will be the transaction price reported in this Report, and commission or commission equivalent charged by us and reported in
this Report and on your official transaction confirmation shall be in additionto any such Hurd- patymzrk -up /down, commission equivalent or spread included in the transaction puce. You acknowledge that
neither we nor our affiliates engage in market making, investment banking or `at risk' proprietary trading. We and our affiliates may, in the ordinary course of our businesses and in correction with a transition,
receive rennneration from each other and third parties in correction with transactions, such as payment for order flow. We will provide you with information regarding any such remuneration upon request. Ann
'Is Mate" means any person that directly or indirectly controls, is controlled by, or is under common control with us.
6. In the course of analyzing a transition, we may identify opportu itiea to effect cross transactions with other clients. In such cases, we will execute the transaction between the independent bid and asked price
for the secu ntv at that time. You acknowledge that you have been informed of our cross - trading techniques and that we or our affiliates may receive reasonable compensation from such third parties with
respect to cross transactions; provided, however, that such compensation need onlybe reasonable to the extent that applicable law, including bit not limited to ERISA, imposes such a requirement.
7. If you effect transactions in American Depositary Receipts or American Depositary Shares (collectively, "ADRs "), we may purchase or sell the securities underlying such ADRs in the local nnarkets in
which such securities are traded. We may also trade the ADRs if you have given us an ordinary share order. You acknowledge that our affiliates may effect foreign exchange or ADR conversion transactions in
connection with such transactions, and that the cost of such services will be included in the price reflected in the confirmation for such transactions. You shall be liable for any and all amours, charges,
commissions, commission equivalents, and fees, including bit not limited to: local market fees (such as stamp duties, exchange fees, securities borrowing and pre - release fees), foreign exchange processing
fees, ADR conversion fees, swap book fees, Internal Netting and ADR cable fees, transaction taxes, service fees and any anomis (such as cash or non -cash payable) in connection with any corporate actioction
with a transition, receive remumeration fronn each other mid Hurd parties in correction with transactions, such as payanet for order flow.
S. Details ofthe compensation earned in conuectionwitlnvourr transactionwill be available uponrequest.
After we execute your transaction, you or your agent should receive our standard trade confirmation.
Our standard fora trade confirmation can be found on our website at:
/uip:llw w.connergmeonV ASSETSI CA O?5025F7394F42B2404835SD615AE0 / Global %20Trade %20Corifmuadon %20Backer %201 %205 %2012 %20 %28FINAL %29.prlf.
Page 1 of 2
Dixie Martinez
From: Mark Hurley [markohurlo @gmail.com]
Sent: Friday, January 11, 2013 5:35 PM
To: Dixie Martinez
Subject: Correspondence Letter for Boynton Beach 2/25/2013 meeting
Attachments: JeffSwansonEmails.txt; PeteStrongEmails.txt; quotelinks.rtf; GRS Report 8- 12.pdf; Valuation
Report 10- 01- 11.pdf
Dear Dixie,
Here is the letter of correspondence for The Boynton Beach Board of Trustees February 25, 2013
meeting as discussed in prior emails about the agenda:
--------------------------------------------------------------------------------------------------------------------------------------
11 January 2013
Dear Board of Trustees & Whom It May Concern:
When I got elected to The Board of Trustees I spent weeks meticulously looking over every bit of
information I could find about The Boynton Beach General Employees Pension Plan. I wanted to fix
every problem I could find and despite my efforts to make a huge list, everything made crystal -clear
sense except for one item -- "The Assumed Actuarial Rate of Return ".
The Assumed Actuarial Rate of Return, or Investment Return, is basically the percentage return of
money we expect from profitable investments during the year that the Actuary uses to calculate other
important financial numbers such as Unfunded Liability and Additional Required Contributions from
The City. The Assumed Actuarial Rate of Return (AARR) is an arbitrary number which has been set
by The Board for at least the last twenty -four years (not including the unpublished 2012) at 8.0 %, but
during that time The Fund only achieved an average of 7.4% AARR and just 3.85% over the last
decade. The effect of lackluster investment returns is magnified by the fact that these need to be
compounded year- over -year to meet payment responsibilities. (So down years require even bigger
rebounds for asset projection to stay consistent.) In November 2011, The Leroy Collins Institute
gave this pension fund a "C" rating because liability is only 70 -80% funded and that grading is
probably too high considering it is derived from the 8.0% AARR.
I researched news articles and studies for a few more weeks and found out other pension funds
across the country are lowering their Assumed Actuarial Rate of Return because of low investment
returns over the last decade. Funds have been dropping upwards of 100 basis points (1 %) to get to
more achievable rates, but even those are uncertain. The City of Miramar, Florida just had a study
done in August 2012 and eight different experts suspected there was only an 18 -42% probability of
exceeding a 7.00% geometric net nominal return over 20 years. (1 will provide links and attachments
of articles, facts, and studies that 1 researched or quoted in this letter.)
This issue appears to me to be a severely dynamic dilemma that requires immediate attention and
action. As Trustees, you have the duty and responsibility to do everything in your power to make
sure that the Pension Fund is sustainable, and in this case you certainly have the power to make the
needed changes. Some Trustees, such as The Mayor and City Manager also have additional
responsibilities to taxpayers and these are definitely not conflicting interests. Rather than being
2/19/2013
Page 2 of 2
passive and dealing with a crisis later on, I urge you to be proactive by lowering The Assumed
Actuarial Rate of Return to significantly lower levels and frequently checking to ensure its feasibility in
the future. In my opinion as a previous Trustee, inaction on your part would put the retirements of
The Plan's vested members at a distinct risk of bankruptcy, and /or require mountainous deficit
payments from The City Budget in the future if returns continue on the same path. For example,
from fiscal year 2004 to 2013, Required Employer Contributions changed from $2,243,356 (10.28%
of payroll) to $6,630,714 (27.80% of payroll).
I asked for the the advice and opinion of The Plan's Actuary and Financial Consultant with respect to
the AARR. It appears The Actuary discussed a report with The Board of Trustees in 2012 at which
time he recommended lowering the Assumed Rate of Return. The current Actuary (the previous
Actuary retired at the end of 2012) believes that a reasonable AARR would be in the ballpark of
between 7.0% and 7.5 %. Mr. Swanson, the current Financial Consultant, objectively noted that the
most common AARR in Florida is still 8.0 %, but the industry is currently seeing a trend of lowering
the AARR. He also informed me that many funds in the State watch the activity of the Florida
Retirement System (FRS) to see what trends are developing. Their AARR is at 7.75% right now and
they have discussed lowering it further. Unofficially, Mr. Swanson said The Boynton Beach General
Pension Fund achieved an investment return of around 18% for 2012. That may sound good, but
remember that there have been big down years and that number could just as easily be negative
18% for 2013.
The Plan's Actuary is able to create simulation numbers for any proposed change in The Assumed
Rate, but it is very expensive and could cost thousands for just a few different hypothetical
percentages depending on how detailed The Board wants the calculations. For this reason, I
recommend working backward and deciding The Board's level of commitment before running the
numbers on test cases. If possible, I recommend dropping to 7.5% immediately so further drops can
be made in the future without having to play "catch up" if the changes are too small. This type of
change could cost The City a couple hundred thousand a year in extra contributions if our numbers
are comparable to other city pension plans I have seen. If this is too much to handle for The City
Budget, The Board could set up a series of progressive changes such as lowering 25 basis points
(.25 %) each year for 2 years or 10 basis points (.10 %) each year for 5 years. These cases would
have a less noticeable effect on The Budget the first few years - maybe in the tens of thousands
instead of the hundreds.
In conclusion, I feel that The Board of Trustees should lower the Assumed Actuarial Rate of Return
from 8.0% to at least 7.5% for the reasons discussed in this letter. The Plan's Actuary also agrees
with lowering the percentage and many other pension funds across The Country have lowered theirs
in the last few years. Please resist the temptation to ignore this problem, and instead take vigilant
ownership head -on as members of The City of Boynton Beach's General Plan have entrusted upon
you.
Sincerely,
Mark Hurley
former General Pension Board Trustee - City of Boynton Beach
------------------------------------------------------------------------------------------------------------------------------
-------------------------------------
Thanks so much Dixie!
Mark Hurley
- former Boynton Beach Pension Trustee
2/19/2013
DRAFT
CITY OF BOYNTON BEACH
GENERAL EMPLOYEES' PENSION PLAN
A PENSION TRUST FUND OF THE
CITY OF BOYNTON BEACH, FLORIDA
FINANCIAL STATEMENTS AND
ACCOMPANYING INFORMATION
For the Years Ended September 30, 2012 and 2011
And Report of Independent Auditors
`� Cherry Bekaert ""
CITY OF BOYNTON BEACH GENERAL EMPLOYEES' PENSION PLAN
TABLE OF CONTENTS DRAFT
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS- ...... 1-2
Management's Discussion and Analysis ......................... ............................... .............. ...... ........ 3-8
BASIC FINANCIAL STATEMENTS
Statementsof Plan Net Assets .......................................................................... ............................... 9
Statements of Changes in Plan Net Assets ..................................................... ............................... 10
Notesto Financial Statements ......................................................................... ............................... 11 -16
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
Schedule of Funding Progress and Schedule of
Contributions from the Employer ....... ............................... .......................... ............................... 17
Notes to Schedule of Funding Progress and
Schedule of Contributions from the Employer ................................................. ............................... 18
OTHER SUPPLEMENTARY INFORMATION
Schedule of Administrative and Investment Expenses .......... .......................... ............................... 19
OTHER REPORTS
Report on Internal Control Over Financial Reporting and on Compliance
And Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards .................... ............................... 20-21
`� Cherry Bekaert "P
CPAs & Advisors
DRAFT
Report of Independent Certified Public Accountants
Board of Trustees
City of Boynton Beach General Employees' Pension Plan
Boynton Beach, Florida
We have audited the accompanying statement of plan net assets of the City of Boynton Beach General
Employees' Pension Plan (the "Plan ") as of September 30, 2012 and 2011, and the related statement of
changes in plan net assets for the years then ended. These financial statements are the responsibility of the
Plan's Board of Trustees and Officers. Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards issued by
the Comptroller General of the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
As discussed in Note 1, the financial statements present only the Plan and do not purport to, and do not, present
fairly the financial position of the City of Boynton Beach, Florida as of September 30, 2012 and 2011, and the
changes in its financial position for the years then ended in conformity with accounting standards generally
accepted in the United States of America.
In our opinion, the financial statements referred to above present fairly, in all material respects, information
regarding the City of Boynton Beach General Employees' Pension Plan 's plan net assets as of September 30,
2012 and 2011, and the changes therein for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated February XX, 2013
on our consideration of the Plan's internal control over financial reporting and on our tests of its compliance with
certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that
report is to describe the scope of our testing of internal control over financial reporting and compliance and the
results of that testing and not to provide an opinion on the internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with Government Auditing
Standards and should be considered in assessing the results of our audit.
DRAFT
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis and other required supplementary information listed on the accompanying table of
contents be presented to supplement the basic financial statements. Such information, although not a part of the
basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be
an essential part of financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of America, which
consisted of inquiries of management about the methods of preparing the information and comparing the
information for consistency with management's responses to our inquiries, the basic financial statements, and
other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion
or provide any assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance.
Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a
whole. The other supplementary information listed on the accompanying table of contents is presented for
purposes of additional analysis and is not a required part of the basic financial statements. The other
supplementary information is the responsibility of management and was derived from and relates directly to the
underlying accounting and other records used to prepare the financial statements. The information has been
subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying accounting and
other records used to prepare the financial statements or to the financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United States of America.
In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements
taken as a whole.
Orlando, Florida
February XX, 2013
2
DRAFT
MANAGEMENT'S DISCUSSION AND ANALYSIS
DRAFT
Management's Discussion and Analysis
As management of the City of Boynton Beach General Employees' Pension Plan (Plan), we offer readers of the
Plan's financial statements this narrative overview of the financial activities of the Plan for the years ended
September 30, 2012 and 2011. This narrative is intended to supplement the Plan's financial statements, and we
encourage readers to consider the information presented here in conjunction with these statements, which begin
on page 9.
Overview of the financial statements
The following discussion and analysis are intended to serve as an introduction to the Plan's financial
statements. The financial statements are:
• Statements of Plan Net Assets
• Statements of Changes in Plan Net Assets
• Notes to the Financial Statements
This report also contains the following "Required Supplementary Information" to the financial statements:
• Schedule of Funding Progress
• Schedule of Contributions from the Employer
• Notes to the Schedule of Funding Progress and Schedule of Contributions from the Employer
The financial statements contained in the report are described below:
• The Statements of Plan Net Assets is a point -in -time snapshot of account balances at fiscal
year -end. It reports the assets available for future payments to retirees and any current
liabilities that are owed as of the statement date. The resulting Net Assets value (Assets —
Liabilities = Net Assets) represents the value of assets held in trust for pension benefits.
• The Statements of Changes in Net Assets displays the effect of pension Plan transactions that
occurred during the fiscal year, where Additions — Deductions = Net Increase (Decrease) in Net
Assets. This Net Increase (Decrease) in Net Assets reflects the change in the net asset value
of the Statement of Plan Net Assets from the prior year to the current year. Both statements are
in compliance with Governmental Accounting Standards Board (GASB) Pronouncements.
• The Notes to the Financial Statements are an integral part of the financial statements and
provide additional information that is essential to the comprehensive understanding of the data
provided in the financial statements. These notes describe the accounting and administrative
policies under which the Plan operates and provide additional levels of detail for select financial
statement items (See Notes to Financial Statements on pages 11 to 16 of this report.)
3
DR-AFT
Because of the long -term nature of a defined benefit pension plan, financial statements alone cannot provide
sufficient information to properly reflect the ongoing plan perspective. Therefore, in addition to the financial
statements explained above, this financial report includes two additional "Required Supplementary Information"
schedules with historical trend information.
• The Schedule of Funding Progress (page 17) includes actuarial information about the status of
the plan from an ongoing, long -term perspective and the progress made in accumulating
sufficient assets to pay pension benefits when due. Valuation Assets in excess of Actuarial
Accrued Liabilities indicate that sufficient assets exist to fund future pension benefits of the
current members and benefits recipients.
• The Schedule of Contributions from the Employer (page 17) presents historical trend
information regarding the value of total annual contributions required to be paid by the City and
the actual performance of the City in meeting this requirement.
• The Notes to the Schedule of Funding Progress and Schedule of Contributions from the
Employer provide background information and explanatory detail to aid in understanding the
required supplementary schedules.
Financial highlights
• The net assets of the Plan exceeded its liabilities at the close of the fiscal years ended
September 30, 2012 and 2011, with $104,061,462 and $88,849,772 in net assets held in trust
for pension benefits, respectively.
• Net assets increased by $15,211,690 or 17.1 percent during 2012, primarily due to the 2012
contributions and investment income.
• Net assets decreased by $66,551 or 0.1 percent during 2011, primarily due to poor investment
performance in 2011.
• The Plan's funding objective is to meet long -term benefit obligations. As of October 1, 2011, the
date of the latest actuarial valuation, the funded ratio of the Plan was 74.2 percent. In general,
this means that for every dollar of pension benefits due, the Plan has $0.742 of net assets
available for payment.
® Additions to plan net assets for the year ended September 30, 2012 were $21,751,748 which
includes member and employer contributions of $6,013,847 and net income from investment
activities totaling $15,737,901.
• Additions to plan net assets for the year ended September 30, 2011 were $6,044,746 which
includes member and employer contributions of $6,505,917 and net loss from investment
activities totaling $(461,171).
• Deductions from plan net assets increased from $6,111,297 during 2011 to $6,540,058 in 2012
or about 7.0 percent. Most of the increase relates to increased benefit payments made in 2012
compared to 2011.
4
DRAFT
Analysis of financial activities
The Plan's funding objective is to meet long -term benefit obligations through investment income and
contributions. Accordingly, the collection of employer and member contributions, and the income from
investments provide the reserves needed to finance future retirement benefits.
Contributions from the City of Boynton Beach are made at levels determined by the Plan's actuary. Because of
higher than expected investment returns in previous years, the City's contribution requirement has decreased.
The Plan's investment portfolio produced higher returns in 2012 compared to 2011. Net assets held in trust for
pension benefits increased by $15,211,690 in 2012, compared to a decrease of $66,551 in 2011.
Net Assets (Table 1)
As of September 30. 2012. 2011 and 2010
Increase (Decrease)
2012 to 2011 2011 to 2010
2012 2011 2010 $ % $
Current and other $1,363,745 $1,598,259 $6,467,450 $(234,514) (14.7) $(4,869,191) (75.3)
assets
Investments, at fair I 102,741,226 87,332,645 82,718,827 15,408,581 17.6 4,613,818 5.6
value +,
Total assets 104,104,971 88,930,904 89,186,277 15,174,067 17.1 (255,373) (0.3)
Current liabilities 43,509 81,132 269,954 (37,623) (46.4) (188,822) (69.9)
Net assets $104.061.462 $88.849.772 J $88,916,323 $15.211 1 17.1 1 $(66.551)
As the years roll forward and total assets and liabilities grow, investment income will continue to play an
important role in funding future retirement benefits. Therefore, investment return over the long term is critical to
the funding status of the retirement Plan.
During 2012, the Plan's investment portfolio experienced a return of approximately 18.0 percent. It is important
to remember that a retirement plan's funding is based on a long time horizon, where temporary ups and downs
in the market are expected. The more critical factor is that the Plan be able to meet an expected earnings yield
of 8.0 percent annual return on investments.
Based on our latest actuarial valuation as of October 1, 2011, the Plan's actuarial value of liabilities exceeds its
actuarial value of assets by $34.1 million, producing a funded ratio of 74.2 percent. The funded ratio is a key
indication of financial strength of a retirement Plan and analyzing this percentage over time indicates whether
the Plan is becoming stronger or weaker.
5
DRAFT
Financial analysis — summary
As previously noted, net assets viewed over time may serve as a useful indication of the Plan's financial position
(See Table 1 above.) At the close of fiscal years 2012 and 2011, the assets of the Plan exceeded its current
liabilities by $104,061,462 and $88,849,772 respectively, shown as net assets held in trust for pension benefits.
The net assets are available to meet the Plan's ongoing obligation to plan participants and their beneficiaries.
Net assets
The Plan's net assets are established from employer and member contributions, and the accumulation of
investment income, net of investment and administrative expenses and benefit payments.
Additions to plan net assets
As noted above, net assets needed to finance retirement benefits are accumulated through collecting employer
and member contributions and through investment earnings (net of investment expenses.) The additions totaled
$21,751,748 for the year ended September 30, 2012. This was $15,707,002 more than the prior year, primarily
due to higher investment returns. The additions totaled $6,044,746 for the year ended September 30, 2011.
Additions to Net Assets (Table 2)
For the Years Ended September 30. 2012. 2011 and 2010
Increase Decrease
2012 to 2011 20 11 to 2010
2012 2011 2010 $ % $ %
Employer $4,502,590 $4,694,545 $5,415,919 $(191,955) (4.1) $(721,374) (13.3)
contributions
Participant 1,511,257 1,811,372 1,957,816 (300,115) (16.6) (146,444) (7.5)
contributions
Net investment 15,737,901 (461,171) 6,860,579 16,199,072 3,512.6 (7,321,750) (106.7)
income (loss)
Total additions $21,751,748 $6.044,746 $14,234,314 $15,707,002. 259.8 $(8,189,568) (57.5)
6
DRAFT
Deductions from plan net assets
The Plan was created to provide retirement, survivor and disability benefits to qualified members and their
beneficiaries. The cost of such programs includes recurring benefit payments, refunds of contributions to
employees who terminate employment, and the cost of administering the Plan.
Deductions from Net Assets (Table 3)
For the Years Ended September 30. 2012. 2011 and 2010
Increase (Decrease)
2012 to 2 011 2011 to 2010
2012 2011 2010 $ % $ %
Benefit payments $5,994,595 $5,369,586 $4,645,585 $625,009 11.6 $724,001 15.6
Refunds of contributions 410,291 602,225 495,983 (191,934) (31.9) 106,242 21.4
Administrative expenses 135.172 139.486. 130.61 (4. (3.1) 8,876 6.8
Total deductions $6,540,058 $6,111,297 $5,272,178 $428,761 7.0 $839,119 15.9
Expenses for the year ended September 30, 2012 totaled $6,540,058, an increase of 7.0 percent from 2011.
The increase was primarily due to increased benefit payments in 2012. Expenses for the year ended
September 30, 2011 totaled $6,111,297, an increase of 15.9 percent from 2010. The increase was primarily
due to increased benefit payments and DROP account withdrawals in 2011. Further analysis of benefit
payments is provided in Table 4 below.
Benefit Payments (Table 4)
For the Year Ended September 30, 2012, 2011 and 2010
Increase (Decrease)
2012 to 2011 2011 to 20110
2 012 2011 2010 $ % $
Retirement benefits $5,760,421 $5,006,405 $4,550,456 $754,016 15.1 $455,949 10.0
DROP account withdrawals 234,174 363 95,129: (129.007) (35.5) 268,052 281.8
Total benefit payments $5,994,595 $5,369,586 $4,645,585 _ $625,009 1 11.6 $724,001 15.6
The deductions of plan net assets of $6,540,058 and additions to plan net assets of $21,751,748 resulted in an
overall increase of $15,211,690 in net assets held in trust for pension benefits for the year ended September 30,
2012. The deductions of plan net assets of $6,111,297 and additions to plan net assets of $6,044,746 resulted
in an overall decrease of $66,551 in net assets held in trust for pension benefits for the year ended September
30, 2011.
7
DRAFT
Fiduciary responsibilities
The Board of Trustees is the fiduciary of the pension trust fund. Fiduciaries are charged with the responsibility of
assuring that the assets of the Plan are used exclusively for the benefit of plan participants and their
beneficiaries and defraying reasonable expenses of administering the Plan.
Requests for information
This financial report is designed to provide the Board of Trustees, our membership, taxpayers and investment
managers with an overview of the Plan's finances and accountability for the money received. Questions
concerning any of the information provided in this report or requests for additional financial information should
be addressed to:
City of Boynton Beach General Employees' Pension Plan
c/o Pension Resource Center, L.L.C.,
4360 Northlake Boulevard, Suite 206
Palm Beach Gardens, FL 33410
8
DRAFT
BASIC FINANCIAL STATEMENTS
CITY OF BOYNTON BEACH GENERAL EMPLOYEES' PENSION PLAN
STATEMENTS OF PLAN NET ASSETS
DRAFT
September 30,
2012 2011
Assets
Cash and cash equivalents $ 825,578 $ 348,915
Receivables
Interest and dividends 306,640 322,514
Pending trades 170,434 339,495
City of Boynton Beach - 180,559
Employees 55,901 59,479
Total receivables 532,975 902,047
Prepaid expenses 5,192 347,297
Investments, at fair value
Money market funds 1,470,873 2,581,447
U.S. Government obligations 5,584,719 5,599,748
Corporate obligations 11,878,324 11,793,500
Foreign obligations 63,414 82,708
Mortgage- backed securities 9,997,771 8,562,818
Municipal obligations 34,500 31,274
Other fixed income securities 8,594 8,314
Equity securities 47,965,764 38,745,422
Equity mutual funds 11,835,611 10,411,854
Equity common trust funds 5,894,285 3,299,651
Real estate common trust funds 8,007,371 6,215,909
Total investments 102,741,226 87,332,645
Total assets 104,104,971 88,930,904
Liabilities
Accounts payable and accrued expenses 43,509 81,132
Total liabilities 43,509 81,132
Net assets held in trust for pension benefits $ 104,061,462 $ 88,849,772
See accompanying notes to financial statements 9
CITY OF BOYNTON BEACH GENERAL EMPLOYEES' PENSION PLAN
STATEMENTS OF CHANGES IN PLAN NET ASSETS
DRAFT
Year Ended September 30,
2012 2011
Additions
Contributions
City of Boynton Beach $ 4,502,590 $ 4,694,545
Employees 1,511,257 1,811,372
Total Contributions 6,013,847 6,505,917
Investment income (loss)
Net appreciation (depreciation) in fair value
of investments (realized and unrealized) 13,392,219 (2,593,303)
Interest and dividends 2,803,393 2,560,826
Other 7,978 10,514
16,203,590 (21,963)
Less investment expenses 465,689 439,208
Net investment income (loss) 15,737,901 (461,171)
Total additions 21,751,748 6,044,746
Deductions
Participant benefit payments 5,994,595 5,369,586
Refunds of participant contributions 410,291 602,225
Administration expenses 135,172 139,486
Total deductions 6,540,058 6,111,297
Net increase (decrease) 15,211,690 (66,551)
Net assets held in trust for pension benefits
Beginning of year 88,849,772 88,916,323
End of year $ 104,061,462 $ 88,849,772
See accompanying notes to financial statements 10
BOYNTON BEACH GENERAL EMPLOYEES' PENSION PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2012 AND 2011 DRAFT
Note 1- Summary of significant accounting policies
Reporting entity - The City of Boynton Beach General Employees' Pension Plan (the "Plan ") was established to
account for the accumulation of resources to be used for the retirement benefit payments to the City's general
employees. The Plan is managed by a seven member Board of Trustees comprised the Mayor, the City
Manager, of two members appointed by the Commission of the City of Boynton Beach, Florida (the "City "), and
three members elected by /from the plan membership, one of whom must be a member of a bargaining unit of
the City and one of whom must not be a member of a bargaining unit of the City. The Plan is reported in the
fiduciary funds (pension trust) in the City's basic financial statements.
Basis of accounting - The Plan's financial statements are prepared using the accrual basis of accounting.
Contributions from the Plan's members are recognized as revenue in the period in which the contributions are
due. Contributions from the City of Boynton Beach, as calculated by the Plan's actuary, are recognized as
revenue when due and when the City has made a formal commitment to provide the contributions. Expenses
are recognized in the accounting period incurred, if measurable. Benefits and refunds are recognized when due
and payable in accordance with the terms of the plan.
Method used to value investments - Investments are reported at fair value. Money market mutual funds are
reported at cost which approximates fair value. Securities traded on national or international exchanges are
valued at the last reported sales price or exchange rates. Net asset values of the common trust funds are
determined by the fund managers using fair market values of the underlying investments of the fund. Net
appreciation (depreciation) in fair value of investments includes the difference between cost and fair value of
investments held as well as the net realized gains and losses for securities which are sold. Interest and
dividend income are recognized on the accrual basis when earned. Purchases and sales of investments are
recorded on a trade date basis.
Use of estimates - The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires the plan administrator to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those
estimates.
Note 2 - Plan description and contribution information
Plan description
The following brief description of the Plan is provided for general information purposes only. Participants should
refer to City ordinances for more complete information.
The City of Boynton Beach, Florida adopted this single employer defined benefit pension plan. The Plan is
governed by Florida Statutes Chapter 112, as revised by ordinances passed by the Boynton Beach City
Commission. All full time general employees (not police officers or firefighters) are covered under the plan.
11
BOYNTON BEACH GENERAL EMPLOYEES' PENSION PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2012 AND 2011 DRAFT
Note 2 - Plan description and contribution information (continued)
Plan description (continued)
The Plan provides retirement, death and disability benefits for its members. Benefit provisions are established
and may be amended by the City of Boynton Beach. A member may retire with normal benefits after the earlier
of age 62 with 5 years of credited service, age 55 with 25 years of credited service or 30 years of credited
service regardless of age. Reduced early retirement benefits are available once a member reaches the earlier
of age 55 and accumulates 10 years of credited service, or age 52 with 25 years of credited service. Normal
retirement benefits are 3.0% of the member's average monthly earnings times his or her credited service years
up to a maximum of 75% of average monthly earnings. Early retirement benefits are the same as normal
retirement benefits, reduced by 3.0% for each year by which early retirement precedes the normal retirement
date. Average monthly earnings for purposes of calculating benefits is the average of salary during the highest
5 years within the last 10 years of employment producing the highest average. Salary includes base salary,
overtime, longevity pay, and may include other types of pay.
Any member who attains 30 years of service, age 62 with 5 years of service or age 55 with 25 years of service
may elect to participate in a deferred retirement option plan (DROP) while continuing his or her active
employment as a police officer. Upon participation in the DROP, the member becomes a retiree for all Plan
purposes so that he or she ceases to accrue any further benefits under the Plan. Normal retirement payments
that would have been payable to the member as a result are accumulated and invested in the DROP plan to be
distributed to the member upon his or her termination of employment. Participation in the DROP plan ceases for
a member at the first to occur of: termination of employment, 35 years of credited service or 5 years of
participation.
Eligibility for disability benefits begins from the member's date of hire. Disability benefits are calculated the
same as a normal retirement pension based on average monthly earnings and credited service at the time of
disability. Benefits are payable on the date at which the member would have otherwise been eligible for normal
benefits.
Pre - retirement death benefits are paid to the member's beneficiary for life. For members with less than 5 years
of contributing service at the date of death, the benefit is the return of the member's contributions, including
interest at an annual rate of 5 %. For members with 5 years or more of contributing service at the date of death,
the benefit is equal to that payable at early or normal retirement age. If the member is eligible for normal
retirement, the benefit is equal to his or her accrued benefit, and is payable for life. The beneficiary of a member
with 5 years or more of contributing service may also elect to receive an immediate lump sum payment equal to
the greater of the return of the member's contributions, including interest at an annual rate of 5 %, or the lump
sum value of the accrued benefit payable at the earliest date that the member could have retired.
Termination benefits for unvested members are the return of the member's contributions. For members who are
vested when they terminate, their vested accrued benefit is payable at the early or normal retirement date. Full
vesting occurs at the completion of 5 years of credited service.
12
BOYNTON BEACH GENERAL EMPLOYEES' PENSION PLAN
NOTES TO FINANCIAL STATEMENTS
DRAFT
YEARS ENDED SEPTEMBER 30, 2012 AND 2011
Note 2 - Plan description and contribution information (continued)
Plan description (continued)
Membership in the Plan consisted of the following at October 1, 2011, the date of the latest actuarial valuation:
Retirees, beneficiaries, and DROP participants receiving benefits 307
Terminated employees entitled to benefits but not yet receiving them 43
Active members 395
Total 745
Contributions
Contribution requirements are established and may be amended by the City of Boynton Beach. Contribution
requirements are based on the benefit structure established by the City. Members are required to contribute
7.0% of their covered salary. The City is required to contribute the remaining amounts necessary to finance the
benefits through periodic contributions at actuarially determined rates. Administrative costs are financed
through investment earnings.
The Plan allows members who were enrolled in elective benefits prior to the passage of Ordinance 10 -006 (on
February 16, 2010) to continue to participate in additional voluntary contributions in order to pay for certain
elective benefits; however, members who enrolled in the Plan after the passage of Ordinance 10 -006 may not
elect the voluntary benefits. There are four elective benefits: cost of living adjustment, health insurance subsidy,
health insurance subsidy with 2% per year cost of living adjustment, and retirement after 25 years of service,
regardless of age.
If a member terminates employment and returns to work for the City within 5 years of termination of
employment, then the member will be considered a new employee with no credited service, unless the member
elects to pay back to the Plan in a lump sum any previous distributions received from the Plan, plus interest
within one year of re- employment. The amount of interest required will be calculated based upon the actuarially
assumed rate of investment return, applied to the period from the date of original distribution to the date of
repayment. If the member repays this amount, the member will be granted the credited service earned prior to
your previous termination of service.
Note 3 - Deposits and investments
Deposits
Custodial credit risk — Florida Statutes require the Plan to maintain its deposits with financial institutions in a
qualified public depository, as determined by the Treasurer of the State of Florida. The Plan's accounts
maintained in qualified public depositories are covered by federal depository insurance for an amount equal to
the aggregate of each participant's ascertainable, non - contingent interest in the Plan (up to $250,000 per
participant). Amounts in excess of federal depository insurance are secured by the Public Depository Trust
Fund (the "Trust Fund ") maintained by the Treasurer. The Trust Fund is a multiple financial institution pool with
the ability to assess its member financial institutions for collateral shortfalls if a member fails.
13
BOYNTON BEACH GENERAL EMPLOYEES' PENSION PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2012 AND 2011 DRAFT
Note 3 - Deposits and investments (continued)
Investments
Authorized investments — Florida Statutes and the Plan's investment policy limit investments to money market
deposit accounts provided by the Plan's custodian; obligations issued by the United States Government;
commercial paper with a maturity of 270 days or less that is rated A -1 by Standard & Poor's or P -1 by Moody's;
bankers' acceptances issued by the largest 50 banks in the United States (in terms of total assets); corporate
equity and fixed income securities; mutual funds; commingled funds; limited partnerships; real estate held in
commingled funds; and absolute or real return investments held in commingled funds. Investments in
companies identified as scrutinized companies by the Florida State Board of Administration (SBA) are
prohibited, with the exception of investments in scrutinized companies that are held within commingled funds (if
the commingled fund sponsor does not offer a similar fund that does not hold investments in scrutinized
companies). Investments in unhedged and /or leveraged derivatives are prohibited.
At September 30, 2012, the Plan had the following investments:
Investment maturitv (in vears)
Credit rating Less than More than
Investment type S &P Fair value 1 1 -5 5 -10 1 0
Money market funds AAAm $ 1,470,873 $1,470,873 $ - $ - $ -
U.S. Government obligations AA+ 5,584,719 1,070,021 2,491,715 687,216 1,335,767
Corporate obligations AA +... BB+ 11,878,324 81,958 508,442 10,240,185 1,047,739
Foreign obligations A- 63,414 - 27,787 - 35,627
Mortgage- backed securities AAA... BBB+ 9,961,378 - 120,128 2,022,212 7,819,038
Mortgage- backed securities D 36,393 _ - 36.393
Mortgage- backed subtotal 9,997,771 120,128 2,022,212 7,855,431
Municipal obligations A- 34,500 - - 34,500
Other fixed income securities BBB- 8.594 8,594
Fixed income subtotal 29,038,195 $2,622,852 $3,156 $12,949,613 $10.309.064
Equity securities N/R 47,965,764
Equity mutual funds N/R 11,835,611
Equity common trust funds N/R 5,894,285
Real estate common funds N/R 8.007,371
Total investments $102,741,226
14
BOYNTON BEACH GENERAL EMPLOYEES' PENSION PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2012 AND 2011 DRAFT
Note 3 - Deposits and investments (continued)
Interest rate risk — This is the risk that changes in market interest rates will adversely affect the fair value of an
investment. Generally, the longer the maturity of an investment the greater the sensitivity of its fair value to
changes in market interest rates. The Plan's investment policy limits the duration of the fixed income portfolio to
135% of the duration of the Barclays Capital Aggregate Bond Index.
Credit risk — This is the risk that a security or a portfolio will lose some or all of its value due to a real or
perceived change in the ability of the issuer to repay its debt. This risk is generally measured by the assignment
of a rating by a nationally recognized statistical rating organization (NSRO), such as Moody's or Standard &
Poor's. The Plan's investment policy states that the average credit quality of the fixed income portfolio must be
"A" or higher as defined by an NSRO. Fixed income securities rated below "BBB" as defined by an NSRO shall
not exceed 15% of the Plan's fixed income portfolio.
Custodial credit risk — This is the risk that in the event of the failure of the counterparty, the Plan will not be able
to recover the value of its investments or collateral securities that are held by the counterparty. The Plan's
policy is to maintain its investments in custodial accounts that identify securities held as assets of the Plan by
registering securities in the name of the Plan, or in street name or nominee name as the Plan's agent.
Concentration of credit risk — The Plan's investment policy limits investments in the equity of fixed income
securities of any one issuing company to 5% of an investment manager's portfolio at cost. Furthermore,
investments in equity securities shall not exceed 65% of the Plan's assets at cost. Investments in foreign
securities, excluding American depository receipts (ADRs), shall be limited to 25% of the Plan's assets at
market value. Investments in real estate shall not exceed 10% of the Plan's assets at market value.
Investments in absolute or real return strategies shall not exceed 20% of the Plan's assets at market value.
Note 4 - Designations
A portion of the plan net assets are designated for benefits that accrue in relation to the DROP plan described in
Note 2. Plan net assets at September 30, 2012 and 2011 consist of the following:
2012 2011
Designated for DROP benefits (fully funded) $ 5,360,303 $ 3,915,418
Undesignated plan net assets 98.701.159 84.934,354
Total plan net assets 104.061.462 $--U0 772.
15
BOYNTON BEACH GENERAL EMPLOYEES' PENSION PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2012 AND 2011 DR
Note 5 — Funding status and funding progress
The Plan provides retirement, death and disability benefits for its members. Benefit provisions are established
and may be amended by the City of Boynton Beach.
The funded status of the Plan as of October 1, 2011, the most recent actuarial valuation date, was as follows:
Unfunded AAL
Actuarial as a
Accrued Percentage of
Actuarial Liability (AAL) Active Member Active Member
Value of Frozen Entry- Unfunded Covered Covered
Assets Age AAL Funded Ratio Payroll Payroll
( a) (b) (b) — (a) (a) /(b) (c) ((b -a) /c)
$98,246,000 $132,394,000 $34,148,000 74.2% $22,183,000 153.9%
The schedule of funding progress, presented as required supplemental information (RSI) following the notes to
the financial statements, present multi -year trend information about whether the actuarial values of plan assets
are increasing or decreasing over time relative to the AALs for benefits.
Additional information as of latest actuarial valuation follows:
Valuation date October 1, 2011
Actuarial cost method Entry Age
Amortization method Level percent, closed
Remaining amortization period 15 years
Asset valuation method 5 year smoothed market
Actuarial assumptions:
Investment rate of return 8.0%
Projected salary increases 4.2% to 7.8 %,
depending on service
Includes inflation and other general increases at 3.5%
Cost of living adjustments Not Applicable
Note 6 - Income taxes
The Plan's tax counsel believes that the Plan is designed and is currently being operated in compliance with
applicable requirements of the Internal Revenue Code and that, therefore, the Plan continues to qualify under
Section 401 (a) as a tax - exempt as of September 30, 2012. Therefore, no provision for income taxes is included
in the Plan's financial statements.
16
REQUIRED SUPPLEMENTARY INFORMATION
BOYNTON BEACH GENERAL EMPLOYEES' PENSION FUND
SCHEDULE OF FUNDING PROGRESS DRAFT
(Unaudited)
Actuarial
Accrued UAAL As
Actuarial Liability Unfunded Percentage
Actuarial Value (AAL) AAL Funded Covered of Covered
Valuation of Assets Entry Age (UAAL) Ratio Payroll Payroll
Date _ (a) (b) (b - a) a( /b) (c ((b -a Ucl_
10/1/2006 $73,022,000 $ 98,272,000 $25,250,000 74.3% $24,942,000 101.2%
10/1/2007 79,841,000 104,360,000 24,519,000 76.5 26,601,000 92.2
10/1/2008 84,042,000 112,907,000 28,865,000 74.4 27,852,000 103.6
10/1/2009 90,975,000 121,690,000 30,715,000 74.8 28,182,000 109.0
10/1/2010 96,128,000 125,795,000 29,667,000 76.4 26,149,000 113.5
10/1/2011 98,246,000 132,394,000 34,148,000 74.2 22,183,000 153.9
SCHEDULE OF CONTRIBUTIONS FROM THE EMPLOYER
(Unaudited)
Fiscal Annual
Year Ended Required Percentage
September 30 Contributions Contributed
2007 3,584,452 100.0
2008 3,909,961 100.0
2009 4,800,411 100.0
2010 5,415,919 100.0
2011 4,694,544 100.0
2012 4,502,590 100.0
17
BOYNTON BEACH GENERAL EMPLOYEES' PENSION FUND
NOTES TO THE SCHEDULE OF FUNDING PROGRESS
AND SCHEDULE OF CONTRIBUTIONS FROM THE EMPLOYER DRAFT
Note 1- Required Information
The information presented in the required supplementary schedules was determined as part of the actuarial
valuations at the dates indicated. Additional information as of the latest actuarial valuation follows:
Valuation date October 1, 2011
Actuarial cost method Entry Age
Amortization method Level percent, closed
Remaining amortization period 15 years
Asset valuation method 5 year smoothed market
Actuarial assumptions:
Investment rate of return 8.0%
Projected salary increases 4.2% to 7.8 %,
depending on service
Includes inflation and other general increases at 3.5%
Cost of living adjustments Not Applicable
Note 2 - Significant factors affecting trends in actuarial information
2011 Changes in plan provisions and actuarial methods since prior valuations
The current amortization bases have been combined and are being amortized as a level percent of
payroll over the next 10 years. This change caused the annual required contribution to decrease by 0.03%
of covered payroll.
• The amortization of unfunded liability bases changed from a 3.25% to a 0.77% payroll growth
assumption which is equal to the average payroll growth over the last 10 years. This change caused the
annual required contribution to increase by 1.89% of covered payroll.
2010 Changes in plan provisions and actuarial methods since prior valuations
None
2009 Changes in plan provisions and actuarial methods since prior valuations
• None
2008 Changes in plan provisions and actuarial methods since prior valuations
• None
2007 Changes in plan provisions and actuarial methods since prior valuations
• None
2006 Changes in plan provisions and actuarial methods since prior valuations
• None
18
DRAFT
OTHER SUPPLEMENTARY INFORMATION
CITY OF BOYNTON BEACH GENERAL EMPLOYEES' PENSION PLAN
SCHEDULE OF
ADMINISTRATIVE AND INVESTMENT EXPENSES
Year Ended September 30,
20 12 2011
Administrative Expenses
Accounting services $ 13,500 $
Actuarial services 19,205 29,936
Legal services 14,851 23,227
Administrative services 56,175 56,491
Fiduciary liability insurance 11,282 12,208
Trustee expenses 9,656 9,128
Computer services 3,881 4,423
Postage 3,178 1,991
ADR fees 2,132 768
Annual membership fees 600 600
Miscellaneous expenses 712 714
Total administrative expenses $ 135,172 $ 139,486
Investment Expenses
Investment management fees $ 383,339 $ 359,941
Custodial fees 33,506 32,280
Performance monitoring fees 48,844 47,022
IRS fees (35)
Total investment expenses $ 465,689 $ 439,208
19
OTHER REPORTS
Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and
Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards
Board of Trustees
City of Boynton Beach General Employees' Pension Plan
Boynton Beach, Florida
We have audited the financial statements of City of Boynton Beach General Employees' Pension Plan (the
"Plan ") as of and for the year ended September 30, 2012, and have issued our report thereon, dated February
XX, 2013. We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to the financial audits in Government Auditing Standards, issued
by the Comptroller General of the United States.
Internal Control Over Financial Reporting
Management of the System is responsible for establishing and monitoring effective internal control over financial
reporting. In planning and performing our audit, we considered the Plan's internal control over financial reporting
as a basis for designing our auditing procedures for the purpose of expressing an opinion on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the Plan's internal control
over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Plan's internal
control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in
internal control such that there is a reasonable possibility that a material misstatement of the entity's financial
statements will not be prevented, or detected and corrected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over financial
reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any
deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined
above.
20
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Plan's financial statements are free of material
misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and
grant agreements, noncompliance with which could have a direct and material effect on the determination of
financial statement amounts. However, providing an opinion on compliance with those provisions was not an
objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no
instances of noncompliance or other matters that are required to be reported under Government Auditing
Standards.
This report is intended solely for the information and use of the Board of Trustees and management, and is not
intended to be and should not be used by anyone other than these specified parties.
Orlando, Florida
February XX, 2013
21
Page 1 of 1
Dixie Martinez
From: Sandie Kyser [sandie @umi91.com]
Sent: Friday, February 22, 2013 8:29 AM
To: Dixie Martinez
Subject: City of Boynton Beach General Employees Pension Plan, Fiduciary Liability Policy
#EPG0008419 - Revised Quote from RLI
Attachments: RLI Quote.pdf; RLI Specimen Policy Form (2).pdf
Hi Dixie:
The Underwriters got busy after I left work yesterday afternoon! Please see attached revised quote from
expiring carrier, RLI Insurance Company (A+ Rated by AM Best). The revised total annual premium is $8,408.00
($8,125.00 Base Premium + $175.00 Waiver of Recourse Premium (7 Trustees @ $25 each -not to be paid by
plan) + $108 FL Surcharges). No change to coverage from the original renewal quote, but Specimen
Endorsements are attached to the quote and I have attached Specimen Policy Form, so you don't have to back
and forth between the two emails. Again, the only change over last year is RLI added "Selection of Counsel
Endorsement," which gives Trustees the option of choosing their own counsel in the event of a claim.
Please review the quote, and let me know if you have any questions.
I have another quote from Alterra America Insurance Company, through Ullico Insurance Group, which I will
email to you under separate cover.
Sincerely,
Sandie Kyser, Account Executive
United Members Insurance
Phone: 813 - 265 -2300, ext. 8
Fax: 813- 265 -2323
Email: san umi91.com
2/22/2013
RL'
RLI Insurance Company I Southeast Branch Office
1165 Sanctuary Parkway ( Suite 350
Alpharetta, GA 30004 -4809
Phone: 770- 754.0100 1 Fax: 770- 754 -0111
www.rlicorp.com
February 21, 2013
Sandie Kyser
United Members insurance,lnc.
6826 W. Linebaugh Ave.
Tampa, FL 33625
Re: City Of Boynton Beach General Employees Pension
Expiring Policy: EPG0008419
Dear Sandie,
Thank you for the opportunity to offer terms on the above captioned account. I am pleased to offer the following program, subject to the
terms and conditions outlined below:
Issuing Company: RLI Insurance Company, A+ XI Admitted
Policy Period: April 10, 2013 to April 10, 2014
Discovery Period: 1 year(s) at 150% of the annual premium
Policy Form: LMT 100 (03/04) / LMT 101 (03/04)
Limit of Liability: $2,000,000 aggregate
Retention (each Claim): $0
Compliance Fee Sublimit: $200,000
Endorsements: LMT 601 (01/08) - Defense Expense Endorsement (Appeal Bonds)
LMT 602 (01 /08) - Health Insurance Portability and Accountability Act (HIPAA)
Endorsement
LMT 604 (07/09) - Waiver of Recourse Endorsement
LMT 605FL (01 /13) - Marital or Domestic Partner Extension Endorsement - Florida
LMT 606 (07/09) - Non - Fiduciary Defense Costs Endorsement
LMT 608 (11/10) - Amend Definition Of Administration
LMT 610 (11/10) - Amend Illegal Profit Exclusion
LMT 611 (11/10) - Delete Investigation And Settlement Endorsement
LMT 612 (11/10) - Representations; Severability Endorsement
LMT 613 (11/10) - Selection Of Counsel
LMTA 409 (07/04) - State of Florida Amendatory Endorsement
LMT 606(07/09) Sublimit 500,000
LMT 602(01/08) Sublimit 1,500,000
Manuscript: 502(c) ERISA Penalty Coverage with Sublimit (100,000)
Manuscript: Amend Notice -Claim Reporting Endorsement
Prior or Pending Date: April 10, 2009
02121/13 14:57:21 SubID 2064211 Quote: 1382191 Page 2 of 3
Premium: $8,125
Waiver: $175
Surcharges: $108
Total Premium and Surcharges: $8,408
Insured Plans: City of Boynton Beach General Employees Pension Plan
THIS PROPOSAL IS VALID UNTIL: April 10, 2013
BINDING IS SUBJECT TO OUR RECEIPT AND ACCEPTANCE OF THE FOLLOWING ADDITIONAL INFORMATION:
- None
Further, these terms are strictly conditioned upon there being no material change in the risk between the date of this letter and the inception date
of the proposed policy. If we determine such material change has occurred, we reserve the right to modify the terms, up to and including
withdrawal of the terms.
RLI Insurance Company is rated "A +" (Superior) by A.M. Best and "A +" by Standard & Poor's.
Again, thank you for the opportunity to consider this account. If you have any questions, please don't hesitate to call.
Best regards,
Justin Evans
02/21/1314:57:21 Subil):2064211 Quote: 1382191 Page 3 of 3
Labor Management Trust Fiduciary Liability Policy
Coverage Section: Labor Management Trust Insurer:
Fiduciary Liability
Effective date of To be attached to and form part of
this endorsement: Policy No.
Issued to:
THIS ENDORSEMENT CHANGES THE POLICY. PLEAS AD IT LLY.
DEFENSE EXPENSE END E
(APPEAL BOND
It is hereby understood and agreed that the definition of Defense Ex ec 3., FINITIONS, is deleted in its entirety and
replaced as follows:
"Defense Expenses" means reasonable and necessary ex es ( ng, without limitation, attorneys' fees and experts'
fees and the premium for any appeal, attachment or ar ond, pro tha the Insurer has no obligation to apply for, furnish or
secure any such bond) incurred in the defense or al of a C notice of such Claim is given to the Insurer. Defense
Expenses shall not include salaries, wages, overhea benefit ex ses of any trustee, director, officer or employee of any Insured
Plan.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
LMT 601 (01/08) Page I of 1
SPECIMEN
Labor Management Trust Fiduciary Liability Policy
Coverage Section: Labor Management Trust Insurer:
Fiduciary Liability
Effective date of To be attached to and form part of
this endorsement: Policy No.
Issued to: N�
THIS ENDORSEMENT CHANGES THE POLICY. PLEAS AD IT LY.
HEALTH INSURANCE PORTABILITY AND ACCOUNT IL T AA) ENDORSEMENT
It is hereby understood and agreed:
1. The exclusions for fines or penalties in the definition of sa ' FINITIONS, shall not apply to civil fines or
penalties imposed upon an Insured for violation of the priv rovi of A.
2. Exclusion a) in Section 4., EXCLUSIONS, is addin ollo ing wording to the end thereof-
"However, this exclusion shall not apply to 'I fines or ties imposed upon an Insured for violation of the privacy
provisions of HIPAA."
3. The Insurer's maximum aggregate xlity f 1 civi or penalties which are covered under this Policy by reason of this
endorsement shall be the followin fi Liabil'
Sublimit of Liability: $ 0 A ate
This Sublimit of Liabi s pa , and not in addition to, the Aggregate Limit of Liability stated in Item 3. of the Declarations
for this Policy.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
LMT 602 (01/08) Page 1 of 1
SPECIMEN
Labor Management Trust Fiduciary Liability Policy
Coverage Section: Labor Management Trust Insurer:
Fiduciary Liability
Effective date of To be attached to and form part of
this endorsement: Policy No.
Issued to:
THIS ENDORSEMENT CHANGES THE POLICY. PLEAS AD IT LLY.
WAIVER OF RECOURSE EN R T
It is agreed Section 22., Subrogation and Waiver of Recourse, ' j&=ende ng a second sentence in its entirety and
replacing it with the following wording:
The Insurer shall have no such rights of recovery against any re son a Waiver of Recourse premium is paid to the
Insurer by or on behalf of the Insured Persons from fun are set a Insured Plan(s).
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
LMT 604 (07/09)
SPECIMEN Page 1 of 1
Labor Management Trust Fiduciary Liability Policy
Coverage Section: Labor Management Trust Insurer:
Fiduciary Liability
Effective date of To be attached to and form part of
this endorsement: Policy No.
Issued to:
THIS ENDORSEMENT CHANGES THE POLICY. PLE RE C LY.
MARITAL OR DOMESTIC PARTNER E EN EMENT
FLORIDA
It is agreed that Section 14., Marital Estate, is deleted in its tire ith a following wording:
14. Marital or Domestic Partner Extension
Subject otherwise to the terms and conditions eof, this Poli y s over Loss arising from any Claim made against the lawful
spouse or domestic partner (whether such sta is derived ason of statutory law, common law, or any other applicable law
of any jurisdiction) of an Insured Pers for ms arising ely out of his or her capacity as the spouse or domestic partner of
an Insured Person, including suc ims th s recoverable from marital community property, property jointly
held by the Insured Person and ouse om er; or property transferred from the Insured Person to the spouse or
domestic partner; provided, ho r, xtension shall not afford coverage for Wrongful Acts of the spouse or domestic
partner. All terms, conditio an rovisiog#f this Policy, inclusive of any provision relative to the applicable retention,
which would be applica in d b nsured Person in such Claim shall also apply to Loss incurred by the spouse
or domestic partner , Clai
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
LMT 605FL (01/13) Page 1 of 1
SPECIMEN
Labor Management Trust Fiduciary Liability Policy
Coverage Section: Labor Management Trust Insurer:
Fiduciary Liability
Effective date of To be attached to and form part of
this endorsement: Policy No.
Issued to:
THIS ENDORSEMENT CHANGES THE POLICY. PLEAS AD IT LLY.
NON - FIDUCIARY DEFENSE COS ME
It is agreed:
1. The definition of Wrongful Act in Section 3., DEFINITI S, is ding the following wording to the end thereof:
iv) with respect to the Insured Plan, any negligent or issi an Insured Person solely in such Insured Person's
capacity as a trustee of, but not as a Fiducia nsur n.
2. The Insurer shall not be liable to make any pa nt under thi dorsement for that part of Loss, other than Defense Expenses,
on account of any Claim solely alleging ong cts, as de d in subparagraph iv) as amended within this endorsement.
3. Section 10., Limit of Liability an tentio amen adding the following wording to the end thereof:
The Insurer's maximum a li for all nse Expenses on account of all Claims solely alleging Wrongful Acts,
as defined in subparagra en s endorsement, committed, attempted, or allegedly committed or attempted
by an Insured P, so 1 be esser er @LMT606PercentSpelledGlobal. percent ( @LMT606PercentAmtGlobal. %)
of the maximum egat imit of Liability stated in Item 3. of the Declarations for this Policy, or
@LMT606Doll elle dollars ($ @LMT606DollarsAmtGlobal.); which amount is part of, and not in addition to, the
Aggregate Li ability d in Item 3. of the Declarations for this Policy.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
LMT 606 (07/09) Page 1 of I
SPECIMEN
Labor Management Trust Fiduciary Liability Policy
Coverage Section: Labor Management Trust Insurer:
Fiduciary Liability
Effective date of To be attached to and form part of
this endorsement: Policy No.
Issued to:
4WAftftWM1'.x
THIS ENDORSEMENT CHANGES THE POLICY. PLE eREANC LLY.
AMEND DEFINITION OF I TIO
It is hereby understood and agreed that the definition of "Admi n" in F ONS, Section 3., is amended by adding the
following:
"iii) supervising, reviewing, recommending, or directing a e de m ayment under an Insured Plan."
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
LMT 608 (11/10) Page 1 of 1
SPECIMEN
Labor Management Trust Fiduciary Liability Policy
Coverage Section: Labor Management Trust Insurer:
Fiduciary Liability
Effective date of To be attached to and form part of
this endorsement: Policy No.
Issued to:
THIS ENDORSEMENT CHANGES THE POLICY. PLE RE C LLY.
AMEND ILLEGAL PROM C ON
It is hereby understood and agreed that EXCLUSIONS, Sectio bsec c), eleted in its entirety and replaced with the
following:
"c) for such Insured gaining in fact any profit, remuneration o an which such Insured was not legally entitled; however,
this Exclusion shall not apply unless a judgment final ca adverse to such Insured establishes that such Insured
gained in fact such profit, remuneration, or adv ge."
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
LMT 610 (11 /10) Page 1 of 1
SPECIMEN
Labor Management Trust Fiduciary Liability Policy
Coverage Section: Labor Management Trust Insurer:
Fiduciary Liability
Effective date of To be attached to and form part of
this endorsement: Policy No.
Issued to:
THIS ENDORSEMENT CHANGES THE POLICY. PLE RE C LY.
DELETE INVESTIGATION AND SETT ND EMENT
It is hereby understood and agreed that Investigation and Settle ction , is ted in its entirety.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
LMT 611 (11/10) Page 1 of 1
SPECIMEN
Labor Management Trust Fiduciary Liability Policy
Coverage Section: Labor Management Trust
Fiduciary Liability Insurer:
Effective date of
this endorsement: To be attached to and form part of
Policy No.
Issued to:
THIS ENDORSEMENT CHANGES THE POLICY. PLE
ORE C LLY.
REPRESENTATIONS; SEVERABI RS NT
It is hereby understood and agreed that Section 16. Represen vera ta
replaced with the following: �h' is Policy shall be deleted in its entirety and
"The Insureds represent that the particulars and statements co ed
that this Policy is issued in reliance on the truth of APP ication are true, accurate and complete, and agree
Me ns, agree that such particulars and statements, which are
deemed to be incorporated into and to constitute a of this Policy, a basis of this Policy. In the event any of the particulars or
statements in the Application are untrue, this P y will be v wit respect to any Insured who knew the facts that were not
truthfully disclosed, whether or not such Ipsur ew the lication contained the untruthful disclosure. No knowledge or
information possessed by any Insured P will uted t y other Insured Person."
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
LMT 612 (11 /10)
SPECIMEN Page 1 of i
Labor Management Trust Fiduciary Liability Policy
Coverage Section: Labor Management Trust Insurer:
Fiduciary Liability
Effective date of To be attached to and form part of
this endorsement: Policy No.
Issued to:
THIS ENDORSEMENT CHANGES THE POLICY. PLE RE C LLY.
SELECTION OF C E
It is hereby understood and agreed that CONDITIONS, Section se C ra ' amended by adding the following:
"The Insureds may select as defense counsel for the defens any by this Policy the defense counsel of its choice,
provided that (i) the Claim is brought and maintained in a' uris n w ne or more attorneys of the firm are licensed to practice
law, and (ii) an additional law firm may be retaine t the wit spect to any Claim if the Insurer believes, at its sole
discretion, such multiple representation is necess Any defense co 1 selected by the Insureds agrees to abide by the litigation
management guidelines of the Insurer. Further, nsurer will b e the defense counsel selected by the Insureds at the same
rates that the Insurer could retain other qual' ed a counsel that jurisdiction. Any amount in excess of such rates is expressly
retained by the Insureds and is not in an insur assum y the Insurer."
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
LMT 613 (11/10) Page 1 of 1
SPECIMEN
Labor Management Trust Fiduciary Liability Policy
Coverage: Labor Management Trust Insurer:
Fiduciary Liability Policy
Effective date of To be attached to and form part of
this endorsement: Policy No.
Issued to: Ak
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE IT FULL .
STATE OF FLORIDA
AMENDATORY ENDOR
1) The definition of "Pollutants," as found in Section 3. DEFIN IONS, d b deleting the last sentence that states:
"Pollutants shall also mean any other air emissions, odor, wasq cts, infectious or medical waste, asbestos
or asbestos products, electric or magnetic or electromagnet' tel "
2) Subsection 18., Cancellation and Nonrenewal, is d b ting entente that states: "If the Policy Period is more than
eighteen (18) months, the premium charged for th' shall b e ed at inception of the Policy Period."
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
LMTA 409 (07/04) Page 1 of I
SPECIMEN
Labor Management Trust Fiduciary Liability Policy
SPECIMEN
Effective date of
this endorsement: Insurer:
Issued to: To be attached to and form part of
Policy No.
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
502(c) ERISA PENALTY COVERAGE WITH SUBLIMIT
In consideration of the premium charged, it is hereby understood and agreed that the Definition of Loss under Insuring Clause 1. is
amended in part to include the civil penalties imposed on an Insured under Section 502(c) of ERISA as a result of a covered
Claim(s).
It is further understood and agreed that solely with respect to the coverage provided by this endorsement, the maximum limit of the
Insurers' liability for all such civil penalties in the aggregate shall be $ ( "Sublimit of Liability for 502(c) Civil
Penalties "). This Sublimit of Liability for 502(c) Civil Penalties shall be part of and not in addition to the aggregate Limit of Liability
stated in Item of the Declarations and shall in no way serve to increase the Insurer's Limit of Liability as therein stated.
Solely with respect to this endorsement, it is also hereby understood and agreed that the Insurer shall not be liable to make any
payment for Loss in connection with any Claim made against an Insured alleging any Wrongful Act occurring prior to the Policy
Period or the Discovery Period (if purchased) or after the end of the Policy Period. This endorsement only provides coverage for
Wrongful Acts occurring during the Policy Period or the Discovery Period (if purchased) and otherwise covered by this coverage
section. Loss arising out of the same or related Wrongful Act shall be deemed to arise from the first such same or related Wrongful
Act.
It is further understood and agreed that solely with respect to this endorsement, the Insurer shall not be liable to make any payment for
Loss in connection with any Claim(s), or any circumstance or situation that could give rise to a Claim, that the Insured knew of prior
to the Policy Period or the Discovery Period (if purchased).
Labor Management Trust Fiduciary Liability Policy
Coverage: Labor Management Trust Insurer: RLI Insurance Company
Fiduciary Liability Policy
Effective date of this endorsement: To be attached to and form part of
Policy No.
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
AMEND NOTICE /CLAIM REPORTING PROVISIONS ENDORSEMENT
It is hereby understood and agreed that CONDITIONS, Subsection S. Notice /Claim Reporting Provisions, is
deleted in its entirety and replaced with the following:
If, during the Policy Period, or the Discovery Period (if purchased):
i) an Insured first becomes aware of a Wrongful Act which may subsequently give rise to a Claim -
ii) the Insureds give the Insurer written notice of such Wrongful Act, including a description of the• FormatEeds Indent: Left: 0.25 ", Ha I
Wrongful Act, the identities of the potential claimants, the consequences which have resulted or may result 0.25" n0
from such Wrongful Act and the circumstances by which the Insured first became aware of such
Wrongful Act and
iii) the Insureds request coverage under this Policy for any subsequent Claim arising from such Wrongful — , Indent: :0, a 25 ", H
Act, nOM9:
0.25"
then- the4fksdreFwiN treat ewy sE�eh sabsegaen�Ciaiut es+f i� Had keen
Perif fit�t#ta Pelisy
ni-
then the Insurer will treat any such subsequent Claim as if it had been first made during the Policy Period.
As a condition precedent to any right to payment in respect of any Claim, the Insured$ must give the Insurer written
notice of such Claim, with full details, as soon as practicable after it is first made.
Notice to any Insured may be given to the Insurance Representative at the address as shown in Item 5. of the
Declarations.
All notices under this Policy shall be in writing and given by prepaid express courier, certified mail, e- mail -at
,jew 14A
or fax properly addressed to the appropriate party.
Notice to the Insurer of any Claim under this Policy shall be given to
RLI Insurance Company
Attention: Claim Department
9025 North Lindbergh Drive
Peoria, ll bineis 61615 -1432 E'
Fax: 1- 866- 692 -6796 x
E -mail: new.clairnQrlicorp.com
All other notices to the Insurer under this Policy hall be
y given to the same addressee but to the attention of the
Underwriting Department. Notice given as described above shall be deemed to be received and effective upon
actual receipt thereof by the addressee or one day following the date such notice is sent, whichever is earlier.
Labor Management Trust Fiduciary Liability Policy
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
}
�'Sk
Policy Number:
Labor Management Trust Fiduciary Liability Policy
In consideration of the payment of the premium, and in reliance upon the statements made to the Insurer in the Application
forming a part hereof and its attachments and the material incorporated therein, , herein called the "Insurer," and the
Insureds agree as follows:
INSURING CLAUSES
1. The Insurer will pay on behalf of the Insureds, Loss which the Insureds are legally ob ' ay esult of Claims first
made during the Policy Period, or during the Discovery Period (if purchased), against th ongful Act by the
Insureds or by any natural person for whose Wrongful Act the Insureds are legally nsi
2. The Insurer will indemnify the Insureds for all Compliance Fees incurre the I reds result of any Voluntary
Compliance Program initiated during the Policy Period, or during the Discov eri purch e
DEFINITIONS
3. When used in this Policy:
"Administration" means:
i) giving advice, counsel or interpretation to participants reg an red Plan, or
ii) affecting enrollment, termination, or cancell of participan er an Insured Plan.
"Claim" means:
i) a written demand for monetary o -mone st any Insured, or
ii) a civil proceeding against any re enc d by the service of a complaint or similar pleading, or
iii) a criminal proceedin y ed P n commenced by the return of an indictment, or
iv) an administrative gulat roceedin against any Insured Person commenced by the filing of a notice of charges, formal
investigative order, document, or
v) a form il, criminal, strative or regulatory investigation against any Insured Person commenced by the service
upon o ther th sured Person of a written notice or subpoena from the investigating authority identifying
specific ron 1 Acts by such Insured Person;
including any app
Solely for purposes of coverage under Insuring Clause 2., Claim means a Voluntary Compliance Program initiated by or against
an Insured.
"Compliance Fees" means VCR compliance fees, compliance correction fees and Audit CAP sanctions paid to the IRS by any
Insured in connection with any Voluntary Compliance Program involving the actual or alleged noncompliance by any Insured
Plan with any statute, rule or regulation. Compliance Fees does not include any other costs, charges, expenses, fees, penalties,
sanctions, assessments, taxes or damages.
"Defense Expenses" means reasonable and necessary fees and expenses (including without limitation attorneys' fees and experts'
fees) incurred in the defense or appeal of a Claim after notice of such Claim is given to the Insurer. Defense Expenses shall not
include salaries, wages, overhead or benefit expenses of any trustee, director, officer or employee of any Insured Plan.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
LMT 101 (03/04) Page 1 of 8
SPECIMEN
"Fiduciary" means a fiduciary (as defined in ERISA) of an Insured Plan, or a person or entity who exercises discretionary
control with respect to the management of an Insured Plan or the disposition of its assets.
"Insurance Representative" means the person or organization authorized to represent the Insureds and designated in Item 5. of
the Declarations.
"Insured," either in the singular or plural, means:
i) the Insured Plan(s),
ii) the Insured Person(s), and
iii) any other organization, plan or natural person listed in Item 6. of the Declarations for this Policy.
"Insured Person," either in the singular or plural, means:
i) any natural persons who were, now are, or shall become duly elected or app ' d trustees, ctors, officers, or participants
of any Insured Plan, in his or her capacity as a Fiduciary or truste an In d P r as a person performing
Administration of an Insured Plan, and
ii) any other natural person who was, now is, or shall become a Fiduc f an re n and is named in Item 6. of the
Declarations for this Policy.
In the event of the death, incapacity or bankruptcy of an Insur an lal ainst the estate, heirs, legal representatives
or assigns of such Insured Person for a Wrongful Act suc on will be deemed to be a Claim against such
Insured Person.
"Insured Plan," either in the singular or plural only pt or trusts specifically enumerated in Item 6. of the
Declarations or those plans or trusts specifically crated bye do ent to this Policy.
"Loss" means monetary damages, jud ts, ements, in ing but not limited to punitive or exemplary damages where
insurable under applicable law, and D se Ex s whi a Insureds are legally obligated to pay as a result of a covered
Claim under Insuring Clause 1.
The law of the jurisdiction most fa the ' bility of those punitive or exemplary damages shall control whether such
damages are insurable, pro ' t s sdic ' is where:
i) those damages w warde impose
ii) any Wron t oc for which such damages were awarded or imposed; or
iii) the Ins r is in d o its principal place of business.
Loss under Ins g Cl a 1. shall not include the multiple portion of multiplied damages, taxes, civil or criminal fines or
penalties imposed y amount not indemnified by an Insured Plan for which the Insured is absolved from payment, or
matters uninsurable r the law pursuant to which this Policy shall be construed.
Solely for purposes of coverage under Insuring Clause 2., Loss means Compliance Fees.
"Pollutants" means any substance located anywhere in the world exhibiting any hazardous characteristics as defined by, or
identified on a list of hazardous substances issued by the United States Environmental Protection Agency or a state, county,
municipality or locality counterpart thereof. Such substances shall include, but not be limited to, solids, liquids, gaseous or thermal
irritants, contaminants or smoke, vapor, soot, fumes, acids, alkalis, chemicals or waste materials. Pollutants shall also mean any
other air emissions, odor, waste water, oil or oil products, infectious or medical waste, asbestos or asbestos products, electric or
magnetic or electromagnetic fields and any noise.
"Related Claims" means all Claims for Wrongful Acts that have as a common nexus any fact, circumstance, situation, event,
transaction, cause or series of related facts, circumstances, situations, events, transactions or causes.
LMT 101 (03/04) Page 2 of 8
SPECIMEN
"Voluntary Compliance Program" means:
i) the Audit Closing Agreement Program (Audit CAP), the Voluntary Compliance Resolution Program, the Walk -in Closing
Agreement Program or the Administrative Policy Regarding Self- Correction, as described in the Employee Plans Compliance
Resolution System, IRS Rev. Proc. 98 -22, as amended; and
ii) the Tax Sheltered Annuity Voluntary Correction Program, as described in IRS Rev. Proc. 95 -24, as amended.
"Wrongful Act" means:
i) any actual or alleged breach of the responsibilities, obligations or duties imposed upon Fidu rtes of any Insured Plan by
ERISA or by the common or statutory law of the United States or any state or other jurisdictio here in the world;
ii) any other matter claimed against an Insured Person solely because of his or her servi cia ny Insured Plan; or
iii) any negligent act, error or omission solely in the Administration of any Insure an.
EXCLUSIONS
4. The Insurer shall not be liable to make any payment for that part of Loss, ense E ses:
a) which constitutes civil or criminal fines or penalties, taxes or the multi in o multiplied damage award, other than
the five percent (5 %) or less penalties, or the twenty perce or le ' s, or the daily civil penalties imposed upon
an Insured as a Fiduciary under Section 502(1) or (1) or (c) RI ;
b) which is based upon, arises out of, directly or indirect ults , or is in consequence of, the failure to collect from
employers any contributions owed to an Insur or 'lure d an Insured Plan, unless the failure is because of
the negligence of an Insured;
c) which constitutes benefits due or to be ome under the t s of an Insured Plan, or benefits which would be due under the
terms of an Insured Plan if such s co d with pplicable law, unless and to the extent that (i) the Insured is a
natural person and the benefits yable y s as a personal obligation, and (ii) recovery for the benefits is based
upon a covered Wrongful A
d) for the return of any co ins y emp if such amounts are or could be chargeable to any Insured Plan,
5. The Insurer shall not le for s on ac t of any Claim made against any Insured:
a) for libel, sl odi , mental anguish, emotional distress, sickness, disease or death of any person, or any damage to
or des n o any tan roperty including loss of use thereof;
b) for liab ers umed by the Insured under any oral, written or implied contract or agreement; however, this
exclusion s a 1 not ap to the extent (i) the Insured would have been liable in the absence of such contract or agreement; or
(ii) the liabili tuned in accordance with or under the trust agreement or equivalent document pursuant to which the
Insured Plan stablished;
c) for such Insured gaining in fact any profit, remuneration or advantage to which such Insured was not legally entitled; or
d) for discrimination in violation of any law other than ERISA.
6. The Insurer shall not be liable to make any payment for Loss in connection with any Claim made against any of the Insureds
based upon, arising out of, directly or indirectly resulting from, or in consequence of:
a) any fact, circumstance, situation, transaction, event or Wrongful Act which was the subject of any notice given under any
prior policy for fiduciary liability or other similar insurance, of which this Policy is a direct or indirect renewal or replacement;
LMT 101 (03/04) Page 3 of 8
SPECIMEN
b) the actual, alleged or threatened discharge, release, escape or disposal of Pollutants into or on real or personal property, water
or the atmosphere; or any direction or request that the Insured test for, monitor, clean up, remove, contain, treat, detoxify or
neutralize Pollutants, or any voluntary decision to do so; including but not limited to any Claim for financial loss to any
Insured Plan, its participants, beneficiaries, or creditors based upon, arising out of, directly or indirectly resulting from, or in
consequence of, the matters described in this exclusion;
c) any litigation or administrative or regulatory proceeding against any Insured pending on or before the Prior or Pending Date
set forth in Item 8. of the Declarations for this Policy, or any actual or alleged fact, circumstance, situation, transaction, event
or Wrongful Act underlying or alleged therein;
d) any Wrongful Act committed or allegedly committed by the Insured with respect to Insured Plan, if when such
Wrongful Act occurred no Insured Person was a Fiduciary of or was responsible for the inistration of, the Insured
Plan;
e) an actual or alleged obligation of any Insured under any law governing workers c oyment insurance,
social security, disability benefits or similar law, except the Consolidated O s B t Recon n Act of 1985, as
amended, or the Health Insurance Portability and Accountability Act of 1996, ended, o
f) any deliberately fraudulent or dishonest act or omission or any willful vi n o statute or egulation by such Insured;
however, this Exclusion shall not apply unless a judgment or other fi ju adver such Insured establishes such
a deliberately fraudulent or dishonest act or omission or willful violat
7. The Insurer shall not be liable to make any payment for CompI ce Fees a t o y matter relating to an Insured Plan
which, as of the earlier of inception of this Policy or inception li in interrupted series of policies issued by the
Insurer of which this Policy is a renewal or replacement, Fi be actually or allegedly noncompliant with any
applicable statute, rule or regulation.
To determine the applicability of the foregoing E : (i) n on Act of any Insured Person will be imputed to any
other Insured Person, and (ii) only Wrongful of any pas or future officer, director or trustee of any Insured Plan
will be imputed to any Insured Plan. pr
CONDITIONS
8. Notice/Claim Reporting Provist
If, during the Policy Period is Peri f purchased):
i) an Insured first mes aw of a W fui Act which may subsequently give rise to a Claim,
ii) the Insure the written notice of such Wrongful Act, including a description of the Wrongful Act, the identities
of the nti claim the consequences which have resulted or may result from such Wrongful Act and the
circum ces b the red first became aware of such Wrongful Act, and
iii) the Insure request c rage under this Policy for any subsequent Claim arising from such Wrongful Act,
then the Insurer wi any such subsequent Claim as if it had been first made during the Policy Period.
As a condition precedent to any right to payment in respect of any Claim, the Insured must give the Insurer written notice of such
Claim, with full details, as soon as practicable after it is first made.
Notice to any Insured may be given to the Insurance Representative at the address as shown in Item 5. of the Declarations.
Notice to the Insurer of any Claim under this Policy shall be given to:
9025 North Lindbergh Drive
Peoria, Illinois 61615
Attention: Claim Department
LMT 101 (03/04) Page 4 of 8
SPECIMEN
All other notices to the Insurer under this Policy shall be given to the same addressee but to the attention of the Underwriting
Department. Notice given as described above shall be deemed to be received and effective upon actual receipt thereof by the
addressee or one day following the date such notice is sent, whichever is earlier.
9. Defense Coverage
The Insurer shall have the right and duty to defend any Claim covered under Insuring Clause I. of this Policy, even if any of the
allegations are groundless, false or fraudulent. The Insurer's duty to defend shall cease upon exhaustion of the Limit of Liability set
forth in Item 3. of the Declarations.
The Insureds agree to provide the Insurer with all information, assistance and cooperation which Insurer reasonably requests,
including without limitation attendance at hearings and trials, assistance in effecting settlements, ob and giving evidence and
obtaining the attendance of witnesses, copies of records, investigations and pleadings. In the event of a m the Insureds will do
nothing that may prejudice the Insurer's position or its potential or actual rights of
investigation it deems necessary. a rer may make any
The Insureds agree not to settle or offer to settle any Claim, incur any Defen xpens or o ise assume any contractual
obligation or admit any liability with respect to any Claim without the Insur tte sent, wh shall not be unreasonably
withheld. The Insurer shall not be liable for any settlement, Defense E ses, obliga&n or admission to which it has
not consented.
10. Limit of Liability and Retention
The amount stated in Item 3. of the Declarations for this PaLcy s mum aggregate liability of the Insurer under this
Policy for all Loss and Compliance Fees from all Clai wh s y provides coverage, regardless of the time of
payment by the Insurer, and regardless of whether Cie are or initiated during the Policy Period or during any
Discovery Period (if purchased). The amount sta 9.0 cc ations for this Policy will be the maximum aggregate
liability of the Insurer for all Compliance Fees ered under I lause 2. which are incurred by the Insureds as a result of
all Voluntary Compliance Programs for whic s Policy p ides coverage, regardless of the time of payment by the Insurer,
and regardless of whether such Volunta om ce Progr were initiated during the Policy Period, or during the Discovery
Period (if purchased). The amount s n Item a ations for this Policy is a sublimit which further limits and does
not increase the Insurer's maxim tlity r this
All Related Claims will be tr d e Clai ade when the earliest of such Related Claims was first made, regardless of
whether such date is befor th icy d. The applicable Retention shall apply only once to each such single Claim.
The Insurer's liability re s to all Lo s resulting from each Claim, including all Compliance Fees resulting from any
Voluntary Coingignce , shall apply only to that part of Loss which is excess of the applicable Retention set forth in
Item 4. of the iolnus s Policy, which shall be borne by the Insureds uninsured and at their own risk.
Defense Ex s o and not in addition to the Limit of Liability, and payment of Defense Expenses by the Insurer
will reduce i of Lia
If the Limit of Lia exhausted by the payment of Loss, the premium will be fully earned, all obligations of the Insurer under
this Policy will be completely fulfilled and exhausted, and the Insurer will have no further obligations of any kind or nature
whatsoever under this Policy.
11. Acquisition or Creation of Another Plan
If during the Policy Period the Insured acquires or creates an Insured Plan or otherwise becomes a Fiduciary of or responsible
for the Administration of an Insured Plan, no coverage shall be afforded to said Insured Plan or its Insureds unless the Insurer,
by specific endorsement, agrees to afford such coverage. Any such coverage shall be at the terms and conditions and for the
premium set forth in such endorsement.
LMT 101 (03/04) Page 5 of 8
SPECIMEN
12. Change of Control
If an Insured Plan merges into or consolidates with another plan or trust not enumerated in Item 6. of the Declarations, coverage
under this Policy for such Insured Plan or the Insureds thereof who were Insureds prior to such merger or consolidation shall
continue until termination of this Policy but only with respect to Claims for Wrongful Acts committed, attempted, or allegedly
committed or attempted prior to such merger or consolidation.
If the responsibilities for the Administration of, or the fiduciary responsibilities with respect to, an Insured Plan are fully
assumed by one or more other persons or entities, coverage under this Policy for such Insured Plan and the Insureds thereof who
were Insureds prior to such assumption of responsibilities shall continue until termination of this Policy but only with respect to
Claims for Wrongful Acts committed, attempted, or allegedly committed or attempted rior to such assumption of
responsibilities.
13. Termination of Insured Plan
If the Insured(s) terminate any Insured Plan before or after the inception date of Poll nod, co a under this Policy
with respect to such terminated Insured Plan shall continue until termination of Policy f se who were Insureds at the
time of such Insured Plan termination, or who would have been Insureds at a of s to n if this Policy had been in
effect, with respect to Wrongful Acts occurring prior to or after the date of Ins Plan to oration. The Insureds shall
give written notice to the Insurer of such Insured Plan termination as so is able to r with such information as the
Insurer may require.
14. Marital Estate
Subject otherwise to the terms hereof, this Policy shall ver m any Claim made against the lawful spouse
(whether such stature is derived by reason of statutory la mm w o other applicable law of any jurisdiction in the
world) of an Insured Person for Claims arising sole
ut o or h acity as the spouse of an Insured Person, including
such Claims that seek damages recoverable from mm rope , property jointly held by the Insured Person and the
spouse; or property transferred from the Insur rson to the s o ovided, however, this extension shall not afford coverage
for Wrongful Acts of the spouse. All terms, c itions and o provisions of this Policy, inclusive of any provision relative to
the applicable retention, which would be Iica to Loss inc by the Insured Person in such Claim shall also apply to Loss
incurred by the spouse in such Claim.
15. Discovery Period
If.
a) the Insurance R sentati ancels olicy,
b) either the I r th rance Representative refuses or declines to renew this Policy for any reason, or
c) a Trans ion de s ction 12. occurs, and
within thirty ( ys aft a end of the Policy Period the Insurance Representative elects to purchase the Discovery Period by
paying the additio m set forth in Item 7. (a) of the Declarations for this Policy, then the coverage otherwise afforded by
this Policy will be ed for the period set forth in Item 7. (b) of the Declarations for this Policy but only for Wrongful Acts
occurring before the end of the Policy Period or the date of any Transaction under subsection 12., whichever is earlier. The Limit
of Liability for the Discovery Period (if purchased) shall be part of, and not in addition to, the Limit of Liability for the Policy
Period.
As a condition precedent to the right to exercise the Discovery Period, the total premium for this Policy must have been paid in
full.
If the Discovery Period is purchased, the entire premium for the Discovery Period shall be deemed fully earned at its
commencement.
Subject to all the terms and conditions of this subsection 15., the Insurer shall, upon request, provide the Insurance
Representative with a quotation for a three (3) year Discovery Period.
LMT 101 (03/04) Page 6 of 8
SPECIMEN
16. Representations; Severability
The Insureds represent the particulars and statements contained in the Application are true, accurate and complete, and agree that
this Policy is issued in reliance on the truth of those representations, and agree that such particulars and statements, which are
deemed to be incorporated into and to constitute a part of this Policy, are the basis of this Policy. In the event any of the particulars
or statements in the Application are untrue, this Policy will be void with respect to any Insured who knew the facts that were not
truthfully disclosed or to whom such knowledge is imputed, whether or not such Insured knew the Application contained the
untruthful disclosure. No knowledge or information possessed by any Insured Person will be imputed to any other Insured
Person except for material facts or information known to the person or persons who signed the Application.
17. Action Against the Insurer
No action shall lie against the Insurer unless, as a condition precedent thereto, there shall have been ompliance with all of the
terms of this Policy, nor until the amount of the Insureds' obligation to pay shall have been finally det ed either by judgment
against the Insureds after actual trial or by written agreement of the Insureds, the claim
No person or organization shall have any right under this Policy to join the Insurer party t action against the Insureds to
determine the Insureds' liability, nor shall the Insurer be impleaded by the Ins s or leg resentatives. Bankruptcy or
insolvency of the Insureds or of the estate of an Insured shall not relieve the er of f its ob . ons hereunder.
Only if requested by the Insureds, the Insurer shall submit any dispute, c ers Iaim e s out of or relating to this Policy
or the breach, termination or invalidity thereof to final and binding arbitra u and procedures as the parties
may agree. If the parties cannot so agree the arbitration shall be adm t by American Arbitration Association in
accordance with its then prevailing commercial arbitration rule itrati p hall consist of one arbitrator selected by the
Insureds, one arbitrator selected by the Insurer, and a third ind itr r se ted by the first two arbitrators. In any such
arbitration, each party will bear its own legal fees and expe
18. Cancellation and Nonrenewal
This Policy shall terminate at the earliest of the f owing times-
a) the effective date of termination spe d i rior writte otice by the Insurance Representative to the Insurer, provided
this Policy may not be terminated a Insu a ntative if the Policy Period is more than eighteen (18) months,
b) ten (10) days after the receip e I nce Representative of a written notice of termination from the Insurer based upon
failure to pay premium due unl premiu received by the Insurer prior to such tenth (10th) date,
c) at such other time y be ed u e Insurer and the Insurance Representative, or
d) upon expiration of I' eriod as set forth in Item 2. of the Declarations of this Policy.
The Insurer re d the ed premium computed at customary short rates if this Policy is terminated by the Insurance
Represent e. U o ircumstances the refund shall be computed pro rata. Payment or tender of any unearned
premium by r sh of be a condition precedent to the effectiveness of such termination, but such payment shall be made
as soon as pra able. If olicy Period is more than eighteen (18) months, the premium charged for this Policy shall be fully
earned at inceptio icy Period.
The Insurer shall not be required to renew this Policy upon its expiration.
19. Other Insurance
If any Loss is insured under any other valid policy(ies), prior or current, then this Policy shall cover such Loss, subject to its
limitations, conditions, provisions and other terms, only to the extent that the amount of such Loss is in excess of the amount of
payment from such other insurance whether such other insurance is stated to be primary, contributory, excess, contingent or
otherwise, unless such other insurance is written only as specific excess insurance over the Limits of Liability provided in this
Policy. This Policy will not be subject to the terms of any other insurance.
20. Assignment
This Policy and any and all rights hereunder are not assignable without the written consent of the Insurer.
LMT 101 (03/04) Page 7 of 8
SPECIMEN
21. Investigation and Settlement
The Insurer may make any investigation it deems necessary and may, with the written consent of the Insureds, make any
settlement of a Claim the Insurer deems expedient. If the Insureds withhold consent to such settlement, the Insurer's liability for
all Loss on account of such Claim shall not exceed the amount for which the Insurer could have settled such Claim plus Defense
Expenses accrued as of the date such settlement was proposed in writing by the Insurer to the Insured.
22. Subrogation and Waiver of Recourse
In the event of any payment under this Policy, the Insurer shall be subrogated to the extent of such payment to all the Insureds'
rights of recovery, including without limitation rights of recovery against other Insureds if this Policy is purchased by the Insured
Plan(s), The Insurer shall have no such rights of recovery against any Insured if this Policy is pur, ed by an Insured other than
the Insured Plan(s). The Insured shall execute and deliver all instruments and papers and do wha else is necessary to secure
and preserve such rights, including the execution of such documents necessary to enable the Insurer a vely to bring suit in the
name of the Insured.
23. Changes
The terms and conditions of this Policy shall not be waived or changed, except ndors t issu form a part of this Policy.
24. Headings
The descriptions in the headings of this Policy are solely for conveni fo
coverage. art of the terms and conditions of
25. Entire Agreement
The Insureds agree this Policy, including the Appii ' n e ements, constitutes the entire agreement between the
Insureds and the Insurer or any of its agents re this ' cc. is Policy is signed for the Insurer by its authorized
officers. It is countersigned on the Declarations, re required by y a duly authorized agent of the Insurer.
26. Worldwide Territory
Coverage under this Policy shall ext ywh a in
27. Valuation and Foreign Currency
All premiums, limits, rete cti os other amounts under this Policy are expressed and payable in the currency of
the United States of a. Exc as o provided, if judgment is rendered, settlement is denominated or another element
of loss under this Po h slat a curren y other than United States of America dollars, payment under this Policy shall be
made in United States the rate of exchange published in The Wall Street Journal on the date the final is
reached, the the s en t is agreed upon r the other element of loss is due, respectively. J gment is
28. Authoriza
It is agreed that the Insur Representative shall act on behalf of all Insureds with respect to the giving and receiving of notice
of Claim or Los tion or termination, the payment of premiums and the receiving of any return premiums that may
become due under olicy, the negotiation, agreement to and acceptance of any endorsements issued to
Policy, and the exercising or declining to exercise any right to a Discovery Period. forth a part t this
In witness whereof, the Insurer issuing this Policy has caused this Policy to be signed by its authorized officers, but it shall not be valid
unless also signed by a duly authorized representative of the Company.
Corporate Secretary Pre ' ent & COO
LMT 101 (03/04)
SPECIMEN Page 8 of 8
Page 1 of 1
Dixie Martinez
From: Sandie Kyser [sandie @umi91.com]
Sent: Friday, February 22, 2013 8:53 AM
To: Dixie Martinez
Subject: City of Boynton Beach General Employees Pension Plan - Fiduciary Liability Insurance Quote
from Alterra America Insurance
Attachments: Alterra Quote.pdf; Alterra - Specimen Policy Form.pdf
Dixie:
Attached you will find a Fiduciary Liability Insurance Quote with Specimen Endorsements and a Specimen Policy
Form for the above referenced Plan, from Alterra America Insurance Company (A Rated by AM Best) through
Ullico Insurance Group. Alterra's total annual premium is $8,474.73 ($8,204.00 Base Premium + $270.73 FL
Surcharges). Under the Alterra Policy Form; in the event of a claim, Trustees have the option of choosing their
own counsel.
Sincerely,
Sandie Kyser, Account Executive
United Members Insurance
Phone: 813 - 265 -2300, ext. 8
Fax: 813- 265 -2323
Email: sandie umi9
2/22/2013
ULLICO ORGANIZED LABOR PROTECTION GROUP, LLC
a voluntary membership organization operating pursuant to the Liability Risk Retention Act of 1986 and whose
principal office is: 1625 Eye Street, NW, Washington, DC 20006
GOVERNMENTAL FIDUCIARY LIABILITY INSURANCE PREMIUM QUOTATION
DATE ISSUED: 02/20/2013 UNDERWRITER: Ann Hughes
QUOTATION NO: QT0000013273 RENEWAL: N
ISSUED BY: Alterra America Insurance Company
INSURANCE REPRESENTATIVE: Ullico Casualty Group, Inc.
1625 Eye St., NW
Washington, DC 20006
PRODUCER: United Members Insurance, Inc.
ADDRESS: 6826 Linebaugh Avenue
Tampa, FL 33625
TRUST(S) OR PLAN(S): City Of Boynton Beach General Employees Pension Plan
ADDRESS: 4360 Northkike Blvd
Palm Beach Gardens, FL 33410 -6264
POLICY PERIOD: 04/10/2013 to 04/10/2014
PRIOR & PENDING
LITIGATION DATE: 04/10/2009
LIMITS OF LIABILITY: (a) $2,000,000 Aggregate Limit of Liability for all Loss
(b) $1,500,000 HIPAA & PPACA Fines and Penalties Sub - Limit:
Aggregate Limit of Liability for all Loss in the form
of civil fines and penalties imposed pursuant to HIPAA
& PPACA (included within and not in addition to the
maximum Aggregate Limit of Liability set forth in
Item 04(a) of the Policy Certitcate.
(c) $200,000 Voluntary Compliance Program Expenditure
Sub - Limit: Aggregate Limit of Liability for all
Voluntary Compliance Program Expenditures
(included within and not in addition to the maximum
Aggregate Limit of Liability set forth in Item 04(a) of
the Policy Certificate.
SELF - INSURED RETENTION: $0 each Claim
GOV- 1000 -Q (10/2012) page 1 oft
COVERAGE: Alterra America Insurance Company
Governmental Fiduciary Liability Insurance Claims -Made Policy Form GOV -1000 (10/2012),
Claims Expenses Inclusive
PREMIUM: (a) $8,204.00 Basic Premium
(b) $270.73 Tax/Other
(c) $8,474.73 Total
CONDITIONS /COVERAGE SUBJECT TO:
Nothing else required
THE FOLLOWING ENDORSEMENTS WILL ATTACH TO THE POLICY:
END NO. /REF NO. ENDORSEMENT
1. GOV -FL (05/12) Florida Amendatory Endorsement
2. GOV -033 (05/12) Acceptance of Substitute Carrier Application Endorsement
This quotation is valid for a period of thirty (30) days from the Issue Date shown above unless amended or withdrawn
by Alterra America Insurance Company (Insurer), with or without cause, prior to its acceptance and binding, and
is subject to the terms and conditions of the policy (ies) to be issued. If the information supplied by the Trust or Plan
in the application changes between the date of the application for this insurance and the Effective Date of the
insurance or the time when the policy is bound (whichever is later), the Trust or Plan must immediately notify
Insurer in writing of such changes and the Insurer may withdraw or amend any outstanding quotations based upon
such changes.
Ullico Organized Labor Protection Group, LLC is administered by Ullico Casualty Group, Inc., a/kla Ullico
Insurance Agency, Inc. in CA, and Ullico Casualty Agency in Y. CA License #0X86030 and FL (Craig Arneson)
License #A008437,
GOV- 1000 -Q (10/2012) Page 2 of
Alterra America Insurance Company
9020 Stony Point Parkway, Suite 325
Richmond, VA 23235
GOV -FL
Issue Date:
Policy Number:
Trust or Plan:
Endorsement Number:
Endorsement Effective Date: (12:01 a.m. Local Time)
Florida Amendatory Endorsement
It is agreed that the above - numbered policy is amended as follows:
1. Section V Exclusions, Part A is amended by adding the following new exclusion:
- Based, upon, arising from, or in consequence of the manufacturing, handling, selling, distribution, disposal,
existence, use of, or exposure to asbestos dust, asbestos fibers, or asbestos products or materials.
2. Section VI Conditions, Item I (Cancellation) and J (Non - Renewal) are amended by adding the following
wording and supersedes any provision to the contrary:
Cancellation of Policies in Effect for Ninety (90) Days or Less
If this policy has been in effect for ninety (90) days or less, the Insurer may cancel it by mailing or delivering
to the Insured shown in Item 02 of the Policy Certificate, written notice of cancellation, accompanied by the
reasons for cancellation, at least:
1. Ten (10) days before the Effective Date of cancellation if the Insurer cancels for non - payment of
premium; or
2. Twenty (20) days prior to the Effective Date of cancellation if the Insurer cancels for any other reason,
except the Insurer may cancel immediately if there has been:
a. A material misrepresentation; or
b. A failure to comply with underwriting requirements established by the Insurer.
Cancellation of Policies in Effect for More Than Ninety (90) Days
If this policy has been in effect for more than ninety (90) days, the Insurer may only cancel it for one or more
of the following reasons:
a. Non - payment of premium;
b. The policy was obtained by a material misstatement;
c. There has been a failure to comply with underwriting requirements within ninety (90) days of
the effective date of coverage;
d. There has been a substantial change in the risk covered by the policy;
e. The cancellation is for all Insureds under such policies for a given class of Insureds.
If the Insurer cancels this policy for any of the above reasons, it will mail or deliver to the Insured shown in Item
02 of the Policy Certificate written notice of cancellation, accompanied by the reasons for cancellation, at least:
1. Ten (10) days before the Effective Date of cancellation if the cancellation is for non - payment of
premium; or
2. Forty-five (45) days before the Effective Date of cancellation if the cancellation is for any other reason
stated above, except non - payment of premium.
Page 1 of 2
GOV -FL (012013)
Non- Renewal of Policy
1. If the Insurer elects not to renew this policy, it shall mail or deliver to the Insured shown in Item 02
of the Policy Certificate written notice of non - renewal, accompanied with the reasons for non -
renewal, at least forty-five (45) days prior to the expiration of this policy.
2. Any notice of non - renewal will be mailed or delivered to the last known address of the Insured shown
in Item 02 of the Policy Certificate. If notice is mailed, proof of mailing will be sufficient proof of
notice.
3. Section II Definition S (Pollutants) is deleted in its entirety and replaced with the following definition:
S. Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot,
fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed.
Nothing contained herein shall vary, alter or extend the terms, conditions and limitations of the policy except as stated
above.
This Endorsement is part of the above numbered policy and is effective as of the Endorsement Effective Date
shown above.
ALTERRA AMERICA INSURANCE COMPANY
1 140
Authorized Representative
Page 2 of 2
GOV -FL (01/2013)
Alterra America Insurance Company
9020 Stony Point Parkway, Suite 325
Richmond, VA 23235
GOV -033
Issue Date:
Policy Number:
Trust or Plan:
Endorsement Number:
Endorsement Effective Date: (12:01 a.m. Local Time)
Acceptance of Substitute Carrier Application
It is agreed that with respect to Section VI, Conditions, K Representations and Severability, of the above numbered
policy, the statements made in [substitute application] ([dated
1) for the Policy Period f 1 to [_
I , together with all attachments to the application and any other material submitted to the Insurer shall be the
representations of the Insured.
Nothing contained herein shall vary, alter or extend the terms, conditions and limitations of the policy except as stated
above.
This Endorsement is part of the above numbered policy and is effective as of the Endorsement Effective Date
shown above.
ALTERRA AMERICA INSURANCE COMPANY
Authorized Representative
Page 1 of 1
GOV -033 (10/2012)
ULLICO ORGANIZED LABOR PROTECTION GROUP, LLC
a voluntary membership organization operating pursuant to the Liability Risk Retention Act of 1986 and whose
principal office is: 1625 Eye Street NW, Washington, DC 20006
GOVERNMENTAL FIDUCIARY LIABILITY INSURANCE POLICY CERTIFICATE
This is a Claims -made and reported policy with Claims Expenses included in the Limits of Liability.
Please read the entire policy carefully.
This Policy Certificate is issued under Master Number GLS- 2300000 -000 issued to
Ullico Organized Labor Protection Group
POLICY CERTIFICATE NO. RENEWAL: Y/N
ISSUED BY: Alterra America Insurance Company
9020 Stony Point Parkway, Suite 325
Richmond, VA 23235
INSURANCE REPRESENTATIVE: Ullico Casualty Group, Inc.
1625 Eye St., NW
Washington, DC 20006
ITEM 01. PRODUCER: <Producer Name>
ADDRESS: < Street Address>
< Street Address>
<City, State Zip Code>
ITEM 02. PLAN (OR PLANS): <Declarations Named Insured(s)>
ADDRESS: < Street Address>
< Street Address>
<City, State Zip Code>
ITEM 03. POLICY PERIOD: Effective Date: xx/xx/xxxx 12:01 a.m. local time at the address in Item 02.
Expiration Date: xx/xx/xxxx 12:01 a.m. local time at the address in Item 02.
ITEM 04. LIMITS OF LIABILITY:
(a) $x,xxx,xx Aggregate Limit of Liability
Aggregate Limit of Liability for all Loss
(b) $x,xxx,xxx HIPAA & PPACA Fines and Penalties Sub - Limit:
Aggregate Limit of Liability for all Loss in the form of civil fines and penalties
imposed pursuant to HIPAA & PPACA (included within and not in addition to the
maximum Aggregate Limit of Liability set forth in Item 04(a) above)
(c) $xxx,xxx Voluntary Compliance Program Expenditure Sub - Limit:
Aggregate Limit of Liability for all Voluntary Compliance Program
Expenditures (included within and not in addition to the maximum aggregate limit
of liability set forth in Item 04(a) above)
ITEM 05. SELF - INSURED RETENTION: $ xx,xxx each Claim
Page I of 2
cov- I 000 -PC (10/2012)
Trust or Plan:
Policy Certificate No.:
ITEM 06. PRIOR & PENDING LITIGATION DATE: xx/xx/xxxx
ITEM 07. PREMIUM:
(a) $xx,xxx Basic Premium
(b) $xx,xxx Tax/Other
(c) $xx,xxx Total
ITEM 08. ENDORSEMENTS: See Endorsement Schedule
The following schedule lists all Endorsements, which form a part of the policy. It is only for reference and provides
no coverage. The actual endorsement should be reviewed to determine its effect on the coverage.
END NO./REF NO. ENDORSEMENT
The above numbered policy includes only: (1) The Policy Certificate together with the policy GOV -1000 10/2012);
(2) the Endorsements indicated in Item 08 above; (3) the completed and signed application(s) with any submitted
attachment(s).
ALTERRA AMERICA INSURANCE COMPANY
Date: — 0
Authorized Representative
Ullico Organized Labor Protection Group, LLC is administered by Ullico Casualty Group, Inc., a/k/a U111co
Insurance Agency, Inc. in CA, and Ullico Casualty Agency in NY. CA License #OH86030 and FL (Craig Arneson)
License #A008437.
Page 2 of 2
GOV- 1000•PC (05/2012)
Alterra America Insurance Company
9020 Stony Point Parkway, Suite 325
Richmond, VA 23235
Governmental Fiduciary Liability Insurance Policy
In consideration of the payment of the premium and subject to the limits of liability and the Policy Certificate,
conditions, limitations, provisions and other terms of this policy, Alterra America Insurance Company (the
"Insurer ") and the Insureds agree as follows:
I. Insuring Agreement
A. The Insurer shall pay on behalf of the Insured all Loss for which the Insured becomes legally obligated to
pay resulting from any Claim first made against the Insured during the Policy Period, the Automatic
Reporting Period or the Extended Reporting Period (whichever is applicable) which results from a
Wrongful Act.
B. The Insurer will pay on behalf of the Insureds those Voluntary Compliance Program Expenditures
incurred by the Insureds as a result of their participation in any Voluntary Compliance Program if such
participation commences during the Policy Period or, if applicable, the Automatic Reporting Period or the
Extended Reporting Period (whichever is applicable).
11. Definitions
The following terms, when set forth in this policy in boldface type, will have the meanings set forth below:
A. Administration means giving advice to participants and beneficiaries with respect to a Plan,
interpreting a Plan, and handling the records or effecting enrollment, termination or cancellation
of participants under a Plan.
B. Automatic Reporting Period means a sixty (60) day period beginning with the non - renewal or
cancellation date of this policy.
C. Bodily Injury means any actual or alleged physical injury, sickness, disease, disability, pain and
suffering, mental anguish, emotional distress, Loss of consortium, or death of any person, or for
damage to or destruction of any tangible property including Loss of use or diminution in value
thereof.
D. Claim means a:
1. Written demand for monetary damages or injunctive relief,
2. Civil proceeding commenced by the service of a complaint or similar pleading,
3. Criminal proceeding commenced by the return of an indictment, or
4. Formal administrative or regulatory proceeding commenced by the filing of a notice of
charges, formal investigative order or similar document;
against an Insured for a Wrongful Act committed or attempted, or allegedly committed or
attempted, by such Insured or by any person for whose Wrongful Acts such Insured is or is
alleged to be legally responsible. Claim does not mean or include any internal proceedings of the
Insured.
Page 1 of 13
GOV -1000 (10/2012)
E. Claim Expenses means reasonable and necessary costs, charges, fees (including but not limited to
attorneys' and experts' fees) and expenses incurred by or on behalf of the Insureds in the
investigation, adjustment, defense or appeal of a Claim, including the premium for an appeal,
attachment or similar bond pertaining to an appeal. Claim Expenses will not include any regular
or overtime wages, salaries, fees or benefits of, or overhead expenses associated with or
attributable to any Insured, or any director, officer, Trustee or employee of any Insured.
F. Employee Benefit Law means any applicable statute, including any rules or regulations
promulgated there under, and any pursuant amendments to the foregoing, of the United States of
America or any state, territory or other political subdivision thereof setting forth the obligations,
responsibilities or duties imposed upon fiduciaries of Plans and to which the Plan is subject,
including but not limited to the:
1. Consolidated Omnibus Budget and Reconciliation Act (COBRA) of 1985,
2. Federal Employees' Retirement System Act (FERS) of 1986,
3. Health Insurance Portability and Accountability Act (HIPAA) of 1996,
4. Newborns' and Mothers' Health Protection Act of 1996,
5. Women's Health and Cancer Rights Act (WHCRA) of 1998,
6. Patient Protection and Affordable Care Act (PPACA)
G. Effective Date means the day this coverage begins at 12.01 a.m. Local Time in this Policy
Period. This date is shown in Item 03 of the Policy Certificate.
H. Endorsement means a document that modifies the coverage provisions set forth in the policy. If
the terms of any Endorsement are inconsistent with the terms of this policy, the terms of the
Endorsement supersede the policy.
1. Environmental Agents means any:
1. Bacteria
2. Mildew, mold, or other fungi
3. Other micro - organisms
4. Mycotoxins, spores, or other by- products of 1, 2, or 3 above;
5. Viruses or other pathogens (whether or not a micro- organism); or
6. Colony or group of any of the foregoing.
J. Expiration Date means the day this coverage ends at 12:01 a.m. Local Time in this Policy
Period. This date is shown in Item 03 of the Policy Certificate.
IG Extended Reporting Period means the period of time indicated in the Extended Reporting
Period Endorsement. All dates are 12:01 a.m. Local Time.
L. Extended Reporting Period Endorsement is an Endorsement which provides coverage on
account of any Claim first made against the Insured, but only for Wrongful Acts occurring
wholly prior to the non - renewal or cancellation date of this policy, and which are subsequently
Page 2 of 13
GOV -1000 (1012012)
reported as soon as practicable but in no event more than thirty (30) days after the end of the
Extended Reporting Period shown on this Endorsement.
M. Insured or Insureds means any:
1. Plan,
2. Natural person serving or formerly serving as Trustee of a Plan,
3. Natural person serving or formerly serving as an employee of a Plan, and
4. Other entity or natural person designated as an additional Insured by written Endorsement to
this policy.
N. Loss means Claims Expenses and monetary damages, judgments (including pre- and post -
judgment interest, if any) or settlements which an Insured is legally obligated to pay as a result of
a Claim; provided, Loss will not include the multiple portion of any multiplied damage award or
any fines, taxes or penalties:
1. Other than civil fines and penalties imposed pursuant to the Health Insurance Portability
and Accountability Act of 1996 ( "HIPAA "), the Patient Protection and Affordable Care
Act CTPACA ") or any regular or overtime wages, salaries, fees or benefits of, or
overhead expenses associated with or attributable to, any Insured or any director, officer,
Trustee or employee thereof.
Loss will not, however, include any matter uninsurable under the law pursuant to which this
policy is construed.
O. Personal Injury means injury arising out of one or more of the following offenses:
1. False arrest, detention or imprisonment, or malicious prosecution;
2. Abuse of process;
3. The publication or utterance of libel or slander or of other defamatory or disparaging
material, or a publication or an utterance in violation of an individual's right to
privacy;
4. Wrongful entry or eviction, or other invasion of the right to private occupancy; or
5. Harassment, misconduct or discrimination of any nature arising out of any cause
whatsoever, including, but not limited to, age, race, creed, color, sex, national origin,
religion, disability, marital status or sexual orientation.
P. Plan means each Plan, system or Trust enumerated in Item 02 of the Policy Certificate of this
policy.
Q. Policy Certificate means the document that validates the coverage available under this policy.
The Policy Certificate shows the Trust or Plan, the certificate number, the Policy Period, the
limits of liability purchased the Self-Insured Retention amount, the premium and the Producer.
This policy is not in effect, unless a Policy Certificate signed by an authorized representative of
the Insurer has been issued.
R. Policy Period means the period of time between the Effective Date and Expiration Date shown
in Item 03 of the Policy Certificate. If the policy is canceled prior to the Expiration Date, the
Page 3 of 13
GOV -1000 (1012012)
Policy Period is the period of time between the Effective Date and the cancellation date of this
policy.
S. Pollutants means any substance located anywhere in the world exhibiting any hazardous
properties as defined by, or identified on a list of hazardous substances issued by, the United
States Environmental Protection Agency or any counterpart thereof in any state, county,
municipality or locality. Such substances will include, without limitation, solid, liquid, gaseous or
thermal irritants, contaminants, smoke, vapors, soot, fumes, acids, alkalis, chemicals and waste
materials, including substances which are intended to be or have been recycled, reconditioned or
reclaimed. Pollutants also means any other air emission, odor, waste water, oil or oil products,
infectious or medical waste, asbestos, asbestos products and noise.
T. Prior & Pending Litigation Date means the date and hours listed in Item 06 of the Policy
Certificate.
U. Producer means the person or organization authorized to represent the Insureds and designated
as such in Item 01 of the Policy Certificate of this policy.
V. Property Damage means physical injury to, or destruction of, tangible property, including Loss
of use thereof.
W. Related Wrongful Act means all Wrongful Acts which are based upon, directly or indirectly
arising or resulting from, in consequence of, or in any way related to the same or a series of
continuous or related facts, circumstances, situations, transactions or events.
X. Trust means those Trusts show in Item 02 of the Policy Certificate.
Y. Voluntary Compliance Program means any voluntary compliance resolution program or similar
voluntary settlement program administered by the U.S. Internal Revenue Service or any other state
or governmental regulatory authority.
Z. Voluntary Compliance Program Expenditure means:
1. Reasonable costs, charges and expenses of attorneys, accountants and/or other professionals
that are incurred solely in investigating and evaluating a Plan's actual or alleged
noncompliance with an statute, rule or regulation and effecting a resolution thereof pursuant
to a Voluntary Compliance Program; and
2. Any fees, fines, penalties or sanctions paid by an Insured to a governmental or regulatory
authority pursuant to a Voluntary Compliance Program as a result of a Plan's actual or
alleged inadvertent noncompliance with an statute, rule or regulation and, subject to the
Insurer's approval, costs to correct a Plan's actual or alleged inadvertent noncompliance
with any statute, rule or regulation that are incurred by the Plan in connection with its
participation in a Voluntary Compliance Program.
AA. Wrongful Act means any:
1. Breach of the responsibilities, obligations or duties imposed upon Insureds of a Plan by an
Employee Benefit Law,
2. Violation of HIPAA or PPACA Claimed against any Insured due solely to such Insured's
service as fiduciary of any Plan, and
3. Negligent act, error or omission by any Insured in the Administration of any Plan.
Page 4 of 13
GOV -1000 (10/2012)
11I. Defense and Settlement
A. If there exists any applicable statute, ordinance, regulation or agreement which provides for the
defense of any Claim to which this insurance applies at no specific additional cost to the Insureds
or to the Insurer, then the Insurer will not be obligated to assume the defense of the Insured, or
of the investigation, defense and/or settlement of any Claim, but the Insurer will have the right
and shall be given the opportunity to associate itself, at its own expense, in the investigation,
defense and /or settlement of any such Claim which, in the Insurer's opinion, may give rise to
liability on the part of the Insurer under this Policy.
B. In the absence of any statute, ordinance, regulation or agreement which provides for the defense of
any Claim as described in paragraph III.A:
1. The Insurer will have the right and duty to defend any Claim covered by this policy, even if
the allegations in such Claim are groundless, false or fraudulent. Upon the exhaustion of the
limit of liability applicable to any Claim, the Insurer's duty to defend such Claim will cease
and, upon the exhaustion of the Insurer's maximum aggregate limit of liability under this
policy as set forth in Item 04(a) of the Policy Certificate, the Insurer will thereafter have no
duty or obligation to defend or to continue to defend any Claim.
2. Subject to Section I1I.13.1 above, the Insureds will have the right to select defense counsel to
defend Claims against them, subject to the Insurer's approval, such approval not to be
unreasonably withheld, and subject to such selected counsel's compliance with applicable
Litigation Management Guidelines. The Insureds must, however, exercise this right in
writing within thirty (30) days after first giving the Insurer notice of the Claim with respect
to which such counsel is to be retained. If the Insureds do not inform the Insurer in writing
of their intent to retain their own defense counsel within thirty (30) days after providing notice
of a Claim, the Insurer will have the right to appoint defense counsel to represent the
Insureds in connection with such Claim and to conduct the defense thereof.
C. Claim Expenses incurred by counsel retained by the Insureds pursuant to Section III.B.2 above,
or by the Insurer if the Insureds do not exercise their right to retain their own defense counsel,
are part of and not in addition to the applicable limit of liability as set forth in Item 04(a) of the
Policy Certificate, and the payment by the Insurer of such Claim Expenses will reduce, and may
exhaust, the applicable limit of liability under this policy.
D. The Insureds agree to provide the Insurer with all information, assistance and cooperation, which
the Insurer reasonably requests, and the Insureds further agree that, in the event of a Claim, they
will do nothing that may prejudice the Insurer's position or actual or potential rights of recovery.
At the Insurer's request, the Insureds will assist in the conduct of actions, suits or proceedings,
including but not limited to attending hearings, trials and depositions, securing and giving
evidence and obtaining the attendance of witnesses, and will assist in making settlements.
E. The Insureds agree not to settle any Claim, incur any Claim Expenses or otherwise assume any
contractual obligation or admit any liability with respect to any Claim without the Insurer's
written consent, which consent will not be unreasonably withheld. The Insurer will not be liable
for any settlement, Claim Expenses, assumed obligation or admission to which it has not
consented in writing.
F. The Insurer may, with the written consent of the Insured, propose or make any settlement offer
or compromise offer of a Claim we deem appropriate. The Insured shall not unreasonably
withhold consent to the Insurer's proposed offer or unreasonably delay considering or acting on
such offer. If the Insured withholds consent to the Insurer's proposed offer or compromise of
any Claim for any reason or otherwise unreasonably delays considering or acting on such
proposed offer or compromise, the Insurer's liability for all Loss with respect to that Claim shall
not exceed the amount of the offer which the Insurer proposed to settle or compromise any
Page 5 of 13
GOV -1000 (1012012)
Claim, plus Claims Expenses accrued as of the date the Insured refused to consent to the
proposed offer of settlement or compromise of such Claim, subject to the applicable Limits of
Liability stated in Item 04(a) of the Policy.
G. If both Loss covered by this policy and Loss not covered by this policy are incurred, either
because a Claim against an Insured includes both covered and uncovered matters or because a
Claim is made against both an Insured and others, the Insurer shall allocate such amount
between covered Loss and uncovered Loss based upon relative legal exposures of such parties to
such matters. Any amounts so reimbursed shall not apply to or create any presumption of a fair
and proper allocation of other amounts between covered Loss and non - covered amounts.
IV. Extensions of Coverage
A. Spouses, Estates and Legal Representatives
Subject to the limits of liability and the Policy Certificate, conditions, limitations, provisions and
other terms of this policy, the coverage provided by this policy will extend to Claims made
against:
1. The estate, heirs, legal representatives or assigns of any natural person Insured if such natural
person Insured is deceased, or the legal representatives or assigns of any natural person
Insured if such natural person Insured is incompetent, insolvent or bankrupt; and
2. The lawful spouse or domestic partner of a natural person insured solely by reason of such
spouse or domestic partner's status as such or such spouse or domestic partner's ownership
interest in property, which the Claimant seeks as recovery for liability of such natural person,
insured.
All conditions, limitations, provisions and other terms of this policy applicable to Claims against
and Loss incurred by natural person Insureds will also be applicable to Claims against and Loss
incurred by their estate, heirs, legal representatives, assigns, spouse and domestic partner. No
coverage will be available under this Section IV.A, however, for any Loss, including costs,
charges or expenses of defense, arising from any act, error or omission committed or attempted, or
allegedly committed or attempted, by a natural person Insured's estate, heirs, legal
representatives, assigns, spouse or domestic partner.
B. Extended Reporting Period
1. If this policy is terminated or not renewed for any reason other than the non - payment of
premium, the Insureds will have the right to purchase an extension of the coverage granted
by an Extended Reporting Period Endorsement. The Extended Reporting Period, if
purchased, will apply only to Claims first made during the Extended Reporting Period, and
only if such Claims are for otherwise covered Wrongful Acts committed or attempted, or
allegedly committed or attempted, before the Effective Date of such termination or non -
renewal.
2. The additional premium for the Extended Reporting Period will be that amount set forth in
the Extended Reporting Period Endorsement. This additional premium must be paid within
thirty (30) days after the Effective Date of the termination or non- renewal of the policy, and
will be deemed to have been fully earned immediately as of the inception of the Extended
Reporting Period.
3. The Insurer's Limits of Liability for Loss from Claims first made or deemed made during
the Extended Reporting Period will be part of, and not in addition to, the limits of liability
stated in Item 04(a) of the Policy Certificate, which are applicable to all Loss for which this
policy provides coverage.
Page 6 of 13
GOV -1000 (10/2012)
4. The Insurer reserves the right to approve a request for a longer Extended Reporting Period
not to exceed seventy -two (72) months, for such additional premium as the Insurer may
require.
V. Exclusions
A. The Insurer will not be liable for any Loss on account of any Claim against any Insured:
1. Based upon, arising from or in consequence of any deliberately fraudulent or criminal act or
omission or any willful violation of any statute, rule or law by such Insured, if a judgment or
any other final adjudication adverse to the Insured establishes such a deliberately fraudulent
act or omission of willful violation;
2. Any deliberately dishonest, fraudulent or criminal acts or omissions or any willful violation of
any statute or regulation by the Insured; provided, however, that this exclusion shall not
apply to such Claim, or to the Insurer's obligation to pay, Claims Expenses regarding such
Claim, until an admission of liability, final judgment or other final adjudication adverse to the
Insured shall establish such acts, omissions and/or violations;
3. Any actual or alleged Bodily Injury, Property Damage or Personal Injury;
4. Based upon, arising from, or in consequence of discrimination in violation of any law or
statute other than an Employee Benefit Law;
5. The actual or alleged or threatened discharge, release, seepage, escape or disposal of any
hazardous or toxic waste, Pollutants, Environmental Agents, emissions or substances,
including but not limited to pollution or contamination of any kind, and including but not
limited to any directions, requests or orders that an Insured report, test for, monitor, clean up,
remove, recycle, contain, treat, detoxify or neutralize any hazardous or toxic waste, emissions
or substances, or the payment of any carbon offsets, or any voluntary decision to do so; or
6. Based upon, arising from, or in consequence of any actual or alleged failure by any Insured
to comply with any law concerning workers' compensation, unemployment insurance, Social
Security or disability benefits, any amendments thereto, any similar provisions of any federal,
state or local statutory or common law anywhere in the world or any rules or regulations
promulgated under any of the foregoing, whether or not such failure to comply is willful;
provided, that this exclusion will not apply to any actual or alleged failure by any Insured to
comply with any Employee Benefit Law;
7. Based upon, arising from or in consequence of any act, error or omission by an Insured in
his, her or its capacity as fiduciary or administrator of any Plan, fund or program other than
the Plan, or by reason of his, her or its capacity as fiduciary or administrator of any such other
Plan, fund or program;
8. Based upon, arising from or in consequence of any liability of others assumed by any Insured
under any contract or agreement, whether oral or written, other than an agreement or
declaration of Trust or similar agreement creating or establishing a Plan; provided, that this
exclusion will not apply to the extent that an Insured would have been liable in the absence
of such contract or agreement; or
9. Based upon, arising from or in consequence of:
a. Any act, error, omission, fact, circumstance, situation, transaction, event, decision or
Wrongful Act if written notice thereof has been given under any policy of which this
policy is a renewal or replacement if such prior policy affords coverage or, but for the
Page 7 of 13
GOV- 1000 (10/2012)
exhaustion of its limit or Limits of Liability, would have afforded coverage for such
Loss, in whole or in part, as a result of such notice;
b. Any demand, suit or other proceeding, or order, decree or judgment rendered, against
any Insured on or prior to the Prior & Pending Litigation Date set forth in Item 06 of
the Policy Certificate of this policy, or the same or substantially similar facts,
circumstances or situations underlying or alleged in any such demand, suit, proceeding,
order, judgment or decree.
B. The Insurer will not be liable for any Loss, other than Claim Expenses on account of any Claim
against any Insured:
1. For failure to fund a Plan in accordance with any applicable Employee Benefit Law or the
Plan instrument, or for failure to collect contributions owed to a Plan; provided, that this
exclusion will not apply to that portion of Loss payable solely as the personal obligation of
such natural person Insured
2. Which constitute the return to any employer, public entities or governmental authorities of
any contributions if such amounts are or could be chargeable to a Plan, or
3. Which constitute benefits due or to become due under the terms of any Plan or which would
be due under any Plan if such Plan were in compliance with all applicable law, except, and to
the extent that, recovery for such benefits is based on a Wrongful Act by a natural person
Insured and is payable solely as the personal obligation of such natural person Insured. This
exclusion will not apply to a monetary award in, or fund for settling, any Claim against any
Insured to the extent that such Claim alleges a Loss to a Plan and/or Loss in the actual
accounts of participants in a Plan, alleging a breach of fiduciary duty resulting in the decrease
in the value of investments held by such Plan, regardless of whether the amounts sought in
such Claim are or have been characterized by plaintiffs as, or are held by a court to be,
benefits;
Provided, that this Section V.B will not limit the Insurer's right and duty to defend any such
Claim or the Insurer's obligation to pay Claim Expenses in connection therewith.
C. No Wrongful Act of any Insured will be imputed to any other Insured to determine the
application of any of the above exclusions.
VI. Conditions
A. Limits of Liability and Retention
1. Regardless of the number of Claims, the number of persons or entities included within the
definition of Insured, the number of Insureds included in a particular Claim or the number
of Claimants who may make Claims against the Insureds, the amount stated in Item 04(a) of
the Policy Certificate will be the Insurer's maximum aggregate limit of liability under this
policy for all Loss for which this policy provides coverage, and the retention stated in Item 05
of the Policy Certificate will apply separately to each Claim.
2. Claim Expenses are part of and not in addition to the limit of liability set forth in Item 04(a)
of the Policy Certificate, and payment of Claim Expenses by the Insurer will reduce, and
may exhaust, that Limit of Liability.
3. The Insurer will have no obligation to pay Loss, including Claim Expenses, or to defend or
continue to defend any Claim, after the Limit of Liability set forth in Item 04(a) of the
Policy Certificate has been exhausted.
Page 8 of 13
GOV -1000 (1012012)
4. The amount set forth in Item 04(b) of the Policy Certificate will be the Insurer's maximum
Limit of Liability under this policy for Loss in the form of civil fines and penalties imposed
pursuant to HIPAA or PPACA, and such amount will be part of and not in addition to the
Insurer's maximum aggregate Limit of Liability for all Loss under this policy as stated in
Item 04(a) of the Policy Certificate.
5. The amount set forth in Item 04(c) of the Policy Certificate will be the Insurer's maximum
limit of liability under I.B Insuring Agreement for all Voluntary Compliance Program
Expenditures incurred in connection with the Insureds' participation in Voluntary
Compliance Programs, and such amount will be part of and not in addition to the Insurer's
maximum Aggregate Limit of Liability for all Loss under this policy as stated in Item 04(a)
of the Policy Certificate.
6. The obligations of the Insurer to pay Loss, including Claim Expenses, will only be in excess
of any applicable retention as stated in Item 05 of the Policy Certificate, which amount will
be borne by the Insureds at their own expense. The Insurer will have no obligation
whatsoever, either to the Insureds or to any other person or entity, to pay all or any portion of
any applicable retention amount on behalf of any Insured, although the Insurer will, at its
sole discretion, have the right and option to do so, in which event the Insureds agree to repay
the Insurer any amounts so paid.
B. Insured's duties in the event of a Claim, reporting requirements and notice provisions
1. If during the Policy Period, the Automatic Reporting Period or if exercised, the Extended
Reporting Period an Insured becomes aware of circumstances that could give rise to a
Claim and gives the Insurer written notice of such circumstances, then any Claims
subsequently arising from such circumstances will be considered to have been made during
the Policy Period, the Automatic Reporting Period or if exercised, the Extended
Reporting Period in which such circumstances were first reported to the Insurer.
2. As conditions precedent to exercising their rights under this policy the Insureds must:
a. Give the Insurer written notice as soon as practicable of any Claim made against them,
b. Inform the Insurer in such notice whether there exists any applicable statute or
agreement which provides for the defense of such Claim at no specific additional cost to
the Insureds or to the Insurer, and
c. Give the Insurer such information and cooperation as the Insurer may reasonably
require, including but not limited to a description of any Claim or circumstances that
could give rise to a Claim, the nature of any Wrongful Acts actually or allegedly
committed or attempted, the nature of the alleged or potential damage, the identities of
actual or potential Claimants, and the manner in which the Insureds first became aware
of any such Claim or circumstances that could give rise to a Claim.
C. Automatic Reporting Period
If this Policy is non - renewed by either the Insured or the Insurer, or is canceled by the Insured,
an Automatic Reporting Period will be afforded provided that all billed premiums have been
paid. The Automatic Reporting Period provided coverage on account of any Claim first made
against the Insured during the sixty (60) day period beginning with the non - renewal or
cancellation of this policy, but only for Wrongful Acts occurring wholly prior to such non -
renewal or cancellation date, and which are subsequently reported as soon as practicable but in no
event after the end of the automatic reporting period. Any Claim made during the automatic
reporting period shall be deemed to have been made during the immediately preceding Policy
Page 9 of 13
cov -i000 (10/2012)
Period. Therefore, the Automatic Reporting Period shall not provide a new, additional or
renewed Limit of Liability beyond that stated in Item 04(a) of the Policy Certificate.
The Automatic Reporting Period may not be canceled. The Automatic Reporting Period,
however, shall not apply to any Claim if other insurance the Insured obtains covers the Claim or
would cover the Claim if its Limits of Liability had not been exhausted.
D. Coverage Territory
The insurance afforded by this policy applies anywhere the world, provided the Claim is made
and brought in the United States of America, its territories or possessions.
E. Related Claims
All Related Claims will be deemed to be a single Claim, which will be deemed to have been first
made at the earlier of the following times:
1. When the earliest of such Related Claims was first made, or
2. At the earliest time at which notice was given under any policy of insurance of any act, error,
omission, fact, circumstance, situation, transaction, event, decision or Wrongful Act
underlying any such Related Claim.
F. Changes in Exposure
1. If, during the Policy Period, a Plan merges into or consolidates with another Trust or Plan
not enumerated in Item 02 of the Policy Certificate, or any entity, regulatory agency or
governmental agency, body or subdivision (or group of entities, regulatory agencies or
governmental agencies, bodies or subdivisions acting in concert) assumes administrative,
organization or supervisory control over any Plan, written notice thereof must be provided to
the Insurer as soon as practicable. Coverage under this policy will continue in full force and
effect with respect to Claims for Wrongful Acts committed or attempted, or allegedly
committed or attempted, before such event by such Plan, by any natural person Insureds with
respect to any Plan or by any person for whose Wrongful Acts any such Insured is legally
responsible. However, coverage under this policy will cease with respect to Claims for
Wrongful Acts committed or attempted, or allegedly committed or attempted, after such
event by any such Insured or by any person for whose Wrongful Acts any such Insured is
legally responsible.
2. If, during the Policy Period, the responsibility for the Administration of a Plan is fully
assumed by another person, entity or group of persons or entities, written notice thereof must
be provided to the Insurer as soon as practicable. Coverage under this policy will continue in
full force and effect with respect to Claims for Wrongful Acts committed or attempted, or
allegedly committed or attempted, before such event by any natural person Insureds with
respect to such Plan prior to such transfer of responsibilities or by any person for whose
Wrongful Acts any such insured is legally responsible. However, coverage under this policy
will cease with respect to Claims for Wrongful Acts committed or attempted, or allegedly
committed or attempted, after such event by any such natural person Insured or by any
person for whose Wrongful Acts any such Insured is legally responsible.
3. If any Plan is terminated, whether before or during the Policy Period, written notice thereof
must be provided to the Insurer as soon as practicable. Coverage under this policy will
continue to apply to Claims for Wrongful Acts committed or attempted, or allegedly
committed or attempted, before such event by such Plan, by any natural person Insureds with
respect to such Plan or by any person for whose Wrongful Acts any such Insured is legally
responsible. No coverage will be available under this policy, however, with respect to Claims
Page 10 of 13
GOV- 1000 (10!2012)
for Wrongful Acts committed or attempted, or allegedly committed or attempted, after such
event by any such Insured or by any person for whose Wrongful Acts, any such insured is
legally responsible.
G. Other Insurance
All Loss payable under this policy will be specifically excess of and will not contribute with any
other valid and collectible insurance, whether such other insurance is stated to be primary,
contributing, excess (except insurance specifically in excess of this policy), contingent or
otherwise.
H. Subrogation; Waiver of Right of Recourse
1. In the event of payment under this policy, the Insurer will be subrogated to, and will be
entitled to an assignment of, all of the Insureds' rights of recovery. The Insureds will
execute all papers and do everything necessary to secure such rights, including the execution
of any documents necessary to enable the Insurer effectively to pursue and en]Force such
rights and to bring suit in the name of the Insureds.
2. If any premium for this policy is paid out of the assets of a Plan, the Insurer will have no
right of recourse against any Insured.
I. Cancellation
1. If the Insured cancels:
To cancel this policy, the Insured must surrender the policy to the Insurer or mail: a written
notice stating when thereafter it wishes the cancellation to take effect. If the Insured cancels
prior to the Expiration Date of the current Policy Period, the Insured shall be refiinded any
unearned premium on a pro -rata basis.
2. This policy may not be cancelled by the Insurer except for non - payment of premium.
J. Non - Renewal
The Insured may non -renew this policy at the end of the Policy Period. The Insurer has the
same right, subject to paragraph J.2 below.
1. If the Insured non - renews:
If the Insured does not pay the renewal premium, or sends us written notice stating the intent
not to renew the policy for the next Policy Period, the Insured has non - renewed the policy.
2. If the Insurer non - renews:
If the Insurer non - renews the policy at the end of the Policy Period, a written notice will be
sent out a minimum of sixty (60) days in advance to the address shown on the Policy
Certificate or to the most current address the Insured has provided in writing.
K. Representations and Severability
1. The Insureds represent that the Policy Certificate and statements contained in the written
application for this policy are true, accurate and complete, and agree that this policy is issued
in reliance on the truth of that representation, and that such Policy Certificate and statements,
which are deemed to be incorporated into and to constitute a part of this policy, are the basis
of this policy and are material to the Insurer's acceptance of this risk.
Page 11 of 13
GOV- 1000 (10/2012)
2. Such written application for coverage will be considered as a separate application for
coverage by each Insured and, with respect to the Policy Certificate and statements
contained in such written application for coverage, no declaration or statement in the
application or knowledge possessed by any Insured will be imputed to any other Insured for
the purpose of determining whether coverage is available.
L. No Action Against the Insurer and Arbitration
I. No action may be taken against the Insurer unless, as a condition precedent thereto, there
shall have been full compliance with all of the terms of this policy, and the amount of the
Insured's obligation to pay shall have been finally determined either by judgment against the
Insureds after actual trial, or by written agreement of the Insureds, the Claimant and the
Insurer. No person or entity will have any right under this policy to join the Insurer as a
party to any dispute to determine the liability of any Insured; nor may the Insurer be
impleaded by an Insured or the Insured's legal representative in any such dispute.
2. Any dispute involving the Insureds and the Insurer arising in connection with or relating to
this policy shall be submitted to binding arbitration. The rules of the American Arbitration
Association shall apply except with respect to the selection of the arbitration panel. The panel
shall consist of one arbitrator selected by the Insureds, one arbitrator selected by the Insurer,
and a third independent arbitrator selected by the first two arbitrators.
M. Bankruptcy or Insolvency of Insured
The Insurer will not be relieved of any of its obligations under the policy by the bankruptcy or
insolvency of any of the Insureds or their estates.
N. Authorization and Notices
1. By acceptance of this policy, the Producer agrees to act on behalf of all Insureds with
respect to all matters under this policy, including but not limited to the payment of premiums
and the receipt of any return premiums, the giving and receiving of notices of Claim and of
circumstances that may give rise to a Claim and all other notices and communications (except
notices to effect the purchase of any Extended Reporting Period), the effecting or accepting
of any Endorsements to or termination or non - renewal of this policy and the Insureds agree
that the Producer will act on their behalf.
2. All notices to the Insurer of Claims, of circumstances that may give rise to Claims, or of the
Insureds' intent to participate in a Voluntary Compliance Program or any other notice
required under the policy must be given in writing by any one of the following methods:
a. By Mail to the following address:
Professional Liability Claims Management
C/O Ullico Casualty Group, Inc.
1625 Eye Street NW
Washington, D.C. 20006
b. By Fax to: (202)962 -8853
c. By Email to: to fessionalcl imsoulli com
Page 12 of 13
cov -l000 (10/2012)
O. Alteration and Assignment
No change in, modification of or transfer or assignment of interest under this policy will be
effective unless made by written Endorsement to this policy signed by an authorized
representative of the Insurer or a designated affiliate thereof.
P. Valuation and Foreign Currency
All premiums, limits, retentions, Loss and other amounts under this policy are expressed and
payable in the currency of the United States of America. If judgment is rendered, settlement is
denominated or any element of Loss under this policy is stated in a currency other than United
States of America dollars, payment under this policy will be made in United States of America
dollars at the rate of exchange published in the Wall Street Journal on the date such final judgment
is reached, the amount of such settlement is agreed upon or such element of Loss is due,
respectively.
Q. Terms of Policy Conform to Statute
Terms of this policy that conflict with applicable statutes of the state where this policy is issued
are hereby amended to conform to such statutes.
R. Authorized Representative of the Insurer
The authorized representative- Ullico Casualty Group, Inc., shall act on behalf of the Insurer with
respect to receiving notices as required under this policy, any other correspondence from the
Insureds or Producer, and receipt of any premiums that may be due under this policy. Except as
required in Condition B and N above, all notices shall be given in writing to:
Ullico Casualty Group, Inc.
1625 Eye Street, NW
Washington, DC 20006
S. Entire Agreement
The Insureds agree that this policy, including the application and any Endorsements, constitutes
the entire agreement between them and the Insurer or any of its agents relating to this insurance.
Should any provision of this policy be declared or be determined by any court of competent
jurisdiction to be illegal, invalid, void or unenforceable, the legality, validity and enforceability of
the remaining parts, terms or provisions of the policy shall not be affected thereby.
IN WITNESS WHEREOF; the Insurer has caused this policy to be signed by its President and Chief
Administrative Office at Richmond, Virginia, but this policy is not effective unless Alterra America Insurance
Company has issued a Policy Certificate as part of this policy.
t
President Chief Administrative Officer
Page 13 of 13
GOV -1000 (10l2012)