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1990.03.08_FAB_Minutes_Regular• TOWN OF HIGHLAND BEACH FINANCIAL ADVISORY BOARD REGULAR MEETING - MINUTES Thursday, March 8, 1990 9:30. A.M. This Regular Meeting of the Financial Advisory Board was called to or- der by Chairman Fred Firstenburg at 9:30 A.M. in Commission Chambers. Present were the Chairman, Vice Chairman Benjamin Cohen and Regular Members Richard Brunton, Victor Page and John F. Rand Also present were Mayor Joseph A. Boulay, Town Manager Mary Ann Mariano Accounting Clerk Michael Seaman and Coopers and Lybrand representatives Charles Shaw and Michael Tillett. The purpose of the meeting was to review the final draft of the Annual Financial Audit Report prepared by Coopers and Lybrand; Mrs. Mariano informed the members that Messrs. Shaw and Tillett would go over the draft since Chief Accounting Officer JoAnn Rutherford was unable to attend. Before the review bagan, Chairman Firstenburg asked why, since the fiscal year ends September 30, the audit report was not ready to be re- viewed until six months after the year-end. Mr. Shaw replied that while Coopers and Lybrand strives to complete their work in a timely manner, a variety of factors come into play, i.e., vacations, changes in personnel, personnel being taken off one job and assigned another, etc. The Town Manager noted that in the future there might not be such a long wait for the audit report since the Chief Accounting Officer came to the Town from Coopers and Lybrand and, as a Certified Public Accountant being familiar with auditing requirements, she would possi- bly institute accounting practices that would result in the yearly audit being completed in a shorter time. The Chairman then asked if in fact the Board could only review without verifying the report, as the members had no way of knowing the figures. Mrs. Mariano acknowledged that neither the FAB nor the Town Commision could change the report; it is only presented for their information. Mr. Shaw added that a meeting such as this one is done only as a client courtesy and further stated that very few of their government clients have a Board such as this. However, Mr. Shaw stated that he and Mr. Tillett would be happy to answer any questions the members might have as the review proceeded. Mr. Rand, agreeing with the Chairman regarding the timing of the audit, asked Mr. Shaw if the timeframe was within that provided by law. Mr. Shaw replied that it was; in fact, he continued, it was within the guidelines set by the GFOA and if filed by March 31, would be eligible for a Certificate of Excellence. Financial Advisory Board •Regular Meeting - Minutes March 8, 1990 Page 2 of 4 FINAL REVIEW - ANNUAL FINANCIAL AUDIT REPORT FOR FISCAL YEAR ENDING SEPTEMBER 30, 1989. Following are significant aspects of the report which were either pointed out by Mr. Shaw or questioned and discussed by the panel. 1. Litigation - Mr. Shaw stated that it was required to make note of pending litigation (#13 - Notes to Financial Statements) and the fact that it was not possible to evaluate any negative impact or amount of potential loss to Town, if any. Mr. Rand asked if our attorney's opinion had been sought for possible projected figures, but Mr. Shaw replied that such an opinion would have no bearing on the audit. 2. Special Revenue - It was noted that the adoption of the Town's Open Space Land and Recreation Land Ordinance accounted for the addi- tional revenue. 3. Revised Figures - In reply to Mr. Brunton's inquiry, Mrs. Mariano answered that the members were dealing with figures that resulted after all transfers were made. Mr. Shaw commented that this was • not uncommon. 4. ICMA - Two important discussions ensued regarding ICMA. In the first, Mr. Brunton asked Mr. Shaw about the Town's fiduciary re- lationship to ICMA, i.e., what control the Town had regarding the handling of funds. Mr. Shaw replied that technically the funds are governed by tax laws and it is not common to describe who is actually handling them. Mrs. Mariano advised that the Town still retains a Retirement Board, comprised of Commission members as well as staff, which meets quarterly to assess returns on ICMA in- vestments. In the second discussion, regarding employee enrollment in the deferred compensation plan, Mr. Rand then addressed #11 - Notes to Financial Statements (Agency Fund) and questioned the following language: ".....Under Internal Revenue Code Section 457, the plan assets remain the property of the Town until paid or made available to participants, subject only to claims of the Town's general creditors." Mr. Rand asked Messrs. Shaw and Tillett about the legality of this statement and they replied that it is part of IRS law. However, they said they would try to provide the members with an answer be- fore they left today, if possible. Town Manager Mariano also re- quested that they provide the location of the statement in ICMA literature where employees would be made aware of such a condition. •Financial Advisory Board Regular Meeting - Minutes March 8, 1990 Page 3 of 4 On concluding review of the audit, Mr. Shaw stated that overall it was a very "clean" report. Messrs. Shaw and Tillett then excused them- selves from the meeting, saying they would try to get the ICMA infor- mation requested by the members before adjournment. REVIEW OF JANUARY 1990 FINANCIAL STATEMENT Accounting Clerk Michael Seaman then joined the Town Manager at the table to review the financial statement for January 1990. Commenting that budgets tend to equal out at the end of the year and that this statement was generally on target, Mrs. Mariano highlighted several areas for the Board. She pointed out that while revenue from building permits was down, it was possible that the ITCO project might start this fiscal year. When Mr. Firstenberg questioned an expenditure for "books," Mrs. Mariano explained that this figure covered the cost of one set of the latest Florida State Statutes. Regarding Police Depart- ment figures, she advised the members that the department now has an officer (Frank Mencik) who has lessened expenditures of the department by doing electronic work on the police vehicles himself, rather than sending them to outside vendors. Mrs. Mariano also advised the Board that the upcoming May meeting would include proposed budget transfers regarding salaries for the Town Commission, Town Boards and the Manager. At this time, Messrs. Shaw and Tillett returned to the meeting with the ICMA information requested and told members they had obtained same from the Town's Finance Department. They presented an ICMA brochure in which Section 457 of the Internal Revenue Code is cited. The Section allows public employers to retain ownership of that part of salary deferred; such monies remain an asset of the employer until benefit eligibility is reached. The 457 Deferred Compensation Action Form to be completed by the employee in order to participate, contains no men- tion of the IRS Code, however. (A copy of both is attached to and made part of these minutes. Based on this information, it was the CONSENSUS of the members to ac- knowledge the Annual Financial Audit Report for the year ended Septem- ber 30, 1989 as presented. However, the members also agreed that the aforementioned ICMA information be investigated and discussed further in the future. The next meeting was then scheduled for Tuesday, May 8, at 9:30 A.M. There being no further business to come before the Board, it was ad- journed upon proper MOTION by Mr. Cohen/Mr. Page at 10:55 A.M. • • Financial Advisory Board Regular Meeting - Minutes March 8, 1990 Page 4 of 4 ATTES DATE: APPROVC- Fted Firstenburg, Chairman &"-M2 &&." Benjai6in Cohen, Vice Chairman Richard Brunton- Victor J. gage v John F. Rand ICMA RETIREMENT CORPORATION Suite 700 (202) 637-3311 1120 G Street, NW Toll Free Washington, D.C. 20005 (800) 424-9249 457 DEFERRED COMPENSATION PLAN EMPLOYEE ACTION FORM INTRODUCTION This action form enables you to participate in a 457 deferred compensation plan. This form is used for five dif- ferent types of transactions: Enrollment, Changing the Beneficiary, Transfer of Funds, Amendment, and Changing Your Address. For each transaction you will need to fill out specific parts of the form, (see below). However, all forms must have your social security number, RC account number and Part A completed. *ENROLLMENT in your present employer's deferred compensation plan administered by the ICMA Retirement Corporation- Complete Parts A, A C and E *AMENDMENT of an investment allocation for future contributions or contribution amount if you are already participating in the RC plan- Complete parts A, C, and E *CHANGING THE BENEFICIARY of your account without changing your contribution amount or your fund allocation - Complete Parts A, B, and E *TRANSFER OF FUNDS- If you have an account with RC and wish to move your accumulated assets among RC's investment options - Complete Parts A, D, and E . *CHANGING YOUR ADDRESS- First, check the appropriate boxes at the top of the form. Always complete the blanks for Employer name and your Social Security number at the top. Complete parts A and E. PART A: ESSENTIAL EMPLOYEE INFORMATION This part of the form must be completed for all transactions. Part A asks you to identify yourself for purposes of establishing your account. RC will use the address you provide to mail account statements, newsletters, and notices of interest to you. PART B: DESIGNATING OR CHANGING BENEFICIARY A beneficiary should always be designated. it may be an individual, an institution, a trustee, or your estate. Your beneficiary will receive the accumulated value of your account(s) as a death benefit if you die before full distribution of your account(s). You can guard against complications and insure faster payment of benefits by keeping your designation as simple as possible. The Primary Beneficiary (Class 1) receives the benefits to be paid when the participant dies. If no Primary Beneficiary (Class 1) is living, the benefits are paid to the Contingent Beneficiary (Class 11). if a Class includes more than one person, the proceeds are divided equally among the living beneficiaries of the class unless you specify otherwise. If none of the beneficiaries are living, the proceeds go to your estate. Be sure to show the complete name, relationship to you, and date of birth of each individual you designate. If • you wish to designate your children as beneficiaries, please name each child individually. If there are other children to be included in the division of your benefits, also name them or describe the designation you wish in the application-e.g., "the children born of my marriage to Martha A. Doe". Page 1 PART B: DESIGNATING A BENEFICIARY, CONTINUED You have the right to change your beneficiary at anytime. It is wise to review your designations from time to • time to be sure they are up to date. Please note the IRS has certain rules governing disbursement of accounts to beneficiaries. These rules are outlined in your employer's contract with RC and in RC's brochure on benefit payments, available to all interested individuals. Also see "General Information" found on the reverse side of the joinder agreement. If you wish to make a designation that does not fit any of these categories, please call our Participant Services staff toll -free at 800-424-9249 for assistance. PART C: CONTRIBUTION AND ALLOCATION TO INVESTMENT FUNDS C1. AMOUNT OF DEFERRED COMPENSATION IRS regulations limit the total amount a person may defer for federal income taxation. The limit is 25% of total compensation or $7, 500 a year, whichever is less. If you participate in other deferred compensation plans regulated by Section 457 of the Internal Revenue Code, the total amount deferred under all plans may not exceed this amount Any compensation deferred must be future compensation and may only be contributed through payroll deduction. 1. Enter the total percentage or dollar amount you wish to contribute under the column labeled "Employee's Contribution". if your employer contributes to your account, enter the percentage or dollar amount of your salary under the column labeled "Employer Contribution". • *If you choose the percentage method fill in the amount before the % sign. This method will allow you to increase your voluntary contribution as your salary increases. This form of contribution is not a fixed amount. For example, If you contribute 5% of a $1,000 paycheck you will be contributing $50 a pay period. If you receive a raise and are paid $2,000 a paycheck, your contribution will then become $100 per pay period. *If you choose the dollar method fill in your amount after the $ sign. This voluntary contribution is a fixed amount and will not change unless you file an amended data form requesting a change of contribution. 2. On the line titled "Payday on which plan is to begin", enter the month, day, and year of the payday covering the pay period when you wish to begin deferring compensation. Be sure the effective date is not in the same month in which you are signing the agreement. A new agreement becomes effective in the month following the month in which it is signed. 3. Your current gross salary should be accurately recorded. Do not subtract from you salary the amount you are deferring nor add any contribution your employer may be making to your deferred compensation. - 4. Indicate how often you are paid. 5. If you are nearing retirement and wish to participate in the catch-up provision, please attach a sheet explaining this. (For more information, call our toll -free number or refer to our brochure.) Page 2 C2. ALLOCATION TO INVESTMENT FUNDS • There are five investment options: Growth Stock Fund, Index Fund, Balanced Fund, Bond Fund, and Guaran- teed Fund. For a description of RC's investment options, see page 5 of this document. You may request that all of your contribution be placed in one investment option, or you may split it among the funds in any combination, as long as you use whole percentages. For example, you may request that 100% be invested in one fund, or invest your contributions in two, three, or all five of the funds. Once again, the only re- quirement is that you use whole percentages (i.e. 50%, 20% etc., not 33 1 /3%, etc.) Some states or local laws restrict the types of investments which should be made with deferred compensation funds. You should check with your employer to see if you have any such restrictions. PART D: FUND TRANSFERS 1. Transfers affect past contributions only. To request a transfer, check the box at the top of the form marked "Fund Transfer". Then complete Part D by indicating the amount or percentage of assets you wish to have transferred from one fund to another. Also, for each transfer request, you must indicate whether you are moving funds from employer or employee contributions. 2. For the percentage method be sure you list the percentage, and the funds you are transferring from and to. When using the dollar method to transfer funds be sure to write in the dollar amount you wish to transfer as well as the fund you will be transferring from, and the fund you will be transferring to. 3. If you wish to change both future and past allocations, check the "Change to an Existing Enrollment" box, • the "Change of Investment Allocation" box, and the "Fund Transfer" box. Then complete Part C - Contribu- tions and Allocation to Investment Funds and Part D - Fund Transfer. 4. Accumulated assets may be transferred among the Growth Stock, Index, Balanced and Bond Funds at any time, as long as 3 months have elapsed between transfers. Your employer may place additional restrictions on transfers. S. Accumulated assets in the Guaranteed Fund may be transferred to another fund during the contract. payout period under which those funds were initially invested under the following provisions: -Direct transfers to or from the Bond Fund are prohibited. -Transfers to the Growth Stock, and/or Index, and/or Balanced Funds may occur every 90 days. -Once funds have been transferred to the Growth Stock, and/or Index, and/or Balanced Funds, subsequent transfers out of these funds or back to the Guaranteed Fund are subject to a 6 month waiting period. -During the 6 month waiting period, funds are free to move between the Growth Stock, Index and Balanced Funds every 90 days. 6. RC executes all transfers on the last working day of the month in which your application is received. RC must receive your transfer form by the 20th of that month to allow for processing time, or else the transfer will be executed at the end of the following month. 6 Page 3 SELECTING INVESTMENT FUNDS The ICMA Retirement Corporation nor your employer can offer you investment advice. The following is a general description of each fund and what you might expect according to conventional investment wisdom. A complete statement of the investment policy and objectives for each fund are available from the ICMA Retire- ment Corporation. All investment policy statements are subject to periodic revision, based on the investment climate and the RC Board of Directors' strategy for accomplishing its objectives. There can be no assurances that these objectives will be met. The past performance of each fund is also recorded in RC's annual invest- ment report. In summarizing each fund, we have pointed out that all investments have a degree of risk. Conventional wisdom assumes that the greater the risk, the greater the possibility for a higher long-term return. However, with the exception of the Guaranteed Fund, future investment results cannot be assured. The GROWTH STOCK FUND is an investment primarily in common stock. It has the potential for the highest earnings of any of RC's investment option but at a correspondingly higher degree of risk. As a long-term in- vestment, the Growth Stock Fund will experience yearly fluctuations exceeding those of RC's other funds. Only those participants whose investment goals are long-term and those who are willing to tolerate short-term losses should consider investing in this fund. The INDEX FUND is an all -equity fund designed to track the performance of stocks in the Standard and Poor 500. The fund offers less risk than the Growth Stock Fund. In addition, the Index Fund's portfolio has no holdings in companies doing business In South Africa. The BALANCED FUND is oriented towards common stock. However, because of the high volatility of return in • equity investment, the fund is balanced with corporate bonds and government securities to protect your account against severe losses. In this fund you should expect significant fluctuations in earnings; in any single year a loss may be experienced. The BOND FUND is designed to take advantage of the significant earnings which can be made by investing in high quality corporate and government bonds. Offering less risk than the Growth Stock, Index, or Balanced Fund, the Bond Fund should provide steady gains over the long term. Yearly fluctuations will occur in this fund, but in any 12-month period, this fund should not have a negative return. The GUARANTEED FUND offers protection of principal plus a guaranteed rate of return for a special period of time. The return is underwritten by short-term guaranteed interest contracts and similar types of securities. The guaranteed rate of return will be based on the current market conditions at the time contracts are negoti- ated. The current guaranteed rate is quoted in RC's brochures, or you can obtain current information by calling RC's toll -free Rate Line (800-222-7199). • Page 5 457 DEFERRED COMPENSATION PLAN Employee Action Form (Please read instructions and sample sections before completing this form.) CHECK APPROPRIATE BOX This is a ❑ New Enrollment (Joinder Agreement) This is a ❑ Change to an Existing Enrollment IF A CHANGE, CHECK ALL APPROPRIATE BOXES ICMA RETIREMENT CORPORATIOI Suite 700 (202) 637 1120 G Street, NW Toll Free Washington, DC 20005 (800) 424-: EMPLOYER NAME: (State) RC ACCOUNT NUMBER: (Forchanges only.) ❑ Change of Beneficiary ❑ Change of Investment Allocation I SOCIAL SECURITY NUMBER: . m . ❑ Change of Address ❑ Fund Transfer EMPLOYEEPARTA. ESSENTIAL •R• FULL NAME: LAST FIRST MIDDLE �I�;; SEX: ❑ MALE [:1 FEMALE MARITAL STATUS: ❑ SINGLE ❑ MARRIED DATE OF BIRTH: ❑ / ❑ / �❑ DATE EMPLOYED: ❑ / ❑ / L_I�_ month day Year r month day year (area code) (area cadet OFFICE PHONE NUMBER: � - HOME PHONE NUMBER: � C❑❑ - JOB TITLE & DEPARTMENT: HOME ADDRESS: No. street City State Zip MAILING ADDRESS: (if different than above) No. Street City State Zip C1. AMOUNT OF DEFERRED COMPENSATION C2. ALLOCATION TO INVESTMENT FUNDS Effective on the payday shown below. I desire to be paid, in the form of deferred compensation as I request that the total amounts of future deferred compensation be applied to the avaiia-, follows: investment funds in the following percentages: Method of Designating Deferred Compensation (Use Only One) Employee's Contribution Employer's Contribubon Total (1) Percentage Method % % % (2) Dollar Methotl' (per pay per' S $ $ 'For Dollar Method, please give amount of each contribution, per pay period. Payday on which plan is to begin Mo. My current salary is $ 1 am paid every (2 weeks, month, 15 days, etc.): Day per pay period. I Fund I Whole Percentages Balanced Fund Bond Fund Growth Stock Fund Guaranteed Fund Index Fund I TOTAL 1 100 Note: If you are using the catch-up provision, please submit "Retirement Age" form found in RC's I understand that where state or local law restricts the nature of the investment of these funds, it wig be necessa-. brochure, "The Catch -Up Provision." restrict the investment choice to those available under the law. PART D. I request that my account assets with the above employer, consisting of previously contributed amounts plus earnings, be transferred as follows: Transfer from to amount $ or % name of hind name of fund Transfer from to amount $ or % name of fund name of fund Transfer from to amount $ or % name of hind name of fund from to name of lurid name of fund ICMA-RC COPY GENERAL: INFORMATION 1. This Joinder Agreement is a deferred compensation agreement between the employer and employee identified on the reverse side, governed by the provisions of the employer's deferred compensation plan, administered by the International City Management Association Retirement Corporation. 2. Unless otherwise specified herein, normal retirement age under this agreement shall be age 70 or an alternate age elected by written instrument and delivered to the ICMA Retirement Corporation by the employee prior to separation from service. A participant's normal retirement age determines (a) the latest time when benefits may commence under this plan (unless the participant continues employment after normal retirement age), and (b) the period during which a participant may utilize the catch-up limitation. Once a participant has to any extent utilized the catch-up limitation, normal retirement age may not be changed. A participant's alternate normal retirement age may not be earlier than the earliest date that the participant will become eligible to retire and receive unreduced retirement benefits under the employer's basic retirement plan covering the partici- pant and may not be later than the date the participant attains age 70. If a participant continues employment after attaining _ age 70, not having previously elected an alternate normal retirement age, the participant's alternate normal retirement age shall not be later than the mandatory retirement age, if any, established by the employer, or the age at which the participant actually separates from service if the employer has no mandatory retirement age. If the participant will not become eligible to receive benefits under a basic retirement plan maintained by the employer, the participant's alternate normal retirement age may not be earlier than attainment of age 55 and may not be later than attainment of age 70. Normal retirement age under this agreement does not represent a mandatory age of retirement nor is it an agreement to retire at this designated age. 3. If the benefits are paid to the employee under an option requiring the purchase of an annuity, designation or redesignation of a beneficiary or beneficiaries may have to be repeated at the time, in accordance with the requirements of the annuitor. The • employee understands that the last dated designation of a beneficiary or beneficiaries filed with the ICMA Retirement Corporation as trustee for any participating employer, shall, in the event of death prior to full distribution after retirement, control the actions of the ICMA Retirement Corporation, as trustee, in the distribution of the deferred compensation funds, assets, and accumulations in all ICMA Retirement Corporation accounts established for the employee. 4. It is understood that federal law and/or regulations of the United States Internal Revenue Service limit the amount which can be deferred from federal income taxes. On January 1, 1979, this limitation was established as 25% of total compensation or $7,500 per year, whichever is less. Total compensation includes wages paid plus any amount which is deferred. (Example: wages paid of $15,000, plus a deferral of $5,000, is 25% of total compensation.) Catch-up Limitation: For each of the last three (3) taxable years of a participant's employment ending before attainment of normal retirement age, the maximum amount of deferral compensation shall be the lesser of. (1) $15,000 or (2) the sum of (a) the normal limitation for the taxable year, and (b) that portion of the normal limitation for each of the prior taxable years commencing after 1978 during which the plan was in existence and the participant was eligible to participate in the plan (or in any other plan established under Section 457 of the Internal Revenue Code by an employee within the same state as the employer) less the amount of deferred compensation for each such prior taxable year (including amounts deferred under such other plan.) It is understood that the employee has certified and that the employer has, to the extent possible, verified that the amounts deferred in this agreement do not exceed the above limitation. Deferral of any amounts beyond the above limitation must be reported to the ICMA Retirement Corporation which will refund the excess amounts for payment as income to the employees. 5. Amounts contributed for the purchase of an annuity contract described in Section 403(b) of the Internal Revenue code, and/ or amount contributed under a Section 457 plan.othenthan this plan;:shall be -treated as if such amounts constituted deferred .compensation under this plan for the taxable year in which the contribution was made and shall thereby reduce the maximum amount ihat may be deferred -for -such taxable year. 6. In the event that an allocation to investment funds is made in such a way as to conflict with state or local law, whether by - error, change of -law, lack of knowtudge ofthe taw, or intent; the"fCMA Retirement Corporation, as trustee, will bear no -- legal responsibility for such designation. The ICMA Retirement Corporation may rely on written representations of the employer, without regard to the employee's approval, and will advise the employer and employee of any action taken. In taking any said action requiring the transfer of significant monies from one fund to another, the ICMA Retirement Corporation shall not be required to unfavorably liquidate securities, or to otherwise act in a time frame which will result in a reduction of any other participant's earnings.