The Jacksonville Police and Fire Pension Fund Board of Trustees selected Willard Payne as its fifth member on Friday during its final meeting of 2015.
Larry Schmitt nominated, noting his experience with the Jax Chamber, the Port Authority, and other boards. “I think his experience and expertise in business dealings would make him a good asset,” Schmitt said.
Two other members had been discussed in November; notable is that former Undersheriff Frank Mackesy withdrew his application for the board. Undoubtedly, there is a compelling narrative there. Bill Scheu and Nat Glover both endorsed Payne, the latter saying that Payne has an “unquestioned reputation” and Glover’s “ringing endorsement.” Richard Patsy wanted to offer a conditional approval, pending a meeting with Payne, and then affirm his approval via email. Apparently that would violate the Sunshine Law. Glover is now off the hook.
John Keane’s terms of employment were further refined, before a discussion of the city’s lawsuit against the pension fund and Keane. “General settlement has been reached,” said Beth McCague, interim director of the fund, and the deal is working its way through City Hall.
Further delineation of legal counsel for the PFPF was discussed; there is a conflict of interest with using the city’s General Counsel for pension issues, and a divergence of opinion between the board and the OGC. The move Schmitt advocated was to continue using independent legal counsel for pension issues, and the General Counsel office for everything else, such as real estate and public records matters.
Another segment of discussion had to do with investment policy in the wake of rate increases and a persistent lag in the energy sector.
As the boom driven by low interest rates ends, and more retirees hit the system, a question going forward will be how the fund continues to perform in a potentially recessionary framework in the coming years.
- Financial and investment reports were covered. Noted: more jobs added on the national level; the interest rate raise was mentioned, in context of wage inflation. Allocation to U.S. equities is 6 percent over target; to that end, the recommendation is to “rebalance,” via shifting $15 million from the S&P index fund to a fixed Thompson-Siegel core bond fund, in accordance with the investment policy. Bill Scheu expressed concern that the rate raise might affect investment income. Larry Schmitt noted that the fund is underweight in real estate as well. City treasurer Joey Grieve noted that, as the city did, the move might be to add new real estate managers. The board moved the $15 million as recommended.
- The Asset Class Review revealed the effect of a broad selloff in the energy sector, which influences energy holdings, the high-yield bond market, and so on. The assertion was that there was a disconnect in fundamentals and the actual pricing of the security. The preponderance of investment in the energy sector: energy storage and transport, which was described as less volatile than the rest of the index.
In other news …
- The external audit, said McCague, is expected after the first of the year. Another big move: taking paper records to the digital sphere, and a vendor recommendation to that end will be made in 2016, a move that she says will increase transparency.
- McCague has reviewed the 22 applications for a permanent executive director that the city has on file; she wasn’t impressed. Three of them have public pension experience. To help create a clean slate regarding the search, she believes the lawsuit between the fund and the city needs to be settled. Another pressure: a “generational shift” within the public pension world, creating a leadership gulf in many public pension plans, and a surfeit of qualified candidates.