Police & Fire Pension

POLICE & FIRE PENSION BOARD MEETING DATE: August 26, 2014 CITY HALL, ROOM 112 TIME: 10:05 A.M. Present: Gail Budrow-Bradstreet, Stan Chubinski, John Hausman, and Joe Newman. Absent: Doug Bagwell Also Present: Dori Drayton, Tim Wendt and Jeremy Tollas of Plante Moran Financial Advisors (PMFA) and Linda Morrison, Finance/Revenue Services Director and Interim Assistant City Manager. Chair Newman asked for approval of the agenda. Motion Chubinski, seconded Hausman to approve the agenda. On a voice vote, motion carried. Minutes of the regular meeting of July 21, 2014 were presented. Motion Hausman, seconded Chubinski to approve the minutes as presented. On a voice vote, motion carried. A summary of assets prepared by Comerica Bank was presented. As of 7/31/2014 the market value of our portfolio was $131,945,664, which is a loss of $1,993,001 since 6/30/2014. As of today the market value of our portfolio is $133,449,649 presently a gain of $1,503,985 since the 7/31/14 month end. Motion Hausman, seconded Chubinski to accept the financial report as submitted. On a voice vote, motion carried. Board Reports Bagwell – Budrow-Bradstreet: Motion Budrow-Bradstreet, seconded Hausman to approve the following resolutions: Resolution #1 WHEREAS, the Board of Trustees is in receipt of an application for retirement from Jennifer A. McCaughna requesting an effective retirement date of 7/5/2014, and WHEREAS, Jennifer A. McCaughna is eligible for retirement based on her service credit pursuant to Act 345 of the Public Acts of 1937, as amended, and retirement provisions of the union contract, and WHEREAS, the final actuarial calculations have been received, therefore be it RESOLVED, that the application of Jennifer A. McCaughna for retirement is approved, and RESOLVED, the retirement benefit for Jennifer A. McCaughna shall commence as of 7/5/2014, and RESOLVED, the gross monthly benefit is $4,267.39 subject to tax withholdings and any other elective deductions, and RESOLVED, the gross retroactive payment of $3,716.76 was paid on or about 8/12/14 and the regular gross monthly benefit shall begin 9/1/2014. Resolution #2: Police & Fire Pension Board August 26, 2014 Page 2 of 4 - Official WHEREAS, the Board of Trustees is in receipt of an application for retirement from James S. Saylor requesting an effective retirement date of 7/17/2014, and WHEREAS, James S. Saylor is eligible for retirement based on his service credit pursuant to Act 345 of the Public Acts of 1937, as amended, and retirement provisions of the union contract, and WHEREAS, the final actuarial calculations have been received, therefore be it RESOLVED, that the application of James S. Saylor for retirement is approved, and RESOLVED, the retirement benefit for James S. Saylor shall commence as of 7/17/2014, and RESOLVED, the gross monthly benefit is $3,466.20 subject to tax withholdings and any other elective deductions, and RESOLVED, the gross retroactive payment of $1,565.38 was paid on or about 8/12/14 and the regular gross monthly benefit shall begin 9/1/2014. Resolution #3: WHEREAS, the Board of Trustees is in receipt of an eligible domestic relations order (EDRO) for James Saylor v Viola M. Saylor, and WHEREAS, Viola M. Saylor, the alternate payee, is eligible for certain benefits pursuant to Public Act 46 of 1991, as amended, and WHEREAS, the EDRO has been accepted by the City of Battle Creek Police and Fire Retirement System Board of Trustees by resolution at its regular meeting on July 21, 2014, and WHEREAS, the final actuarial calculations have been received and paid for, therefore be it RESOLVED, the alternate payee EDRO benefit for Viola M. Saylor shall commence as of 7/17/2014, and RESOLVED, the gross monthly EDRO benefit is $2,300.72 subject to tax withholdings, and RESOLVED, the gross retroactive EDRO payment of $1,039.03 will be paid on or about 9/1/14 and the regular gross monthly EDRO benefit shall begin 9/1/2014. Resolution #4: WHEREAS, the Board of Trustees is in receipt of an application for retirement from Ronald E. Alberty requesting an effective retirement date of 7/20/2014, and WHEREAS, Ronald E. Alberty is eligible for retirement based on his service credit pursuant to Act 345 of the Public Acts of 1937, as amended, and retirement provisions of the union contract, and WHEREAS, the final actuarial calculations have been received, therefore be it RESOLVED, that the application of Ronald E. Alberty for retirement is approved, and RESOLVED, the retirement benefit for Ronald E. Alberty shall commence as of 7/20/2014, and RESOLVED, the gross monthly benefit is $4,914.40 subject to tax withholdings and any other elective deductions, and RESOLVED, the gross retroactive payment of $1,902.35 will be paid on or about 9/1/14 and the regular gross monthly benefit shall begin 9/1/2014. On a voice vote, motion approved. Chubinski – none. Police & Fire Pension Board August 26, 2014 Page 3 of 4 - Official Hausman – DROP program information received from actuary. Summary – GRS using same assumptions used for police and fire actuary calculations; gave one result if participants 0% interest and one if participants receive 4% interest; everyone would continue to contribute 7.5%; the maximum time allowed in the DROP program would be 5 years; impact to the retirement plan – if 4% interest earnings, using the interest earnings and all other assumption, the city’s contribution as a percent of payroll would reduce by 0.59%; if 0% interest earning and all other assumptions, it would reduce the city’s contribution as a percent of payroll by 0.83%; it was noted GRS only used 1.4 additional years of service as the average although there may be language to incentivize participants to stay a minimum of 2 years. The overall percent of payroll change could be better or worse depending on how all of the assumptions are met. Newman – none. Old Business PA 347 Compliance: Investment policy – PMFA reminded the Board our investment policy is in compliance now. They are simply working to get more clarity on the new language that may possibly initiate a change to the investment policy allowing for a more diverse investment strategy. Disability Pension Application – applicant has been seen by Police and Fire Retirement System’s designated physician; awaiting formal report. Also waiting on a formal report from applicant’s physician. Expect to have formal reports by our next meeting. Motion Budrow-Bradstreet, seconded Hausman to accept Alternative #2 proposed by Gabriel Roeder Smith and Company at a cost of $9,300 for the retainer services for the fiscal year July 1, 2014 through June 30, 2015, including 5 benefit calculations with additional benefit calculations at a cost of $250 each. On a voice vote, motion carried. New Business Motion Chubinski, seconded Hausman to adopt the proposed 2014-2015 budget. On a voice vote, motion carried. Jeremy Tollas of PMFA gave the market update: Bond returns, particularly the Barclays aggregate are up 3.67% year to date. Equities, even after the pull back in July, are still showing good returns. The Russell 2000 Index is the one reverse story, down 6% year to date. The market is now trending a bias to larger stocks and international stock, which are up over 4%; emerging markets are up 8% year to date. Specifically international and emerging markets are now starting to pay off. Employment levels are improving; GDP rebounded in second quarter, exceeding the estimates; this result corrected the first quarter numbers that were down; still seeing strong corporate earnings; volatility has stayed fairly low as compared over the last 5 years; however, a correction is still looming – the big question is when will it occur. Tollas reviewed the P&F portfolio noting the following:  Asset allocation vs target allocation – PMFA feels comfortable as of now –no need for rebalancing. Rebalanced in January and were able to take advantage of gains at that time Police & Fire Pension Board August 26, 2014 Page 4 of 4 - Official  the second quarter we had all positive returns; the total portfolio was up 3.36% for the last quarter (April-May-June) and in line with the 3.35% benchmark.  Robeco Boston Partners Large Cap Value was up 2.29% the last quarter which is below the benchmark of 5%; this is attributed to stock selection – there are a few stocks held in the Russell 1000 value index not held by Robeco; Robeco feels they have a value edge with quality that will pay off in the long run.  Harding Loevner International ADR Equity has a bias to high quality stocks; they select companies with a lower debt to equity ratio than those held in the comparative index attributing to its underperformance.  As of August 15, 2014 the time weighted return for FY 2014-15 is -0.15%, annualized return -1.20%; the time weighted return for the calendar year is 0.18%, annualized return 2.17%. The FYT return is better than the benchmark of -0.29%; the CYT return is not as good as the 0.61% benchmark. Public Comment - None. Next regular meeting: Monday, September 22, 2014 at 10:00 a.m. Meeting adjourned at 11:02 a.m. Respectfully submitted, Gail Budrow-Bradstreet, Secretary __________________________________ _________________________________ Board Member signature Board Member signature