Police & Fire Pension

POLICE & FIRE PENSION BOARD MEETING DATE: June 16, 2015 CITY HALL, ROOM 112 TIME: 10:04 A.M. Present: Doug Bagwell, Gail Budrow-Bradstreet, Stan Chubinski John Hausman and Joe Newman. Absent: None. Also Present: Jeremy Tollas of Plante Moran Financial Advisors (PMFA); Linda Morrison, Finance and Revenue Services Director. Chair Newman asked for approval of the agenda. Motion Hausman, seconded Bagwell to approve the agenda. On a voice vote, motion carried. Minutes of the regular meeting of May 18, 2015 were presented. Motion Bagwell, seconded Hausman to approve the minutes as presented. On a voice vote, motion carried. A summary of assets prepared by Comerica Bank was presented. As of 5/31/15 the market value of our portfolio was $134,469,795, a loss of $23,587 since 4/30/15. As of today the market value of our portfolio is $132,148,374, presently a loss of $2,321,421 since the 5/31/15 month end. Motion Hausman, seconded Bagwell to accept the financial report as submitted. On a voice vote, motion carried. Board Reports Bagwell – none. Budrow-Bradstreet: Joe Newman was reappointed to the Board at the June 2, 2015 City Commission meeting for a term ending June 30, 2019. Chubinski – none. Hausman – none. Newman – none. Old Business FAC Policy Review: Draft policy with revisions based on May meeting discussion presented to Board. Final revisions to be presented at the next meeting to consider formal adoption. Revised Pension Benefits: The Board received an opinion from VanOverbeke, Michaud and Timony, P.C. with regard to corrections of benefit payments made to retirees. Simply stated, the Board has a fiduciary responsibility to correct any errors found; either increase or decrease the pension benefit accordingly; and, in the case of an underpayment, figure out a plan to pay the additional amount owed to the retiree or, in the case of an overpayment, figure out a plan for the retiree to pay the pension back. On March 16, 2015 the Board approved a resolution accepting one half of the $8,030.00 overpayment to retiree Edward Jacobs to be paid in a lump sum. When contacted by Budrow- Bradstreet via telephone to inquire when payment would be sent, Mr. Jacobs said he was not Police & Fire Pension Board June 16, 2015 Page 2 of 3 - Official paying at this time and has hired an attorney. Given the latest legal opinion and status of the repayment by Jacobs the Board took the following action: Motion Bagwell, seconded Budrow-Bradstreet to begin deducting $133.83 per month for the next five (5) years (or sixty months) effective August 1, 2015 to recover the $8,030.00 pension overpayment. On a voice vote, motion carried. Mr. Jacobs will be notified of this action by certified mailed. When the recalculation of benefits for some police and fire retirees was necessary due to the Department of Labor and FLSA payments, the City discovered a clerical error in the final average compensation calculation of Kurt Dittmer and William Woodward resulting in an overpayment of benefits. The revised benefit for Dittmer and Woodward shall begin July 1, 2015. Woodward met with Pension Board representatives Hausman and Budrow-Bradstreet, and Linda Morrison, Finance & Revenue Services Director, to work out a payment plan. A resolution detailing the payment plan will be presented at the next meeting for Board acceptance. A meeting with Dittmer has yet to be scheduled. Budrow-Bradstreet updated the Board on recent changes to the health trust deduction for Police retirees. The contribution changed from 2.5% to 2% effective 7/1/15. The question was asked as to who should notify those retirees impacted by this change – both the retirees with the contribution and those eligible but have opted to pay the direct premium instead. The Board was in agreement that the RHFVT Board should handle that notification. New Business Policy – Correction of Errors, Overpayment/Underpayments: consensus of the Board to discuss at a future meeting. Portfolio Update: Jeremy Tollas of PMFA presented the market overview highlighting the following:  Federal Open Market Committee meeting today (6/16); the outcome of this meeting will impact the market but favorably or otherwise is unknown;  Bond market is down;  The strengthening U.S. dollar has been a detracting factor relative to the European and International markets; even so, confidence in the European markets is at an all-time high since 2007;  GDP (gross domestic product) is fairly weak and flattened out in the 1st quarter; housing starts have pulled back compared to April yet there has been an increase in general construction permits;  Mixed economic data is translating to mixed performance results for equities. The portfolio year to date time weighted return (TWR) net of fees as of May 31, 2015 was 2.92%, which is slightly better than the blended benchmark earning 2.71%. Bond managers, while holding their own in comparison to the benchmark, are just above 1% returns. All managers had positive returns through 5/31/15. The fiscal year to date TWR as of 6/9/15 is 3.72%, annualized to 3.95%; the calendar year to date TWR for the same period is 1.74%, Police & Fire Pension Board June 16, 2015 Page 3 of 3 - Official annualized to 4.01%. The annualized TWR 12/31/2008 through 6/9/2015 is 10.25%. Asset allocation is on target with no changes recommended at this time. Public Comment – Linda Morrison shared the following items:  Retirees may not make changes to insurance until open enrollment in November;  The overpayment to Jacobs, Woodward and Dittmer will be booked as a receivable and shown on the financial statement;  She attended the Government Finance Officers Association annual conference and will share the information she acquired relating to pensions [with the Board]. Budrow-Bradstreet noted, in response to Morrison’s comment regarding insurance changes, retirees eligible for inclusion in the health trust fund may change the method of payment for insurance at any time; that is, contribute to the health trust from which premiums would be paid or pay premiums direct and have no contribution to the health trust fund. Next regular meeting: Monday, July 20, 2015 at 10:00 a.m. Meeting adjourned at 11:30 a.m. Respectfully submitted, Gail Budrow-Bradstreet, Secretary __________________________________ _________________________________ Board Member signature Board Member signature