Police & Fire Pension

POLICE & FIRE PENSION BOARD MEETING DATE: February 21, 2017 CITY HALL, ROOM 112 TIME: 10:00 A.M. Present: Doug Bagwell, Stan Chubinski, John Hausman and Joe Newman. Absent: Gail Budrow-Bradstreet Also Present: Jeremy Tollas, Plante Moran Financial Advisors (PMFA); Linda Morrison, Finance and Revenue Services Director and Nancy Mullett, City Labor Attorney. Chair Newman asked for approval of the agenda. Motion by Hausman, seconded by Bagwell to approve the agenda. On a voice vote, motion carried. Presented minutes of the regular meeting of January 24, 2017. Motion by Hausman, seconded by Bagwell to approve the minutes as presented with one correction: Under Public Comment regarding the audit, the minutes should read “unmodified opinion” rather than “unmodified audit”. On a voice vote, motion carried. Presented a summary of assets prepared by Comerica Bank. As of 1/31/17 the market value of our portfolio was $133,610,263, a gain of $992,375 since 12/31/16. As of 2/17/17 the market value of our portfolio was $135,350,833, presently a gain of $1,740,570 since the 1/31/17 month end. Motion by Bagwell, seconded by Hausman to accept the financial report as submitted. On a voice vote, motion carried. Board Reports Bagwell – Reported a new hire, Ben Downey. Budrow-Bradstreet (written report): New hires: Benjamin Downey, PD on 2/13/17; Joshua Chapman, PD on 8/15/16. Zackary S. Smith no longer with Police Department as of 1/14/16. Request for annuity withdrawal received and processed 2/7/17; paid contributions $5,280.29 plus $111.67 interest for a gross total $5,391.96. Mary Yesh, surviving spouse of officer Donald Yesh, died 1/20/17; pension benefit pulled back and adjusted for 20 days in January ($902.51). Jerry Gilbert, former Fire Chief, died 2/15/17. March 1 benefit payment adjusted for 15 days of his benefit in February and 15 days of the surviving spouse benefit. All set going forward. Edward Marshall submitted the required forms and is officially in the DROP as of 2/4/17. His retirement benefit calculation will be processed as soon as FAC is available. Esteban Rivera submitted his application for service retirement. I provided the documents and information John needs to submit for the benefit calculation. The only thing we are waiting on is his FAC from Finance. February 21, 2017 Page 2 of 3 - Official Scott Silverman, police officer, requested the purchase of one-year military service credit. I explained the process to him. He paid for the actuarial valuation. Upon my return on March 6 everything will get going and we should be able to complete the process (that is, take it to City Commission for approval) prior to July 1. I will update the Board along the way. There are a couple of corrections with the June 30, 2016 actuarial valuation by GRS. It was reported the OSP Fire group are now FAC 3 but missed in the process – GRS used FAC 5. Also, it was reported that the Police Non-Supervisory contribution rate was 8.0% as of 6/30/17 and will increase to 8.25% effective 7/1/17. The FAC 3 versus FAC 5 does impact the final calculations; the 8.0% versus 8.25% as printed in the valuation report does not impact the final calculations. GRS is making the corrections and will send a revised 6/30/16 Actuarial Valuation report on or about February 27. As soon as we receive it, I will forward you an electronic copy, the web site will be updated and city administration (Finance) will get a copy. There is no charge for the corrections. Chubinski – None. Hausman – Brought up several concerns regarding difference in benefits & contributions between Patrol Personnel & Sergeants. 1) New hires do not pay contributions on overtime under current contract. However, if promoted to a supervisory position later in their career, they will get a better pension calculation without contributing to the fund in the early part of their career. Example….A person works 22 years in patrol, becomes a Sergeant for the last 3 years and has their FAC calculated on earning that include overtime as a Sergeant, but made no contributions as a Patrolman on overtime. How is this being funded ? 2) The Sergeants group was calculated in the Actuarial Report as a 13 member closed unit. What if this group is expanded and retire with a changed benefit after 1 year as a Sergeant. There was discussion on a question that Newman had posed to Hausman regarding his ability to retain his position on the Pension Board if he takes part of the DROP. It appears Hausman would have to step down and an election would have to be held to fill the remainder of his position on the Board. To be referred to Treasurer Bradstreet. He also mention that it is expected to see more new hires in the Fire Department once the 2017-2018 City Budget goes into effect. Newman – Asked what happens to a problematic employee when it gets time to retire and they opt to come into the DROP. What options does Management have if this were to take place? Old Business Police and Fire Pension Handbook – The Board had several questions on the age of Option Graph under item 3 and if it was needed. The age requirement of 50 is not necessary with February 21, 2017 Page 3 of 3 - Official the 25 and out clause in the contracts. It was thought that item 13-Health Insurance should be removed or at least modified to give a correct presentation. In the end, City Labor Atty. Nancy Mullett agreed to take the Handbook and review it to see what sections agree with or conflict with Act 345 and the current contracts. There was also a brief discussion as to how this information will get to new hires, and it was agreed the revised manual would be presented as part their basic training. New Business PMFA Update Jeremy Tollas advised that the market continues to do well following the 2016 Election. One question remains as to how easy it will be to get campaign promises into reality. Bonds continue to be steady but will have to see what happens if the Fed follows through with the proposed rate increases during 2017. At this time there is no need to rebalance the holdings of the Fund, but in several months there will be a need to come up with cash for the payment of benefits and operating expenses. He also reviewed several Money Managers and their performance over the last quarter and did advise that their quality of holdings did reflect in the returns for the quarter. Higher quality was reflected in lower returns while those with some lower quality holdings did out perform their indexes. Over all, bonds held their own, while both U.S. & International Equities did well. Public Comment – None. Next regular meeting: Monday, March 20, 2017 at 10:00 a.m. Meeting adjourned at 11:10 a.m. Respectfully submitted, Stan Chubinski, Recording Secretary __________________________________ _________________________________ Board Member signature Board Member signature