Police & Fire Pension

POLICE & FIRE PENSION BOARD MEETING DATE: June 26, 2017 CITY HALL, ROOM 112 TIME: 10:03 A.M. Present: Doug Bagwell, Gail Budrow-Bradstreet, Stan Chubinski, John Hausman and Joe Newman. Absent: None. Also Present: Dori Drayton and Tricia Newcomb, Plante Moran Financial Advisors (PMFA); Nancy Mullett, Employee Relations; and Linda Morrison, Revenue Services and Finance. Chair Newman asked for approval of the agenda. Motion Bagwell, seconded Chubinski to approve the agenda. On a voice vote, motion carried. Presented minutes of the regular meeting on May 15, 2017. Motion Hausman, seconded Bagwell to approve the minutes as presented. On a voice vote, motion carried. Presented a summary of assets prepared by Comerica Bank. As of 5/31/17 the market value of our portfolio was $136,912,022, a gain of $967,004 since 4/30/17. As of today, the portfolio market value is $137,730,277, which is a gain of $818,255 since the prior month end. Motion Chubinski, seconded Bagwell to accept the financial report as submitted. On a voice vote, motion carried. City contribution of $2,360,086.62 sent; should be received today (6/26). Board Reports Bagwell – In the process of hiring four (4) new employees; three (3) current employees will be retiring by the end of summer. Budrow-Bradstreet:  Scott Silverman purchased one year military service credit (approved by Commission 4/10/17). All calculations and payments received.  Wayne Thompson purchased 10 months military service credit (approved by Commission 5/16/17). All calculations and payments received.  Carl Vandyke – Letter re: withdrawal or deferment options mailed 5/25/17; actual withdrawal request received 6/12/17. Total payment $11,536.31 - $58.20 interest, $11,478.11 contributions.  Retiree Sam Chronister died June 12, 2017. He has no surviving spouse. July 1 benefit adjusted for 12 days in June for final pay $480.00  Pending retirement: Police Department – John Chrenenko, Charles Pelfrey, Todd Madsen, Jeff Coons, Simon Austin; Fire Department – Mark Burkart, Ann Piper, Wayne Thompson, Chris Love and John Hausman. Chubinski – 401(h) meeting was held last week. Commissioner Behnke had questions about millage and funding liability. It was a good meeting; positive for the retirees. About 70-80 left in the group. Had about $60,000 to distribute and checks will go out this week. An additional June 26, 2017 Page 2 of 3 - Official note: health, dental and vision insurance premiums for these individuals were set up as deductions from the retirement benefit – city is no longer sending invoices. Hausman – today is his last meeting since he is entering the DROP program. Jake Martin attended the meeting – has an interest in serving. John’s last day is July 9. He enjoyed his time on the Board and will miss the interaction. He is available if we have any questions regarding the retirement forms submitted to the actuary. Newman – On behalf of the Board, thank you for serving all of these years. It has been our pleasure working with you. Old Business Police and Fire Pension Handbook – Mullett presented a document with recommended changes; Board to review. She went over the changes briefly. Board to consider formal adoption at next meeting. Election Policy – presented final draft for the Election Policy with changes as recommended at May meeting. Motion Hausman, seconded Bagwell to approve changes as presented. On a voice vote, motion carried. New Business 2017-2018 Budget – presented budget for 2017-2018. Discussion held regarding Pension Fund reimbursement to the City for additional compensation paid to Treasurer specifically for the administrator-type duties. Waiting on attorney opinion. Motion Hausman, seconded Bagwell to accept budget as presented. On a voice vote, motion carried. Actuarial Assumptions for 6/30/17 – David Hoffman of Gabriel, Roeder, Smith and Company provided an analysis of actuarial assumptions based on the asset allocation of 55% equity and 45% fixed income. Non-Duty Disability Retirement – a non-duty disability retirement application was submitted by Silverman along with all a release of medical records and copies of medical records from 2012 through 2017. Silverman named a physician representing him on the Medical Committee. Independent Medical Evaluations, PC provided a list of physicians from which to select one to serve on the Medical Committee as the Police & Fire Retirement Board Independent Medical Examiner (IME). Motion Hausman, seconded Bagwell to select Dr. John Flood for P&F IME. On a voice vote, motion carried. PMFA Update – Tricia Newcomb, Senior Analyst, has been with PMFA 12 years. Newcomb gave an overview of the market as follows:  equities still fairly strong; international stocks up over double digits;  Bond returns about 2.5%; impacted by interest changes – Feds have been transparent on anticipated rate hikes;  Gross Domestic Product (GDP) expected to be 2.5 – 3 %; employment numbers good – wage pressures very low for a long time but expect these to go up over time; inflation about 2.5%; optimistic outlook by all – consumers, investors, businesses; volatility continues to trend lower; favorable expectations. June 26, 2017 Page 3 of 3 - Official Asset allocation analysis provided; p/e ratio – recently has been about 21; fairly high compared to historical – 16. Low p/e means lower priced; higher p/e means priced higher; 5.66% is the 10-year projected return. Motion Budrow-Bradstreet, seconded Hausman to change asset allocation from 50/50 to 55 equity/45 fixed income. The allocation is easily within the range that PMFA said is prudent as fiduciaries of the portfolio. Discussion followed. On a voice vote, motion carried. Motion Bagwell, seconded Hausman to keep assumptions the same. On a voice vote, motion defeated. Motion Hausman, seconded Chubinski to change investment assumption from 6.75% to 6.50% and wage growth assumption from 4.25% to 4.0%. On a voice vote, motion carried. Non-duty disability application from Silverman. Public Comment – Morrison: Treatment of Police & Fire pension contributions will be pre-tax starting with first pay in July. Finance will provide notification to employees. Changes coming in HR. Snow’s last day is Friday, June 30. Morrison/Mullett stepping in temporarily. City will be making quarterly contribution as a percent of payroll starting FY 17/18 (rather than semi- annually). BCTIFA captures part of the P&F pension taxes collected; this may be reviewed in the future. Next regular meeting: Monday, August 21 at 10:00 a.m. Meeting adjourned at 12:17 p.m. Respectfully submitted, Gail Budrow-Bradstreet, City Treasurer __________________________________ _________________________________ Board Member signature Board Member signature