Police & Fire Pension

POLICE & FIRE PENSION BOARD MEETING DATE: June 18, 2018 CITY HALL, ROOM 302A TIME: 10:00 A.M. Present: Doug Bagwell, Gail Budrow-Bradstreet, Stan Chubinski, Jake Martin and Joe Newman. Absent: None. Also Present: Dori Drayton of Plante Moran Financial Advisors (PMFA); Linda Morrison, Revenue Services and Finance Director; Tammy Giannunzio, Deputy Treasurer; and Kourtney Matuschka, Finance Officer. Chair Newman asked for approval of the agenda. Motion Chubinski, seconded Bagwell to approve the agenda. On a voice vote, motion carried. Presented minutes of the regular meeting and closed session on May 14, 2018. Motion Bagwell, seconded Martin to approve the minutes as presented. On a voice vote, motion carried. Presented the summary of assets prepared by Comerica Bank. As of 5/31/18 the market value of the portfolio was $144,422,516, a gain of $1,182,769 since 4/30/18. On or about May 21, 2018 the transactions to raise $3,000,000 cash for future expenses and benefit payments was complete. As of today, the portfolio market value is $145,928,107, which is a gain of $1,505,591 since the prior month end. Motion Bagwell, seconded Chubinski to accept the financial report as submitted. On a voice vote, motion carried. Board Reports Bagwell – one new hire, Everett Lanphar and Carl Vandyke, previously employed for Battle Creek, is returning; two offers out. Budrow-Bradstreet:  The accumulated DROP funds totaling $37,415.72 from 7/12/17 to 5/17/18 for Wayne Thompson were distributed as a rollover per his request.  Member Kathleen Chrenenko requested to purchase 12 months military service credit. She paid $1,200 for the GRS actuarial lump sum cost calculation. The request will go to City Commission on 6/19/18. Motion Martin, seconded Bagwell to approve the following resolution: WHEREAS, the Board of Trustees is in receipt of an application for vested retirement benefits from Graydon Pierce requesting an effective retirement date of 5/28/2018, and WHEREAS, Graydon Pierce is eligible for retirement based on his deferred benefits, credited years of service and having reached what would have been 25 years of service pursuant to Act 345 of the Public Acts of 1937, as amended, and retirement provisions of the union contract, and WHEREAS, the final actuarial calculation was received, and WHEREAS, Graydon Pierce elected straight life with 60% surviving spouse benefit, and June 18, 2018 Page 2 of 3 - Official WHEREAS, Graydon Pierce is not married at the time of retirement, therefore be it RESOLVED, that the application of Graydon Pierce for retirement is approved, and RESOLVED, the retirement benefit for Graydon Pierce shall commence as of 5/28/18, and RESOLVED, the gross monthly benefit is $3,109.81 subject to tax withholdings and any other elective deductions, and RESOLVED, the gross retroactive payment of $401.27 for four days in May was paid on or about 6/1/2018 and the regular gross monthly benefit shall begin 7/1/2018. On a voice vote, motion carried. Chubinski – no report. Martin – inquired about the DROP cost of 5% for administering the program. Asked if the 5% and a DROP participant’s penalty for early termination could be applied against the administrative fee paid [to the City] by the pension fund. It was explained the 5% and any penalty simply stays in the pension fund portfolio so this isn’t an additional charge. Newman – no report. Old Business Public Act 202 of 2017 – Budrow-Bradstreet presented a draft of a letter to send to the City’s lobbyist regarding the mandates of PA 202 of 2017. Board shall discuss details at next meeting. New Business 2018-2019 Budget – presented budget for 2018/19. Motion Bagwell, seconded Chubinski to accept as presented. On a voice vote, motion carried. Election of Police Representative – Election held for the Police Representative for the term 7/1/2018 through 6/30/2022. Only One nomination was received – Doug Bagwell. Motion Martin, seconded Chubinski to accept the single nomination for Doug Bagwell as officially “elected” as Police Representative on the Policemen and Firemen Retirement System Board. On a voice vote, motion carried. Agreement for Legal Representation – presented Board with letter from Vanoverbeke, Michaud & Timmony regarding rate increase and formal agreement for services. Chair requested review of the agreement by either City Attorney or Labor Relations Attorney. No action taken at this time. Re-employment of a Retiree Policy - Budrow-Bradstreet requested a change to the current policy to clarify re-employment as a civilian or otherwise. No change recommended – policy accepted as is. PMFA Update – Dori Drayton of PMFA provided market perspectives related to the yield curve – when yield curve is inverted (below zero) it has signaled a recession. Presently the yield curve is trending down toward zero. Even when this happens, the equities can still have positive returns. Bonds also have a low correlation to stocks so no worries right now. Drayton also provided active management vs index returns for the first quarter of 2018 and for one year through 3/31/18. A chart illustrating cumulative performance relative to target returns June 18, 2018 Page 3 of 3 - Official show the fund has been exceeding the benchmark since inception, rewarding managers for risks taken. Drayton specifically spoke to the performance of Boston Company Large Cap Growth, which has been declining and underperforming compared to the index. Boston Company is ranked in the 80th percentile for first quarter, 2018. This is due to the lack of bank stocks held. While generally one would not expect large cap growth funds to hold financial equities, some of the peer group has entered into that sector. Rest of managers all performing towards the top 25% of their peer group. The current value of the portfolio is as follows:  Time weighted return(TWR) net of fees year to date through 5/31/18: .79%; outperforming the blended core benchmark;  TWR fiscal year to date as of 5/31/18 is 7.23%; annualized return 7.90%; also outperforming the benchmark. Public Comment – Linda Morrison indicated state Treasury has yet to determine the details for implementation of Public act 202 so there could still be some changes. In relation to the Agreement for Legal Representation, Morrison indicated the City is seeing more of these types of agreements proposed for other services (i.e. audit, actuary) so this is not unusual in today’s climate. Chris Love spoke up regarding the Re-employment of a Retiree Policy, citing City administrative policy that may also confirm the Board’s policy. Motion Bagwell, seconded Martin to convene into closed session to discuss current applications for disability retirement (11:18 a.m.). On a voice vote, motion carried. Board returned to open session (12:01 p.m.) Motion Martin, seconded Budrow-Bradstreet approve Jeff Maxson’s non-duty disability application. On a roll call vote: Bagwell – no; Budrow-Bradstreet – yes; Chubinski – yes; Martin – yes; Newman – no. Motion carried. Next regular meeting: Monday, July 16, 2018 at 10:00 a.m. Meeting adjourned at 12:10 p.m. Respectfully submitted, Gail Budrow-Bradstreet, City Treasurer __________________________________ _________________________________ Board Member signature Board Member signature