Police & Fire Pension

POLICE & FIRE PENSION BOARD MEETING DATE: October 15, 2018 CITY HALL, ROOM 302A TIME: 10:02 A.M. Present: Doug Bagwell, Stan Chubinski, Tammy Giannunzio, Ed Guzzo (left early), and Jake Martin. Absent: none. Also Present: Dori Drayton of Plante Moran Financial Advisors (PMFA); Linda Morrison, Finance Director; Nancy Mullett, Labor Attorney; and Kourtney Matuschka, Finance Officer/Police & Fire Retirement System Administrator. Vice Chair Chubinski asked for approval of the agenda. Motion Bagwell, seconded Giannunzio to approve the agenda. On a voice vote, motion carried. Presented minutes of the regular meeting on September 17, 2018. Motion Guzzo, seconded Bagwell to approve the minutes as presented. On a voice vote, motion carried. Presented the summary of assets prepared by Comerica Bank. As of 9/30/18 the market value of the portfolio was $147,043,014, a loss of $838,070 since 8/31/18. As of today, the portfolio market value is $142,752,941, which is a loss of $5,128,143 since the prior month end. Motion Martin, seconded Giannunzio to accept the financial report as submitted. On a voice vote, motion carried. Board Reports Bagwell – none Chubinski – none. Giannunzio – none. Guzzo – none. Martin – none. Matuschka – none. Old Business Disability Policy review: Matuschka shared an email from legal counsel that clarifies a member must be an active employee in order to apply for disability retirement. He also recommended the Board determine the type of disability (duty or non-duty) after the Board approves the disability retirement. Matuschka will review the Disability Policy to determine if revisions will be needed to clearly define how the Board will first determine disability and then determine if it is duty or non- duty related. The Board also requested to remove duty and non-duty from Disability Application. Matuschka will bring suggested revisions to next meeting. MAPERS Fall Conference: Giannunzio and Matuschka presented the Board with a written report and expense summary of the MAPERS Fall Conference. They both provided the board with their key points they took away from the conference. October 15, 2018 Page 2 of 3 - Official  Matuschka brought attention to list of policies provided in asked how frequently the Board reviews each policy to determine if it needs updates. Guzzo suggested the Board to review each policy regularly. Matuschka will provide details of each policy and the last updated date.  Discussed record retention policy and the Board believes they follow the state’s regulations regarding the amount of time to keep records. Giannunzio and Matuschka will take inventory on files in storage and determine a plan to report the inventory and discuss with the Board when to discard out-dated information.  Discussed PA 202 and shared how funding levels can be impacted by economy, actuarial assumptions, pension contributions and plan options. The Board recently changed actuarial assumptions on investment return and wage inflation. Some assumptions are required and some are various. New Business Release of retiree information: Matuschka shared the request from Chief Blocker to provide a current list of retirees and their addresses. Matuschka asked the Board if this information can be released or should the Chief request the information through a formal FOIA request. The Board believes the best practice is to FOIA the information to show the members and retirees the information was obtained through the proper process. Bagwell will reach out to Chief Blocker to clear up any questions. Public Act 202 Update: Matuschka provided the Board with a copy of the PA 202 Uniform Assumptions provided by the Board’s legal counsel. Morrison clarified the assumptions are only for PA 202 reporting purposes and may differ from the assumptions for funding purposes. PMFA Update – Drayton reviewed time weighted return summary by asset manager through 9/30/2018. While some investments may represent a negative YTD return, they are still out performing against their benchmarks. Boston Company still out performing benchmark even though we had prior concerns regarding their performance. Robeco Small Cap and Lazard International are performing below their benchmark and PMFA will review prior to next month. Drayton also confirmed the quarterly contribution from the City was deposited, therefore there is no need to raise cash. Guzzo asked how the allocation of investments is determined. Drayton explained the Board determines the target percentages and they are currently at Fixed Income: 42%; Equities: 55%; Cash: 3%. She also explained how the public act sets limitations on investment types. Drayton also shared during the annual actuarial review, PMFA discusses the investment policy and if updates are needed. Target percentage readjustments based on drastic market change is not typically recommended by PMFA. Time weighted returns as follows:  Calendar year to date through 10/5/18 – 2.45% in comparison to benchmark of 1.73%; annualized to 3.23%; benchmark 2.27%  Fiscal year to date through 10/5/18 – 1.97% in comparison to benchmark of 1.58% annualized to 7.60%; benchmark 6.07%  No recommended change in asset allocation October 15, 2018 Page 3 of 3 - Official Public Comment – Linda Morrison: In addition to PA 202 discussion, Morrison mentioned the City’s Legacy Cost Committee and their function. City Manager, Rebecca Fleury and Morrison are in the process of drafting a letter of recommended changes that need to take place in as an attempt to reduce legacy costs. MERS plan was reported as underfunded by the state based on PA 202. As a result, a corrective action plan (CAP) will be drafted and will include suggestions for the Police and Fire Retirement, MERS and Retiree health care benefits. Morrison expects sometime in November the CAP plan will be approved by the City Commission. Todd Elliott and Chris Love are the police and fire representation on the Legacy Committee. Nancy Mullett: Question regarding new Fire Chief. She asked where does it state that Police & Fire Retirement System members have a 10 year vesting requirement? She knows this has been the assumption of the board and city members but she does not find anything in PA 345 stating 10 years as a vesting requirement. She also does not find anything in the PA regarding refund of contributions to members. Mullett is aware of other non-represented members having a resolution approved by City Commission where it states all specifics of their pension. The Board recommended that Matuschka review prior Chief Headings and how his pension was handled. Board members also said they would look at PA 345 and see if they can find where it discusses vesting and refund of contributions. They would also like Matuschka to ask legal counsel for clarification. Guzzo has abstained from the closed session stating a personal connection with the applicant. This decision was reviewed with City Attorney, Jill Steele. (left meeting at 11:29 a.m.) Motion Chubinski, seconded Martin to enter into closed session regarding Disability Retirement Application. (11:29 a.m.) On a voice vote, motion carried. Board returned to open session. (11:46 a.m.) Next regular meeting: Monday, November 19, at 10:00 a.m. Meeting adjourned at 11:48 a.m. Respectfully submitted, Kourtney Matuschka, Recording Secretary __________________________________ __________________________________ Board Member signature Board Member signature