Police & Fire Pension

POLICE & FIRE PENSION BOARD MEETING DATE: February 11, 2019 CITY HALL, ROOM 302A TIME: 10:03 A.M. Present: Doug Bagwell, Stan Chubinski, Tammy Giannunzio, Ed Guzzo, and Jake Martin. Absent: none. Also Present: Jeremy Tollas of Plante Moran Financial Advisors (PMFA); Derek Henning of Gabriel, Roeder & Smith Company; Linda Morrison, Finance Director; Nancy Mullett, Labor Attorney (via conference call); Gregory Huggett, POLC/GELC State Labor Representative and Kourtney Matuschka, Finance Officer/Police & Fire Retirement System Administrator. Chair Chubinski asked for approval of the agenda. Motion Guzzo, seconded Bagwell to approve the agenda. On a voice vote, motion carried. Presented minutes of the regular meeting on January 14, 2019. Motion Bagwell, seconded Guzzo to approve the minutes as presented. On a voice vote, motion carried. Bank Summary of Assets & Expense Report: Consolidated Statement for 1/31/2019 was unavailable as of 2/7/2019. As of 2/7/2019, the portfolio market value was $142,770,153.72, which is a gain of $6,708,763.55 since 12/31/2018. For the month of January, the following invoices were authorized by Giannunzio and paid from the Cash Account: Cash Account - Detail Amount Actuarial Services Fee 7,700.00 Administrative Fee Auditing Fee Consulting Services Invoice Fee* 16,658.08 Legal Fees Medical Fees Misc Fees *Invoice Fees were not approved by Giannunzio. Invoices are quarterly bank charges deducted directly by Comerica Bank. Motion Martin, seconded Giannunzio to accept the financial report as submitted. On a voice vote, motion carried. Board Reports Bagwell – none. Chubinski – none.  February 11, 2019 Page 2 of 4 - Official Giannunzio – MAPERS Spring Conference is open for registration and reminded Ed and Jake that they will need to attend. Guzzo – none. Martin – none. Matuschka  Theresa Rivera, Fire Fighter, retirement effective 1/21/19.  Carl Turner, First Class Fire Fighter, entered the DROP effective 1/13/19.  The following resolution needs approved: RE: Nancy Ann Shepperly v. Joel Alan Shepperly Calhoun County Circuit Court Case No. 17-3232-DO WHEREAS, the Board of Trustees is in receipt of an Amended Domestic Relations dated December 6, 2018, wherein Nancy Ann Shepperly, the Alternate Payee, is awarded certain rights to the benefits of Joel Alan Shepperly, the Participant, and WHEREAS, the Alternate Payee is entitled to claim a portion of the Participant’s monthly retirement benefit from the Retirement System, and WHEREAS, said mater having been discussed with legal counsel who has opined that the applicable terms of said court order are consistent with the provisions of the Retirement System and applicable law, therefore be it RESOLVED, that the Board acknowledges receipt of said court order and will administer benefits consistent with said order as soon as administratively feasible, and further RESOLVED, that a copy of this Resolution be immediately attached as the top sheet of the Participant’s pension file and other appropriate records be retained by the Retirement System relative to this matter, and further RESOLVED, that copies of this resolution be sent to Joel Alan Shepperly, the Participant; Nancy Ann Shepperly, the Alternate Payee; and Kellie E. Podolsky, Esq., attorney for the Alternate Payee. Motion Bagwell, seconded Martin to approve the DRO resolution, on a voice vote, motion carried. Old Business Disability Policy review: Matuschka submitted the Workers Compensation Offset section of the Disability Policy to legal counsel to review. He believes it is consistent with Act 345 and offered assistance when we may need to implement the process. Motion Martin, seconded Bagwell to accept the revised Disability Policy as submitted. On a voice vote, motion carried. Election Policy Review: Matuschka provided revisions from previous meeting. No further revisions needed. Motion Bagwell, seconded Giannunzio to accept the revised Election Policy as submitted. On a voice vote, motion carried. February 11, 2019 Page 3 of 4 - Official Handbook Review: Matuschka provided revisions from previous meeting. Additional revisions needed. Will present at March meeting. New Business GRS Actuarial Valuation Review 6/30/2018: Derek Henning of Gabriel, Roeder & Smith Company presented the Actuarial Valuation Review for the period ending 6/30/2018 and he explained the overall purpose of the valuation review is to measure funding status of the plan and to determine employer contribution funding percent for the upcoming fiscal year. Some of the key notes are as follows:  The plan’s funding for 6/30/2017 was 76% and the funding for 6/30/2018 dropped to 75.6%.  The employer contribution requirement will increase 1.25% from last year. Going from 33.36% to 34.61%. This is due to the experience deviating from projected assumptions. Increase of employer contribution is based on wages increasing higher than assumed. Appears that members with more years of service have increased wages which impacts the system more drastically than a new hire with an increase.  A recommendation as the plan becomes more mature is on page A-17 column 7. Make amortization payment as a lump sum payment versus a percentage of payroll because if the payroll decreases, you may not be fully paying unfunded liabilities. Something to consider during experience study.  PA 202 Review  For 6/30/2019 forms must include uniform assumptions provided by the state. Amortization period needs to be based on 20 years, we are currently using 26 years. The plan can have two different set of valuation numbers one used for reporting only to the state and one used for actual funding calculations.  An experience study to review assumptions is required every 5 years. The plan’s last experience study was in 2015, using 6/30/2014 information. An experience study will be required after 6/30/2019 valuation.  An audit of actuarial valuation or replacement of the plan actuary is required every 8 years. The scope of what the audit should entail has not been determined by the state. Has not seen requests for audit review from outside customers come through his firm. Need further explanation of when the first audit should take place and what the audit should entail before me make that step. PMFA – Asset Manager Portfolio Update: Tollas presented an overview of the portfolio as of the quarter ending 12/31/18.  Domestic and International Equities were down during the month of December due to concerns over the state of the economy, trade negotiations and rate hikes anticipated in 2019.  Calendar year 2018 was moderately more volatile market than past years.  The portfolio is made up of 45% bonds this is helpful to offset the returns in small/large cap investment groups.  Boston Partners Small Cap had a quarterly return of -18.45% and Westfield Mid Cap returned -15.72%, but both remain comparable to their benchmarks. February 11, 2019 Page 4 of 4 - Official  In January, the portfolio made a recovery from the losses incurred in December. The portfolio had YTD returns of 4.86% in comparison to the blended benchmark of 5.06%.  No required rebalancing at this time.  Time weighted returns as follows: o Calendar year to date through 1/31/19: 4.86% in comparison to benchmark of 5.06%. o Fiscal year to date through 1/31/19: -0.07% in comparison to benchmark of 0.68%, annualized to -0.12%; benchmark 1.16%. Public Comment – Linda Morrison – discussed that the City is starting their annual budget process and now is a perfect time to consider paying the amortization as a lump sum rather than a percentage of wages. She also wanted to let GRS know that the city is now making monthly employer contributions to the pension fund rather than bi-annual deposits. Derek added that page C6 of the actuarial data provides a schedule that shows the various amortization windows and provides a dollar amount to determine how much to pay if we were to transition to a flat amount for the amortization portion of employer costs. The table calculates normal cost x percentage plus the flat amortization amount to be paid. Next regular meeting: Tuesday, March 26, 2019 at 10:00 a.m. Motion Chubinski, seconded Martin to convene into closed session to discuss current application for disability retirement (11:23 a.m.) On a roll call vote, Bagwell – yes; Martin – yes; Guzzo – yes; Giannunzio – yes; Chubinski – yes, motion carried. Guzzo has previously abstained from this closed session and left the meeting at 11:23 a.m. Board returned to open session (11:39 p.m.) Motion Bagwell, seconded Martin to approve Victorie Kersten’s application for Duty Disability Retirement effective 9/15/2018, the day following her last date paid by the city. On a voice vote, motion carried. Meeting adjourned at 11:40 a.m. Respectfully submitted, Kourtney Matuschka, Recording Secretary __________________________________ __________________________________ Board Member signature Board Member signature