Police & Fire Pension

POLICE & FIRE PENSION BOARD MEETING DATE: July 20, 2020 Electronic Zoom Meeting TIME: 10:01 A.M. Present: Doug Bagwell, Stan Chubinski, Tammy Giannunzio, Ed Guzzo (10:04) and Jake Martin. Also Present: Justin Cohen, Dori Drayton, & Jeremy Tollas of Plante Moran Financial Advisors (PMFA); Linda Morrison, Revenue Services Director; Sarah VanWormer, IT Director; Jessica Vanderkolk, Communications Manager and Kourtney Matuschka, Finance Officer/Police & Fire Retirement System Administrator. 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 May 27, 2020. No minutes for June 22, 2020 meeting cancelled. Motion Bagwell, seconded Giannunzio to approve the regular session minutes. On a voice vote, motion carried. Bank Summary of Assets & Expense Report: As of 6/30/2020, the market value of the portfolio was $155,245,354, a gain of $2,742,115 from the 5/31/2020 balance. As of 7/16/2020, the portfolio market value was $159,402,167, which is a gain of $4,156,813 since 6/30/2020. For the month of May, the following expenses were authorized for payment. Additional Expense Type Payee Amount Frequency Details Investment Fees Loomis Sayles & Co 23,439.75 Quarterly 1/1 - 3/31/20 Investment Fees Harding Loevner International 15,300.00 Quarterly 4/1 - 6/30/20 Investment Fees Richmond Capital Management 2,367.00 Quarterly 1/1 - 3/31/20 Investment Fees Robeco Boston Partners SCV 9,648.25 Quarterly 1/1 - 3/31/20 Investment Fees Westfield Capital Management 13,710.07 Quarterly 1/1 - 3/31/20 Investment Fees Lazard Intl Equity 11,104.61 Quarterly 4/1 - 6/30/20 Investment Fees Robeco Boston Partners LCV 11,287.55 Quarterly 1/1 - 3/31/20 Investment Fees Earnest Partners Intermediate 15,563.54 Quarterly 1/1 - 3/31/20 Total Investment Fees 102,420.77 Misc Fees (asset manager) Misc Admin fees - non investment 3,723.47 Monthly 5/1 - 5/31/20 Consulting Services Plante Moran Financial Advisors 23,750.00 Quarterly 1/1 - 3/31/20 Legal Fees VanOverbeke, Michaud & Timmony, P.C. 2,049.60 Quarterly 1/1 - 3/31/20 Administrative Fee City of Battle Creek 2,000.00 Quarterly 1/1 - 3/31/20 Total Admin. Fees 31,523.07  July 20, 2020 Page 2 of 4 - Official Additional Notes: Attorney's invoice contained $256.20 for Legislative/CARES Act updates; $311.10 review orders & resolution re: Rolfe vs State of Michigan; $585.60 review & resolution for EDRO; $768.60 addressing military service time, FAC & policy for active member; $128.10 for annuity withdrawal review For the month of June, the following expenses were authorized for payment. Additional Expense Type Payee Amount Frequency Details Misc Fees (asset manager) Misc Admin fees - non investment 5,400.26 Monthly 6/1 - 6/30/20 Administrative Fee City of Battle Creek 2,000.00 Quarterly 4/1 - 6/30/20 Total Admin. Fees 7,400.26 Motion Martin, seconded Guzzo to accept the financial report and quarterly bank summary as submitted. On a voice vote, motion carried. Board Reports Bagwell – Multiple retirements, two resignations and two new hires. Chubinski – none. Giannunzio – none. Guzzo – none. Martin – none. Matuschka  Matthew Robinson exited the DROP with a retirement date effective 5/31/20. Total benefits and interest totaled $69,941.61 less 5% of interest earned ($24.30), less early withdrawal penalty of 75% of interest earned ($364.54). The remaining balance of $69,552.77 was requested to be payable to Mr. Robinson $54,552.77 and $15,000.00 rollover payable to ICMA RC. Both payments were issued on 6/4/20 and his regular monthly benefit payments will begin on 7/1/20 with a pro-rated portion for May (1 day) and full June benefit amount.  Isaac Yonkers, Police Officer terminated on 5/29/20. A letter regarding his options for withdrawal was sent 6/8/20.  Julie Madsen, Police Officer retired effective 6/13/20.  Fire Retiree, Robert Schuder died 5/17/20, without a surviving beneficiary. His 6/1/20 payment was pulled back on 6/8/20 and replaced with a pro-rated portion for 17 days in May.  Fire Retiree, John Bell died 5/26/20, without a surviving beneficiary. His 6/1/20 payment was pulled back on 6/8/20 and replaced with a pro-rated portion for 26 days in May.  Jordan Pardee, Police Officer terminated on 6/27/20. A letter regarding his options for withdrawal was send 7/6/20.  Fire Retiree, James Elliott died 7/1/20, no surviving spouse benefit is payable. His 8/1/20 payment will reflect a pro-rated portion for 1 day in July.  Joseph Seech and Dominic Alderman hired as Police Officers effective 7/13/20. July 20, 2020 Page 3 of 4 - Official  Brad Wise, Police Inspector entered the Police Non-Represented DROP program effective 7/1/20.  Brian Bartzen, Fire Lieutenant retired effective 7/7/20.  Jon Hancotte, Police Officer retired effective 7/11/20.  Surviving Spouse, Elsie Shulters died 7/5/20. Her 8/1/20 benefit payment will represent a pro-rated portion for 5 days in July.  Reminder to Stan & Doug – MAPERS 9/12 – 9/15, Mackinac Island. Old Business Disability Retirement Re-Examination: Board must decide which doctor to use for re- examination for non-duty disability retiree, Jason Crape. Motion Martin, seconded Bagwell to accept Dr. Ravinder Mediratta as the Board’s selection for the re-examination for Jason Crape. On a voice vote, motion carried. Disability Policy: The Board discussed the Disability Policy and the understanding about the re-examination requirements. The Board has requested further clarification from legal counsel. The Board prefers to have the re-examination requirements clarified in the following manner: 1. The Board may require a disability retiree to be re-examined once during the first five (5) of disability retirement. 2. The Board may require a disability retiree to be re- examined once every three (3) years after their first re-examination. 3. If a disability retiree requests to be re-instated, the Board may require a re-examination prior to being re-instated. Motion Guzzo, seconded Martin to request legal opinion on Disability Policy revision as indicated above. On a voice vote, motion carried. New Business PMFA – Asset Manager Portfolio Update: Cohen presented an update on the economy and capital markets through June 30, 2020.  GDP recorded for Quarter 1 of 2020 revised to show -5%. This represents the first quarterly drop in output since 2014.  Manufacturing sector, ISM index has shown improvements increasing from 41.5 to 43.1 in the month of May and to 52.6 in June.  Household balance sheets are the strongest they have been in over 40 years with low debt payments and high savings rates.  Calendar year-to-date portfolio return is .22% vs benchmark of .28%.  Fiscal year-to-date portfolio return 6.16% vs benchmark of 6.55% and June 30 quarterly returns are 13.38% vs benchmark of 12.38%. July 20, 2020 Page 4 of 4 - Official Tollas discussed the need to rebalance the portfolio.  Total fixed income is currently at 38.3% and our target percentage is 45%; total equities are at 61.7% vs target percentage of 55%.  1st part of rebalancing suggestion is to sell $10.5 million out of equities and move to fixed income.  2nd part of rebalancing suggestion is to reduce Robeco LCV, WAM & Loomis LCP manager’s target allocation by 1% for each manager and increase Robeco SCV allocation by 2% and Westfield Mid Cap allocation by 1%. This will change the target allocation for the sub asset class going forward. Motion Bagwell, seconded Guzzo to authorize the selling of $10.5 million from equities to purchase fixed income investments; also, to reduce the target allocations of large cap managers by 3% (1% for three managers) and increase the small cap value by 2% and mid cap by 1%. On a voice vote, motion carried. Public Comment – Morrison shared information from the Police & Fire Retiree Health Care Insurance Board meeting on June 26. For fiscal year 2020 the unspent funds totaling $71,991 will be combined with unspent funds of $15,948 from fiscal year 2019 totaling $87,939 to be left in the pension fund and recorded as a designation of fund balance on the Pension Fund’s financial statements. Next regular meeting: Monday, August 17, 2020 at 10:00 a.m. Meeting adjourned at 10:54 a.m. Respectfully submitted, Kourtney Matuschka, Recording Secretary __________________________________ __________________________________ Board Member signature Board Member signature