Police & Fire Pension

POLICE & FIRE PENSION BOARD MEETING DATE: MAY 15, 2023 CITY HALL, ROOM 302A TIME: 1:30 P.M. Present: Stan Chubinski, Ed Guzzo, Tammy Giannunzio, Jake Martin, and Chris Rabbitt. Also Present: Lily Vardell (Police & Fire Pension Administrator), Jeremy Tollas (CAPTRUST), Michelle Hull (Human Resources Director), and Doug Bagwell (Police Lieutenant.) Chair Chubinski asked for approval of the agenda. Motion Guzzo, seconded by Rabbitt. On a voice vote, motion carried. Presented minutes of the regular meeting from April 20, 2023. Motion Giannunzio, seconded by Guzzo to approve the regular meeting minutes from April 20, 2023. On a voice vote, motion carried. Bank Summary of Assets & Expense Report: As of 4/30/2023, the market value of the portfolio was $163,629,579.80, a gain of $1,563,473.39 from the 3/31/2023 balance. For the month of April, the following expenses were deducted: Expense Type Payee Amount Frequency Additional Details Investment Fees Loomis Sayles & Co 30,104.26 Quarterly 1/1/23‐3/31/23 Total Investment Fees 30,104.26 Administrative Fee Loomis 13.69 As Needed Misc Recovery Expense Invoice Fee Comerica Bank 12,347.08 Quarterly 1/1/23‐3/31/23 Misc Fees 10.00 As Needed x1 Class Action Handling Fee Conference Registration MAPERS 700.00 As Needed x2 MAPERS Conf Registrations Total Admin. Fees 13,070.77 Motion Giannunzio, seconded by Guzzo to accept the financial reports and quarterly bank summaries submitted for April. On a voice vote, motion carried. Board Reports Chubinski ‐ none Giannunzio – none Guzzo ‐ none Martin – none Rabbitt ‐ none Page 1 of 5 Vardell  Travis Black, Police Officer, terminated on 4/6/23. o A letter regarding his options for withdrawal was sent 4/24/23. o Travis withdrew his contributions totaling $12,658.18. o A lump sum payment was issued to Travis on 5/2/23.  Austin Brophy, Firefighter, terminated on 4/22/23. o A letter regarding his options for withdrawal was sent 5/9/23.  David Kellogg, Fire Dept retiree, passed away 4/22/23. o His 5/1/23 payment was returned and replaced with a pro‐rated portion for 22 days in April. o This final payment of $1,979.13 was made on 5/3/23. o His surviving spouse, Linda Kellogg, has been sent the necessary paperwork to begin her benefit payments. Once this paperwork is completed: o Linda will receive a pro‐rated May benefit payment of $431.81. o Linda’s regular benefit payments of $1,619.29 will begin on 6/1/23.  Iris Bush, surviving spouse of Fire Dept retiree Bob Bush, passed away 4/29/23. o Her 5/1/23 payment was returned and replaced with a pro‐rated portion for 29 days in April. o This final payment of $1,669.53 was made on 5/9/23. Old Business  BCPD Proposal on Re‐employment of a Retiree – Review Legal Opinion: o Comment from Chubinski – after reviewing the Attorney’s opinion, it looks like the bottom line is that they are suggesting a Letter of Understanding for this Proposal. o Comment from Bagwell – BCPD met with the Union to see if they agreed with the Proposal. We have to determine if the re‐hired retirees will contribute into the Pension Fund once they are re‐hired, or if they will be exempt. The re‐hired retirees will not be eligible for any additional benefits due to their re‐employment. o Comment from Hull – if we hire a P&F retiree, the current Board Policy states we have to suspend their pension benefits while they are working. Currently, when a retiree is re‐hired, they begin contributing to the Pension Fund again out of their paychecks as an employee. When they leave employment, they can begin collecting their pension benefits again and withdraw any additional contributions they made plus interest. o Comment from Bagwell – hypothetically, if we do not hire a retiree and instead hire a new employee, that retiree would still be receiving their monthly pension benefit and the new employee would be contributing into the Pension Fund. Say that new employee decides to terminate their employment with the City after two Page 2 of 5  years. We would have to pay the employee back their contributions plus two percent interest. This proposal could work the same way, but the Board could write a policy to instead pay the retiree zero interest on their withdrawn contributions. That would at least be a benefit to the Pension Fund for re‐hiring a retiree. The Act would allow for this as it states the maximum interest we need to pay an employee is 2%, it does not require a minimum. o Comment from Hull – I just want to be clear that there are two options on the table: 1. The re‐hired retiree is allowed to receive their pension and they contribute to the Pension Fund out of their new paychecks. When they leave, they withdraw their new contributions but receive no interest income. 2. The re‐hired retiree is allowed to receive their pension but is excluded from contributing to the Pension Fund out of their new paychecks. o Comment from Bagwell – I know it was discussed at the last meeting, but there are many benefits to hiring retirees to fill these Bronson positions. We are having a hard time finding people to fill the positions now, and it is unfair to station a new employee there who has just gotten out of training. A retiree would know all of our policies and procedures already. o Question from Chubiniski – was there any discussion between the City and the Union to have this Proposal mirror the DROP program?  Answer from Hull – if we were to hold their monthly pension benefits in an account while they were working as a re‐hire, then we would have to treat it as a DROP program.  Response from Chubinski – if we were to treat this Proposal like a DROP, we would already have a system and practices in place to manage it.  Response from Hull – The Union would like to see that we are not suspending their benefit payments at all, so we would prefer to not treat this Proposal as a DROP. o Question from Martin – what prevents the re‐hired retiree from laterally moving out of the Bronson position and bidding on a different position?  Response from Bagwell – we will make sure in the agreement between the City and the Union that the re‐hired retirees would only be eligible to work the Bronson position. We can also cap the position at a two‐year term and re‐evaluate the need for the position at that time, based on BCPD staffing and if the Bronson contract is continuing with BCPD. o Comment from Rabbitt – it would be beneficial to the Pension Fund if the re‐hired retirees paid into the Pension System as opposed to being excluded. That way, Page 3 of 5  the Pension Fund could earn and keep interest from their contributions. I would prefer this option rather than them being excluded, because that doesn’t benefit the Pension Fund at all. o Comment from Chubinski – before the Board can adjust its policy regarding the re‐hire of a retiree, we need to see a Letter of Understanding between the City and the Union so we have a foundation for our decision. o Question from Bagwell – before we move forward with a Letter of Understanding, what is the Board’s preference on the terms of this Proposal? Would you rather them not contribute in to the Pension Fund upon rehire, or should they contribute with the ability to withdraw their contributions once they leave and the Pension Fund keeps the interest?  Response from Chubinski – We prefer that they contribute to the Pension Fund upon rehire. o Comment from Chubinski – there is always the concern of what this looks like to the Public. We are paying a retiree their pension and paying them a salary.  Response from Rabbitt – we can justify it by showing how much it costs to hire and train new police officers. o Comment from Martin – in addition to seeing the Letter of Understanding, we would also want to hear from an actuary to understand the potential costs or benefits to the Pension Fund because of this agreement. Tabled for further discussion – The Board will need the Letter of Understanding between the City and the Union, and a review from an actuary before revising their Policy on the re‐hire of a retiree. New Business  Policy Review – Correction of Errors, Over or Under Payments: o Policy was reviewed and no changes were made.  CAPTRUST: Tollas provided a First Quarter investment report: o Year‐to‐date, US Bonds are up 3%, compared to being down 13% in 2022. o This is the second straight quarter we have had fairly substantial positive returns. o Growth has substantially outperformed value in the first quarter. High‐ performing sectors this Quarter were Technology, Retail, and Communication Services. o This quarter has shown an increase in short‐term interest rates. Mortgage rates continue to increase. Page 4 of 5  o Food and energy prices have decreased. Consumer sentiment has improved with lower costs. o The total portfolio performance return is at 5.54% for the Quarter. o PIMCO Low Duration is marked for concern in the overall Investment Review. It lags behind in the investment review because it is shorter duration and more conservative. However, it continues to perform well for its objective. It is less volatile and pairs well with Loomis.  CAPTRUST: Tollas provided an April investment update: o As of 4/30/23, the total portfolio was up 0.85%, bringing the calendar year‐to‐date total up to 6.44%.  CAPTRUST: Tollas provided a Proposed Trade to raise cash: o There is just over $640,000 available in the Comerica Cash Account. On average, there are outflows of about $550,000 a month from this account. o CAPTRUST is making their annual proposal to raise $4.5 million in cash to support about nine months of benefit payments. o In order to raise the cash, CAPTRUST is proposing to sell three equity funds: $2 million from Fidelity 500 Index, $1.5 million from American Funds Europacific Growth, and $1 million from Hartford International Opportunities. Motion Martin, seconded by Rabbitt to approve CAPTRUST’s proposed trades to raise cash for benefit payments and rebalance the Fund. On a voice vote, motion carried. Public Comment – none *The Board went into a closed session to discuss a disability retirement re‐examination. Next regular meeting: Monday, June 12th at 10:00 AM Meeting adjourned at 2:36pm Respectfully submitted, Lily Vardell, Recording Secretary __________________________________ __________________________________ Board Member signature Board Member signature Page 5 of 5