Police and Fire Retirement Board

Item 4 A. July 9, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING June 18, 2024 Page 1 of 7 The regular meeting of the Center Line Police and Fire Retirement Commission was called to order at 3:01 p.m. by Chairman Allen. Members Present: David Allen, Richard Stys, Gregory Suma, Jorge Bermudez and Gregory Pearl who arrived at 3:16 p.m. Members Absent: None. Also Present: Timothy Brice from Graystone Consulting a division of Morgan Stanley via teleconference and Shana Neeson from Gabriel, Roeder, Smith & Co. AGENDA ITEM 2. – Approval of the Agenda: A. Approval of Agenda: June 18, 2024 with an addendum: A motion by Trustee Suma to approve the June 18, 2024 agenda with an addendum was seconded by Trustee Stys. AYES: 4 NAYS: None Motion carried 4 - 0. ABSENT: Gregory Pearl. AGENDA ITEM 3 – Public Comment Seeing there was no one in the audience this item was closed. AGENDA ITEM 4 – Approval of the minutes A. Approval of the Regular Meeting minutes held on May 14, 2024. A motion by Trustee Stys to approve the minutes was seconded by Trustee Bermudez. AYES: 4 NAYS: None Motion carried 4 - 0. ABSENT: Gregory Pearl. AGENDA ITEM 5 – Remembrances of deceased Members and Beneficiaries: A. None.  Item 4 A. July 9, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING June 18, 2024 Page 2 of 7 AGENDA ITEM 6 – Presentations: A. Timothy Brice from Graystone Consulting a division of Morgan Stanley. i. On The Markets – The Path of Least Resistance – June, 2024. ii. Fact sheet on American Funds New World F2 (USD). iii. Portfolio asset allocation and Market value as of June 3, 2024 ~ $ 13,526,925.50. iv. Review of rebalance with MLP and alternative investments. Mr. Brice said the market value as of June third was at $ 13,526,925.50 and is up 4.00% for the year. Our equities are at 67.00% of the portfolio. Under emerging markets we have Harding Loevner and GQG Partners. Harding Loevner’s portfolio is valued at $ 239,000.00. Mr. Brice said this is the portfolio we will address. Mr. Brice recommends that we move the portfolio to the American Funds New World. From Morning Star, it has a gold rating with five stars. Mr. Brice said under performance the fund has a 25th ranking for one and three years. For five years it is in the 11th percentile and in the last ten years it is in the top third percentile. There only bad performance was in 2016. Their gross expense ratio is 68 basis points and it is cheaper than what we are paying now. Their risk versus return is average. Their risk versus returns for three and five years is average plus. They have some USA exposure but the majority of their business is in the emerging markets arena. Trustee Suma said that is what he wanted to address. It seems like this fund has more USA exposure than our two other emerging market managers. Is it truly an emerging markets manager if they have that much exposure to the USA? Mr. Brice said yes because that is how it is categorized by Morning Star. Their benchmark is the emerging markets benchmark. Mr. Brice said he would go back to check on their due diligence report to see the highest the fund has been exposed to the USA markets. Mr. Brice said if we make the motion to make the move today that he would have an answer before the move is completed. Mr. Brice has said there have been stories in the news about China’s economic struggles. Based on Mr. Brice’s recommendation, Trustee Suma motioned to liquidate Harding Loevner’s portfolio and move the funds to the American Funds New World F2 fund. Trustee Stys seconded the motion. AYES: 4 NAYS: None Motion carried 4 - 0. ABSENT: Pearl. Mr. Brice said he will make a note to check the historic percentage of USA exposure.  Item 4 A. July 9, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING June 18, 2024 Page 3 of 7 Mr. Brice addressed the asset rebalance of the portfolio. Mr. Brice said with the latest asset allocation we should move $ 200,000.00 from our money markets funds and allocate $ 100,000.00 to Blackstone Private Credit and $ 100,000.00 to Tortoise Energy Infrastructure an MLP manager. As we have discussed, we wanted to start allocating the portfolio to more alternative investments. Based on Mr. Brice’s recommendation, Trustee Suma motioned to liquidate $ 200,000.00 from the money market fund and allocate $ 100,000.00 to Blackstone Private Credit and $ 100,000.00 to the MLP manager Tortoise Energy Infrastructure. Trustee Stys seconded the motion. AYES: 5 NAYS: None Motion carried 5 - 0. ABSENT: None. B. Shana Neeson from Gabriel, Roeder, Smith & Co. presenting the Sixty-second Annual Actuarial Valuation dated: December 31, 2023. Mrs. Neeson was introduced and is presenting the sixty-second actuarial valuation dated: December 31, 2023. The report will give the city the amount of contributions required for the next fiscal year. There is a normal cost which is the cost of active service members and then the piece of the unfunded liability which is amortized over a period of time. The city provides member information, asset information, and the current benefit provisions. The commission approves the assumptions every five years. The plan has forty-six retirees and beneficiaries receiving a pension benefit for an annual expense of $ 1,500,000.00. Mrs. Neeson covered the historical information on retirees. The plan has sixteen active members as of December 31, 2023. The annual payroll for these members are about the same as retirees, $ 1,500,000.00. The average age is 39.5 years with five years of service. Mrs. Neeson went over the age and service grid. The plan has two values. One is the market value which is what the plan of assets is valued at and the second is the Funding value of assets. The funding value is what the actuary uses for their calculations. It is a smoothed value that takes gains and losses and smooths their impact over a four-year period. Mrs. Neeson went over how the funding value is achieved. Trustee Allen asked how do we get the assumed rate of return at 6.75%? Mrs. Neeson said the commission adopts that. In section D of the report are the assumptions used to determine a city recommended  Item 4 A. July 9, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING June 18, 2024 Page 4 of 7 annual contribution. Under Public Act 202 of 2017 it requires the commission to review and adopt assumptions every five years. This will be the fifth year since the last time they were reviewed. The market value of the plan at December 31, 2023 was $ 13.6 mil and the Smoothed valuation was $ 14.6 million. We have an unfunded liability of $ 5.8 million. The plan is funded at 71.50% funded. Trustee Pearl asked if the bunch of participants who retired recently did it hurt the plan? Trustee Suma said withdrawing of $ 500,000.00 in annuity withdrawals at once does have an impact. Mrs. Neeson said she does have a load factor used for that kind of an impact. The Level Dollar Total Projected Contribution for Fiscal year July 1, 2025 is $ 920,087.00. Trustee Suma said it is time to do an experience study. Trustee Suma made a motion to have Mrs. Neeson conduct an experience study with the information ending December 31, 2023 and it was seconded by Trustee Pearl. AYES: 5 NAYS: None Motion carried 5 - 0. ABSENT: None. Trustee Suma stated that under Public Act 202 of 2017 it was mandated to conduct an Actuarial peer review of our actuary every eight years. It is about that time to have it done. Mr. Suma called our attorney, Thomas Michaud to see if any of his other clients are working on this. He said no. Mr. Suma asked Mr. Michaud to inform the commission if any of his clients proceed to do this so we can obtain some guidelines how they went about it. Mrs. Neeson said there are varying degrees of audits from full blown reviews which can be very expensive to a lesser one over review of an actuarial valuation report. AGENDA ITEM 7 - For Your Information: A. Correspondence from Morgan Stanley dated: June 21, 2023. Re: Active- Passive Framework 2.0: Sharpening its Objectives and Streamlining its Recommendations. Trustee Suma had asked Mr. Brice at the last meeting to forward us this report. A motion by Trustee Suma was seconded by Truste Pearl to receive and file this item.  Item 4 A. July 9, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING June 18, 2024 Page 5 of 7 AYES: 5 NAYS: None Motion carried 5 - 0. ABSENT: None. AGENDA ITEM 8 – Old Business: A. None. AGENDA ITEM 9 – New Business: A. Discussion on approving the Center Line P & F Retirement Commission budget for July 1, 2024 through June 30, 2025. Trustee Suma presented a budget for Fiscal Year 2025 for the commission to take action. Trustee Stys said these appear to be in line with minor increases. Trustee Stys asked if my reimbursement of my costs to the plan are shown reimbursing the city. Trustee Suma said yes in the line-item reimbursement to the city’s general fund. Trustee Stys said isn’t that a little high. Trustee Suma said he works sixty percent of his time on retirement system related work. City Treasurer Sobota invoices us for sixty percent of all my Mr. Suma’s wages and benefit costs. Trustee Pearl said he believes we did not vote to include sixty percent of Mr. Suma’s benefits. Trustee Pearl asked what if Mr. Suma did not work for the city, then who on the city side would do this work. Mr. Suma said that the retirement commission would have to go out and hire a company to do it. The city has hardly involvement with the daily activities of the retirement commission. They do some envelope stuffing and mail check stubs. Mr. Sobota uses the actuarial valuation report for the next year’s fiscal year city contributions. The retirement commission is a separate autonomous body from the city. Trustee Suma will forward all documentation in this matter when it was first discussed to the Trustees. Trustee Pearl made a motion to approve the fiscal year 2025 budget and it was seconded by Trustee Stys. AYES: 5 NAYS: None Motion carried 5 - 0. ABSENT: None.  Item 4 A. July 9, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING June 18, 2024 Page 6 of 7 B. Gabriel, Roeder, Smith & Co. – December 31, 2023 Summary Annual Report. Trustee Suma made a motion to approve the 2023 Summary Annual Report so it can be placed on the city website. It was seconded by Trustee Bermudez. AYES: 5 NAYS: None Motion carried 5 - 0. ABSENT: None. AGENDA ITEM 10 – Retirements: A. None. AGENDA ITEM 11 – Annuity Withdrawals: A. None. AGENDA ITEM 12 – Approval of Pension Figures: A. None. AGENDA ITEM 13 – Vouchers: A. May 24, 2024, pensions paid: Pay Report 546 ~ $ 127,233.98. A motion by Trustee Stys to pay the May 24, 2024 pensions was seconded by Trustee Pearl. AYES: 5 NAYS: None Motion carried 5 - 0. ABSENT: None. B. First quarter 2024 consulting fee for the CGA account. Invoice # 10062024096 Dated: April 5, 2024 ~ $ 410.38. A motion by Trustee Pearl to pay the first quarter 2024 consulting fee was seconded by Trustee Bermudez. AYES: 5 NAYS: None Motion carried 5 - 0. ABSENT: None.  Item 4 A. July 9, 2024 CENTER LINE POLICE & FIRE RETIREMENT COMMISSION MINUTES REGULAR MEETING June 18, 2024 Page 7 of 7 C. Reimburse the City of Center Line for retirement system administrator Wages from January 1, 2024 through June 30, 2024. $ 27,709.54. A motion by Trustee Bermudez to pay the invoice from the City of Center Line was seconded by Trustee Pearl. AYES: 5 NAYS: None Motion carried 5 - 0. ABSENT: None. AGENDA ITEM 14. - Commission Members Comments: None. AGENDA ITEM 15 – Adjournment: As there was no further business to discuss, a motion by Trustee Pearl and supported by Trustee Bermudez that the meeting be adjourned at 4:14 p.m. AYES: 5 NAYS: None Motion carried 5 - 0. ABSENT: None.