Fire Pension Board

MINUTES CITY OF DEKALB DeKalb Firefighters Pension Fund October 14, 2021 The DeKalb Firefighters Pension Board of Trustees (“Pension Board”) held a regular meeting on October 14, 2021, at DeKalb Police Headquarters, 700 W. Lincoln Hwy., 2nd Floor, Training Classroom, DeKalb, IL 60115. ROLL CALL President Bill Lynch called the meeting to order at 8:09 AM and conducted roll call. Pension Board trustees present were Chief Jeff McMaster, Bill Kalal, Bill Lynch, and Bob Terry. Ray Krueger was absent. Guests in attendance were attorney Tom Hartwell of Collins Radja & Hartwell, Michael May of Lauterbach & Amen, Assistant City Manager Josh Boldt (left meeting at 8:22 AM), and Administrative Assistant Natalie Nelson as recorder. Financial consultant Craig Larsen of Mission Wealth participated remotely by phone. APPROVAL OF AGENDA Josh Boldt notified the Board that he must leave the meeting at 0830 hours and requested F. New Business, 5. Pension Consolidated Letters of Direction to Transfer Assets appear as the second New Business item. Chief McMaster motioned to approve the agenda as per Josh Boldt’s request, Bill Kalal seconded the motion, and a voice vote was conducted. The motion passed unanimously. PUBLIC PARTICIPATION President Lynch introduced the guests in attendance. No other comments were made. APPROVAL OF MINUTES Bill Kalal motioned to approval of the minutes from the regular meeting held July 8, 2021, as presented, Bob Terry seconded the motion, and a voice vote was conducted. The motion passed unanimously. DeKalb Firefighters Pension Fund Board of Trustees October 14, 2021 Page 2 of 5 OLD BUSINESS Seminars None. NEW BUSINESS Investment Manager Report Craig Larsen of Mission Wealth presented the Third Quarter DeKalb Firefighters Pension Fund report for the quarter ending September 30, 2021. The most recent quarter’s performance was flat compared the prior quarter; however, twelve-month returns and five- year average rate of returns have exceeded benchmarks. Mr. Larsen discussed factors affecting investments during the pandemic, including jobs figures and supply chain issues. He advised the Fire Pension Board to decide how much cash to have on hand during the consolidation process. Michael May of Lauterbach & Amen discussed the current handling of Fire Pension fund deposits and disbursements by DeKalb City Hall and the institutions currently holding those funds. This process will change upon the consolidation on January 4, 2022. Craig Larsen stated that he would present options for moving Fire Pension funds to the consolidation at the Board’s next meeting. After the consolidation, instead of Mission Wealth, the DeKalb Assistant City Manager or soon-to-be-hired Finance Director will assume responsibility for anticipating cash needs and requesting funds from the State Pension Fund. The first opportunity to request funds from the State Pension is 60 days after consolidation. Receipt of funds typically takes another 30. Receipt of funds could take 45 to 60 days, depending upon the date the request is received. The State Pension has an emergency fund request procedure, but the timeline for receiving funds is unknown. Currently, the Pension Board holds 5.3 months of expenses in cash. Most local Pension Boards are holding cash for 6 months of expenses. The Pension Board discussed increasing the cash held and agreed to increase this amount to 6 months of expenses, using an average monthly expenditure of approximately $360,000. Required Investment Transactions Michael May of Lauterbach & Amen distributed materials regarding required investment transactions. He summarized the materials, including the balance sheet, the income statement contributions by municipality, active members, and the investment income. DeKalb Firefighters Pension Fund Board of Trustees October 14, 2021 Page 3 of 5 Approval of Financial Transactions and Financial Reports Discussion occurred regarding the process for requesting funds from accounts to increase the cash held amount. Bill Kalal motioned to enter into collateralization agreements with Harris Bank and Bank of America. Bob Terry seconded the motion. A roll call vote was conducted: Aye votes were cast by Jeff McMaster, Bill Kalal, Bill Lynch, and Bob Terry; no Nay votes were cast. The motion passed. Bill Lynch motioned to raise $1 million from the equity portfolio and transfer funds to First National Bank to cover monthly expenses for at least 6 months. The motion was seconded by Bob Terry. A roll call vote was conducted: Aye votes were cast by Jeff McMaster, Bill Kalal, Bill Lynch, and Bob Terry; no Nay votes were cast. The motion passed. Chief McMaster motioned to approve the Third Quarter DeKalb Firefighters Pension Fund financial report as presented and the Financial Transactions, Bill Kalal seconded the motion. A roll call vote was conducted: Aye votes were cast by Jeff McMaster, Bill Kalal, Bill Lynch, and Bob Terry; no Nay votes were cast. The motion passed. Accounts Payable – Review of Invoices and Expenses No discussion occurred. At 9:00 AM, a short break occurred. At 9:04 AM, the meeting resumed. Pension Consolidation Letters of Direction to Transfer Assets Tom Hartwell of Collins Radja & Hartwell presented the drafted Letters of Direction to Transfer Assets (LOD) prepared by the State Firefighters’ Pension Investment Fund (FPIF) to be submitted to the current custodians, Charles Schwab and Fidelity. This is due November 1, 2021. He noted that the draft LODs contained errors and/or omissions. He advised the Pension Board to ensure the account numbers and names on the letters are complete and correct before submitting. Craig Larsen reported that the LOD was accepted by Charles Schwab but not by Fidelity. Lauterbach & Amen will contact Fidelity for guidance to ensure acceptance. These letters will need to come directly from the Pension Board, not Lauterbach & Amen, or else they will be rejected. He explained the normal process for transferring funds to a new custodian: a new custodian requests funds transferred from current custodian(s). The State Pension is requiring the opposite: current custodians (Charles Schwab and Fidelity) are requesting funds transferred to new custodians (Northern Trust). DeKalb Firefighters Pension Fund Board of Trustees October 14, 2021 Page 4 of 5 Paperwork required by FPIF for the consolidation included the following exhibits, copies of which were distributed to the members: • Exhibit A: Form of Resolution – Naming Authorized Agents, President Bill Lynch and Secretary Bob Terry. • Exhibit B: Form of Certification – Approving of the Form of Resolution (Exhibit A) and signed by Secretary Bob Terry. • Exhibit C: Form of Notice – Transfer of Investment Assets to FPIF’s custodian, Northern Trust, and instructions for the Investment Manager Craig Larsen detailed the steps necessary to accomplish the funds transfer by January 4, 2022. He stated his firm would end its relationship with the local Fire Pension Board upon consolidation. The 2022 Fourth Quarter Report will be the last prepared and presented at the last meeting. A termination agreement will be necessary but only after all work is complete. Bill Kalal motioned to approve the three exhibits as presented, authorizing Bill Lynch and Bob Terry to execute Letters of Direction to transfer funds from Charles Schwab and Fidelity to Northern Trust. Bob Terry seconded the motion. A roll call vote was conducted: Aye votes were cast by Jeff McMaster, Bill Kalal, Bill Lynch, and Bob Terry; no Nay votes were cast. The motion passed. Schedule of Board Meetings for 2022 Discussion occurred regarding the meeting schedule. Thursdays at 8:00 AM at the Police Department Training Room will continue, provided the room is available. Natalie Nelson will arrange the meetings to occur at 8:00 AM, provided the room is available: January 20 April 21 July 21 October 20 Retirements Chief McMaster’s reciprocity figures from Blue Island Fire Department were requested but no response has occurred. Attorney Tom Hartwell will contact Blue Island Fire Department to determine the status of this information. New Members More pension booklets are needed. Three new hires have begun since last quarter: Jacob Needham, Michael Lunk, and Sarah Faivre; a fourth new hire, Jackson Marbutt, will begin October 25. Each of the new hires are automatically enrolled in the fire pension and begin receiving contributions on their first day. DeKalb Firefighters Pension Fund Board of Trustees October 14, 2021 Page 5 of 5 Request for Benefits None. Military Service Time Buyback None. Service Breaks and Pension Funding None. Discussion of Agenda Topics for Next Meeting None. ADJOURNMENT Bill Kalal motioned to adjourn, Bill Lynch seconded the motion, a voice vote conducted, all trustees present voiced aye votes. The motion passed. The meeting adjourned at 10:14 AM. Natalie Nelson, Recording Secretary Minutes approved by DeKalb Firefighters Pension Board on January 20, 2022.