Police & Fire Retirement Board

REGULAR MEETING MINUTES OF THE STERLING HEIGHTS POLICE AND FIRE RETIREMENT SYSTEM, ACT 345 JUNE 21, 2012 FIRE DEPARTMENT CONFERENCE ROOM 41625 RYAN ROAD STERLING HEIGHTS, MI 48313 1. The regular meeting of the Police and Fire Retirement System was called to order by President Solak at 3:30 p.m. 2. Board Members present: Solak, Wellhausen, Padovini (arrived at 3:40 p.m.), Nash, Varney. Also present: Tim Brice, representing Merrill Lynch Private Client Group; Marc Sydnor and Ken Grimes representing Herndon; Derick Grembi representing BlackRock; John Johnson representing Eagle; Tom Michaud, Legal Counsel; and Nancy Duyck, Pension Technician. 3. APPROVAL OF CONSENT AND REGULAR AGENDAS Motion by Wellhausen, supported by Nash, to approve the consent agenda as presented. Ayes: Wellhausen, Nash, Solak, Varney. Absent: Padovini. The motion carried. Motion by Nash, supported by Solak, to approve the regular agenda as presented. Ayes: Nash, Solak, Wellhausen, Varney. Absent: Padovini. The motion carried. 4. APPROVAL OF MINUTES No corrections were made to the draft minutes of the regular meeting of May 17, 2012.  Motion by Solak, supported by Varney, to approve the minutes as presented. Ayes: Solak, Varney, Wellhausen, Nash. Absent: Padovini. The motion carried; the minutes of the regular meeting of May 17, 2012 are hereby approved. 5. CITIZEN PARTICIPATION There was no Citizen participation 6. REPORT FROM LEGAL COUNSEL No formal legal report was presented. Mr. Michaud commented on items of old business as they were considered. CONSENT AGENDA 7. CORRESPONDENCE a. Intercontinental first quarter report for Fund III received May 14, 2012. b. Correspondence to Rodwan Consulting Co. dated May 21, 2012 re: POA request. c. Correspondence from Intercontinental dated May 25, 2012 re: Amendment to Operating Agreement d. Correspondence from Intercontinental dated May 31, 2012 re: distribution in U.S. REIF Fund. e. Other correspondence received from: 1. ING Investment Management update 2. Merrill Lynch – market value updates 3. Pomerantz Haudek Grossman & Gross LLP 4. Robbins Geller Rudman & Dowd LLP f. Magazines received: 1. Pensions & Investments for May 28 and June 11, 2012. 2. Institutional Investor for June 2012 3. Plan Sponsor for June 2012 8. BILLS AND EXPENDITURES b. Disbursements to retirees/members other than monthly benefit payments  There were no disbursements to retirees/members other than monthly benefit payments this month. c. Checking Account Summary Beginning Balance $1,905.23 5/01/12 Additions (1) 1. 5/2 $5,000.00 Subtractions (5) $2,401.70 Check 1. 5/25 100.00 ND – postage reimbursement 1879 Check 2. 5/30 36.15 AT & T phone bill – 5/16/12 1880 Check Contract Payment Nancy 3. 5/11 1,094.46 5206 Duyck Check 4. 5/15 76.62 Contract fee – Gurin & Gurin 5207 Check Contract Payment Nancy 5. 5/25 1,094.47 5208 Duyck Electronic withdrawals (5) $1,812.03 1. 5/02 408.46 IRS Fed. tax w/h 2. 5/11 125.10 Michigan St. tax w/h 3. 5/14 461.54 IRA contribution 4. 5/16 408.47 IRS Fed. tax w/h 5. 5/30 408.46 IRS Fed. tax w/h Ending Balance $2,691.50 5/31/12 d. Transmittal of Checks 1. $234.11 received from Gary Choate for the purchase of 3 days of eligible municipal service credit. 9. FUNDS MANAGEMENT  a. The current value of funds as of May 31, 2012 is detailed below: Clearing account $ 1,309,229.38 Intercontinental $ 8,134,830.43 McDonnell $ 16,342,840.96 Pimco $ 16,135,380.84 Wamco $ 15,994,698.86 MD Sass $ 17,080,763.32 Horizon $ 17,396,492.87 Earnest Partners $ 9,180,648.68 NFJ/Allianz $ 12,550,979.13 AIM/Invesco $ 12,591,481.89 Janus $ 17,826,255.13 Winslow $ 16,767,029.15 Checking account $ 2,691.50 TOTAL FUNDS $ 161,313,322.14 b. The System received all of the 2011/12 budget of $7,368,876.00 as of April 12, 2012. c. A Securities Loan Statement Recap sheet as of 4/30/12 is enclosed showing the amounts received each month in the Securities Loan Program. Our earnings for the 2011/12 fiscal year through 4/30/12 are $1,289.05. d. Benefit Register Listing as of June 1, 2012 from Comerica Bank showing 287 retirees/beneficiaries with a payout for June of $1,119,769.74 and a year-to-date of $7,332,064.63. e. The current Merrill Lynch Bond index for May 2012 is 1.79%. 10. BENEFITS & PLAN ADMINISTRATION a. Old Business 1. Abel/Noser Reports for April 2012 Abel/Noser has supplied the April 2012 report. 2. Gary Choate – adjusted hire (retirement) date  The adjusted hire (retirement) date for Gary Choate is June 12,1990 after the purchase of 3 days of eligible municipal service credit. REGULAR AGENDA 8. BILLS AND EXPENDITURES a. Disbursements other than retiree benefit payments (bills) 1. Disbursement to Mark Wellhausen in the amount of $433.93 for travel expenses for the 2012 Spring MAPERS Conference in Mt. Pleasant, MI on May 20-22, 2012. 2. Disbursement to Ken Solak in the amount of $481.33 for travel expenses for the 2012 Spring MAPERS Conference in Mt. Pleasant, MI on May 20-22, 2012. 3. Disbursement to James Nash in the amount of $675.97 for travel expenses for the 2012 Spring MAPERS Conference in Mt. Pleasant, MI on May 20-22, 2012. Motion by Varney, supported by Wellhausen, to approve the bills as presented. Ayes: Varney, Wellhausen, Solak, Nash. Absent: Padovini. The motion carried. The following items were taken out-of-order of the published agenda. 10. BENEFITS & PLAN ADMINISTRATION a. Old Business 3. Frank Broda – DROP retirement termination information - discussion Lt. Frank Broda of the Fire Department terminated his DROP retirement as of June 14, 2012. He is also rolling over his entire DROP account. All required paperwork is on file in the Pension Office.  Motion by Wellhausen, supported by Solak, to approve the disbursements for the regular pension, annuity withdrawal, and DROP account and process the retirement certificate as submitted. Ayes: Wellhausen, Solak, Nash, Varney. Absent: Padovini. The motion carried. 4. Robert Henigan – DROP retirement termination information - discussion Lt. Robert Henigan of the Police Department terminated his DROP retirement as of June 21, 2012. All required paperwork is on file in the Pension Office. Motion by Solak, supported by Wellhausen, to approve the disbursement for the regular pension and process the retirement certificate as submitted. Ayes: Solak, Wellhausen, Nash, Varney. Absent: Padovini. The motion carried. 5. Daniel Media - DROP resolution – discussion Interim Assistant Fire Chief Daniel Media applied for the DROP from the Fire Department effective April 27, 2012. All required paperwork is on file in the Pension Office. The following DROP retirement resolution was considered: R 12-6-21-1 WHEREAS, INTERIM ASSISTANT FIRE CHIEF DANIEL MEDIA of the Fire Department has voluntarily elected to participate in the DROP per application dated March 8, 2012, as submitted to the Police and Fire Retirement Board, and WHEREAS, INTERIM ASSISTANT FIRE CHIEF DANIEL MEDIA has elected to DROP, effective April 27, 2012, per Appendix G of the applicable collective bargaining agreement, and WHEREAS, INTERIM ASSISTANT FIRE CHIEF DANIEL MEDIA has served the City of Sterling Heights Fire Department for 25 years, which includes 2 years of municipal service credit and 3 years of EMS service credit, as of the date of the DROP election, and WHEREAS, the Trustees of the Police and Fire Retirement Board, Act 345 have verified that INTERIM ASSISTANT FIRE CHIEF DANIEL MEDIA meets all those requirements for participation in the DROP as established in both Act 345 and the applicable collective bargaining agreement, and WHEREAS, the Trustees have provided all the necessary personal and financial data to the Board’s Actuary as it relates to ASSISTANT FIRE CHIEF DANIEL MEDIA and his spouse, GAIL MAC INTYRE, and the necessary reports have been reviewed and completed by the Actuary, which includes a copy of his marriage license and his spouse’s full name, documentation re: date of birth, and social security number, and WHEREAS, INTERIM ASSISTANT FIRE CHIEF DANIEL MEDIA has reviewed this data and has elected to receive his DROP participation benefit in the form of a regular retirement pension with a potential benefit of sixty (60%) percent of the regular retirement pension being paid to his surviving spouse, who must also be his spouse on the effective date of retirement and death, and WHEREAS, the forenamed member has requested an annuity withdrawal (total lump sum distribution from the defined contribution plan) under the provisions of the Retirement System and collective bargaining agreement, and WHEREAS, the Police and Fire Retirement Board is now in receipt of the necessary final average compensation amount. The Board of Trustees on receipt of this data forwarded it to the Board  Actuary for the updated retirement data. The actuary has indicated to the Board, in writing, the retirement benefits due INTERIM ASSISTANT FIRE CHIEF DANIEL MEDIA, as a result of this data, therefore be it RESOLVED, that INTERIM ASSISTANT FIRE CHIEF DANIEL MEDIA, after having been credited with 25 years as of the date of the DROP election, and is hereby granted DROP participation in accordance with Act 345 and the collective bargaining agreement, effective April 27, 2012. RESOLVED, that INTERIM ASSISTANT FIRE CHIEF DANIEL MEDIA request for annuity withdrawal, authorizing a payment representing the total amount of his contribution plus interest to the date of his participation in the DROP, be granted, and further RESOLVED, that INTERIM ASSISTANT FIRE CHIEF DANIEL MEDIA shall be paid an annuity withdrawal (total lump sum distribution from the defined contribution plan) of $95,785.76, and a yearly regular retirement pay in the amount of $84,368.16 or monthly benefits of $7,030.68, after DROP participation and termination of employment, and further RESOLVED, that INTERIM ASSISTANT FIRE CHIEF DANIEL MEDIA shall be credited $7,642.04 monthly during the period of DROP participation because distribution of the annuity withdrawal was deferred until termination of employment, and further RESOLVED, that the Treasurer shall immediately calculate and pay INTERIM ASSISTANT FIRE CHIEF DANIEL MEDIA the appropriate amounts. All amounts shall be paid into the DROP account until the date of termination, after which time distribution shall be made in accordance with the collective bargaining agreement. Motion by Wellhausen, supported by Solak, to adopt the resolution as presented. Ayes: Wellhausen, Solak, Nash, Varney.  Absent: Padovini. The motion carried; the resolution is hereby adopted. 6. Bonnie DeMeyere - DROP resolution – discussion Captain Bonnie DeMeyere applied for the DROP from the Fire Department effective April 27, 2012. All required paperwork is on file in the Pension Office. The following DROP retirement resolution was considered: R 12-6-21-2 WHEREAS, CAPTAIN BONNIE DEMEYERE of the Fire Department has voluntarily elected to participate in the DROP per application dated March 20, 2012, as submitted to the Police and Fire Retirement Board, and WHEREAS, CAPTAIN BONNIE DEMEYERE has elected to DROP, effective April 27, 2012, per Appendix G of the applicable collective bargaining agreement, and WHEREAS, CAPTAIN BONNIE DEMEYERE has served the City of Sterling Heights Fire Department for 25 years, which includes 2 years and 12 days of municipal service credit, and 2 years, 11months and 18 days of EMS service credit, as of the date of the DROP election, and WHEREAS, the Trustees of the Police and Fire Retirement Board, Act 345 have verified that CAPTAIN BONNIE DEMEYERE meets all those requirements for participation in the DROP as established in both Act 345 and the applicable collective bargaining agreement, and WHEREAS, the Trustees have provided all the necessary personal and financial data to the Board’s Actuary as it relates to CAPTAIN BONNIE DEMEYERE, a single woman, and the necessary reports have been reviewed and completed by the Actuary, which includes documentation re: date of birth, and social security number, and WHEREAS, CAPTAIN BONNIE DEMEYERE has reviewed this data and has elected to receive her DROP  participation benefit in the form of a regular retirement pension, and WHEREAS, the forenamed member has requested an annuity withdrawal (total lump sum distribution from the defined contribution plan) under the provisions of the Retirement System and collective bargaining agreement, and WHEREAS, the Police and Fire Retirement Board is now in receipt of the necessary final average compensation amount. The Board of Trustees on receipt of this data forwarded it to the Board Actuary for the updated retirement data. The actuary has indicated to the Board, in writing, the retirement benefits due CAPTAIN BONNIE DEMEYERE, as a result of this data, therefore be it RESOLVED, that CAPTAIN BONNIE DEMEYERE after having been credited with 25 years, as of the date of the DROP election, is hereby granted DROP participation in accordance with Act 345 and the collective bargaining agreement, effective April 27, 2012. RESOLVED, that CAPTAIN BONNIE DEMEYERE request for annuity withdrawal, authorizing a payment representing the total amount of his contribution plus interest to the date of his participation in the DROP, be granted, and further RESOLVED, that CAPTAIN BONNIE DEMEYERE shall be paid an annuity withdrawal (total lump sum distribution from the defined contribution plan) of $107,159.98, and a yearly regular retirement pay in the amount of $92,138.40 or monthly benefits of $7,678.20, after DROP participation and termination of employment, and further RESOLVED, that CAPTAIN BONNIE DEMEYERE shall be credited $8,345.87 monthly during the period of DROP participation because distribution of the annuity withdrawal was deferred until termination of employment, and further RESOLVED, that the Treasurer shall immediately calculate and pay CAPTAIN BONNIE DEMEYERE the appropriate amounts. All amounts shall be paid  into the DROP account until the date of termination, after which time distribution shall be made in accordance with the collective bargaining agreement. Motion by Wellhausen, supported by Solak, to adopt the resolution as presented. Ayes: Wellhausen, Solak, Nash, Varney. Absent: Padovini. The motion carried; the resolution is hereby adopted. Mr. Padovini arrived at 3:40 p.m. 7. Jimmy Fawaz – EDRO/annuity withdrawal question - discussion Police Sgt. Jimmy Fawaz has requested clarification of his EDRO as it relates to the annuity withdrawal. Legal Counsel reviewed the EDRO and Mr. Fawaz is eligible to take 100% of the annuity withdrawal. No motion was required. 8. 2012/13 Meeting schedule – discussion The meeting schedule for 2012/13 fiscal year must be approved and posted. The dates for the regular meetings of the Sterling Heights Police & Fire Retirement System for the 2012/13 fiscal year are as follows: Thursday, July 19, 2012 at 4:000 pm Thursday, August 16, 2012 at 4:00 pm Thursday, September 20, 2012 at 4:00 pm Thursday, October 18, 2012 at 4:00 pm Thursday, November 15, 2012 at 4:00 pm Thursday, December 13, 2012 at 4:00 pm Thursday, January 17, 2013 at 4:00 pm Thursday, February 21, 2013 at 4:00 pm Thursday, March 21, 2013 at 4:00 pm Thursday, April 18, 2013 at 4:00 pm Thursday, May 16, 2013 at 4:00 pm Thursday, June 20, 2013 at 4:00 pm Motion by Varney, supported by Nash, to approve the meeting dates for the fiscal year 2012/13 as presented. Ayes: All. 9. Account transfer for July 2012 benefit payments – discussion As of June 18, 2012, the Clearing Account had a balance of $125,475.43. An additional $1,400,000.00 is needed for the July 1, 2012 pension benefit payments and bills from the Clearing Account. Merrill Lynch has forwarded an e-mail that the additional amount needed should be taken from the Janus, Horizon, Earnest Partners and McDonnell accounts, based on the asset allocation targets. Motion by Solak, supported by Varney, to approve the transfer of the appropriate amount of funds from the Janus, Horizon, Earnest Partners and McDonnell accounts, based on the asset allocation targets, to provide for pension benefit payments and bills on July 1, 2012. Ayes: All. The motion carried. The Board returned to the published agenda. REGULAR AGENDA 9. FUNDS MANAGEMENT f. Interview large cap value candidates Mr. Brice gave a recap of the firms attending this meeting. 1. Herndon Capital Marc Sydnor and Ken Grimes represented Herndon Capital at this meeting. They presented a detailed report regarding their large cap value investment philosophy and style. They reviewed the written report in detail and also responded to individual Board Members’ questions. 2. BlackRock Investments Derick Grembi represented BlackRock Investments at this meeting. He presented a detailed report regarding their large cap value investment philosophy and style. He reviewed the written report in detail and also responded to individual Board Members’ questions. 3. Eagle Capital Management John Johnson represented Eagle Capital Management at this meeting. He presented a detailed report regarding their large cap value investment philosophy and style. He reviewed the written report in detail and also responded to individual Board Members’ questions. Mr. Brice gave a brief recap of the three presentations. After discussion the following motion was considered: Motion by Wellhausen, supported by Nash, to terminate Horizon and MD Sass and to hire Herndon Capital and Eagle Capital, pending contract negotiations. Ayes: All. The motion carried.  The Board also discussed cancelling the Dividend Reinvestment Plan (DRIP) with Intercontinental in order to have more cash available for monthly benefits and bills. Motion by Varney, supported by Nash, to cancel the DRIP with Intercontinental. Ayes: All. The motion carried. Appropriate documentation will be sent to Intercontinental on their required form. 11. Trustee Comments: None. 12. ADJOURNMENT Motion by Padovini, supported by Wellhausen, to adjourn at 5:58 p.m. Ayes: All. The motion carried; the meeting is hereby adjourned. Mark Wellhausen Secretary