Police & Fire Retirement Board

REGULAR MEETING MINUTES OF THE STERLING HEIGHTS POLICE AND FIRE RETIREMENT SYSTEM, ACT 345 JUNE 20, 2013 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 4:02 p.m. 2. Board Members present: Solak, Wellhausen, Lamerato, Varney. Absent: Nash (excused). Also present: Tom Michaud, Legal Counsel; and Nancy Duyck, Pension Technician. 3. APPROVAL OF CONSENT AND REGULAR AGENDAS Motion by Lamerato, supported by Wellhausen, to approve the consent agenda as presented. Ayes: Solak, Wellhausen, Lamerato, Varney. Absent: Nash. The motion carried. The following item was added to the regular agenda: 10 a 6 Jeffery Valken – DRO rejection resolution - discussion Motion by Varney, supported by Lamerato, to approve the regular agenda as amended. Ayes: Solak, Wellhausen, Lamerato, Varney. Absent: Nash. The motion carried. 4. APPROVAL OF MINUTES No corrections were made to the draft minutes of the regular meeting of May 16, 2013. Motion by Solak, supported by Lamerato, to approve the minutes as presented. Ayes: Solak, Wellhausen, Lamerato, Varney. Absent: Nash. The motion carried; the minutes of the regular meeting of May 16, 2013 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. Correspondence from Intercontinental dated May 7, 2013 re: distribution from U.S. Real Estate Investment Fund III. b. Correspondence from Intercontinental dated May 9, 2013 re: distribution from U.S. Real Estate Investment Fund. c. E-mail from Merrill Lynch dated May 21, 2013 re: Eagle Capital section limits. d. Correspondence from Rodwan Consulting Company dated May 21, 2013 re: S.H.P.O.A. supplemental report. e. Correspondence from City Clerk dated May 22, 2013 re: Fire Department representative election and results dated June 11, 2013. f. Other correspondence received from: . ING Investment Management . Merrill Lynch – market value updates . Pomerantz Grossman Hufford Dahlstrom & Gross LLP . Robbins Geller Rudman & Dowd LLP g. Magazines received: 1. Pensions & Investments for May 27 and June 10, 2013. 2. Institutional Investor for June 2013 3. Plan Sponsor for June 2013 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 $5,238.47 5/01/13 Additions (1)  1. 5/15 $5,000.00 Subtractions (5) $1,966.80 Check 1. 5/20 31.79 MW – power strip 1905 Check 2. 5/20 39.22 AT & T phone bill – 5/16/13 1906 Check VOID 5248 Check Contract Payment Nancy 3. 5/10 909.58 5249 Duyck Check 4. 5/13 76.64 Contract fee – Gurin & Gurin 5250 Check Contract Payment Nancy 5. 5/29 909.57 5251 Duyck Electronic withdrawals (5) $1,698.17 1. 5/01 377.40 IRS Fed. tax w/h 2. 5/13 461.54 IRA contribution 3. 5/15 377.47 IRS Fed. tax w/h 4. 5/20 104.34 Michigan St. tax w/h 5. 5/30 377.42 IRS Fed. tax w/h Ending Balance $6,573.50 5/31/13 d. Transmittal of Checks There were no checks transmitted this month. 9. FUNDS MANAGEMENT a. The current value of funds as of May 31, 2013 is detailed below: Clearing account $ 135,913.62 Intercontinental $ 9,206,805.84 McDonnell $ 15,872,961.94 Pimco $ 16,221,394.71 Wamco $ 16,392,494.66 Winslow $ 20,134,029.11 Janus $ 20,129,889.69 Eagle $ 20,253,815.92 Herndon $ 20,327,152.45 Earnest Partners $ 11,107,927.94 NFJ/Allianz $ 15,666,923.51 AIM/Invesco $ 15,053,629.93 Checking account $ 6,573.50 TOTAL FUNDS $ 180,509,512.82  b. The Board received a copy of the Summary of Employer Contributions to the Police and Fire Retirement System for the 2012 tax year as of 6/13/13. The System has received $8,638,459.88 of the 2012/13 budget of $8,815,031.00, leaving a $176,571.12 balance. c. Benefit Register Listing as of June 1, 2013 from Comerica Bank showing 295 retirees/beneficiaries with a payout for June of $1,157,082.07 and a year-to-date of $7,323,529.48. d. The current Merrill Lynch Bond index for May 2013 is 1.85%. 10. BENEFITS & PLAN ADMINISTRATION a. Old Business 1. Abel/Noser Reports for April 2013 Abel/Noser has supplied the April 2013 report. REGULAR AGENDA 8. BILLS AND EXPENDITURES a. Disbursements other than retiree benefit payments (bills) 1. Disbursement to Merrill Lynch in the amount of $32,811.57 for the quarterly Herndon account UMA fee for the quarter ended 6/30/13. 2. Disbursement to Merrill Lynch in the amount of $31,265.81 for the quarterly Winslow account UMA fee for the quarter ended 6/30/13. 3. Disbursement to Merrill Lynch in the amount of $18,834.67 for the quarterly Earnest Partners account UMA fee for the quarter ended 6/30/13. 4. Disbursement to Merrill Lynch in the amount of $28,096.76 for the quarterly NFJ/Allianz account UMA fee for the quarter ended 6/30/13. 5. Disbursement to Merrill Lynch in the amount of $27,436.35 for the quarterly Pimco account UMA fee for the quarter ended 6/30/13. 6. Disbursement to Merrill Lynch in the amount of $27,590.53 for the quarterly WAMCO account UMA fee for the quarter ended 6/30/13. These ML bills are revised bills from the ones that were approved in April.  7. Disbursement to Mark Wellhausen in the amount of $716.16 for travel expenses for the 2013 Spring MAPERS Conference in Bellaire, MI on June 2-4, 2013. Motion by Varney, supported by Solak, to approve the disbursements as presented. Ayes: Solak, Lamerato, Varney. Absent: Nash. Abstain: Wellhausen. The motion carried. 10. BENEFITS & PLAN ADMINISTRATION a. Old Business 2. Code of Conduct and Ethics Policy Resolution - discussion Legal Counsel previously supplied a draft Code of Conduct and Ethics Policy for the Board’s consideration. After discussion, the following resolution was considered: RESOLUTION 74 L 13-6-20-1 Adopted: June 20, 2013 RE: CODE OF CONDUCT AND ETHICS WHEREAS, the City of Sterling Heights Police and Fire Retirement System ("Retirement System") is administered in accordance with the provisions of Public Act 345 of 1937, as amended ("Act 345"), applicable collective bargaining agreements, and applicable state and federal laws, and WHEREAS, the Board of Trustees of the Retirement System ("Board") is vested with the general administration, management, and operation of the Retirement System, and has a fiduciary responsibility to make decisions solely in the interest of plan members and beneficiaries, and WHEREAS, the Board recognizes that it is subject to the provisions of the Public Employee Retirement System Investment Act, Michigan Public Act 314 of 1965 ("Act 314"), as amended [MCL 38.1132 et seq.], wherein the Board is required to act as a prudent investor in all transactions related to Retirement System funds and assets by discharging its duties solely in the interest of the participants and beneficiaries, and shall act with the same care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a similar capacity and familiar with those matters would use in the conduct of a similar enterprise with similar aims; and with due regard for the management, reputation, and stability of the issuer and the character of the particular investments being considered, and WHEREAS, the Board recognizes that in order for the members and beneficiaries of the Retirement System to have the best representation by their elected and appointed Trustees, it is imperative for the representatives of the Retirement System to participate in Board business, including Board meetings, continuing education programs, and due diligence evaluations of current and potential investments, and WHEREAS, due to the fiduciary responsibilities entrusted to the Board, all Retirement System representatives are encouraged to participate in Board business and maintain the highest standards of conduct and ethics above the minimum requirements of applicable law and policy, and WHEREAS, the Board desires to state its policy with regard to Trustee conduct and ethics, therefore be it RESOLVED, that each and every member of the Board shall diligently attend to the business of the Retirement System and shall not leave to other Board members control over the administration of the affairs of the Board and Retirement System, and further RESOLVED, that Board members shall conduct official and private affairs so as to avoid giving rise to a reasonable conclusion that he or she can be improperly influenced in the performance of his or her public duty or that he or she is using his or her position on the Board to further his or her own financial interests, and further RESOLVED, Board members shall not do any of the following: (a) accept or solicit any gift, favor, or service that may reasonably tend to influence a trustee in the discharge of official duties or that the trustee knows, or should know, is being offered with the intent to influence the trustee’s official conduct; (b) accept other employment or compensation that could reasonably be expected to impair the trustee’s independence of judgment in the performance of the trustee’s official duties; (c) intentionally or knowingly solicit, accept, or agree to accept any benefit for having exercised the trustee’s official powers or for having performed the trustee’s official duties in favor of another; (d) transact any business in the trustee’s official capacity with any entity or person in which the trustee has an economic interest; (e) appear before the Board of Trustees while acting as an advocate for himself or any other person, group, or entity; (f) represent any business entity before the Board of Trustees, for pay;  (g) use his position as a trustee to secure a special privilege or exemption for himself or others, or to secure confidential information for any purpose other than official duties; and (h) intentionally or knowingly disclose any confidential information gained by reason of the trustee’s position concerning the property, operations, policies or affairs of the Board of Trustees, or use such confidential information for pecuniary gain, and further RESOLVED, that Board members shall provide fair and equal treatment to all persons and matters coming before the Board, and further RESOLVED, that Board members are expected to and may provide general information to Plan members, however, Board members shall also be aware of the risk of communicating inaccurate information to plan members (both active members and retirees), and the possible harm to a plan member that may result from any such miscommunications, and further RESOLVED, that Board members shall mitigate the risk of miscommunication with plan members by refraining from providing specific detail, advice or counsel with respect to the rights or benefits to which a plan member may be entitled, and where explicit advice or counsel is needed, Board members will refer inquiries to the appropriate designee, and further RESOLVED, that upon becoming aware of a violation of this Policy, Board member(s) shall have a duty to disclose said violation(s) in writing prior to the next regularly scheduled meeting of the Board, and further RESOLVED, that violation of this Policy by any member of the Board may result in disciplinary action as determined by the remaining Board members, up to and including removal from the Board in accordance with applicable law, and further RESOLVED, that the Board shall make this policy resolution available to all current and prospective service providers, as well as the appropriate City, Union, and Departmental Representatives. Motion by Lamerato, supported by Wellhausen, to adopt the resolution as presented. Ayes: Solak, Wellhausen, Lamerato, Varney. Absent: Nash. The motion carried, the resolution is hereby adopted. 3. 2013/14 Meeting schedule – discussion The meeting schedule for 2013/14 fiscal year must be approved and posted. The dates for the regular meetings of the Sterling Heights Police & Fire Retirement System for the 2013/14 fiscal year are as follows:  July 18, 2013 at 3:30 pm August 15, 2013 at 3:30 pm September 19, 2013 at 3:30 pm October 17, 2013 at 3:30 pm November 21, 2013 at 3:30 pm December 12, 2013 at 3:30 pm January 16, 2014 at 3:30 pm February 20, 2014 at 3:30 pm March 20, 2014 at 3:30 pm April 17, 2014 at 3:30 pm May 15, 2014 at 3:30 pm June 19, 2014 at 3:30 pm Motion by Lamerato, supported by Wellhausen, to approve the meeting dates for the fiscal year 2013/14 as presented with a time change from 4:00 pm to 3:30 pm. Ayes: Solak, Wellhausen, Lamerato, Varney. Absent: Nash. The motion carried. 4. Election of Officers - discussion The Board elected Officers for the 2013/14 fiscal year. It was noted that Mark Wellhausen was re-elected as the Fire representative on the Board for a term expiring June 30, 2017. Motion by Solak, supported by Lamerato, to certify the election results. Ayes: Solak, Lamerato, Varney. Absent: Nash. Abstain: Wellhausen. The motion carried. Motion by Lamerato, supported by Varney, to have the present officers continue by acclamation. Ayes: Solak, Wellhausen, Lamerato, Varney. Absent: Nash. The motion carried. 5. Account transfer for July 2013 benefit payments – discussion As of June 17, 2013, the Clearing Account had a balance of $143,136.52. An additional $1,069,100.00 is needed for the July 1, 2013 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 Herndon and Eagle accounts equally ($534,550.00), based on the asset allocation targets.  Motion by Solak, supported by Wellhausen, to approve the transfer of the appropriate amount of funds from the accounts, based on the asset allocation targets, to provide for pension benefit payments and other disbursements on July 1, 2013. Ayes: Solak, Wellhausen, Lamerato, Varney. Absent: Nash. The motion carried. 6. Jeffery Valken – DRO rejection resolution - discussion Legal Counsel has reviewed a Domestic Relations Order (DRO) for Police Officer Jeffrey Valken, who is a DROP active employee. Legal Counsel supplied a resolution to reject the DRO. After discussion, the following resolution was considered: L 13-6-20-2 Adopted: June 20, 2013 Re: Jeffrey Richard Valken v. Suzanne Marie Valken Macomb County Circuit Court Case No. 12-6913-DO WHEREAS, the Board of Trustees is in receipt of a Domestic Relations Order ("DRO") dated May 8, 2013, wherein Suzanne M. Valken, the Alternate Payee, is awarded certain rights to the retirement benefits of Jeffrey R. Valken, the Participant, and WHEREAS, the DRO states that Mr. Valken is retired, and WHEREAS, Mr. Valken is a DROP Participant and an active employee, and WHEREAS, at the time of his entry into the DROP, Mr. Valken elected the Plan’s regular straight life retirement allowance with automatic 60% surviving spouse benefit, and WHEREAS, the DRO states further that as a result of the parties’ divorce, Ms. Valken will no longer qualify for the Plan’s automatic 60% surviving spouse benefit, and WHEREAS, as Mr. Valken has not yet retired, Ms. Valken continues to remain eligible for the Plan’s automatic 60% surviving spouse benefit, and WHEREAS, said matter had been discussed with Legal Counsel who has opined that the terms of said DRO are inconsistent with the provisions of the Retirement System and applicable law, and WHEREAS, the DRO does not meet the requirements of the Retirement System and applicable law, therefore be it RESOLVED, that the Board of Trustees acknowledges receipt of said court order, rejects said court order as inconsistent with Plan provisions and applicable law, and hereby indicates that it will not pay pension benefits in accordance with the terms of said order until such time as an acceptable order is presented to the Retirement System, and further RESOLVED, that a copy of this resolution be immediately attached as the top sheet of the Participant’s pension file and other appropriate records be kept for the Retirement System relative to this matter, and RESOLVED, that the Board of Trustees’ Legal Counsel correspond directly with the parties’ attorneys to explain the reasons that the Board has rejected the DRO. Motion by Solak, supported by Wellhausen, to adopt the DRO rejection resolution as presented. Ayes: Solak, Wellhausen, Lamerato, Varney. Absent: Nash. The motion carried; the resolution is hereby adopted. 11. Trustee CommentS Wellhausen mentioned doing an investment consultant review. Legal Counsel will get questions prepared for the Board’s review. Varney stated that quotes for fiduciary liability insurance have been requested. 12. ADJOURNMENT Motion by Solak, supported by Wellhausen, to adjourn at 4:45 p.m. Ayes: Solak, Wellhausen, Lamerato, Varney. Absent: Nash. The motion carried; the meeting is hereby adjourned. Mark Wellhausen Secretary