Police & Fire Retirement Board

REGULAR MEETING MINUTES OF THE STERLING HEIGHTS POLICE AND FIRE RETIREMENT SYSTEM, ACT 345 SEPTEMBER 19, 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 3:27 p.m. 2. Board Members present: Solak, Wellhausen, Nash, Lamerato, Varney. Also present: Tim Brice, representing Merrill Lynch Private Client Group; Marc Sydnor and Derik Coffey, representing Herdon Capital; Jacob Katz and Cameron Schneider, representing CSSC Investment Advisory Services, Inc; Tom Michaud, Legal Counsel; and Nancy Duyck, Pension Technician. 3. APPROVAL OF CONSENT AND REGULAR AGENDAS Motion by Wellhausen, supported by Lamerato, to approve the consent agenda as presented. Ayes: All. The motion carried. Motion by Nash, supported by Lamerato, to approve the regular agenda as presented. Ayes: All. The motion carried. 4. APPROVAL OF MINUTES No corrections were made to the draft minutes of the regular meeting of August 15, 2013. Motion by Varney, supported by Lamerato, to approve the minutes as presented. Ayes: All. The motion carried; the minutes of the regular meeting of August 15, 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 supplied a legislative update on proposed House Bill No. 4314, which would amend the Freedom of Information Act to establish the Open Government Commission within the Michigan Department of Civil Rights. Mr. Michaud commented on items of old business as they were considered. CONSENT AGENDA 7. CORRESPONDENCE a. Correspondence from Intercontinental dated August 13, 2013 re: distribution in U.S. REIF Fund. b. Correspondence from Intercontinental dated August 20, 2013 re: distribution in U.S. REIF III Fund. c. Other correspondence received from: 1. Bernstein Litowitz Berger & Grossman LLP 2. ING Investment Management 3. Merrill Lynch – market value updates 4. NCPERS 5. P & I Conferences 6. Pomerantz Grossman Hufford Dahlstrom & Gross LLP 7. Robbins Geller Rudman & Dowd LLP d. Magazines received: 1. Pensions & Investments for August 19 and September 2 and 16, 2013. 2. Institutional Investor for September 2013 3. Plan Sponsor for September 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 $3,636.00 8/01/13  Additions (1) 1. 8/07 $5,000.00 Subtractions (8) $3,755.74 1. 8/22 Check 1916 500.00 MAPERS reg. (2) 2. 8/22 Check 1917 250.00 MAPERS reg. (1) 3. 8/16 Check 1918 160.20 ND – postage reimbursement 4. 8/26 Check 1919 40.18 AT & T phone bill – 8/16/13 5. 8/05 Check 5258 76.64 Contract fee – Gurin & Gurin 6. 8/02 Check 5259 909.57 Contract Payment Nancy Duyck 7. 8/16 Check 5260 909.57 Contract Payment Nancy Duyck 8. 8/30 Check 5261 909.58 Contract Payment Nancy Duyck Electronic withdrawals (4) $1,320.72 1. 8/05 461.54 IRA contribution 2. 8/07 377.42 IRS Fed. tax w/h 3. 8/20 104.34 Michigan St. tax w/h 4. 8/21 377.42 IRS Fed. tax w/h Ending Balance $ 3,559.54 8/31/13 d. Transmittal of Checks There were no checks transmitted this month. 9. FUNDS MANAGEMENT a. The current value of funds as of August 31, 2013 is detailed below: Clearing account $ 1,263,393.04 Intercontinental $ 8,846,271.12 McDonnell $ 15,459,929.44 Winslow $ 20,021,530.78 Janus $ 20,123,672.25 Eagle $ 20,014,828.98 Herndon $ 19,640,903.79 Earnest Partners $ 11,304,736.02 NFJ/Allianz $ 15,235,384.74 AIM/Invesco $ 15,228,326.75 Pimco $ 15,279,733.83 Wamco $ 15,944,657.32  Checking account $ 3,559.54 TOTAL FUNDS $ 178,366,927.60 b. The Board received a copy of the Summary of Employer Contributions to the Police and Fire Retirement System for the 2013 tax year as of 8/28/13. The System has received $4,937,900.00 of the 2013/14 budget of $8,095,472.00, leaving a $3,157,572.00 balance. c. Benefit Register Listing as of September 1, 2013 from Comerica Bank showing 298 retirees/beneficiaries with a payout for September of $1,188,170.06 and a year-to-date of $10,996,957.51. d. The current Merrill Lynch Bond index for August 2013 is 2.25%. 10. BENEFITS & PLAN ADMINISTRATION a. Old Business 1. Abel/Noser Reports for July 2013 Abel/Noser has supplied the July 2013 report. 2. 2013 Annual verifications The 2013 annual verifications were mailed out on August 15, 2013 to all retirees/beneficiaries receiving benefits from the Retirement System. The verifications are due back to the Pension Office by September 30, 2013. REGULAR AGENDA 8. BILLS AND EXPENDITURES a. Disbursements other than retiree benefit payments (bills) No bills were received for payment this month. 9. FUNDS MANAGEMENT e. Performance Report 1. Herdon Capital Management Marc Sydnor and Derik Coffey of Herdon Capital Management were in attendance to discuss their performance with the Board.  Tim Brice suggested that the Board request McDonnell Investment Management attend the November regular/quarterly meeting to discuss their performance. He will notify McDonnell. 10. BENEFITS & PLAN ADMINISTRATION a. Old Business 3. Tax Recovery Service - discussion Comerica Bank has contracted with a private company to do tax recovery service. Forms have been received should the Board wish to proceed with the new service. Motion by Solak, supported by Wellhausen, to approve participation in the new tax recovery service as presented. Ayes: All. The motion carried. 4. Jeffrey Valken – EDRO resolution – discussion The Board is in receipt of an Eligible Domestic Relation Order dated August 16, 2013 that purports to grant Alternate Payee, Suzanne (Valken) Hartley part of the monthly pension benefit normally payable to DROP active Police Officer Jeffrey Valken. Legal Counsel has opined that the EDRO is consistent with the provisions of the Retirement System and applicable law. After discussion, the following resolution was considered: L 13-9-19-1 Re: Jeffrey Valken v. SUZANNE (VALKEN) HARTLEY Macomb County Circuit Court Case No. 12-6913-DO WHEREAS, the Board of Trustees is in receipt of an Eligible Domestic Relations Order (EDRO) dated August 16, 2013, wherein Suzanne (Valken) Hartley, the Alternate Payee, is awarded certain rights to the retirement benefits of Jeffrey Valken, the Participant, and WHEREAS, the Alternate Payee is entitled to claim a portion of the Participant’s retirement benefit from the Defined Benefit Plan and a portion of the Participant’s Deferred Retirement Option Plan (DROP) Account, and WHEREAS, the payments from the plan to the Alternate Payee of the Participant’s defined benefit benefits shall begin when the Participant commences benefits from the Retirement System, unless the Alternate Payee elects to receive benefits at any time after the Participant reaches his earliest retirement date, but not later than when the Participant actually commences benefits, and WHEREAS, Section 6 of the EDRO states that the Participant’s DROP Account is divisible immediately, and WHEREAS, the Board’s policy is to require that the cost for the actuary’s calculations are to be borne by the parties to the domestic relations proceedings, and the order provides that the Participant and the Alternate Payee shall be equally responsible for any and all additional costs for actuarial services, and WHEREAS, said matter has been discussed with Legal Counsel who has opined that the applicable terms of said court order are consistent with the provisions of the Retirement System and applicable law including Public Act 46 of 1991 (MCLA 38.1701) as amended, therefore be it RESOLVED, that the Board of Trustees acknowledges receipt of said court order, will pay pension benefits consistent with said order subject to an application being filed by either the Alternate Payee or the Participant seeking payment, and further RESOLVED, that upon application of either the Alternate Payee or the Participant, this file be forwarded to the Board’s actuary for calculation of the benefits, and further RESOLVED, that notwithstanding Section 6 of the EDRO, the Participant’s DROP Account is not divisible until the Participant terminates employment with the City of Sterling Heights and terminates his DROP participation, 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 further RESOLVED, that copies of this resolution be sent to Jeffrey Valken, the Participant; Christopher Fischer, Esq., Attorney for the Participant; Suzanne (Valken) Hartley, the Alternate Payee; Talia Goetting, Esq., Attorney for the Alternate Payee; and the Board’s actuary. Motion by Solak, supported by Wellhausen, to adopt the resolution as presented. Ayes: All. The motion carried; the resolution is hereby adopted. 5. David Vinson – partial DROP distribution – discussion  Chief David Vinson of the Police Department terminated his DROP retirement as of June 18, 2008. He requested a partial distribution from his DROP account. Motion by Solak, supported by Wellhausen, to approve the partial DROP distribution as presented. Ayes: All. The motion carried. 6. Consultant RFI – discussion The Consultant RFIs are due on Friday, September 20, 2013. The Board discussed the next phase of the review process. Ken Solak and Mark Wellhausen will review the submitted RFIs and make a recommendation to the Board of firms to interview. 7. Presentation by Jacob Katz, CSSC Jacob Katz and Cameron Schneider of CSSC Investment Advisory Services were in attendance to discuss with the Board their manager research investment program. 11. Trustee CommentS Jennifer Varney supplied the Board with an updated comparison of the pension and OPEB funds with their annual returns. She also stated that no additional firms had supplied an RFI for fiduciary insurance. 12. ADJOURNMENT Motion by Solak, supported by Varney, to adjourn at 5:45 p.m. Ayes: All. The motion carried; the meeting is hereby adjourned. Mark Wellhausen Secretary