Police & Fire Retirement Board

REGULAR MEETING MINUTES OF THE STERLING HEIGHTS POLICE AND FIRE RETIREMENT SYSTEM, ACT 345 MAY 21, 2015 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 Lamerato at 3:30 p.m. 2. Board Members present: Lamerato, Wellhausen, Maleszyk, Schwarb, Varney. Also present: Tim Brice, representing The Brice Group/Morgan Stanley Graystone Consulting; Tom Michaud, Legal Counsel; and Nancy Duyck, Pension Technician. 3. APPROVAL OF CONSENT AND REGULAR AGENDAS Motion by Wellhausen, supported by Schwarb, to approve the consent agenda as presented. Ayes: All. The motion carried. The following items were added to the regular agenda. 10 a 5 Lamar Kashat – municipal buyback - discussion 10 a 6 Actuarial Report date change – discussion Motion by Wellhausen, supported by Schwarb, to approve the regular agenda as amended. Ayes: All. The motion carried. Regular Meeting Minutes – May 21, 2015 Page Two 4. APPROVAL OF MINUTES No corrections were made to the draft minutes of the regular meeting of April 16, 2015. Motion by Schwarb, supported by Maleszyk, to approve the minutes as presented. Ayes: All. The motion carried; the minutes of the regular meeting of April 16, 2015 are hereby approved as presented. 5. CITIZEN PARTICIPATION There was no Citizen participation. 6. REPORT FROM LEGAL COUNSEL Legal Counsel supplied the annual 2015 Legal Case Update for the Board’s review. Mr. Michaud commented on items of old business as they were considered. CONSENT AGENDA 7. CORRESPONDENCE a. Other correspondence received from: 1. Eagle insights 2. Earnest Partners – Form ADV Part II 3. Herndon performance update – March 4. Intercontinental – Form ADV Part II 5. Invesco – Form ADV Part II 6. Morgan Stanley – market value updates 7. Pomerantz LLP 8. Robbins, Geller, Rudman & Dowd LLP b. Magazines received: 1.Institutional Investor for May 2015 2. Pensions & Investments for April 20, May 4 and 18, 2015. 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. Regular Meeting Minutes – May 21, 2015 Page Three CONSENT AGENDA – cont. 8. BILLS AND EXPENDITURES – cont. c. Checking Account Summary Beginning Balance $ 4,749.22 4/01/15  Additions (1) 1. 4/28 $ 5,000.00 Subtractions (7) $ 2,052.93 1. 4/29 Check 1969 27.49 AT & T phone bill – 4/16/15 2. 4/10 Check 5326 910.72 Contract Payment Nancy Duyck 3. 4/13 Check 5327 79.74 Contract fee – Gurin & Gurin 4. 4/27 Check 5328 124.25 St. of MI UIA 5. 4/24 Check 5329 910.73 Contract Payment Nancy Duyck Electronic withdrawals (4) $1,694.65 1. 4/01 376.25 IRS Fed. tax w/h 2. 4/13 461.54 IRA contribution 3. 4/15 376.27 IRS Fed. tax w/h 4. 4/20 104.34 Michigan St. tax w/h 5. 4/29 376.25 IRS Fed. tax w/h Ending Balance $ 6,001.64 4/30/15 d. Transmittal of Checks 1. $63.64 received from LPS Securities Litigation as a pro rata share of the supplemental distribution of the Net Settlement Fund in the Lender Processing Services, Inc. litigation. 2. $6.00 Check received from Roosen, Varchetti & Olivier PLLC for a garnishment fee. 3. $286.17 received from Gary Choate for one-half of the fee for an EDRO actuarial calculation. 9. FUNDS MANAGEMENT a. The current value of funds as of April 30, 2015 is detailed below: Clearing account $ 3,251,122.90 Intercontinental $ 6,731,522.16 Regular Meeting Minutes – May 21, 2015 Page Four CONSENT AGENDA 9. FUNDS MANAGEMENT a. The current value of funds as of April 30, 2015 is detailed below: - cont. Winslow $ 16,282,811.69 Janus $ 16,925,803.86 Eagle $ 11,310,343.43 Herndon $ 22,094,236.71 Earnest Partners $ 14,670,324.18 NFJ/Allianz $ 16,395,997.92 AIM/Invesco $ 17,878,801.76 Western $ 27,288,151.25 Met West $ 25,627,589.26 London Co. $ 31,499,435.26 MS Cash $ 1,648.00  Checking account $ 6,001.64 TOTAL FUNDS $ 209,963,790.02 b. The Board received a copy of the Summary of Employer Contributions to the Police and Fire Retirement System for the 2014 tax year as of 5/12/15. The System has received $7,742,518.51 of the 2014/15 budget of $7,953,970.00, leaving a $211,451.49 balance. c. Benefit Register Listing as of May 1, 2015 from Comerica Bank showing 320 retirees/beneficiaries with a payout for May of $1,306,664.75 and a year-to-date of $7,019,704.06. d. The current Merrill Lynch Bond index for April 2015 is 1.99%. 10. BENEFITS & PLAN ADMINISTRATION a. Old Business None. REGULAR AGENDA 8. BILLS AND EXPENDITURES a. Disbursements other than retiree benefit payments (bills) 1. Disbursement to the City of Sterling Heights in the total amount of $1,854.56 for accounting services rendered for the first quarter 2015 and the Braathen EDRO calculation. Regular Meeting Minutes - May 21, 2015 Page Five REGULAR AGENDA 8. BILLS AND EXPENDITURES a. Disbursements other than retiree benefit payments (bills) – cont. 2. Disbursement to Morgan Stanley in the total amount of $206,597.75 for investment management fees for the first quarter 2015 for all ten money manager accounts. 3. Disbursement to Eagle Capital Management in the amount of $37,490.28 for investment management fees for the first quarter 2015. Motion by Schwarb, supported by Wellhausen, to approve the bills as presented. Ayes: All. The motion carried. 9. FUNDS MANAGEMENT e. Quarterly Performance Report 1. The Brice Group Tim Brice reviewed the summary report of manager performance. Enclosed in this report was the Board’s summary of investment policies and objectives, first quarter 2015 AIM Market Focus report.  Also included was an executive summary of the Composite, NFJ/Allianz, Eagle, Earnest, Herndon, Intercontinental, Invesco, Janus, London, MetWest, Western and Winslow reports. The following manager specific comments were discussed: Western Asset Management a. The total portfolio return in the first quarter was 1.5%, ranking in the 90th percentile of the IM U.S. Broad Market Fixed Sample. It trailed the BC Aggregate Bond index (1.6%). b. Their total portfolio return was 5.0% since inception (7/1/11). This exceeded the BC Aggregate Bond index (3.9%). Regular Meeting Minutes – May 21, 2015 Page Six REGULAR AGENDA 9. FUNDS MANAGEMENT e. Quarterly Performance Report 1. The Brice Group – cont. Herndon Investment Counsel a. The total portfolio return in the first quarter was 2.5%, ranking in the 14th percentile of the IM U.S. Large Cap Value Equity. It exceeded the Russell 1000 Value Index (-0.7%). b. Their total portfolio return was 13.9% since inception (10/1/12). This trailed the Russell 1000 Value Index (18.1%). Eagle Investment Counsel a. The total portfolio return in the first quarter was 1.3%, ranking in the 35th percentile of the IM U.S. Large Cap Value Equity. It exceeded Russell 1000 Value Index (-0.7%). b. Their total portfolio return was 20.3% since inception (10/1/12). This exceeded the Russell 1000 Value Index (18.1%). Winslow Investment Counsel a. The total portfolio return in the first quarter was 4.1%, ranking in the 47th percentile of the IM U.S. Large Cap Growth Equity. It exceeded the Russell 1000 Growth Index (3.8%). b. Their total portfolio return was 15.1% since inception (4/1/12). This trailed the Russell 1000 Growth Index (16.3%). Janus Investment Counsel a. The total portfolio return in the first quarter was 7.9%, ranking in the 4th percentile of the IM U.S. Large Cap Growth Equity. It exceeded the Russell 1000 Growth Index (3.8%). b. Their total portfolio return was 15.4% since inception (1/1/10). This trailed the Russell 1000 Growth Index (15.8%). Earnest Partners  a. The total portfolio return in the first quarter was 5.5%, ranking in the 58th percentile of the IM U.S. SMID Cap Core Equity. It exceeded the Russell 2500 Index (5.2%). b. Their total portfolio return was 10.2% since inception (10/1/06). This exceeded the Russell 2500 Index (9.1%). Regular Meeting Minutes – May 21, 2015 Page Seven REGULAR AGENDA 9. FUNDS MANAGEMENT e. Quarterly Performance Report 1. The Brice Group – cont. INVESCO Capital Management a. The total portfolio return in the first quarter was 3.6%, ranking in the 81st percentile of the IM International Equity Developed Markets. It exceeded the MSCI AC World x US net (3.5%). b. Their total portfolio return was 7.6% since inception (1/1/11). This exceeded the MSCI AC World x US net (3.5%). NFJ/Allianz Global Investors a. The total portfolio return in the first quarter was 0.2%, ranking in the 99th percentile of the IM International Equity Developed Markets. It trailed the MSCI AC World x US net (3.5%). b. Their total portfolio return was 3.9% since inception (1/1/11). This exceeded the MSCI AC World x US net (3.5%). The following table details the Investment Performance Review for the first quarter ending March 31, 2015. Market value of the funds under management as of March 31, 2015 was $204,860,322.00. The total fund return for the first quarter was 3.0%, ranking in the 18th percentile of All Public Plans less than $1 billion, as summarized below: 12/14 3/14 3/12 3/10 3/05 1/92 To 3/15 to 3/15 to 3/15 to 3/15 to 3/15 to 3/15 Total fund* 3.0/18 10.6/2 11.0/19 9.7/45 5.8/92 n/a *Ranked against All Public Plans less than $1 billion The following manager specific return information is detailed separately from the other long-term data: 12/14 3/14 3/12 7/11 Western to 3/15 to 3/15 to 3/15 to 3/15 Total Fund* 1.5/90 6.7/9 4.7/24 5.0/39 *Ranked against the IM U.S. Broad Market Fixed 12/14 3/14 10/12 Herndon to 3/15 to 3/15 3/15 Total Fund* 2.5/14 4.4/93 13.9/93 *Ranked against the IM U.S. Large Cap Value Equity Regular Meeting Minutes – May 21, 2015 Page Eight REGULAR AGENDA 9. FUNDS MANAGEMENT e. Quarterly Performance Report 1. The Brice Group – cont. 12/14 3/14 10/12 Eagle to 3/15 to 3/15 to 3/15 Total Fund* 1.3/35 12.1/26 20.3/31 *Ranked against the IM U.S. Large Cap Value Equity 12/14 3/14 4/12 Winslow to 3/15 to 3/15 to 3/15 Total Fund* 4.1/47 16.2/40 15.1/70 *Ranked against the IM U.S. Large Cap Growth Equity 12/14 3/14 3/12 1/10 Janus to 3/15 to 3/15 to 3/15 to 3/15 Total Fund* 7.9/4 21.5/5 17.6/26 15.4/53 *Ranked against the IM U.S. Large Cap Growth Equity 12/14 3/14 3/12 3/10 10/06 Earnest Part. to 3/15 to 3/15 to 3/15 to 3/15 to 3/15 Total Fund* 5.5/58 13.7/37 18.2/43 16.5/53 10.2/58 *Ranked against the IM U.S. SMID Cap Core Equity 12/14 3/14 3/12 1/11 Invesco to 3/15 to 3/15 to 3/15 to 3/15 Total Fund* 3.6/81 4.6/19 10.0/49 7.6/36 *Ranked against the IM International Equity Developed Markets 12/14 3/14 3/12 1/11 NFJ/Allianz to 3/15 to 3/15 to 3/15 to 3/15 Total Fund* 0.2/99 -4.3/87 5.1/98 3.9/89 *Ranked against IM International Equity Developed Markets f. MetWest Performance Report – conference call Erick Coan from MetWest presented a performance report through a conference call with the Board. He had forwarded a detailed report regarding the funds under management. He reviewed the report and responded to individual Board member’s questions. Market value of the funds under management as of March 31, 2015 was $25,600,927.00. Regular Meeting Minutes – May 21, 2015 Page Nine REGULAR AGENDA 10. BENEFITS & PLAN ADMINISTRATION a. New Business  1. Mark Glazewski – retirement resolution - discussion Officer Mark Glazewski of the Police Department retired effective April 3, 2015. All required paperwork is on file in the Pension Office. The following retirement resolution was considered: R 15-5-21-1 WHEREAS, OFFICER MARK GLAZEWSKI of the Police Department has submitted his request for a service retirement to the Police and Fire Retirement Board with an effective requested date of retirement April 3, 2015, and WHEREAS, OFFICER MARK GLAZEWSKI has served the City of Sterling Heights Police Department for 13 years, 2 months and 8 days, which includes 5 months and 26 days of lost time, and WHEREAS, OFFICER MARK GLAZEWSKI has requested that the Trustees recognize his prior service with the City of Hamtramck under the Reciprocal Retirement Act, Public Act 88 of 1961, as amended, and WHEREAS, the Trustees have received verification from the City of Hamtramck that OFFICER MARK GLAZEWSKI had over 23 years of service time with the City of Hamtramck, and WHEREAS, the Trustees of the Police and Fire Retirement Board, Act 345 have verified that OFFICER MARK GLAZEWSKI meets all those requirements for a service retirement 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 OFFICER MARK GLAZEWSKI and his spouse, ROCHELLE GLAZEWSKI, 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, OFFICER MARK GLAZEWSKI has reviewed this data and has elected to receive his service retirement 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 Regular Meeting Minutes – May 21, 2015 Page Ten REGULAR AGENDA 10. BENEFITS & PLAN ADMINISTRATION a. New Business 1. Mark Glazewski – retirement resolution – discussion – cont. 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 Actuaries for the updated retirement data. The actuary  has indicated to the Board, in writing, the retirement benefits due OFFICER MARK GLAZEWSKI, as a result of this data, and THEREFORE, BE IT RESOLVED, that OFFICER MARK GLAZEWSKI shall be paid an annuity withdrawal (total lump sum distribution from the defined contribution plan) of $61,800.61 and a yearly regular retirement pay in the amount of $30,111.24 or monthly benefits of $2,509.27. That the Treasurer shall immediately calculate and pay OFFICER MARK GLAZEWSKI the appropriate amount effective from the first date of his retirement, April 3, 2015, and further RESOLVED, that the Trustees approve OFFICER MARK GLAZEWSKI’s request to recognize 23 years of service time under the Reciprocal Retirement Act, PublicAct 88 of 1961, as amended, for purposes of meeting the service credit requirements for service retirement under the Retirement System, and further RESOLVED, that service credit recognized under the Reciprocal Retirement Act is solely for satisfying the eligibility requirements for a service retirement allowance, and is approved in accordance with Public Act 345 of 1937, as amended, applicable collective bargaining agreements, and applicable laws (specifically, MCL Public Act 88 of 1961, as amended), and further RESOLVED, that OFFICER MARK GLAZEWSKI’s request for annuity withdrawal, authorizing a payment representing the total amount of his contribution plus interest to the date of his service retirement, be granted, and further RESOLVED, that OFFICER MARK GLAZEWSKI after having been credited with 13 years, 2 months and 8 days of service credit, is hereby granted a service retirement in accordance with Act 345 effective April 3, 2015. Regular Meeting Minutes – May 21, 2015 Page Eleven REGULAR AGENDA 10. BENEFITS & PLAN ADMINISTRATION a. New Business 1. Mark Glazewski – retirement resolution – discussion – cont. Motion by Schwarb, supported by Wellhausen, to adopt the resolution and approve the retirement and annuity withdrawal disbursements and process the retirement certificate as presented. Ayes: All. The motion carried. 2. Mark Schroeder – DROP retirement termination - discussion Captain Mark Schroeder of the Fire Department terminated his DROP retirement as of April 17, 2015. All required paperwork is on file in the Pension Office. Motion by Wellhausen, supported by Schwarb, to approve the retirement and annuity withdrawal disbursements and process the retirement certificate as presented. Ayes: All.  The motion carried. 3. Bonnie De Meyere – DROP retirement termination - discussion Battalion Chief Bonnie De Meyere of the Fire Department terminated her DROP retirement as of April 23, 2015. All required paperwork is on file in the Pension Office. Motion by Wellhausen, supported by Schwarb, to approve the retirement and annuity withdrawal disbursements and process the retirement certificate as presented. Ayes: All. The motion carried. Regular Meeting Minutes – May 21, 2015 Page Twelve REGULAR AGENDA 10. BENEFITS & PLAN ADMINISTRATION a. New Business 4. FOIA Policy and Procedures - discussion Legal Counsel has supplied a draft FOIA Policy and Procedures for the Board’s review. After discussion the following motion was made: Motion by Varney, supported by Wellhausen, to table this item until the next meeting. Ayes: All. The motion carried. 5. Lamar Kashat – law enforcement buyback - 3 years - discussion The above named Police Officer has submitted an application for buyback of law enforcement time as noted. All required paperwork is on file in the Pension Office. Motion by Schwarb, supported by Wellhausen, to approve the buyback as presented. Ayes: All. The motion carried. 6. Actuarial report date change – discussion The Treasurer requested a change for the actuarial report from a calendar year basis to a fiscal year basis, which would correspond with the requirements for GASB 67 and 68 reports.  Motion by Varney, supported by Wellhausen, to change the actuarial report date from a calendar year basis to a fiscal year basis starting June 30, 2015. Yes: All Motion carried. Regular Meeting Minutes – May 21, 2015 Page Thirteen 11. TRUSTEE COMMENTS Wellhausen reported that Randall Schwarb was re-elected as the Police Representative to the Board to a term ending June 30, 2019. Wellhausen noted that the June and July pension meetings would be held at City Hall Conference Room 202 due to the parking lot resurfacing at Fire Station 5. Varney stated that the new City web site is up and running and requested any suggestions from the Board on pension related items for the web site. 12. ADJOURNMENT Motion by Wellhausen, supported by Schwarb, to adjourn at 5:15 p.m. Ayes: All. The motion carried; the meeting is hereby adjourned. Mark Wellhausen Secretary