Police & Fire Retirement Board

REGULAR MEETING MINUTES OF THE STERLING HEIGHTS POLICE AND FIRE RETIREMENT SYSTEM, ACT 345 MARCH 17, 2016 FIRE DEPARTMENT CONFERENCE ROOM 41625 RYAN ROAD STERLING HEIGHTS, MI 48314 1. President Lamerato called the regular meeting of the Police and Fire Retirement System to order at 3:30 p.m. 2. Board Members Present: Lamerato Wellhausen, Schwarb, Maleszyk, Varney. Also present: Tim Brice, representing The Brice Group/Morgan Stanley Graystone Consulting; Devin Sullivan, representing Intercontinental Real Estate; Mary Jane Cullinan and John Thomas, representing Rothschild Asset Management; Mark Keller and John Pierucki, representing Confluence Investment Management; 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. Motion by Wellhausen, supported by Schwarb, to approve the regular agenda as presented. Ayes: All. The motion carried. Regular Meeting Minutes – March 17, 2016 Page Two 4. APPROVAL OF MINUTES No corrections were made to the draft minutes of the regular meeting of February 18, 2016. Motion by Schwarb, supported by Varney, to approve the minutes as presented. Ayes: All. The motion carried. 5. CITIZEN PARTICIPATION There was no Citizen participation. 6. REPORT FROM LEGAL COUNSEL No formal legal report was presented. Mr. Michaud reviewed with the Board proposed IRS regulations regarding “Normal Retirement Age” rules for governmental pension plans. Issues were previously raised regarding the ability of members to receive distributions from a retirement system while continuing employment (i.e., in- service distributions). The proposed regulations are anticipated to be effective no earlier than the first plan year beginning on or after January 1, 2017. Motion by Wellhausen, supported by Schwarb, to receive and file. Ayes: All. The motion carried. Mr. Michaud commented on items of new business as they were considered. CONSENT AGENDA 7. CORRESPONDENCE a. Correspondence to Brian Baker, Finance & Budget Director, dated February 25, 2016 re: 2016/17 budget. b. Other correspondence received from: 1. Morgan Stanley – market value weekly updates 2. The Pomerantz Monitor newsletter 3. Robbins Geller Rudman & Dowd LLP c. Magazines received: 1.Institutional Investor for March 2016 2. Pensions & Investments for February 22nd and March 7, 2016. Regular Meeting Minutes – March 17, 2016 Page Three CONSENT AGENDA 8. BILLS AND EXPENDITURES c. Checking Account Summary Beginning Balance $5,247.36 2/01/16  Additions (1) 1. 2/24 $ 5,000.00 Subtractions (5) $ 2,259.44 1. 2/24 Check 1993 31.53 AT & T phone bill – 2/16/16 2. 2/19 Check 1994 145.00 ND – postage reimbursement 3. 2/12 Check 5359 931.84 Contract Payment Nancy Duyck 4. 2/16 Check 5360 219.22 Contract fee – Gurin & Gurin 5. 2/26 Check 5361 931.85 Contract Payment Nancy Duyck Electronic withdrawals (4) $1,338.94 1. 2/03 385.28 IRS Fed. tax w/h 2. 2/16 461.54 American Funds IRA contribution 3. 2/17 385.30 IRS Fed. tax w/h 4. 2/19 106.82 Michigan St. tax w/h Ending Balance $6,648.98 2/29/16 d. Transmittal of Checks 1. There were no checks received this month. 9. FUNDS MANAGEMENT a. The current value of funds as of February 29, 2016 is detailed below: Clearing account $ 2,839,921.44 Intercontinental $ 4,364,149.53 Winslow $ 14,171,692.58 Janus $ 15,108,560.47 Eagle $ 14,365,963.09 Herndon $ 13,541,767.10 Earnest Partners $ 12,724,363.97 Cambiar $ 13,062,518.28 AIM/Invesco $ 15,272,771.95 Western $ 27,383,815.60 Met West $ 25,598,047.93 Regular Meeting Minutes – March 17, 2016 Page Four CONSENT AGENDA 9. FUNDS MANAGEMENT a. The current value of funds as of February 29, 2016 is detailed below: – cont. London Co. $ 29,089,000.88 MS Cash $ 390.00 Checking account $ 6,648.98 TOTAL FUNDS $ 187,529,611.80 b. The Board received a copy of the Summary of Employer Contributions to the Police and Fire Retirement System for the 2015 tax year as of 2/29/16. The System has received $7,787,377.84 of the 2015/16 budget of $7,986,312.00, leaving a balance of $198,934.16.  c. Benefit Register Listing as of March 1, 2016 from Comerica Bank showing 339 retirees/beneficiaries with a payout for March of $1,415,138.31 and a year-to-date of $4,426,795.19. d. The current Merrill Lynch Bond index for February 2016 is 2.17%. 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 Rodwan Consulting Company in the amount of $8,600 for the 2015 Experience Study. Motion by Varney, supported by Wellhausen, to approve the bill as presented. Ayes: All. The motion carried. Regular Meeting Minutes - March 17, 2016 Page Five REGULAR AGENDA 8. BILLS AND EXPENDITURES – cont. b. Disbursements to retirees/members other than monthly benefit payments 1. Alan Byrd – partial DROP distribution – discussion Alan Byrd of the Police Department terminated his DROP retirement as of June 18, 2008. He is requesting a partial DROP distribution from his DROP account. All required paperwork is on file in the Pension Office. Motion by Varney, supported by Wellhausen, to approve the disbursement as presented. Ayes: All. The motion carried. 2. Anthony Dykas - refund of contributions Police Officer Anthony Dykas was hired on September 8, 2015 and terminated employment on December 9, 2015. He is requesting a refund of his contributions and interest. Walt Hessell has calculated the amount of the refund. All required paperwork is on file in the Pension Office.  Motion by Varney, supported by Wellhausen, to approve the disbursement as presented. Ayes: All. The motion carried. 3. Mark Schroeder – partial DROP distribution Mark Schroeder of the Fire Department terminated his DROP retirement as of April 17, 2015. He is requesting a partial DROP distribution from his DROP account. All required paperwork is on file in the Pension Office. Motion by Varney, supported by Wellhausen, to approve the disbursement as presented. Ayes: All. The motion carried. Regular Meeting Minutes - March 17, 2016 Page Six REGULAR AGENDA 9. FUNDS MANAGEMENT e. Quarterly performance 1. Intercontinental Real Estate Devin Sullivan represented Intercontinental Real Estate at this meeting. He gave a recap of the portfolio and also responded to individual Board member’s questions. f. Large Cap Value Manager presentations 1. Rothschild Asset Management Mary Jane Cullinan and John Thomas, representing Rothschild Asset Management; were in attendance to give a presentation on large cap value. 2. Confluence Investment Management Mark Keller and John Pierucki, representing Confluence Investment Management; were in attendance to give a presentation on large cap value. After discussion the following motion was made: Motion by Lamerato, supported by Wellhausen, to terminate Herndon and to equally split the assets between the two new managers, Rothschild Asset Management and Confluence Investment Management. Ayes: All. The motion carried. 10. BENEFITS & PLAN ADMINISTRATION  a. New Business 1. 2015 STD/LTD report - discussion The Board received a listing of Police and Fire members who were on short- term/long term disability during 2015 from the City Human Resources/Risk Management Department. Persons affected by periods of STD/LTD were sent correspondence detailing the preliminary findings according to the report and the amount of time that may be lost net of the sixty-day allowance permitted by Act 345. Regular Meeting Minutes - March 17, 2016 Page Seven REGULAR AGENDA 10. BENEFITS & PLAN ADMINISTRATION a. New Business 1. 2015 STD/LTD report – discussion – cont. Total Total Total Adjusted Member Name Days Off Days credited Lost time Ret. Date Deprez, Linda 22 22 0 N/A Heins, Richard 52 52 0 N/A Kovalcik, Robert 11 11 0 N/A McLellan, Kevin 83 60 23 5/7/08 Plaunt, Jeffrey 75 N/A N/A In DROP Amormino, Mike 6 6 0 N/A Batty, Doug 72 60 12 3/29/93 Kensicki, Brian 91 60 31 4/24/05 Kohut, Stephen 15 15 0 N/A Motion by Wellhausen, supported by Schwarb, to approve the 2015 short-term disability report with credits and adjustments as listed. Ayes: All. The motion carried. 2. Davide Guerra - EDRO resolution – discussion The Board is in receipt of an Eligible Domestic Relation Order dated February 16, 2016 that purports to grant Alternate Payee, Rebecca Guerra, part of the monthly pension benefit normally payable to Davide Guerra. Legal Counsel has opined that the EDRO is consistent with the provisions of the Retirement System and applicable law. Motion by Schwarb, supported by Wellhausen, to approve the EDRO resolution as presented. Ayes: All. The motion carried. Regular Meeting Minutes - March 17, 2016 Page Eight REGULAR AGENDA 10. BENEFITS & PLAN ADMINISTRATION a. New Business – cont. 3. 2016 MAPERS Spring Conference - discussion The Board has received registration information for the 2016 MAPERS Spring Conference. It is scheduled for May 21-24, 2016 at the Soaring Eagle Resort in Mt. Pleasant, MI. Four members are budgeted to attend this conference. Motion by Schwarb, supported by Maleszyk, to register two members for the 2016 Spring MAPERS conference, based on availability. Ayes: All. The motion carried. Schwarb and Maleszyk will not be attending the conference. Mr. Lamerato will be attending as he is on the MAPERS Board. 4. Account transfer for April 2016 benefit payments – discussion As of March 14, 2016, the Clearing Account had a balance of $1,370,110.50. An additional $150,000.00 is needed for the April 1, 2016 pension benefit payments and bills from the Clearing Account. The Brice Group has forwarded an e-mail that the additional amount needed should be taken from the London account, based on the asset allocation targets. Motion by Wellhausen, supported by Schwarb, to approve the transfer of the appropriate amount of funds from the London account, based on the asset allocation targets, to provide for pension benefit payments and other disbursements on April 1, 2016. Ayes: All. The motion carried. 11. TRUSTEE COMMENTS The Board briefly discussed a proposed HB 5438, which deals with base pay compensation to calculate public employee compensation. Regular Meeting Minutes - March 17, 2016 Page Nine 12. ADJOURNMENT Motion by Wellhausen, supported by Schwarb, to adjourn at 5:37 p.m. Ayes: All. The motion carried; the meeting is hereby adjourned. Mark Wellhausen Secretary