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Home My WebLink AboutPacket - 01/02/2018 - Police Pension BoardcHenr McHenry Police Pension Board of Trustees McHenry Municipal Center 333 Green Street McHenry, Illinois 60050 Phone: (815) 363-2108 Fax: (815) 363-2119 www.ci.mchenry.il.us POLICE PENSION BOARD OF TRUSTEES Tuesday, January 2, 2018 2:30 PM Municipal Center - 333 South Green Street City Council Chambers AGENDA 1. Call to Order 2. Roll Call 3. Public Input (5 minutes) 4. Motion to approval of October 10, 2017 meeting minutes. 5. Semi-annual review of Executive Session Minutes. 6. Investment Reports: a) Presentation and Motion to approve Treasure Report b) LPL Financial Equities Report c) Capitals Gains, Inc. Fixed Assets Report 7. Motion to approve Applications for Participation in the City of McHenry Police Pension Fund for Officer Katelyn M. Lorenz and Roger J. Hendrickson. 8. Motion to approve annual pension increases. 9. Unfinished Business: a) Motion to approve payment of bills as presented b) Public Pension Trustee Training Update 10. Adjournment Next meeting: Tuesday, April 24, 2018, 2:30 PM. MCHenr Police Pension Board of Trustees Regular Meeting October 10, 2017 1. Call to Order. A meeting of the City of McHenry Police Pension Board of Trustees was called to order at 2:30 PM in the McHenry City Council Chambers, 333 S. Green Street., McHenry, IL. 2. Roll Call: President Jeffrey Foerster, Jon Meyer, Ormel Prust, Absent: Marc Fisher and Nick Clesen. Others present: Jim Schmidt, LPL Financial; Gary Karshna, Capital Gains, Inc.; City Treasurer Carolyn Lynch, and recording secretary Marci Geraghty. 3. Public Input None. President Foerster announced Sgt. Clesen was delayed and items will not be considered in the order they appear on the agenda in anticipation of Sgt. Clesen's attendance at the meeting. 4. Approval of Minutes a) Amendment: Page one, item a) motion. Ayes should be amended to Clesen, Foerster, and Meyer. J. Meyer made a motion, seconded by O. Prust to approve meeting minutes from July 11, 2017 as amended and to hold them for audit. Ayes: Meyer, Prust, Foerster Nays: None Absent: Fisher, Clesen Motion carried 7. Motion to approve Application for Retirement Benefits from John M. Jones. President Foerster announced Chief of Police John M. Jones has applied for retirement benefits. He served the City of McHenry Police Department for 28 years. His retirement is effective October 20, 2017. O. Prust made a motion, seconded by J. Meyer to approve retirement benefits for John M. Jones as presented. Ayes: Prust, Meyer, Foerster Nays: None Absent: Fisher, Clesen Motion carried 8. Unfinished Business: a) President Foerster called for a motion to accept bills presented for payment. Meyer made a motion, seconded by O. Prust to approve payment of bills as presented: Capital Gains: $4,974 Mesirow Fiduciary Insurance $4,329 Ayes: Meyer, Prust, Foerster Nays: None Absent: Fisher, Clesen Motion carried b) Public Pension Trustee Training Update. President Foerster reported that Trustee Clesen is scheduled to attend Certified Trustee Training for new Trustees on October 30 to November 2. Board Trustee N. Clesen joined the meeting at 2:45 PM. 6. Report of Investments and Accounts: a) Motion to approve Treasurer Report: There was no Treasurer Report presented. b) Equities Investment Report: Jim Schmidt of LPL Financial reported as of October 9, 2017, the market value of all equity funds was $14,805,931.29, an increase of 17.51% from December 30, 2016. Mr. Schmidt provided an update on all equity investment funds. President Foerster noted the percentage of equities invested is getting close to the 65% limit. Mr. Schmidt stated at the end of the fiscal year, the percentage may be no higher than 65% - the law allows for inadvertent fluctuations throughout the year. c) Capital Gains Fixed Assets Investment Report: Fixed Assets Manager Gary Karshna presented the investment report for the period ending September 30, 2017, at which time the estimated Market Valuation was $9,080,420 and Book Valuation $9,172,413. As suggested by the board at the last meeting, Mr. Karshna recommended creating a blended benchmark using the Barclays Intermediate Government Bond Index and the Bloomberg Barclays US Intermediate Credit Bond Index. Currently, the portfolio has a concentration of assets in corporate bonds at 59% with the balance of 41% invested in a diversified local, state, and federal government bonds, notes and STRIPS. Therefore, we can use that ratio to create a blended bond benchmark index and adjust it to reflect accurately the exact holdings in the portfolio each month. Benchmark Comparisons of the Bloomberg Barclays US Intermediate Credit Bond Index (CIU), Bloomberg Barclays US Intermediate Corporate Bond Index (ITR), and Bloomberg Barclays US Aggregate Intermediate Total Return Index (AGG) were presented to the board. Incorporating the new indices, Mr. Karshna reported the portfolio has outperformed the bond benchmarks over the past 12 months. Mr. Schmidt left the meeting at 3:00 PM. d) Semi -Annual review of Police Pension Fund Investment Policy: No changes were recommended to the current policy. President Foerster will request LPL Financial to continue to monitor the percentage of equities invested in the fund to comply with State Statutes. W 5. Presentation of Actuarial Valuation Report as of May 1, 2017, and recommendation to forward Pension Fund Tax Levy request to McHenry City Council. Dennis Dressel representing Lauterbach & Amen, LLP provided the board with an Actuarial Assumption Summary for the McHenry Police Pension Fund. Of note, five new members were added to the fund. The recommended contribution requirement increased $145,484 from prior year to $2,019,703. The funded percentage increased 3.28% on an Actuarial Value of Assets Basis. The percent funded increased from 48.69% from the prior valuation to 51.97% current. The Market Value of Assets increased to 50.34%. President Foerster called for questions from the board. Trustee Meyer noted a 3.5% Pay Assumption should have been used; the report uses 3%. Treasurer Lynch announced that the city's audit had already been completed using 3%. Mr. Dressel stated this should not fundamentally change the numbers. After additional discussion, the board agreed to maintain the 3% pay assumption for this year and use 3.5% next year. President Foerster called for a motion to accept the report using a 3% pay assumption: Motion by J. Meyer, seconded by O. Prust to accept the 3% pay assumption used in the Actuarial Valuation as of May 1, 2017. Ayes: Meyer, Prust, Clesen, Forester Nays: None Absent: Fisher Motion carried Referring to page 7 of the report, Trustee Meyer asked why in the second paragraph, demographic assumptions were changed pursuant to the Firefighters and Fire Pension Funds in Illinois. Mr. Dressel said this was an error and Police Pension Fund data was used for the assumptions. The report will be corrected. President Foerster called for a motion to accept the Valuation Report as presented. Motion by J. Meyer, seconded by O. Prust to a) accept the Actuarial Valuation as of May 1, 2017 conducted by Lauterbach & Amen, LLP changing the demographic assumption used on page 7, paragraph two from Firefighters and Fire Pension Funds to Police Pension Funds; and b), recommendation to forward a request to the McHenry City Council that the FY 2018/19 budget reflect the actuarially required contribution amount of $2,019,703 for the McHenry Police Pension Fund. Ayes: Meyer, Prust, Clesen, Foerster Nays: None Absent: Fisher Motion carried 9. Adjournment N. Clesen made a motion, seconded by O. Prust to adjourn the meeting. Ayes: Clesen, Prust, Meyer, Foerster Nays: None Absent: Fisher Motion carried 3 The meeting was adjourned at 3:40 PM. Next meeting: January 2, 2017 at 2:30 PM. Respectfully submitted, Marci Geraghty, Recording Secretary is • �REF'AK PKUTEkT EUUk1 ATE I N I tUK l Do you have any newly elected or appointed trustees in need of the mandatory 32-hour certification training? The IPPFA Certified Trustee Program is the ONLY 32-hour public pension trustee certification program in Illinois that meets the requirements of the Illinois Pension Code and is certified by Northern Illinois University. The 32-hour program is offered throughout the year in four eight -hour modules. All modules must be completed within a twelve month period*. The cost of the program is $800.00 per participant for IPPFA members and $1,700.00 for non-members, and includes all instructional material and related handout material. The Illinois Department of Insurance has approved this fee as a "necessary pension fund expense" under the Illinois Pension Code. MODULE 1 FIDUCIARY FUNDAMENTALS: FIDUCIARY DUTIES OF PUBLIC PENSION FUND TRUSTEES FUNDAMENTALS OF PENSION FUND INVESTING MODULE 3 INVESTMENTS: FUNDAMENTALS OF FIXED INCOME INVESTING FUNDAMENTALS OF EQUITY INVESTING Register at www.ippfa.org and select a location: Program 18-1 - NIU Campus, Hoffman Estates - January 11, February 8, March 8, April 5 Program 18-2 - Embassy Suites, East Peoria, IL - April 30, May 1, 2, 3 Program 18-3 -NIU Campus, Hoffman Estates - August 16, September 13, October 11, November 8 Program 184 - Lewis & Clark College, Edwardsville - August 21, September 18, October 16, November 13 Program 18-5 -NIU Campus, Hoffman Estates - October 29, 30, 31, November 1 MODULE 2 ACTUARIAL/MEDICAL: BASIC FUNDING CONCEPTS UNDERSTANDING MEDICAL AND DISABILITY ISSUES MODULE 4 LEGAL/ADMINISTRATIVE PRACTICES: LEGAL ISSUES AND ETHICS FOR PENSION FUND TRUSTEES UNDERSTANDING THE ADMINISTRATION OF PENSION BENEFITS *The IPPFA Certified Trustee Program must be taken in its enfirety and is not available in individual modules. Each participant must success- fully complete module one before attending any of the three remaining modules. All four modules of instruction must be completed within a These dates are subject to change. More IPPFA Training opportunities in 2018: IPPFA Illinois Pension Conference - May 14 Embassy Suites, East Peoria, IL IPPFA MidAmerican Pension Conference - October 2-5 Grand Geneva Resort, Lake Geneva, WI Regional Seminars: February 15- NIU Hoffman Estates Campus March 21—Jumer's Hotel/Casino, Rock Island June 20- Lewis &Clark Community College Edwardsville Campus November TBA- John A. Logan College, Carterville Register for these events at www.ippfa.org. Remember, the training year for public pension trustee continuing education begins on August 13th of each year. ■ ■