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HomeMy WebLinkAboutMinutes - 10/10/2017 - Police Pension BoardMCHenry 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. �-' J. 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. 2 5. Presentation of Actuarial Valuation Report as of May 1 2017 and recommendation to forward Pension Fund Tax Levyequest 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 OR