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Police Pension Board of Trustees
Regular Meeting
April 8, 2014
A meeting of the City of McHenry Police Pension Board of Trustees was called to order at 3:30 PM by
President Jeffrey Foerster. Other board members present: Jon Meyer, Marc Fisher, Kelly Ducak, and Ormel
Prust.
Others present: Gary Karshna, Capital Gains, Inc.; Jim Schmidt, LPL Financial; Finance Director/Treasurer
Carolyn Lynch and recording secretary Marci Geraghty, City of McHenry.
Public Input
None.
Approval of Minutes
J. Meyer made a motion, seconded by K. Ducak to approve the meeting minutes from January 14, 2014 as
presented and to hold them for audit.
Voting Aye:
Voting Nay:
Abstain:
Absent:
Motion carried.
Treasurer's Report
Meyer, Ducak, Fisher, Prust, Foerster
None
None
None
Finance Director Lynch presented the Treasurer's Report for the period ending March 31, 2014 with total cash
and investments of $20,247,410.88.
O. Prust made a motion, seconded by M. Fisher to approve the Treasurer's Report for the period ending March
31, 2014 as presented and to hold it for audit.
Voting Aye:
Prust, Fisher, Meyer, Ducak, Foerster
Voting Nay:
None
Abstain:
None
Absent:
None
Motion carried.
Reports of Investments and Accounts:
a) Capital Gains, Inc.: Gary Karshna of Capital Gains, Inc. presented the fixed assets report for the period
ending March 31, 2014. Mr. Karshna reported the yield on the 10 year US Treasury Note peaked at 3%
last December and has been in the range of 2.65% to 2.72% since January 2014. Our current fixed
income strategy is effective and we will continue to acquire short-term taxable muni's and corporate
bonds with higher yields in the current fixed income environment. The portfolio Market Valuation as of
March 3151 was $9,293,626 and the Book Valuation was $9,409,186.
b) LPL Financial: Equities fund manager Jim Schmidt presented the fund equity report. As of March 31,
2014, the total fund value was $11,062,070; an increase of 1.51% year to date.
Mr. Schmidt also provided an overall portfolio composition of all equity funds. Mr. Schmidt noted
although IVY Asset Strategy is not performing as well as other funds in the portfolio it is a tactical
allocation, offers more mobility than the other funds, and can be converted into cash quickly if the
market drops with no penalty. He recommends holding IVY Asset Strategy for at least three years.
Equity investments total 54% of the fund as of March 31 ". Mr. Schmidt stated the fund is permitted by state
statue to invest up to 65% in equities with 10% in insurance backed annuities. However, remaining at 55%/45%
equities/bonds is consistent with our investment policy.
Approval to deposit profits from investments and/or the sale of individual investments and deposit those funds
into the Pension Fund checking account for the purpose of paying bills.
At the January meeting, Finance Director Lynch reported funds would be needed in April & May to pay bills.
O. Prust made a motion, seconded by J. Meyer to authorize Capital Gains to withdraw $90,000 in April from a
money market account for deposit in the Pension Fund checking account to pay bills.
Voting Aye:
Prust, Meyer, Fisher, Ducak, Foerster
Voting Nay:
None
Abstain:
None
Absent:
None
Motion carried.
O. Prust made a motion, seconded by K. Ducak to authorize Capital Gains to withdraw $118,000 in May from a
money market account for deposit in the Pension Fund checking account to pay bills.
`-- Voting Aye:
Prust, Ducak, Meyer, Fisher Foerster
Voting Nay:
None
Abstain:
None
Absent:
None
Motion carried.
Semi-annual review of Investment Policy.
Mr. Meyer asked if there is a minimum bond -rating for investments. Mr. Karshna said state statute requires
bonds purchased by pension funds to have at least a BBB rating. If bond rating drops, the fund has 90 days to
liquidate. Mr. Meyer asked if we could raise the standard and Mr. Karshna answered yes, however it would
drastically reduce the fund's yield. No changes were recommended to the Investment Policy.
Approve application to Police Pension Fund submitted by Zachary Piekarski.
O. Prust made a motion, seconded by J. Meyer to approve the application submitted by Zachary Piekarski to join
the City of McHenry Police Pension Fund.
Ayes: Prust, Meyer, Ducak, Fisher, Foerster
Absent: None
Abstain: None
Motion carried
2
Approve request from Pensioner David Porter to change pension status from Non -Duty -Related Police Officer
Disability Pension to Retired Police Officer Pension effective May 2 2014.
K. Ducak made a motion, seconded by M. Fisher to approve the change in pension status for Retired Police
Officer David Porter as presented.
Ayes:
Absent:
Abstain:
Motion carried
Unfinished Business.
Ducak, Fisher, Prust, Meyer, Foerster
None
None
a) 2014 Mayoral Appointment of Pension Board Trustee. Mr. Foerster reported Jon Meyer was
reappointed by Mayor Low to serve an additional two-year term expiring April 30, 2015.
a) Public Pension Trustee Training Update. State statute requires trustees to annually complete 16 hours of
education and training - first -term trustees are required to complete 32 hours during their first year in
office.
Trustee
Completed
Balance
As of April 8, 2014: Ducak
32 hours
0 hours
Fisher
32 hours
0 hours
Foerster
8 hours
8 hours
Meyer
8 hours
8 hours
Prust
8 hours
8 hours
Approval of Bills.
J. Meyer made a motion, seconded by K. Ducak to approve payment to Capital Gains in the amount of $5,106
for fixed income investment management services as presented.
Ayes:
Absent:
Abstain:
Motion carried
New Business
Meyer, Ducak, Fisher, Prust, Foerster
None
None
President Foerster reported the July 8`h regularly scheduled meeting of the board will be held on July 15th.
Adjournment
K. Ducak made a motion, seconded by O. Prust to adjourn the meeting.
Ayes: Ducak, Prust, Meyer, Fisher, Foerster
Absent: None
Abstain: None
Motion carried.
The meeting was adjourned at 4:20 PM.
Respectfully submitted,
Marci Geraghty, Recording Secretary
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