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HomeMy WebLinkAboutMinutes - 04/09/2013 - Police Pension BoardPolice Pension Board of Trustees Meeting April 9, 2013 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, Robert Roske, and Ormel Prust. Absent: Daniel Kreassig. Others present: Gary Karshna, Capital Gains, Inc.; Jim Schmidt, LPL Financial; and recording secretary Marci Geraghty. Public Input None. Approval of Minutes Prust made a motion, seconded by Roske to approve meeting minutes from January 8, 2013 as presented and to hold them for audit. `-- Ayes: Meyer, Foerster, Roske, Prust Absent: Kreassig Abstain: None Motion carried Bi-Annual Review of Executive Session Minutes Mr. Meyer made a motion, seconded by Mr. Prust to accept advice from board counsel and release the March 18, 2008 Pension Board disability hearing transcript for David Porter; April 22, 2008 Pension Board disability hearing transcript for Doyle Kearns; and May 17, 2011 Pension Board disability hearing transcript for Mary Lee Eschbach. Ayes: Meyer, Foerster, Roske, Prust Absent: Kreassig Abstain: None Motion carried. President Foerster announced all executive session matters are now released. Treasurer Report The Treasurer Report for the period ending March 31, 2013 was presented. Full market value of cash and investments at that time was $18,334,788.78, which is an increase of 1.9% over December 31, 2012. `.. Motion by Officer Roske, seconded by Mr. Prust to approve the Treasurer Report for the period ending December 31, 2012 as presented and to hold it for audit. President Foerster called for a roll call vote: Ayes: Meyer, Foerster, Roske, Prust Absent: Kreassig Abstain: None Motion carried Investment Reports a) Capital Gains, Inc.: Gary Karshna of Capital Gains, Inc. presented the fixed assets report for the period ending March 31, 2013. Mr. Karshna reported bonds rallied slightly in March. The portfolio continues to outperform the benchmark Barclays Intermediate Government Bond Index by a significant margin fiscal year-to-date and over the past 12 months. Cash balances are higher than usual. Mr. Karshna said surplus cash will be invested this month. The market value of the fixed assets fund as of March 315t was $9,236.377; book value was $9,247,362; 50% of the fund is invested in corporate bonds; and 25% in short-term municipal bonds. b) LPL Financial: Jim Schmidt of LPL Financial presented the equities report for the period ending April 8, 2013. Value of the fund as of April 8 was $9,027,875, an increase of 7.52% year-to-date. Mr. Schmidt said at this time, the stock market is the safest place to invest. A discussion ensued on a possible ruling by the Department of Insurance to permit pension funds to invest up to 65% in equities. Old Rucinesc a) 2013 Pension Trustee Election/Appointment Update. President Foerster reported election ballots were distributed to pensioners and active members of the fund. Two active participant positions are up for reelection as well as the retired member representative. Results of the election will be announced in mid -April. Mayor Low will confirm the reappointment of Ormel Prust at the April 291h annual meeting. Officers will be elected by the board at the July meeting. b) Public Pension Trustee Annual Ethics Training Update. As required by state statute, new trustees are L required to accomplish 32-hours of Certified Trustee Training and veteran trustees are required to accomplish 16-hours of training per year from August to August. Required training for the period 8/12 through 8/13 has been accomplished by the Pension Board of Trustees: Prust, Ormel: Online Videos/Presentations: 8-hours; 2/27/13, IPPFA Training: 8-hours. Training Completed as of 4/9/13: 16-hours. Foerster, Jeffrey: 2/27/13 IPPFA Training: 8-hours; Videos/Prenstations: 8-hours. Training Completed as of 4/9/13: 16-hours. Roske, Robert: 2/27/2013 IPPFA Training: 8-hours. Training Completed as of 4/9/13: 8-hours. Meyer, Jon: 2/20/12 IPPFA Online Training: 8-hours. Training Completed as of 4/9: 8-hours. Bills for Approval Motion by Mr. Meyer, seconded by Mr. Prust to approve payment of the following bills: Timothy Sharpe Actuarial Valuation Report, $2,100; Capital Gains quarterly fees, $5,055; and Jeffrey Foerster, reimbursement of lunch expenses for three trustees at 2/27/13 IPPFA training, $39.23. Ayes: Meyer, Foerster, Roske, Prust Absent: Kreassig Abstain: None Motion carried 2 Presentation of May 1, 2012 — April 30 2013 Actuarial Valuation Report Timothy Sharpe presented the 5/1/12 — 4/30/13 Actuarial Valuation Report via teleconference at 4:00 PM. Mr. Sharpe noted it has been a good year for the pension fund. There were no changes with respect to plan provisions, actuarial methods or actuarial assumptions from the prior year. There were no unexpected changes with respect to the participants included in this report — one new member, one termination, and no retirements or disability incidents. Annual payroll increased 3.2% with the average salary increased by 4.1%. There were no unexpected changes with respect to the fund's investments from the prior year with an annual rate of return at 2.53%. The city's tax levy requirement increased slightly by 1.9% from $1,171,844 last year to $1,193,543 due to an increase in salaries and the investment return was less than assumed, which was offset due to using 5-year market averaging. The percent funded increased from 52% last year to 53.5% this year. Mr. Sharpe noted the fund has 10 years in reserves. Mr. Sharpe recommended monitoring the percent rate of assumption. Mr. Meyer is of the opinion the rate of return should be reduced from 7.5% to 7% with a 4% salary scale. Mr. Sharpe agreed and said the fund is in a good position to reduce the salary assumption from 5% to 4% with a decrease in the rate of return assumption to 7% with little or no cost to the city. This would be a more conservative stance. President Foerster asked if it was possible to change the rate of return and salary assumption by October 2013 so it could be presented to the City Council prior to approving the tax levy. Mr. Sharpe recommended asking the city auditor to calculate the numbers one month prior to the date needed. The teleconference with Mr. Sharpe concluded at 4:39 PM. Adjournment The next meeting of the Police Pension Fund Board of Trustees is July 9, 2013. Mr. Meyer made a motion, seconded by Mr. Prust to adjourn the meeting. Ayes: Meyer, Foerster, Roske, Prust Absent: Kreassig Abstain: None Motion carried. The meeting was adjourned at 4:40 PM. Respectfully submitted, Marci Geraghty, cor g Secretary