HomeMy WebLinkAboutMinutes - 04/10/2010 - Police Pension Board`— POLICE PENSION BOARD
CITY OF MCHENRY
Tuesday, April 20, 2010
A meeting of the McHenry Police Pension Board was called to order on Tuesday, April 20,
2010, at 3:30 PM in the City of McHenry Municipal Center, 333 South Green Street.
At roll call, the following members were present: Sgt. Jeff Foerster, Ormel Prust, Officer Robert
Roske, and Bob Hettermann. Absent: Daniel Kinnerk
Other present at the meeting: Gary Karshna, Capital Gains; Carolyn Lynch, Chris Black, and
Marci Geraghty; City of McHenry.
Reading and Approval of Minutes
Minutes from the January 19, 2010 meeting were presented.
Prust made a motion seconded by Roske to approve the January 19, 2010, minutes as
presented and to hold them both for audit. All ayes, motion carried.
Treasurer's Report
Carolyn Lynch presented the Treasurer Report for the period ending, March 31, 2010. Full
market value of the fund for the period was $15,813,850.74, an increase of approximately 0.7%
or $65,121.19 from last quarter (December 31, 2009) and 1.3% increase from September 30,
2009.
Lynch reported that a $1-million certificate of deposit held with McHenry Bank & Trust expires
on June 2"d. Foerster asked Lynch to obtain quotes from local financial institutions to purchase
a CD with the funds. A discussion ensued on the amount that should be reinvested. Chris Black
reported that investments are up 12% including contributions by employees. The board
scheduled a special meeting on Thursday, May 27th to discuss investment options for the $1-
million CD.
Roske made a motion, seconded by Prust to approve the Treasurer Report for the period
ending March 31, 2010, as presented and to hold it for audit. All ayes, motion carried.
Old Business
LPL Financial. Jim Schmidt presented an updated on equity investments for the period ending
April 19, 2010. He noted that Capital World Growth & Income is down 1.42% year-to-date
adding that the volcano in Iceland, which disrupted the economy in Europe, most likely
influenced the international market. In total, equity funds are valued at $6,144.102, a 5.54%
increase year-to-date. As of December 31, 2009, total investments increased $1,824,578.
Schmidt stated that capital earnings are strong. Tech stocks are in a key position however he is
not sure if the trend will continue.
Chris Black reported that as a result of former City Treasurer Welter's resignation the board was
required to appoint a new trustee for the American Funds equity investment account.
Police Pension Board
April 20, 2010
Page Two
Hettermann made a motion, seconded by Prust to appoint City of McHenry Finance
`- Director Chris Black as trustee for the American Funds equity investments account. All
ayes, motion carried.
Capital Gains, Inc. Gary Karshna reported on fixed assets as of March 31, 2010. The police
bond portfolio rate of return increased 3.19% fiscal year to date as compared to Barclays
Intermediate Government Bond index which was up 2.00%.
FY YTD 2009-10
Portfolio Market Valuation $7,903,988
Portfolio Book Valuation $7,873,070
Average Maturity 5.86 years Effective Duration 3.32 years
Transactions: One bond was sold capturing profits in the process. Two callable US Agency
positions were acquired - an FHLB step-up note with a 1.26% yield to the call date with a 2.29%
yield to maturity, and an FFCB note with a .47% yield to the call with a 4.58% yield to maturity.
Karshna opined that interest rates will most likely increase after the elections in November,
which will cause the value of existing bonds to decrease. He recommends keeping the duration
of the portfolio short to minimize price erosion. Karshna favors callable securities and
municipal bonds. He also noted that the flexible fixed income strategy is working.
Eschbach Pension Appeal. Foerster reported that the Appellate Court of the Second District
`- upheld the board's decision to deny former officer Mary Lee Eschbach a disability pension.
Although she has 35 days to file an appeal, an appeal is not expected. Ms. Eschbach will most
likely apply for a non -duty related pension and the board can anticipate a hearing scheduled in
the next six months.
Investment Strategies. Finance Director Black distributed copies of the Actuarial Valuation
Report for the year ending April 30, 2010 completed by Timothy W. Sharpe, EA, MAAA. The
valuation is based on plan provisions in effect as of May 1, 2009.
In summary, there were no changes to plan provisions, actuarial methods or actuarial
assumptions from the prior year and no unexpected changes with respect to plan participants.
There were no terminations, four retirements, two incidents of disability, annual payroll
decreased (6.6%) and the average salary increased 9.2%.
The city's tax levy requirement increased 35.5% or $854,754 last year to $1,158,309 this year.
The increase in levy is a result of the increase in average salaries that was greater than the
assumption and investments returns were much less than assumed. The percentage funded
decreased from 64.3% in 2008 to 49.9% in 2009. The city levied only $639,000 due to sales tax
decreases and decreases in investments. Black said the funded ratio is approximately 60% and
most likely will be approximately 60% next year.
Training Update: President Forester announced that all pension board trustees have
accomplished training required by the DOI.
`, New Business
New Officer Application: Robert Klasek was hired on February 10, 2010 and submitted an
application to participate in the police pension fund.
Police Pension Board
April 20, 2010
Page Three
Hettermann made a motion seconded by Roske to approve the application to participate
�-- in the police pension fund from Robert Klasek. All ayes, motion carried.
Bills for Approval
An invoice from Pension Board Attorney Richard J. Puchalski for professional services
regarding the Eschbach v McHenry Police Pension Board case in the mount of $800 was
presented for approval.
Prust made a motion, seconded by Roske to approve payment of bills as presented. All
ayes, motion carried.
Adiournment
President Foerster announced that the next regular meeting of the Pension Board of Trustees is
scheduled for July 20, 2010. He also reminded the board that a special meeting to discuss
investment strategies was scheduled for May 27th at 3:30 PM.
Prust made a motion, seconded by Roske to adjourn the meeting. All ayes, motion
carried.
The meeting was adjourned at 4:10 PM.
Respectfully submitted,
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Marci Geraghty, R&bordinV Secretary