HomeMy WebLinkAboutMinutes - 04/15/2008 - Police Pension BoardPOLICE PENSION BOARD
CITY OF MCHENRY
�-' Tuesday, April 15, 2008
A meeting of the McHenry Police Pension Board was called to order on Tuesday, April 15,
2008, 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, Officer Robert Roske, Bob
Hettermann, Ormel Prust, and Daniel Kinnerk.
Other present at the meeting were Gary Karshna, Capital Gains; Jim Schmidt, LPL Financial;
Timothy Sharpe, Actuary; Chris Black, Carolyn Lynch, and Recording Secretary Marci
Geraghty, City of McHenry.
Meeting Minutes
Meeting minutes from January 15, 2008, were presented for approval. Jim Schmidt noted that
on page 2, item b, fourth sentence reference to the DOW was incorrect. He recommended that
it be stricken from the record.
Motion by Prust, seconded by Kinnerk to approve the minutes from January 15, 2008 as
amended and to hold them for audit. All ayes, motion carried.
Treasurer's Report
City of McHenry Accountant Carolyn Lynch presented the treasurer's report for the period
ending December 31, 2007.
Net assets held in trust for that period including investments totaled $16,706,594. Schmidt
noted that the percentage of equity investments is at 41 % and therefore, there is no need to
make adjustments at this time.
Roske made a motion, seconded by Prust to approve the Treasurer's Report as
presented and to hold it for audit. All ayes, motion carried.
Old Business
a. LPL Financial. Jim Schmidt presented the board with the equity report through
April 14, 2008. Total value of investments as of April 14th was $6,671,399, down
8.32%. Schmidt reported that the fund's investments continue to outperform the
S&P, which was down 9%.
b. Capital Gains. Gary Karshna reported on the pension funds fixed assets as of
March 31, 2008.
Portfolio Market Valuation $7,247,639
Portfolio Book Valuation $7,162,103
Average Maturity 5.33 years Effective Duration 3.97 years
The fixed income portfolio produced a 7.75% rate of return over the past twelve
months, which is above the actuarial target of 7% set by the State of Illinois to
achieve full funding of police and fire pension funds by the year 2033. One US
Treasury STRIPS position was sold capturing profits of $8,839.
Police Pension Board Meeting
April 15, 2008
Page Two
In addition, one FHLB note was called. The proceeds were invested in two
callable US Agency notes with short call dates. Longer -term investments will be
made when interest rates return to levels that are more attractive.
A discussion ensued on the efforts of the Federal Reserve to keep the economy
out of a recession.
C. Timothy Sharpe — May 1, 2007 Actuarial Report. Mr. Sharpe discussed
highlights of the actuarial results for the period ending May 1, 2007. He informed
the board that there were no changes with respect to plan provisions, actuarial
methods, or actuarial assumptions from the prior year. In addition, there were no
unexpected changes to the participants included in the actuarial valuation or
fund's investments from prior year.
The city's tax levy requirement increased slightly (1%) from $769,870 last year to
$784,328 this year. The increase in the levy is due to the increase in salaries
and offset due to an investment return greater than expected.
The percent funded increased from 61.6% last year to 64.9% this year. State
average is 65% funded.
Salaries increased by an average of 5% - the assumption was 5.5%.
Sharp concluded his report by stating that the fund's investment returns are good
and his only adjustment he would recommend is that the city increases its
contribution slightly. Foerster noted that the city is aware of this.
d. Investment Strategies. Foerster reported that a certificate of deposit for
$1,000,000 would mature on June 2, 2008. He asked for a motion to seek
requests for proposals (RFQ) from local financial institutions to reinvest the
money in another certificate of deposit.
Roske made a motion, seconded by Hettermann to seek RFQ's from local
financial institutions to seek terms and rates for the purchase of a
$1,000,000 certificate of deposit with funds from the certificate that will
mature on June 2, 2008. All ayes, motion carried.
The board agreed to schedule a special meeting of the board for Friday, May 30tn
at 3:00 PM to review RFQ's. Finance Director Black offered to coordinate the
RFQ process.
New Business
a. Foerster reported that the board would consider a request for a duty -related
disability pension from Officer Doyle Kearns on April 22, 2008, at 2:00 PM.
Police Pension Board Meeting
April 15, 2008
Page Three
Bills for Approval
Hettermann made a motion, seconded by Kinnerk to approve the following bills as
presented: Wells Fargo Bank, NA, $533.39 for trust account quarterly fees; Capital Gains,
$3,774 for investment management services; and, board attorney Richard I Puchalski,
$7,330 for legal services. All ayes, motion carried.
Other Business
a. Foerster informed the board that to date, Mary Lee Eschbach has not filed an appeal to
the board's decision to deny her a duty -related pension. Board attorney Puchalski
expects her to submit an appeal. She has 35 days to respond to the board's decision.
The hearing was held on March 18, 2008.
b. A conversation ensued about the pros/cons of investing in long term bonds.
Adjournment
Hettermann made a motion, seconded by Roske to adjourn the meeting. All ayes, motion
carried. The meeting was adjourned at 3:25 PM.
Next meeting: Tuesday, July 15, 2008
I`%_I Respectfully submitted,
Marcia M. Geraghty, F4cordiroSecretary