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HomeMy WebLinkAboutMinutes - 10/14/2008 - Police Pension BoardPOLICE PENSION BOARD CITY OF MCHENRY Tuesday, October 14, 2008 A meeting of the McHenry Police Pension Board was called to order on Tuesday, October 14, 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 Jim Schmidt, LPL Financial; Chris Black, Carolyn Lynch, and Marci Geraghty; City of McHenry. Meeting Minutes Motion by Prust, seconded by Hettermann to approve the July 15, 2008 minutes as presented and to hold them for audit. All ayes, motion carried. Treasurer's Report City of McHenry Accountant Carolyn Lynch presented treasurer's reports for the period ending September 30, 2008, with the exception of Government Agencies, for the period ending August 31, 2008. The full market value of the fund as of September 30tn was $14,928,667.49, down $988,545.48 from June 30tn Roske made a motion, seconded by Kinnerk to approve the Treasurer's Report as presented and to hold it for audit. All ayes, motion carried. Old Business a. Capital Gains. Gary Karshna was not present at the meeting however, a fixed assets report for the period ending September 30tn was mailed to the board. Portfolio Market Valuation $7,306,259 Portfolio Book Valuation $7,301,800 In September, one US Treasury STRIPS position was sold capturing profits in the process. The profits will be reinvested in intermediate term securities after bond yields rise to more attractive levels. The fund continues to outperform the benchmark Lehman Intermediate Bond Index fiscal year-to-date. Schmidt added that the lack of available credit has crushed the bond market. Once the bailout is in process credit should be more available, which will benefit the fixed and equity markets. LPL Financial. Jim Schmidt presented the equities investment report for the period ending October 13, 2008. Total value of investments for that period was $4,857,445, down-33.25%. Schmidt stated that this is the first time in 10-years that American Funds did not outperform the S&P 500. Schmidt distributed a chart depicting equity account values from the initial investment of $3,260,092 on December 31, 2002 and account values as of September 30, 2008. The average annual return on investment for that period was 7% or $5,639,892. A discussion ensued on the financial state of the equities Regular meeting of the Police Pension Board October 14, 2008 Page Two market. Schmidt noted that investments in utilities are prudent in the current market — they are less volatile and pay higher dividends. Schmidt reported that the surrender date to liquidate the American Legacy annuity is November 8, 2008. He recommended reinvesting the money in a high dividend -paying fund such as Washington Mutual or perhaps a CEDAR. After some discussion, it was the consensus of the board to invest the funds from the American Legacy annuity in Washington Mutual. Kinnerk made a motion, seconded by Hettermann to surrender the American Legacy annuity upon its expiration on November 8, 2008. All ayes, motion carried. Hettermann made a motion, seconded by Kinnerk to take the proceeds from the sale of the American Legacy annuity and purchase shares in Washington Mutual. All ayes, motion carried. Schmidt noted that there might be a lag time of approximately one week for the sale to become effective. b. Investment Strategies A certificate of deposit invested with McHenry Bank & Trust for $1,000,000 will expire on December 14, 2008. Director Black offered to obtain quotes from local banks for 12 and 24 months. Hettermann asked if the money market funds at McHenry Bank &Trust and LaSalle Bank were insured. Finance Director Black answered yes; the investments are collateralized. C. Custodian Bank Prust made a motion, seconded by Roske to switch custodian banks for the pension fund from Wells Fargo to US Bank. Discussion: Foerster noted that US Bank charges approximately 50% less than Wells Fargo for the same service. Prust commented that US Bank is one of the most secure banks in the country. All ayes, motion carried. New Business a. Applications for Retirement Pensions. Foerster presented applications for retirement pensions from the following personnel: Patrol Officer Kathleen M. Leonard is retiring effective October 17, 2008, after 20 years with the department. Police Chief Thomas J. O'Meara is retiring effective October 24, 2008, after 26 years with the department. Sgt. Foerster noted that O'Meara did leave the department for four years, but bought -back the years when he returned to McHenry. Regular meeting of the Police Pension Board October 14, 2008 Page Three Roske made a motion, seconded by Prust to accept the applications for retirement benefits from Patrol Officer Kathleen M. Leonard and Police Chief Thomas J. O'Meara as presented. All ayes, motion carried. b. Dan King Disability Pension Sgt. Foerster requested a motion to accept the exam findings from the independent medical exam for Daniel King as presented in a letter from Benjamin S. Frank, MD. Kinnerk made a motion, seconded by Roske to accept the exam findings from the IME for former officer Daniel King and continue his disability pension. All ayes, motion carried. Sgt. Foerster explained that pension regulations required persons who receive a disability pension prior to age 50 years obtain an annual independent medical examination to determine their eligibility for the disability pension. Bills for Approval Roske made a motion, seconded by Prust to approve the following bills as presented by Wells Fargo Bank, NA, $576.14 for trust account quarterly fees; Law Offices of Richard Puchalski, $1,800 and $3,850; and, Capital Gains, Inc. $3,958. All ayes, motion carried. Other Business a. Foerster informed the board that the petition filed by former police officer Mary Lee Eschbach to appeal the board's decision to deny her a duty -related pension is being reviewed by Judge McIntyre. A written finding is expected from the judge on November 14, 2008. b. The board scheduled a special meeting for Thursday, December 11th at 3:30 PM to review quotes obtained by the city's Finance Department to reinvest a $1,000,000 CEDAR currently held with McHenry Bank & Trust due to expire on December 14, 2008. Quotes were requested for 12 and 24 months. Adjournment Kinnerk made a motion, seconded by Roske to adjourn the meeting. All ayes, motion carried. The meeting was adjourned at 4:15 PM. Next special meeting: Thursday, December 11th, 2008 Next regular board meeting: January 20, 2009 Respectfully submitted, Marci Geraghty, Re&rdino Secretary