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