HomeMy WebLinkAboutMinutes - 01/15/2008 - Police Pension BoardPOLICE PENSION BOARD
CITY OF MCHENRY
Tuesday, January 15, 2008
A meeting of the McHenry Police Pension Board was called to order on Tuesday, January 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;
Chris Black, Carolyn Lynch; City of McHenry; and, Recording Secretary Marci Geraghty.
Meeting Minutes
Meeting minutes from October 16, 2007 and special meeting minutes from December 13, 2007
were presented for approval.
Motions by Prust, seconded by Kinnerk to approve the minutes from the October 16,
2007 and December 13, 2007 as presented 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 September 30, 2007.
Net assets held in trust for that period including investments were $16,659,340.
Hettermann 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. Capital Gains. Gary Karshna reported on the pension funds fixed assets as of
November 30, 2007.
Portfolio Market Valuation
Portfolio Book Valuation
Average Maturity 4.83 years
$7,158, 711
$7,108,071
Effective Duration 4.12 years
Karshna reported that the market is good for bonds. Recently the Federal
Reserve cut the Fed Funds Rate 25 basis points from 4.50% to 4.25%. The fixed
income portfolio was the direct beneficiary of a stock market plunge in
November, pushing bond prices higher and yields lower. Karshna further stated
that both markets should remain volatile until the uncertainty related to the
strength of the domestic economy is resolved.
In December, Capital Gains acquired $800,000 PAR, US Treasury Strips with a
4.75% yields and February 2022 maturity date.
Police Pension Board Meeting
January 15, 2008
Page Two
The Police Pension portfolio trails the Lehman Intermediate Bond Index fiscal
year to date and over the past 12-months. Karshna is of this opinion that this is a
short-term phenomenon attributable to the subprime lending flight to quality from
stocks to US Treasury securities. Since most of the fixed income portfolio is in
US Agency notes, it did not appreciate as much as US Treasury securities.
Since US treasury instruments have rallied well beyond US Agency securities,
the real value in the market place is US Agency securities.
b. LPL Financial. Jim Schmidt presented the board with the equity report for the
period ending December 31, 2007. Total values of investments for the period
was $7,276,729, up 11.86% for the year and double the S&P 500. However, the
last three weeks reigned havoc on the market. The Dow is down by 7,056 or 3%
already this year. One positive is that the American Funds always outperforms in
down -markets.
A discussion ensued on the penalty fee for the annuity fund. Schmidt stated that
the penalty period would expire in October 2008.
Schmidt will report on the percentages of the funds equity investments at the
next meeting.
c. Investment Strategies. Director of Finance Chris Black reported that he is
completing the Predatory Loan Certificate as required by the State of Illinois.
The certificate is due to the state by February 28, 2008.
New Business
a. President Foerster presented a request for application to the Police Pension
fund from Matthew Schmitt.
Kinnerk made a motion, seconded by Hettermann to accept the
application to the Police Pension fund for Matthew Schmitt. All ayes,
motion carried.
b. President Foerster presented a letter from Pension Board Attorney Richard
Puchalski notifying the board of a $25/hour increase in the hourly billing rate.
Foerster noted that this is the first increase in four years and the total hourly
billing rate will now be $200.
Roske made a motion, seconded by Hettermann to accept the new
billing rate of $200/billing hour for Richard Puchalski's legal services.
All ayes, motion carried.
Bills for Approval
Kinnerk made a motion, seconded by Prust to approve payment to Wells Fargo Bank, NA
for $393.98 for trust account quarterly fees as presented. All ayes, motion carried.
Other Business
Foerster reported that three requests for disability pensions would probably be scheduled for
hearing in February and March.
Police Pension Board Meeting
January 15, 2008
Page Three
The actuarial report should be ready for review in April. Foerster stated that the preliminary
report looks favorable —the fund is 61 % to 65% funded.
As questioned at the October meeting, Foerster researched the rules regarding simple majority
voting and determined that a majority of the whole board or three trustees must be present for
action to be taken. Conference calls are acceptable.
Adiournment
Kinnerk made a motion, seconded by Prust to adjourn the meeting. All ayes, motion
carried. The meeting was adjourned at 4:02 PM.
Next meeting: Tuesday, April 15, 2008
Respectfully submitted,
L LtIl i
Marcia M. Geraghty, Wcortg Secretary