HomeMy WebLinkAboutPacket - 04/13/2021 - Police Pension Board
POLICE PENSION BOARD OF TRUSTEES
Tuesday, April 13, 2021
2:30 PM
Municipal Center ‐ 333 South Green Street
Aldermen’s Conference Room
AGENDA
1. Call to Order
2. Roll Call
3. Public Input
4. Approve the October 13, 2020 Meeting Minutes, the November 30, 2020 Special Meeting
Minutes, and the January 12, 2021 Meeting Minutes
5. Report of Investments and Accounts:
a. Presentation and motion to approve the Treasurer’s Report
b. LPL Financial Equities Report
c. Capital Gains, Inc. Fixed Assets Report
d. Semi‐annual review of the Police Pension Board Fund Investment Policy
6. New Business:
a. Motion to approve the payment of bills
b. Accept pension applications of Katherine Zajac, Daniel Lincicum, and Alberto Martinez
7. Unfinished Business:
8. Additional Items for Discussion
9. Adjournment
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CITY OF MCHENRY
POLICE PENSION FUND
INVESTMENT POLICY
Adopted July 13, 1999
Revised:
3/13/2001
1/8/2013
10/8/2013
1/12/201 6
10/11/2016
7/10/18
5-12-20
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CITY OF MCHENRY POLICE PENSION
FUND INVESTMENT POLICY
STATUTORY REQUIREMENT 40 ILCS 5/1-113.6
Investment Policies and Investment Sustainability, effective January 1, 2020.
Every board of trustees of a police pension fund shall adopt a written investment policy and file a
copy with the Department of Insurance within 30 days after its adoption. Whenever a board
changes its investment policy, it shall file a copy with the Department within 30 days.
The investment policy shall include a statement that material, relevant, and decision-useful
sustainability factors have been or are regularly considered by the board, within the bounds of
financial and fiduciary prudence, in evaluating investment decisions. Such factors include but are
not limited to: (1) corporate governance and leadership factors; (2) environmental factors; (3)
social capital factors; (4) human capital factors; and (5) business model and innovation factors, as
provided under Illinois Sustainable Investing Act.
PURPOSE
The investment of pension funds is the responsibility of the members of the Board of
Trustees (Pension Board) of the McHenry Police Pension Fund (Fund). The purpose of this
investment policy is to indicate a conscious, formal effort by the Pension Board to develop,
implement and monitor the investment of pension funds. It shall be considered an important
means to communicate the Pension Board's policy views on management of pension funds to
the public, participants, and beneficiaries of the Fund.
SCOPE
This policy governs investment practices and applies to all financial transactions of the
McHenry Police Pension Fund.
OBJECTIVES
The Pension Board has a fiduciary responsibility to discharge their duties with respect to
the Pension Fund solely in the interest of the participants and beneficiaries as set forth in the
Illinois Pension Code at 40 ILCS 5/1-109.
• Safety: Safety of principal is the foremost objective of the McHenry Police Pension
Fund. Each investment transaction shall seek to first ensure that large capital losses
are avoided whether they are from securities, defaults or erosion of market value.
• Return on Investments: The Pension Board seeks to attain or exceed market rates of
return on its investments consistent with constraints imposed by its safety objectives,
cash flow considerations and Illinois Laws that restrict the placement of public funds.
• Maintenance of Public Trust: All participants in the investment process shall seek to
act responsibly as custodians of pension funds. Investment officials shall avoid any
transactions that might reasonably impair Fund participant's confidence in the Pension
Board's ability to manage the Fund.
• Liquidity: The assets shall be sufficiently liquid to meet the Fund's disbursement
requirements for the payment of operating expenses and benefits.
RESPONSIBILITY
Management of the investment program is the responsibility of the McHenry Police Pension Fund
Board of Trustees. No person may engage in an investment transaction except as provided
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under terms of this policy established by the Pension Board.
The Pension Board may appoint an investment manager (as defined in 40 ILCS 5/1-101.4) to assist
in the management of the investment program. The investment manager shall acknowledge, in
writing, that they are a fiduciary with respect to the McHenry Police Pension Fund. Any such written
agreement shall be attached to this policy.
The Pension Board will meet with the investment manager quarterly to review market
conditions and to determine investment strategy. The Treasurer of the City of McHenry
(Treasurer) is responsible for ensuring all investment transactions undertaken are consistent
with the Fund's investment strategy.
The Board shall file a copy of this Policy with the Illinois Department of Insurance within
30 days after its adoption, per 40 ILCS 5/1-113.6. A copy of this Policy shall be made
available to the public at the main administrative office by the Fund, per 30 ILCS 235/2.5(b).
PRUDENCE
The standard of prudence to be used by investment officials shall be the "prudent person" and
shall be applied in the context of managing the portfolio. Investments shall be made with care,
skill, prudence and diligence that a prudent person acting in like capacity and familiar with
such matters would use in the conduct of an enterprise of like character with like aims.
PROHIBITED TRANSACTIONS
A Fiduciary with respect to the Fund shall not:
• Deal with the assets of the Fund in their own interests or for their own account.
• In their individual or other capacity act in any transaction involving the Fund on
behalf of a party whose interests are adverse, to the interests of the Fund or the
interests of its participants or beneficiaries.
• Receive any consideration for their own personal account from any party dealing with
the Fund in connection with a transaction involving the assets of the Fund.
INVESTMENT INSTRUMENTS
The Pension Fund may invest in any type of security allowed for in Police Pension Statutes
40 ILCS 5/1 - 113. Approved investments include:
1) Bonds, notes, certificates of indebtedness, treasury strips, treasury bills, or other
securities, including obligations of the Government National Mortgage Association,
which are guaranteed as to principal and interest by the full faith and credit of the
government of the United States of America or its agencies.
2) Agencies include Federal Housing Administration (FHA), Government National
Mortgage Association (GNMA), Public Housing Boards (HUD), Farmers Home
Administration, General Services Administration (GSA), Maritime Administration,
Small Business Administration (SBA), Tennessee Valley Authority (TVA), Washington
Metropolitan Area Transit Authority, Federal Land Bank, Federal Intermediate Credit
Banks, Banks for Cooperatives, Federal Farm Credit Banks, Federal Home Loan
Banks, Federal Home Loan Mortgage Corporation (Freddie Mac), Federal National
Mortgage Association, Student Loan Marketing Association (Sallie Mae) and any other
agency created by Act of Congress.
3) Interest-bearing savings accounts, interest-bearing certificates of deposit or interest-
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bearing time deposits or any other investment constituting direct obligations of any
institution that is insured by the Federal Deposit Insurance Corporation or insured
accounts at credit unions chartered in the state of Illinois or federally chartered
provided its principal office is located in Illinois.
4) Illinois Funds (formerly IPTIP)
5) Municipal bond and tax anticipation warrants issued by any city, county, township,
village, incorporated town, municipal corporation or school district in Illinois and
Illinois Municipal Certificates of Accrual (M-Cats) or tax-exempt securities.
6) Guaranteed Investment Contracts (GIC's) valued at purchase price (not market value)
not to exceed 10% of the total aggregate book value of the portfolio.
7) Separate accounts of a life insurance company authorized to do business in Illinois,
comprised of; common or preferred stocks, bonds or money market instruments; real
estate or loans upon real estate secured by first or second mortgages. The total
investment in such separate accounts shall not exceed 10% of the aggregate book
value of all investments owned by the fund.
8) State of Israel Variable Rate Issue Bonds and Prime Rate State of Israel Notes,
limited to 5% of the book value of the pension fund. The fund must have at least $5
million of net present assets to invest in these funds.
9) Corporate bonds which meet the following requirements:
a) Rated as investment grade by one of the two largest credit rating
services Standard & Poor 's and Moody 's Investors Service - at the time of
purchase.
b) If securities are downgraded by both Standard & Poor's and Moody 's
Investors Service, subsequent to purchase, below investment grade, they must
be liquidated within 90 days of the downgrade.
10) McHenry Police Pension Fund Corporate Bond Acquisition Policy
a) Long-Term Bonds. Corporate bonds with maturities beyond two (2) years, must
have an S&P rating of AA or higher and/or a Moody’s rating of Aa2.
b) Intermediate-Term Bonds. Corporate bonds in the one (1) to two (2) year maturity
range, must have a minimum S&P rating of BBB and/or a Moody’s rating of Baa2.
c) Short-Term Bonds. Corporate bonds with a final maturity date of one (1) year or
less, can be acquired with a BBB- S&P rating and/or a Baa3 Moody’s rating. The
final maturity dates on these bonds are so short, they will most likely mature long
before a dual ratings downgrade occurs and the subsequent 90-day mandatory sale
rule, goes into effect.
11) McHenry Police Pension Fund Corporate Bond Sale Policy.
a) Capture Profits. Corporate bonds owned by the Pension Fund can be sold, to
capture a profit, at the discretion of the Investment Manager. A bond sale to capture
profits will be made in instances where the sale will significantly enhance the
investment revenue in the Pension Fund bond portfolio.
b) Preemptive Sale. When a long-term or intermediate-term corporate bond (final
maturity date of 1 year or more) owned by the Pension Fund, is downgraded to the
lowest investment grade rating, which is a BBB_ rating by S&P and Baa3 rating by
Moody’s, Capital Gains Incorporated will sell the bond (if a positive rate of return
can be realized) before it is downgraded to a level below investment grade, to avoid
the huge downslide in pricing of this bond. If a positive rate of return is not
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available, Capital Gains Incorporated will notify the Pension Board of these
downgrades and discuss the various options available (hold or disposal) to the
Pension Fund, regarding the downgraded corporate bond.
c) 90-day Statutory Requirement. Per Illinois Pension Statutes, Corporate Bonds
must be sold, within 90 days, if downgraded (below investment grade) by both, of
the top two (2) rating agencies. Capital Gains Incorporated will comply with this
statutory requirement, unless instructed by the Pension Board to do otherwise.
If the Fund has assets in excess of $2,500,000, it may invest up to 45% of its total assets
in the following items:
1) Separate accounts that are managed by life insurance companies authorized to transact
business in Illinois and are comprised of diversified portfolios consisting of common
or preferred stocks, bonds or money market instruments.
2) Mutual funds that meet the following requirements:
a) The mutual fund is managed by an investment company as defined and
registered under the federal Investment Company Act of 1940 and registered
under the Illinois Securities Law of 1953.
b) The mutual fund has been in operation for at least 5 years.
c) The mutual fund has total net assets of $250 million or more.
d) The mutual fund is comprised of diversified portfolios of common or preferred
stocks, bonds, or money market instruments.
If the Fund has assets in excess of $5,000,000 and has appointed an investment advisor
under section 1-113.5, it may, through that investment advisor, invest up to 45% of the
aggregate market value of the total portfolio in domestic common and preferred stocks,
provided;
1) The common stocks are listed on a national securities exchange or board of trade as
defined in the federal Securities Exchange Act of 1934 and set forth in Illinois
Securities
2) Law of 1953 or quoted in the National Association of Securities Dealers Automated
Quotation System, National Market System (NASDAQ NMS)
3) The securities of a corporation created or existing under the laws of the United States
or any state, district, or territory thereof and the corporation has been in existence for
at least 5 years.
4) The corporation has not been in arrears on payment of dividends on its preferred stock
during the past 5 years
5) The market value of stock in any one corporation does not exceed 5% of the cash and
invested assets of the pension fund, and the investments in the stock of any one
corporation do not exceed 5% of the total outstanding stock of that corporation.
6) The straight preferred stocks or convertible preferred stocks are issued or guaranteed by
a corporation whose common stock qualifies for investment by the Board.
7) The issuer of the stocks has been subject to the requirements of Section 12 of the
federal Securities Exchange Act of 1934 and has been current with the filing
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requirements of Sections 13 and 14 of that Act during the preceding 3 years.
8) The Fund's total investment in the items authorized in section 5/1-113.3 and 5/1-
113.4, shall not exceed 45% of the market value of the pension fund's net present
assets stated in its most recent annual report on file with the Illinois Department of
Insurance.
If the Fund has net assets of at least $10,000,000 and has appointed an investment
adviser, as defined under Sections 1-101.4 and 1-113.5, it may, through that investment
adviser, invest an additional portion of its assets in common and preferred stocks and
mutual funds.
The stocks must meet all the following requirements:
1) The common stocks must be listed on a national securities exchange or board of trade
(as defined in the Federal Securities Exchange Act of 1934 and set forth in paragraph
G of Section 3 of the Illinois Securities Law of 1953) or quoted in the National
Association of Securities Dealers Automated Quotation System National Market System.
2) The securities must be of a corporation in existence for at least 5 years.
3) The market value of stock in any one corporation may not exceed 5% of the cash
and invested assets of the pension fund, and the investments in the stock of any one
corporation may not exceed 5% of the total outstanding stock of that corporation.
4) The straight preferred stocks or convertible preferred stocks must be issued or
guaranteed by a corporation whose common stock qualifies for investment by the board.
The mutual funds must meet the following requirements:
1) The mutual fund must be managed by an investment company registered under the Federal
Investment Company Act of 1940 and registered under the Illinois Securities Law of
1953.
2) The mutual fund must have been in operation for at least 5 years.
3) The mutual fund must have total net assets of $250,000,000 or more.
4) The mutual fund must be comprised of a diversified portfolio of common or preferred
stocks, bonds, or money market instruments.
ASSET ALLOCATION
The Pension Funds total equity investment in the items authorized under this Section and Section 1-
113.3 shall not exceed 65% of the market value of the Pension Fund's net present asset valuation, at
fiscal year- end (April 30th). The recommended percentages of each asset class are listed below.
Asset Class Minimum Maximum
Equities 40 % 65%
Fixed Income 20 % 59 %
Cash/Cash Equivalents 1 % 30%
1) Other permitted investments as approved by the Pension Board from time to time.
The Board of Trustees may register the investments of the Fund in the name of the
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Pension Fund, in the nominee name of a bank or a trust company authorized to conduct trust
business in Illinois, or in the nominee name of the Illinois Public Treasure's Investment
Pool.
CONTROLS
The Fund maintains its books and records in conformance with generally accepted
accounting principles. The internal controls shall be reviewed by the Pension Board and an
independent auditor. The controls shall be designed to prevent losses of public funds arising
from fraud, employee error, misrepresentation by third parties, unanticipated changes in
financial markets of imprudent action by employees and officers of the Pension Board.
The Treasurer is named an authorized signature on all Fund accounts. All Fund disbursements
shall be authorized by the Pension board and be executed by two (2) signatures. One of the
signatures shall be the Treasurer and the other shall be a Trustee authorized by the Pension
Board.
DIVERSIFICATION/STRATEGY
Fixed Income:
1) The average maturity/duration of the portfolio will be managed based upon the
current existing interest rate environment.
Equities:
2) Shall be maintained in accordance with the guidelines of Illinois
State Statutes.
COLLATERALIZATION
It is the policy of the Fund to require that all deposits in excess of FDIC insurable
limits (applies to bank Certificates o f Deposit) be secured by collateral in order to protect
deposits from default.
1) Eligible collateral instruments and collateral rations (market value divided by deposit) are
as follows:
a ) U. S. Government Securities
b ) Obligations of Federal Agencies
c ) Obligations of the State of Illinois
d ) Illinois Municipal Bonds rated “A” or better by Moody’s
The ratio of fair market value of collateral to the amount of funds secured shall be
reviewed at least quarterly and a dditional collateral shall be requested when the ratio
declines below the level required.
2) Safekeeping of collateral:
a) Third party safekeeping is required for all collateral. To accomplish this, the
securities can be held at the following locations:
1. A F e d e r a l Reserve B a n k o f b r a n c h office.
11. At a nother custodial facility generally in a trust dep artment through
book entry at the Federal Reserve, unless physical securities are
involved. If physical securities are involved, at a third-party depository
in a suitable vault and insured against loss by fire, theft, and similar
causes.
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b) Safekeeping of collateral shall be documented by a written agreement
approved by the Treasurer. This may be in the form of a safekeeping
agreement, trust a greement, escrow agreement or custody a greement.
c) Substitution or exchange of securities held in safekeeping as collateral may occur
without prior written notice to the Treasurer provided that the market value of the
replacement securities is, equal to or greater than, the market value of the
securities being replaced. The Treasurer shall be notified in writing within two days
of all substitutions.
CUSTO DY AND SAFEKEEPING OF INVESTMENT S
1) Third party safekeeping is required for all securities owned by the Fund. To accomplish
this, the securities shall be held in a trust department through book-entry at the
Depository Trust Company.
2) Safekeeping shall be doc u mented by an approved written agreement. The agreement
may be in the form of a safekeeping agreement, trust agreement, escrow agreement or
custody agreement. Fees for this service shall be mutually agreed upon by the Pension
Board and the safekeeping bank.
ETHICS AND CONFLICTS OF INTEREST
Any fiduciary with respect to the Fund shall refrain from personal business activity that could
conflict with the proper execution of the investment program, or which could impair their
ability to make impartial investment decisions.
INDEMNIFICATION
Pension Board members, investment officers, and the Treasurer acting in accordance with
this Investment Policy and such written procedures as have been or may be established, in
relation thereto, and exercising due diligence, shall be relieved of personal liability for an
Individual security's credit risk or market changes.
REPORTING
On an annual basis, the Treasurer shall submit to the Pension Board an investment report which
shall describe the portfolio in terms of investment securities, maturity, cost, and earnings for
the current period and year to date. The Treasurer shall also submit a comprehensive annual
report on the investment program and activity.
MEETING SCHEDULE
The Board shall schedule quarterly meetings on the 2nd Tuesday of January, April, July and
October of each year. Special meetings may be called, from time-to-time, by the Police Pension
Fund President,
AUDIT
The Police Pension Fund shall be audited annually by a certified public accountant in
conjunction with the Ci ty's audit. In addition, the Fund is subject to periodic examination
by the Illinois Department of Insurance.
DEFINITIONS:
Beneficiary. Person eligible for or receiving benefits from a pension fund.
Book Entry Security. Securities that can be transferred from institution to institution using
the federal electronic wire system, thus eliminating the physical transfer of certificates.
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Records are maintained on a computer system at the Federal Reserve.
Collateral. The pledging of a security to guarantee performance of an obliga tion. Commercial
Paper. Unsecured promissory notes of corporations issued for 270 days or less. Fiduciary.
Person entrusted with the control of assets for the benefit of others.
Investment Manager. An individual or organization that provides investment
management services for a fee, either on a discretionary or nondiscretionary basis. Under
Illinois law, an investment manager is considered a fiduciary with respect to the Fund.
IPTIP (Illinois Public Treasurer's Investment). A short -term money market fund for public
funds in Illinois.
Market Value. The present price of a given security.
Return. The profit or interest as payment for investment.
Security. Any note, stock, bond, certificate of interest or certificate of deposit.
Stagnate Account. Term used of variable annuities. Because the risk is borne by the i nvestor in
a variable annuity, the issuer may not commingle funds invested in the variable annuity with
the general funds of the issuer.
Treasury Bill. Short-term debt obligation of the U.S. government which will mature within
ten years at the time of original issuance.
Treasury Bond. Longer debt obligations of the U.S. government which will mature in ten years
or longer at the time of original issuance.
Yield. Percentage measured by taking annual interest from an investment and dividing by
current market value
AMENDMENT
This policy may be amended from time to time by the Pension Board.
CONFLICT
In the event of any conflict between this Policy and the Illinois Compiled Statutes or case
decisions of the State of Illinois, the Statutes and case law decisions shall govern.
Investment Policy
Signature Page
The undersigned have read and agree to follow the Investment Policy adopted by the Board of
Trustees of the City of McHenry Police Pension Fund on July 13, 1999, and last amended on
May 12, 2020.
Name Officers Signature
Jeffrey Foerster President
Nicholas Clesen Vice President
Marc Fisher Vice President
Cheryl Kranz Assistant Secretary
Ann Buss Appointed Trustee
Investment Managers Signature
Gary Karshna Capital Gains, Inc
James Schmidt LPL Financial
Board Attorney Signature
Laura Goodloe Puchalski, Goodloe,
Marzullo LLP
Police Pension Board of Trustees
Regular Meeting Minutes
October 13, 2020
Call to Order
The regular meeting of the City of McHenry Police Pension Board of Trustees was called to order at 2:30
p.m. at the McHenry City Council Chambers and as an online Zoom meeting due to the COVID‐19
pandemic.
Roll call:
Members present: President Jeffery Foerster, Cheryl Kranz, Marc Fisher, Sergeant Nick Clesen. Members
absent: Ann Buss. Others present: Monte Johnson, Carolyn Lynch, Gary Karshna, James Schmidt, James
Ritchie.
Public Input:
No members of the public were present to offer comments.
Approve the July 21, 2020, meeting minutes.
A motion was made by Cheryl Kranz and seconded by Mark Fisher to approve the July 21, 2020, meeting
minutes as presented. Roll Call Vote: 4‐ayes, 0‐nays, 0‐abstained. Motion carried.
Semi‐annual review of the Police Pension Board Fund Investment Policy
There were questions or suggestions for changes to the policy.
Presentation of Actuarial Valuation Report and recommendation to forward Police Pension Fund Tax
Levy Request to McHenry City Council
James Ritchie of Lauterbach & Amen was present to give a presentation on the yearly actuarial
reporting. Mr. Ritchie explained the current year contribution recommendation, which was $2,576,006.
This shows a current year funded percentage of 53.08%. He also explained the expected benefit
payments, risk management, changes in contributions, demographic changes, assumption changes, plan
changes, and the change in the market value of assets. A motion was made by Sergeant Clesen and
seconded by Officer Fisher to accept the Actuarial Funding Report as of May 1, 2020. Roll Call Vote: 4‐
ayes, 0‐nays, 0‐abstained. Motion carried.
A motion was made by Officer Fisher and seconded by Cheryl Kranz to forward the Pension Fund Tax
Levy request of $2,576,006 to the McHenry City Council. Roll Call Vote: 4‐ayes, 0‐nays, 0‐abstained.
Motion carried.
Capital Gains, Inc. Fixed Assets Report
Investment Manager Gary Karshna explained that we still have low yields as rates are kept down.
Despite hits to the restaurants, airlines, and travel industries, the stock market is still doing well. There is
a lot of money out there ready to invest, and people are saving more than ever. The 5 month rate of
return sits at 1.54%, with a 5% rate of return over the last 12 months.
LPL Financial Equities Report
Investment Advisor James Schmidt reported a year to date yield of 8.85%, but the focus should be on
the money coming in from the pension bonds. He reviewed the asset allocation report, where 24% of
the investment sits in the AMCAP fund, which is up 14%. He also explained that he would like to invest a
larger percentage of money in the MFS Growth Fund. Through September, that fund is up 22%.
He reviewed his handout showing a proposed investment strategy where he would use a dollar cost
average over six months. When the pension bond money comes in, he would immediately invest $5
million into LPL. The extra cash would be given to Mr. Karshna to roll off a little at a time, and transfer
money back to invest at the intervals shown on the handout. The one change he might suggest is if there
is a large correction in the market, such as 10%, he would recommend investing the whole amount all at
one time.
The investment strategy was discussed amongst Mr. Schmidt, Mr. Karshna, and all of the trustees.
Treasurer Lynch explained that the bonds should sell in the next couple of weeks with a closing date of
December 1. The timing of when we receive the cash will be critical to the investment strategy,
especially with the Presidential election approaching.
Approve the investment of funds from the Taxable General Obligation Bonds, Series 2020B
Because of the uncertainty of the election, and what the market will look like when the money comes in
from the bonds, Sergeant Clesen suggested to wait and hold a special meeting to approve the
investments. Everybody will have a better idea of what the market will look like and we will be able to
make a more informed decision if we make the decision right before the money arrives. It was agreed
up on that a special meeting will be held on November 30th to approve the investments. That date could
change if the closing date of the bonds changes.
Approval of the 2021 Police Pension Board Schedule
President Foerster suggested moving the July 13th date to July 6th. The dates for 2021 will be January 12,
April 13, July 6, and October 12. A motion was made by Officer Fisher and seconded by Sergeant Clesen
to approve the amended 2021 Police Pension Board Schedule. Roll Call Vote: 4‐ayes, 0‐nays, 0‐
abstained. Motion carried.
Approve portability of time for Joseph Lazicki
A motion was made by Officer Fisher and seconded by Sergeant Clesen to approve the portability
request for Joseph Lazicki. The total amount transferred is $234,629.26. Roll Call Vote: 4‐ayes, 0‐nays, 0‐
abstained. Motion carried.
Approve portability of time for Sue Ellis
A motion was made by Cheryl Kranz and seconded by Officer Fisher to approve the portability request of
Sue Ellis as presented. Her new start date is May 20, 2002, with an amount of $435,024.58. Roll Call
Vote: 4‐ayes, 0‐nays, 0‐abstained. Motion carried.
Approve the investment of funds in the amount of $435,024.58 from the Susan Ellis portability
A motion was made by Cheryl Kranz and seconded by Officer Fisher to allocate the investments based
on the 65‐35% rule, and to invest the 65% of equity into the MSF fund allocation as presented by James
Schmidt. Roll Call Vote: 4‐ayes, 0‐nays, 0‐abstained. Motion carried.
Payment of Bills
A motion as made by Officer Fisher and seconded ty Cheryl Kranz to approve the payment of bills as
submitted. Roll Call Vote: 4‐ayes, 0‐nays, 0‐abstained. Motion carried.
Motion to Adjourn
A motion was made by Sergeant Clesen and seconded by Cheryl Kranz to adjourn the meeting at 3:42
p.m. Roll Call Vote: 4‐ayes, 0‐nays, 0‐abstained. Motion carried.
______________________________ ______________________________
Monte Johnson, Recording Secretary Jeff Foerster, President
Police Pension Board of Trustees
Regular Meeting Minutes
January 12, 2021
Call to Order
The regular meeting of the City of McHenry Police Pension Board of Trustees was called to order at 2:30
p.m. as an online Zoom meeting due to the COVID‐19 pandemic.
Roll call:
Members present: President Jeffery Foerster, Marc Fisher, Sergeant Nick Clesen. Members absent: Ann
Buss, Cheryl Kranz. Others present: Monte Johnson, Carolyn Lynch, Gary Karshna, James Schmidt.
Public Input:
No members of the public were present to offer comments.
Approve the October 13 2020, meeting minutes.
The minutes were not part of the packet distributed to Board members prior to the meeting. Deputy
Clerk Johnson will email those to the Board for approval at a later point in the meeting. *
Presentation and motion to approve the Treasurer’s Report
A motion was made by Sergeant Clesen and seconded by Officer Fisher to approve the Treasurer’s
Report as presented. Roll Call Vote: 3‐ayes: Sergeant Clesen, Officer Fisher, Jeff Foerster. Motion carried.
LPL Financial Equities Report
Investment Advisor James Schmidt explained that another $4 million has been added to the fund. The
year end value sat at $29 million and now sits at $32.5 million with the recent money that was added.
The total rate of return for the previous calendar year was 19.80%.
Capital Gains, Inc. Fixed Assets Report
Investment Manager Gary Karshna explained that all of the incoming money from bond proceeds was
invested in short order and it all worked out well. It was difficult because there is no yield on the market.
Most of the money has been invested at an average yield of about 1%. Moving forward it would be wise
to transfer money into equities, and most of the fixed assets are invested for an average of a 5 month
term. There is about $500,000 in cash plus securities in a lump sum, so there is $2 million in investments
that could be made in March and April. We could easily liquidate that and transfer it if the stock market
is low at that time. The rate of return for the last 12 months is 5%, but the first 8 months of the fiscal
year has a return of 1.23%.
Approve Pension Increases
A motion was made by Sergeant Clesen and seconded by Officer Fisher to approve the pension increases
as presented. Roll Call Vote: 3‐ayes: Sergeant Clesen, Officer Fisher, Jeff Foerster. Motion carried.
PGM‐Law Retainer Fees
President Foerster explained that the PGM‐Law retainer fees are being increased from $215 per hour to
$230 per hour. He still believes this is a fair price. A motion was made by Officer Fisher and seconded by
Sergeant Clesen to approve the fee increases as presented for PGM‐Law. Roll Call Vote: 3‐ayes: Sergeant
Clesen, Officer Fisher, Jeff Foerster. Motion carried.
Approve the retirement of Sergeant Sexton
A motion was made by Officer Fisher and seconded by Sergeant Clesen to approve the retirement of
Sergeant Sexton. Roll Call Vote: 3‐ayes: Sergeant Clesen, Officer Fisher, Jeff Foerster. Motion carried.
Approve the retirement of Anthony Mucciante
A motion was made by Sergeant Clesen and seconded by Officer Fisher to approve the retirement of
Anthony Mucciante. Roll Call Vote: 3‐ayes: Sergeant Clesen, Officer Fisher, Jeff Foerster. Motion carried.
Accept Pension Application of Joseph Lopez
A motion was made by Officer Fisher and seconded by Sergeant Clesen to accept the pension
application of Joseph Lopez. Roll Call Vote: 3‐ayes: Sergeant Clesen, Officer Fisher, Jeff Foerster. Motion
carried.
Motion to approve the payment of bills
Submitted bills included an LPL payment of $11,836.91, an LPL payment from October for $14,102.69, a
Capital Gains payment of $4,769, a payment for legal fees from PGM of $250. A motion was made by
Sergeant Clesen and seconded by Officer Fisher to approve the payment of bills as presented. Roll Call
Vote: 3‐ayes: Sergeant Clesen, Officer Fisher, Jeff Foerster. Motion carried
Public Pension Trustee Training Update
It was reported that all training certificates have been received. Copies will be sent to Director Lynch for
inclusion of the audit.
Semi‐Annual Review of Executive Session Minutes
There were no executive session minutes to review.
Addition Items for Discussion
It will soon be time for the election of trustees. That paperwork will be prepared and sent out by Deputy
Clerk Johnson.
Motion to Adjourn
A motion was made by Sergeant Clesen and seconded by Officer Fisher to adjourn the meeting at 2:58
p.m. Roll Call Vote: 3‐ayes: Sergeant Clesen, Officer Fisher, Jeff Foerster. Motion carried
* Clerk’s Note: The minutes of the October 13, 2020, meeting were not voted on at this meeting. Those
will be approved at the next meeting.
______________________________ ______________________________
Monte Johnson, Recording Secretary Jeff Foerster, President
Police Pension Board of Trustees
Special Meeting Minutes
November 30, 2020
Call to Order
A special meeting of the City of McHenry Police Pension Board of Trustees was called to order at
9:00 a.m. via Zoom online due to the COVID‐19 pandemic.
Roll call:
Members present: President Jeffery Foerster, Ann Buss, Officer Marc Fisher, Sergeant Nick Clesen,
Cheryl Kranz. Others present: Monte Johnson, Carolyn Lynch
Public Comments:
No members of the public were present to offer comments.
Approve the investment of funds from the Taxable General Obligation Bonds, Series 2020B
Gary Karshna explained that we are expecting $23,429,567.65 from the bonds. The money has
not hit our account yet, but should be in there later today.
Jim Schmidt prepared an investment schedule that was previously discussed at the last
meeting. The proposal was screen shared via Monte Johnson’s computer. The Dollar Cost
Averaging Program was discussed in detail by Mr. Schmidt.
A motion was made by Sergeant Clesen and seconded by Ann Buss to follow the investment schedule as
presented by Jim Schmidt. Roll Call Vote: 5‐ayes: Jeff Foerster, Ann Buss, Marc Fisher, Nick Clesen,
Cheryl Kranz. 0‐nays, o‐abstained. Motion carried.
Motion to Adjourn
A motion was made by Sergeant Clesen and seconded by Cheryl Kranz to adjourn the meeting at 9:18
a.m. Roll Call Vote: 5‐ayes: Jeff Foerster, Ann Buss, Marc Fisher, Nick Clesen, Cheryl Kranz. 0‐nays, 0‐
abstained. Motion carried.
______________________________ ______________________________
Monte Johnson, Recording Secretary Jeff Foerster, President