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HomeMy WebLinkAboutMinutes - 10/12/2021 - Police Pension BoardPolice Pension Board of Trustees Regular Meeting Minutes October 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. remotely via Zoom due to the COVID-19 pandemic. Roll call: Members present: President Jeffery Foerster, Officer Robert Beaudoin, Sergeant Nick Clesen, Thomas Settles. Members absent: 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 July 6, 2021, meeting minutes A motion was made by Tom Settles and seconded by Sergeant Clesen to approve the minutes from July 6, 2021. Roll Call Vote: 4-ayes: Jeff Foerster, Sergeant Clesen, Officer Beaudoin, Thomas Settles. Motion carried. Presentation of Actuarial Valuation Report and recommendation to forward Pension Fund Tax Levy request to McHenry City Council James Ritchie of Lauterbach & Amen shared his screen to review the report. He explained the contributions recommendation and the current funding status. There was a significant drop from last year to this year with a big increase in the market value of assets and the pension bonds. We are currently 102% funded. Mr. Ritchie reviewed the reconciliation information which showed how members get another year of service, and how contributions and salaries are set to increase. The actuarial expense is a big change because we paid off the unfunded liability. He also reviewed the demographic changes and the expected benefit payments. There is a good balance between the active and inactive members. We are in a much better position overall with having the bonds for the unfunded liability. We are only paying out 3.58% with a 7% return. The requested amount of funding needed from the City is $630,420. A motion was made by Thomas Settles and seconded by Sergeant Clesen to approve the recommended pension fund tax levy request to the McHenry City Council. Roll Call Vote: 4-ayes: Jeff Foerster, Sergeant Clesen, Officer Beaudoin, Thomas Settles. Motion carried. LPL Financial Equities Report Jim Schmidt reported that the markets have done well. Fiscal year returns sit at 24%. Since May 1st the fund has earned 3.5%, and we are expecting more volatility this fall with the expected inflation. As feds increase the interest rates it will hurt the growth stocks and value stocks. He reviewed the report and showed we have 26% of investments in the international market. Mr. Settles asked what fees we are paying, and Mr. Schmidt reported that the internal expenses are between 0.35 to 0.5%. Capital Gains, Inc. Fixed Assets Report Mr. Karshna reported that the returns for the fiscal year are .56% with a book value of .41. In the last 12 months the index is up .12% with the portfolio up .1% and a book value of 1.03%. Semi-annual review of Police Pension Fund Investment Policy No changes to the policy are needed at this time. Approval of the 2022 Police Pension Board Schedule The Board decided to move meetings to 9:00 a.m. and to move the July 12th meeting to July 19. A motion was made by Sergeant Clesen and seconded by Thomas Settles to approve the 2022 Police Pension Board Schedule as presented with the above changes. Roll Call Vote: 4-ayes: Jeff Foerster, Sergeant Clesen, Officer Beaudoin, Thomas Settles. Motion carried. Approve Luis Pena portability request A motion was made by Sergeant Clesen and seconded by Officer Beaudoin to approve the portability request by Luis Pena. Roll Call Vote: 4-ayes: Jeff Foerster, Sergeant Clesen, Officer Beaudoin, Thomas Settles. Motion carried. Discuss training for Pension Board members President Foerster explained that certificates should be sent to Monte Johnson once the training has been completed and the certificate has been issued. Approve the payment of bills The list of bills were submitted by Treasurer Lynch totaling $86,997.48. A motion was made by Thomas Settles and seconded by Officer Beaudoin to approve the payment of bills as submitted. Roll Call Vote: 4-ayes: Jeff Foerster, Sergeant Clesen, Officer Beaudoin, Thomas Settles. Motion carried. Empower James Schmidt of LPL Financial with Discretionary Authority President Foerster explained that we can give James Schmidt the same discretionary authority that Gary Karshna has. This gives him the ability to buy and sell on a daily basis. If our fund is over 65% we would not have to call a special meeting. His intention is not to buy and sell on a regular basis, but to make things easier and more efficient for the Board. A motion was made by Sergeant Clesen and seconded by Officer Beaudoin to empower James Schmidt of LPL Financial with Discretionary Authority. Roll Call Vote: 4-ayes: Jeff Foerster, Sergeant Clesen, Officer Beaudoin, Thomas Settles. Motion carried. Authorize the purchase of military service credit for Officer Zajac, and allow or deny the option to pay that amount over a period of time. President Foerster explained that she does not plan to pursue purchasing military credit at this time, so there is no need for a vote on the issue. Refund of contributions of Officer Lopez Officer Lopez has left the City of McHenry and is requesting a refund of $4975.93. A motion was made by Sergeant Clesen and seconded by Thomas Settles to approve a refund of contributions to Officer Lopez. Roll Call Vote: 4-ayes: Jeff Foerster, Sergeant Clesen, Officer Beaudoin, Thomas Settles. Motion carried. Accept Pension Application of Matthew Szoke Matthew Szoke is a newly hired officer and is currently at the Police Academy. A motion was made by Sergeant Clesen and seconded by Officer Beaudoin to accept the pension application of Mathew Szoke. Roll Call Vote: 4-ayes: Jeff Foerster, Sergeant Clesen, Officer Beaudoin, Thomas Settles. Motion carried. Motion to purchase IPPFA Retirement Guide for all members Sergeant Clesen reported what he learned at the IPPFA conference, and the IPPFA has produced a guide that provides valuable information to all members. It is a simple book that serves as a nice guide for our members. The books cost $7.50 each and he recommends purchasing them for all active members. There are currently 47 active members, and he requests purchasing 60 as they must be purchased in packs of 10. A motion was made by Sergeant Clesen and seconded by Thomas Settles to purchase 60 retirement guide books from the IPPFA for a total of $450.00. Roll Call Vote: 4-ayes: Jeff Foerster, Sergeant Clesen, Officer Beaudoin, Thomas Settles. Motion carried. Motion to approve an automatic transfer of funds from equities or fixed assets in an amount to be determined each month to cover necessary payroll expenses from January 2022 through April 2022 Treasurer Lynch explained that since we are fully funded for the pension, we don’t have as much money coming in each year to pay the current pensioners. Starting in January we won’t have enough cash to pay the pension payroll. We are looking to transfer in money each month. President Foerster explained that now that Jim Schmidt has the authority to move money, he can do this automatically without the need for more approval. The first amount that will be needed for January is $180,000. Treasurer Lynch suggested that we will revisit the issue in January if the market does not hold up well. A motion was made by Sergeant Clesen and seconded by Thomas Settles to approve the transfer of $180,000 from equities for the January payroll, with the issue to be revisited in January. Roll Call Vote: 4-ayes: Jeff Foerster, Sergeant Clesen, Officer Beaudoin, Thomas Settles. Motion carried. Additional Items for Discussion Sergeant Clesen explained what he learned at the conference in regards to consolidation. The consolidation board has 9 members and an executive director. Five of the nine members are participant members, there are two beneficiary members, and three come from municipalities. One of the members is a municipal league member appointed by the Governor. There are currently no dates set for consolidation but they believe it will be the middle of next year. We will need to determine how much money to send them and how much we need to keep out to pay bills and the beneficiaries. Currently there is a State law that says the State of Illinois can’t have access to the pension funds. The fire department pension funds have begun consolidation and five of the funds have brought on litigation against the consolidation. President Foerster reported that Sergeant Lumber has started getting IMEs, and we may need to have a disability hearing in the future. Motion to Adjourn A motion was made by Tom Settles and seconded by Officer Beaudoin to adjourn the meeting at 3:35 p.m. Roll Call Vote: 4-ayes: Jeff Foerster, Sergeant Clesen, Officer Beaudoin, Thomas Settles. Motion carried. ______________________________ Monte Johnson, Recording Secretary