Fire & Police Pension & Retirement Board

Fire & Police Pension & Retirement Board

January 20, 2014

MINUTES OF THE REGULAR MEETING OF THE CHARTER TOWNSHIP OF SHELBY FIRE & POLICE PENSION AND RETIREMENT BOARD HELD ON MONDAY, JANUARY 20, 2014 AT FIRE STATION #1, 6345 23 MILE ROAD, SHELBY TOWNSHIP, MICHIGAN.

The meeting was called to order at 5:04 p.m. by Secretary Mark Semaan.

Members Present: Michael Flynn, Jerry Moffitt, Mark Semaan

Members Absent: David Diegel, Matt Stachowicz

Also Present: Lewis Thumm, Pension Board Attorney

Mike Holycross, Graystone Consulting

Thomas Wilhelm, McMorgan Infrastructure Fund

John McCoy, President, Firefighters Local 1338

Terry Elsey, Shelby Township Fire Department

APPROVAL OF MINUTES

MOTION by Moffitt, supported by Flynn, to approve the minutes of the regular meeting of the Charter Township of Shelby Fire & Police Pension and Retirement Board held on Monday, December 16, 2013, as presented, and waive the reading.

Motion carried.

PRESENTATIONS

Tom Wilhelm, McMorgan Infrastructure Fund, was in attendance. He began his presentation by providing background regarding his company and advised the members that the program being presented is designed to generate cash in pensions with a yearly return and not seven years down the road.

Mr. Wilhelm pointed out that pension liabilities continue to stretch out into infinity. Investments that bounce up and down with the market are not a great match for that type of liability. Investments that are not built around delivering cash are also not a great match for long-term pension liabilities.

Mr. Wilhelm explained pertinent sections of his submittal together with graphs comparing performance from 2008 through 2012 which supported his reasons why he feels this plan would be suitable for investment of our pension funds.

They are able to offer this program at 100 basis points with 1% charged only on invested capital. Everything gets invested into assets that throw off cash when you need it. It is not something where they will invest in funds where we will hope to get money back three, four or five years later.

Mr. Wilhelm explained the strategies used, the type of assets that they invest in and their investment objectives.

Questions of the Pension Board members were addressed by both Mr. Wilhelm and Mr. Holycross.

Mr. Holycross recommended investing up to 5% of the Pension Board assets in this fund. Mr. Semaan clarified that the most we can invest would be between $3 million and $3.5 million.

A decision will be made at the next Pension meeting when we have a full Board in attendance. Authorization would have to be made by March 31 to finalize the paperwork.

Graystone Consulting – Review – Asset Allocation Distribution 12-31-2013

Mr. Holycross reviewed the Asset Allocation Distribution as of 12/31/2013. The portfolio reflects a market value of $68.4 million at the end of the year. They are still going through communication with Merrill Lynch to get as much of the Pension Board’s performance data as possible so they don’t have to use 1/1/2014 as the inception date.

Mr. Flynn advised that he received an e-mail from Financial Management indicating that there are many accounts that have balances reflected on the transferred accounts. Mr. Semaan indicated that everything has been transferred to Comerica. Mr. Holycross explained there may be settlement fees that have been rebated, dividends that were paid, etc. It may take 6 months for all of the transactions to be completed. Graystone will make sure that these accounts have a zero balance and nothing is left behind. As soon as Graystone gets all of the performance data from Merrill Lynch, they will begin building a performance report for the Pension Board.

OLD BUSINESS

Review of Policies and Procedures with Pension Board Attorney and Investment Consultant

Mr. Thumm provided a list of guidelines of the topics that will be discussed this evening citing different Acts that support the information presented.

Mr. Thumm reviewed the documents presented to the Board in detail, which included Policy Resolution, Exhibit A to Policy Resolution, Itemized Budget for Projected 2014 Expenditures of the Retirement System, Service Provider Fee Policy, Policy and Budget for Retirement Board Members Annual Education, Training and Travel, and Records Keeping Policy. Input was provided by the Pension Board members. It was agreed that these documents would be placed on the February agenda to be adopted by a full board.

NEW BUSINESS

Mr. Flynn informed the Pension Board of a request from HR with regard to actuarial calculations. During the negotiation process, both the union and Township Board require these calculations. Mrs. Suida is asking for a Resolution from the Pension Board saying it is okay to provide this information upon request.

MOTION by Flynn, supported by Moffitt, to authorize calculations for the actuarial evaluations outlined in an e-mail sent to Michael Flynn on Tuesday, January 14, 2014 (copy attached) and any future requests for supplemental actuarial evaluations provided that they are paid for by the requesting party, e.g. the Township or the Union. A copy of the actuarial study should be sent to the Pension Board as well.

Motion carried.

Discussion – Proposed 2014 Pension Board Budget

This item will be discussed at the February Pension Board Meeting.

Mr. John McCoy, President of Firefighters Local 1338, and Mr. Terry Elsey, Firefighter, had questions regarding pensions that come up in negotiations, and they were present tonight to receive input from the Pension Board. The questions concerned deferred compensation and deferred benefits. Mr. Thumm provided his opinion to representatives from the Fire Department which was followed by discussion among the Pension Board members, Mr. McCoy and Mr. Elsey. Mr. McCoy’s concern was why have communities who operated under the DB plan, switched to the DC plan, and then changed back to the DB plan. He questioned if it was for financial reasons. Communities such as Wayne County, Washtenaw County and the City of Utica were part of this switch. Since they worked under both plans, why would they go back to the original plan? There has to be a good reason.

APPROVAL OF BILL

$3,460.00 - Gabriel, Roeder, Smith & Company

Quarterly Fee – 10-1-2013-12-31-2013

Actuarial Services

MOTION by Moffitt, supported by Flynn, to pay the bill.

Motion carried.

It was decided that the next Pension Board meeting will be held on Monday, February 24, 2014.

MOTION by Flynn, supported by Moffitt, to adjourn.

Motion carried.

The meeting adjourned at 6:25 p.m.

______

Mark C. Semaan, Secretary

ds

Page 4