The Peoria Firemen's Pension Fund Board of Trustees met May 24.
The board meets at 9:30 a.m. on the fourth Monday of the month at City Hall, 419 Fulton St..
Here are the meeting minutes as provided by the Peoria Firemen's Pension Fund :
ROLL CALL
Roll Call showed the following Board Members present: Ball, Nichting, Phillips, Troglio, President Nieukirk - 5; Absent: None.
Others present: Mr. Tom McShane, First Vice President -Investments, Senior Investment Management Consultant with Graystone Consulting, a business of Morgan Stanley/Smith Barney in Chicago; Attorney Jim Dobrovolny of Reimer Dobrovolny & Karlson; Applicant, Michael Brooks; Attorney Gordon Fiddes of Stephens Fiddes McGill on behalf of the Applicant; Attorney John Dundas of Hasselberg Grebe Snodgrass Urban &Wentworth on behalf of the City of Peoria; Attorney Kyle Tompkins of Hasselberg Grebe Snodgrass Urban & Wentworth on behalf of the City of Peoria; Risk Manager Ed Hopkins from the City of Peoria Human Resource Department; Chief Deputy City Clerk Stefanie Rice; and Court Reporter Cheryl Zeone of Sivertsen Reporting Services.
INVOCATION
President Nieukirk requested a moment of silent prayer or silent reflection in remembrance of those firefighters who lost their lives while serving their community.
REQUEST TO MOVE AGENDA ITEM
Trustee Phillips moved to move Item No.9 forward on the agenda, pertaining to the Michael Brooks Line of Duty Disability, to be discussed at this time; seconded by Trustee Troglio.
Approved by roll call vote. Yeas: Ball, Nichting, Phillips, Troglio, President Nieukirk - 5; Nays: None.
UNFINISHED BUSINESS
ITEM NO.9 REQUEST for APPROVAL of the FINAL ORDER of LINE OF DUTY DISABILITY for ENGINEER MICHAEL BROOKS and to DISCUSS the City of Peoria's Petition to Supplement the Record and Re-Open the Record for Further Testimony. Recommendation: Board to take action deemed appropriate.
Attorney Jim Dobrovolny reviewed the duty disability case for Engineer Michael Brooks. He said Mr. Brooks' attorney was unable to attend the hearing scheduled on April 25, 2016, wherein the case was continued to the May 24, 2016, Board meeting for continued hearing on the City's Petition to Supplement the Record and to Re-Open the Record for Further Testimony. He asked the City for additional arguments, if any, in support of the motion.
Attorney Snodgrass provided argument on the City's Petition to Reopen the Record in Conjunction with the Petition to Intervene stating that Dr. Adams' records were not made part of the record. He referenced the incident that occurred at the Peoria Fire Training Academy on July 16, 2015, which was used as a basis for the Line of Duty Application.
Attorney Fiddes objected to the Petition to Supplement the Record and to Re-Open the Record for Further Testimony. He argued that pursuant to Section 4.110 of the Illinois Pension Code provided a disability pension due to accumulative effectives of the job.
Attorney Dobrovolny stated the letter from Attorney Fiddes dated April 25, 2016, was made part of the record.
Attorney Snodgrass objected that he was not allowed to complete his argument on behalf of the City prior to the Board going into Executive Session.
In response to Trustee Troglio, Attorney Snodgrass said the City would not file a petition with the Circuit Court for the right to intervene until the Board entered a final written decision.
Attorney Snodgrass objected to the Board going into Executive Session prior to the City providing additional argument.
Attorney Dundas added that the objection should show that the Board would now allow the City to argue on the Renewed Petition to Intervene.
EXECUTIVE SESSION
Request for a Motion to go into EXECTUIVE SESSION to discuss 2(c)(4) Evidence or testimony presented in open hearing, or in closed hearing where specifically authorized by law, to a quasi-adjudicative body, as defined in this Act, provided that the body prepares and makes available for public inspection awritten decision setting forth its determinative reasoning, and 2(c)(11) Litigation, when an action against, affecting, or on behalf of the particular public body has been filed and is pending before a court or administrative tribunal, or when the public body finds that such an action is probable or imminent.
Trustee Phillips moved to go into Executive Session to discuss 2(c)(4) Evidence or testimony presented in open hearing, or in closed hearing where specifically authorized by law, to a quasi-adjudicative body, as defined in this Act, provided that the body prepares and makes available for public inspection a written decision setting forth its determinative reasoning, and 2(c)(11) Litigation, when an action against, affecting, or on behalf of the particular public body has been filed and is pending before a court or administrative tribunal, or when the public body finds that such an action is probable or imminent; seconded by Trustee Ball.
The Board adjourned into Executive Session at 9:48 A.M.
RECONVENING OF THE BOARD OF TRUSTEES
The Board Meeting reconvened at 10:04 AM.
Roll Call showed the following Board Members Present: Ball, Nichting, Phillips, Troglio, PresidentNieukirk- 5. Absent: None.
Others present: Mr. Tom McShane, First Vice President -Investments, Senior Investment Management Consultant with Graystone Consulting, a business of Morgan Stanley/Smith Barney in Chicago; Attorney Jim Dobrovolny of Reimer Dobrovolny & Karlson; Applicant, Michael Brooks; Attorney Gordon Fiddes of Stephens Fiddes McGill on behalf of the Applicant; Attorney John Dundas of Hasselberg Grebe Snodgrass Urban & Wentworth on behalf of the City of Peoria; Attorney Kyle Tompkins of Hasselberg Grebe Snodgrass Urban & Wentworth on behalf of the City of Peoria; Risk Manager Ed Hopkins from the City of Peoria Human Resource Department; Chief Deputy City Clerk Stefanie Rice; and Court Reporter Cheryl Zeone of Sivertsen Reporting Services.
Trustee Nichting moved to grant the City's Petition to Supplement the Record and to Re-open the Record for Further Testimony; seconded by Trustee Phillips.
Approved by roll call vote. Yeas: Ball, Nichting, Phillips,Troglio, President Nieukirk- 5; Nays: None.
Trustee Nichting moved to subpoena additional records from Dr. Adams; seconded by Trustee Phillips.
Approved by viva voce vote.
Trustee Phillips moved to submit additional records that were supplied by the City together with any non-duplicative records obtained from Dr. Adams to the original IME doctors; seconded by Trustee Troglio.
Approved by viva voce vote.
Attorney Fiddes requested the Board to ask the IMEs their opinions regarding cumulative effects.
Trustee Phillips moved to deny the City's Petition to Intervene; seconded by Trustee Troglio.
Objection by Attorney Snodgrass
Motion to deny the City's Petition to Intervene was approved by viva voce vote; 2 nays.
Trustee Troglio requested that the Board ask the IMEs whether the disability was due to the accumulative effects of Mr. Brooks' duties.
In response to Trustee Nichting, Attorney Dobrovolny stated that the Board was only going to request additional records from Dr. Adams and would not ask him about the issue of accumulative effects.
MINUTES
Recommendation to Approve the Minutes of the Special Board Meeting held on April 25, 2016, as printed.
Trustee Nichting moved to approve the Minutes of the Special Board Meeting held on April 25, 2016, as printed; seconded by Trustee Treglio.
Approved by viva voce vote.
Trustee Ball stated that the Rescheduled Regular Meeting minutes for April would be available for approval at the May Board meeting.
REGULAR BUSINESS
ITEM NO. 1 MONTHLY PORTFOLIO PERFORMANCE REVIEW by TOM McSHANE
GRAYSTONE CONSULTING (A business of Morgan/Stanley Smith-Barney), and Discussion Regarding Recommendations, Possible Action Regarding the Firemen's Pension Fund Portfolio Performance, Discussion and Review of the Asset Allocations, and Review of the Open Orders with the S&P 500 Exchange Traded Fund (ETF), with Request to Receive and File Reports or Take Other Action.
Mr. McShane previously mailed a copy of the Performance Update for the period ending April 31, 2016, to all members of the Board. The Performance Update showed the portfolio value at $119,662,544. Since its inception, the total portfolio performance returned 5.75% versus the custom benchmark of 5.57%.
Mr. McShane reviewed the transfer of funds from U.S. Bank to Segal Fixed Income, noting there were some adjustments in the numbers. He reported that all of Segal's assets were moved. He reported that the Fund has orders placed for the S&P500 for below market value. He said the IW, which was an index of the S&P500, was at $205.00, and orders were placed at $193.00, $183.00, $174.00, $161.00, and $140.00.
Mr. McShane reviewed the Fund's portfolio as follows:
Cash & Cash Equivalent: Target Allocation, 2.00%, Asset Allocation, 2.31%; Fixed Income: Target Allocation, 38.00%, Asset Allocation, 35.06%; Equity: Target Allocation 60.00%. Asset Allocation 62.63%
Mr. McShane remarked that the Fund was over-allocated in cash and equity yet under- allocated in fixed income, which was done by design. He said the Fund had a higher cash position based upon the interest rates paid by the bank of approximately 70 basis points.
Trustee Nichting noted that the Fund would receive the Personal Property Replacement Tax around June 21,2016, for approximately $3 million. He said the Fund generally received $6 million annually from PPRT.
Mr. McShane said no change was recommended at this time regarding the allocations in fixed income, cash or equities.
In response to Trustee Nichting's question as to whether the Fund would want to reduce its cash to take advantage of the higher interest rates, Mr. McShane stated that the Fund currently had a good interest rate with the bank of 70 basis points with no risk. He said if the short-term rates would happen to increase, then the bank's rates would increase as well. He said the Fund's cash position was good. He said if there was a swing in the markets, then the Fund would be able to invest in Segal or another manager in order to take advantage of the higher rates.
Mr. McShane reported on the Government Debt Monitor noting that as of a few days ago the 2- year rate was at 88 basis points. He reviewed the volatility, noting it was a continuing discussion. He said Graystone Consulting still recommended equities over bonds. He reported that emerging market needed to become more stabilized and that the Fund was under-weighted in Real Estate Investment Trusts (REITs). He reviewed the concern of investing in REITs, which was why the Fund currently had no investments in that asset class. He said the Fund exited real estate as well as took investments from emerging markets and reallocated into an international manager. He said the Fund currently had an allocation of 21.87% in an International Manager who also invested in some emerging markets. He said he would not recommend any changes in allocations at this time.
The specific allocations were reported as follows:
Target Allocation/Asset Allocation
Cash & Cash Equivalents Mid Cap Equity Small Cap Equity Real Estate Equity Emerging Markets International Equity Large Cap Equity Fixed Income
2.00% 3.00% 3.00% 3.00% 8.00% 16.00% 27.00% 38.00%
2.31% 3.10% 4.81% 0.00% 0.00% 21.87% 32.85% 35.06%
Mr. McShane reviewed the large cap equity managers. After a recent reallocation of the funds with the large cap equity managers, Mr. McShane reported as follows:
iShares / S&P 500 Index/ Great Lakes Premier
$12.0 million /$12.9 million /$14.2 million
Mr. McShane reviewed the portfolio performance. He reported that the Fund's current quarter returns were 5.23% versus a benchmark of 5.70%; one-year returns of -2.53% versus a benchmark of -1.49%. He said the Board chose to reduce exposure to Premier and the emerging markets in order to rectify some of the losses. Since inception, he said the Fund returned 5.75% above the benchmark of 5.57%. However, he said the Fund was behind its assumed actuarial rate of return. He said the Board took less risk than the market with a greater return.
Mr. McShane reported that growth stocks have not done well. He said Premier owned Google, Apple and Facebook, which was the Fund's growth exposure. Since hired, he said Premier was up 13.5% versus the benchmark of 14.89%, off -1.31%, which indicated that the underperformance came over the last year. He reported that the Fund received value added by Great Lakes, which was up 1.36% for the year versus the benchmark of -0.41%. Over the last 10 years, he said Great Lakes was up 6.21% versus the benchmark of 5.67%.
Discussions were held regarding the benchmarks for Great Lakes and Premier and how to cut fees and underperformance.
Mr. McShane stated that the key was to see whether the underperformance would be indicative of future returns. He stated that Kayne Anderson under-performed initially, but since inception the manager returned 11.0% versus a benchmark of 8.67%. He said the Board utilized both passive and active investments. He recommended placing this topic on the next Fire Pension agenda for discussion. He said he would distribute to the Board additional research on those investments and reassess the Fund's position.
Trustee Ball moved to receive and file the Performance Update Report as of April 31,2016; seconded by Trustee Troglio.
Approved by viva voce vote.
ITEM NO.2 Report from Fire Marshal Charles Lauss of Pension Fund Contributions, which were made by payroll deductions during the MONTH of MARCH 2016, from the active members of the Peoria Fire Department and which checks were turned in to the City Treasurer's Office by Director of Finance/Comptroller, with Recommendation to Concur and Receive and File.
Payroll Period Feb. 21, 2016 - Mar. 5, 2016 Mar. 6, 2016 - Mar. 20, 2016
When Deducted
Amount March 15,2016
$67,016.29 March 31, 2016
$66,957.53
TOTAL
$133,973.82
Trustee Troglio moved to concur and place on file the Fire Marshal's Report for March 2016; seconded by Trustee Ball.
Approved by roll call vote. Yeas: Ball, Nichting, Phillips,Troglio, President Nieukirk- 5; Nays: None.
ITEM NO.3 Report from Fire Marshal Charles Lauss of Pension Fund Contributions,
which were made by payroll deductions during the MONTH of APRIL 2016, from the active members of the Peoria Fire Department and which checks were turned in to the City Treasurer's Office by Director of Finance/Comptroller, with Recommendation to Concur and Receive and File.
Payroll Period Mar. 21, 2016 - Apr. 5, 2016 Apr. 6, 2016 - Apr. 20, 2016
When Deducted
Amount April 15, 2016
$66,820.33 April 31, 2016
$68,196.99
TOTAL
$135,017.32
Trustee Ball moved to concur and place on file the Fire Marshal's Report for April 2016; seconded by Trustee Phillips.
Approved by roll call vote. Yeas: Ball, Nichting, Phillips,Troglio, President Nieukirk- 5; Nays: None.
ITEM NO.4 Request to Approve the following BILLS:
Pensions for May 2016 (dated May 31,2016). $1,034,651.37 Sikich - Professional Services through April 15,2016. 8,000.00 Illinois State Treasurer for Public Pension Compliance Fee. 8,000.00 Lauterbach & Amen - Professional Services for April 2016.. 3,155.00 Sivertsen Reporting Service - Transcript of Proceedings for Brooks. 112.00 Daniel W. Ryan - Purchase of 5 Retirement Books for the Board. 94.75 Jack Nieukirk - Reimbursement for Swear-In Dinner at Jim's Steakhouse 826.65** Jack Nieukirk (Reimburse the Fund for overpayment of travel expenses) (10.00) Ralph Phillips (Reimburse the Fund for overpayment of travel expenses) (10.00)
SUB-TOTAL FOR MAY. Great Lakes Advisors (Jan 1, 2016, to Mar 31, 2016).
$1,054,819.77
16,030.34*
GRAND TOTAL FOR MAY. $1,070,850.11
"No check should be processed for this amount. This amount is to be automatically deducted from the account. ""No check should be processed for these amounts. Checks were previously requested and issued.
Trustee Phillips moved to approve the bills in the grand total amount of $1,070,850.11; seconded by Trustee Troglio.
Approved by roll call vote. Yeas: Ball, Nichting, Phillips,Troglio, President Nieukirk- 5; Nays: None.
ITEM NO.5 REQUEST to APPROVE the REMOVAL from the PENSION ROLLS of DOROTHY DUNNIGAN due to her Death on February 17, 2016, and to make payment to the Dorothy Dunnigan Estate in the Amount of $1,000.96 for 17 days of February 2016. Recommendation: Receive and File the Death Certificate and to Approve the Payment of $1,000.96 for 17 days of February 2016.
Trustee Ball remarked that Lauterbach and Amen had made the appropriate adjustments for the Dorothy Dunnigan Estate. She said the Board was still utilizing Small World, but Small World had not reported the death.
Trustee Nichting recommended researching the use of a Social Security Database for deceased to determine whether it would be more useful than Small World.
In response to Trustee Nichting regarding overpayment, Trustee Ball reported that Mrs. Dunnigan's Estate had not been overpaid.
Trustee Ball moved to approve the removal from the pension rolls of Dorothy Dunnigan due to her death on February 17, 2016, and to make payment to the Dorothy Dunnigan Estate in the amount of $1,000.96 for 17 days of February 2016 and to receive and file the death certificate; seconded by Trustee Troglio.
Approved by roll call vote. Yeas: Ball, Nichting, Phillips, Troglio, President Nieukirk - 5; Nays: None.
ITEM NO. 6 MONTHLY FINANCIAL REPORTS from LAUTERBACH & AMEN, LLP for the Month of APRIL 2016, which Includes the STATEMENT OF PLAN NET ASSETS, STATEMENT OF CHANGES IN PLAN NET ASSETS, SUMMARY of CASH AND INVESTMENTS, BALANCE SHEET, REVENUES and REVENUE REPORT, EXPENSES and EXPENSE REPORT, PAYROLL JOURNAL, and VENDOR CHECKS REPORT, with Recommendation to Approve.
Trustee Ball moved to approve the monthly financial reports from Lauterbach & Amen, LLP for the month of April 2016, which includes the State of Plan Net Assets, Statement of Changes in Plan Net Assets, Summary of Cash and Investments, Balance Sheet, Revenues and Revenue Report, Expenses and Expense Report, Payroll Journal, and Vendor Checks Report; seconded by Trustee Troglio.
Approved by roll call vote. Yeas: Ball, Nichting, Phillips, Troglio, President Nieukirk - 5; Nays: None.
ITEM NO.7 RECEIPTS and DISBURSEMENTS REPORTS for PEORIA COMMUNITY BANK and HARRIS BANK from Patrick Nichting, Treasurer, for the Month of APRIL 2016, with Recommendation to Receive and File.
Trustee Troglio moved to receive and file the receipts and disbursements reports for Peoria Community Bank and Harris Bank from Patrick Nichting, Treasurer, for the month of April 2016, with recommendation to receive and file; seconded by Trustee Phillips.
Approved by viva voce vote.
ITEM NO.8 REQUEST for APPROVAL of a RESOLUTION Authorizing Trustee Patrick Nichting the POWER TO INVEST, and Authorize Trustee Nichting to Maintain a Minimum of $10,000.00 in the HARRIS BANK ACCOUNT.
Trustee Ball moved to approve the Resolution authorizing Trustee Patrick Nichting the power to invest, and authorize Trustee Nichting to maintain a minimum of $10,000.00 in the Harris Bank Account; seconded by Trustee Phillips.
Approved by roll call vote. Yeas: Ball, Nichting, Phillips, Troglio, President Nieukirk - 5; Nays: None.
UNFINISHED BUSINESS
ITEM NO.9 REQUEST for APPROVAL of the FINAL ORDER of LINE OF DUTY DISABILITY for ENGINEER MICHAEL BROOKS and to DISCUSS the City of Peoria's Petition to Supplement the Record and Re-Open the Record for Further Testimony.
CLERK'S NOTE: See Page 1 for discussion.
ITEM NO. 10 REVIEW the AMENDED List of Questions Sent to Independent Medical Examiners for Disability Applications, with a Request to Approve or Take Other Action.
Trustee Ball said each Trustee received a copy of the amended list of questions that was to be sent to the Independent Medical Examiners and she said this list of questions needed to be approved by the Board.
It was determined that the additional question covered the Trustees' concerns.
Trustee Troglio moved to approve the amended list of questions sent to independent medical examiners for disability applications; seconded by Trustee Phillips.
Approved by roll call vote.
NEW BUSINESS
Parkmon Disability Update Trustee Ball provided an update on the Parkmon Disability. She said Mr. Parkmon had his first doctor's appointment in Decatur, Illinois, yesterday and she noted he had two more scheduled for June 7,2016, in Chicago and in Evanston.
Trustee Ball reported that the Fund had received a subpoena from the City of Peoria's attorney asking for all of Parkmon's file. She said the Fund had responded to the Subpoena.
Brooks Disability Update Trustee Ball provided an update on the Brooks Disability. She said the Fund received a Freedom of Information Act request which was due Wednesday. She said the Fund would be asking for a 5-day extension. She said the City's Attorney was asking for 15 years' worth of disability decisions, minutes and contributions to Fire Pension Fund. She said staff was in the process of compiling the information to forward to Attorny Reimer's Office for review and to answer the FOIA appropriately.
Fire Pension Disability Application and Process In response to Trustee Nichting's question regarding the application process and whether the applications asked the applicant to list their physicians, Trustee Ball said the applications asked for a list of doctors for the last five years.
Trustee Troglio recommended that the Board review the application to determine whether it needed to be updated, especially in light of the recent disabilities filed.
Trustee Ball said the instructions for the application stated that the burden of proof was on the applicant and to provide whatever doctors' reports the applicant wanted the Board to consider for the Public Hearing. She said a number of applicants do not submit any reports.
Attorney Dobrovolny remarked that even if an applicant did not submit any doctors' reports, the Board would still need to send them to see three independent medical examiners. He said the Board could base its decision on what was provided by the IMEs.
Verification of Member Status Discussions were held regarding mailings to verify each member's status. Mr. McShane said his firm provided such a service and he said he would come back with a cost estimate.
CITIZENS' OPPORTUNITY TO ADDRESS THE BOARD OF TRUSTEES
It was determined there were no citizens to address the Board of Trustees.
EXECUTIVE SESSION
Request for a Motion to go into EXECUTIVE SESSION to discuss 2(c)(21) for a Discussion of minutes of meetings lawfully closed under this Act, whether for purposes of approval by the body of the minutes or semi-annual review of the minutes as mandated by Section 2.06 AND Any Other Exceptions.
Trustee Troglio moved to go into Executive Session to discuss 2(c)(21) for a discussion of minutes of meetings lawfully closed under this Act, whether for purposes of approval by the body of the minutes or semi-annual review of the minutes as mandated by Section 2.06 and any other exceptions; seconded by Trustee Nichting.
Approved by roll call vote. Yeas: Ball, Nichting, Phillips, Troglio, President Nieukirk - 5; Nays: None.
The Fire Pension Board went into Executive Session at 11:07 AM. and an Executive Session was held.
The Board Meeting reconvened at 11:16 AM.
ADJOURNMENT
Trustee Phillips moved to adjourn the Rescheduled Regular Firemen's Pension Board Meeting; seconded by Trustee Troglio.
Approved by va voce vote.
The meeting adjourned at 11:17 AM.
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