The city of Peoria Firemen's Pension Fund Board of Trustees met Sept. 26 to file the tax levy report.
Here are the meeting's minutes, as provided by the board:
September 26, 2016
Peoria, Illinois
PROCEEDINGS OF A REGULAR MEETING
OF THE BOARD OF TRUSTEES OF THE FIREMEN'S PENSION FUND
OF PEORIA, ILLINOIS
A Regular Meeting of the Board of Trustees of the Firemen's Pension Fund of Peoria, Illinois,
was held this date at City Hall, 419 Fulton Street, Room 404, Peoria, Illinois, at 9:30 A.M., with
proper notice having been given, for the purpose of conducting regular Firemen's Pension
Fund business.
ROLL CALL
Roll Call showed the following Board Members present: Ball, Nichting, Troglio, President
Nieukirk - 4; Absent: Phillips - 1.
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; Assistant Corporation Counsel Sonni Williams of the City of Peoria;
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 Jim Dobrovolny of Reimer Dobrovolny & Karlson; Chief
Deputy City Clerk Stefanie Rice;
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.
MINUTES
Recommendation to Approve the Minutes of the Regular Board Meeting held on August
29, 2016, as printed.
Trustee Troglio moved to approve the Minutes of the Regular Board Meeting held on August
29, 2016, as printed; seconded by Trustee Nichting.
Approved by roll call vote.
Yeas: Ball, Nichting, Troglio, President Nieukirk - 4;
Nays: None.
UNFINISHED BUSINESS
ITEM NO.1 PUBLIC HEARING Regarding the MICHAEL BROOKS DISABILITY to
Consider the Admission of Documentary Evidence, to Hear Argument
Regarding the Continuation of Disability at that Time, and to Continue the
Matter for Deliberation, with Request to Receive and File or to Take Other
Action Deemed Necessary.
PROCEEDINGS - FIREMEN'S PENSION MEETING SEPTEMBER 26, 2016
PAGE 2
Attorney Dobrovolny reconvened the Public Hearing regarding the Disability Application of
Michael Brooks. He identified all parties present. He stated that the Board received additional
records from the City and that the Board sent out an additional subpoena for more records. He
said these records were then sent to the three independent medical examiners to see whether
their decision regarding Mr. Brooks' disability would change. He reviewed the additional
exhibits as follows:
Board Exhibit No.9 Correspondence to Woodlake Medical
Management with documents received from
Subpoena issued to United Point Health -
Methodist
Board Exhibit No. 10 Joshua M. Alpert, M.D.
Addendum to 2/22/16 Medical Report
Board Exhibit No. 11 Michael S. Lewis, M.D.
Addendum to 2/22/16 Medical Report
Board Exhibit No. 12 James B. Stiehl, M.D.
Addendum to 2/18/16 Medical Report
Applicant Exhibit No. 1 Correspondence from Midwest Orthopaedic
Center from Thomas J. Mulvey, M.D. dated
4/17/16
Attorney Fiddes objected to the Board's additional exhibits being admitted into the record
stating that additional information was needed. He remarked on the importance of asking the
Independent Medical Examiners their opinion of what the impact of accumulative effects would
have on Mr. Brooks' injury.
Attorney Dundas asked for a reconsideration of the City's Petition to Intervene in this matter.
Trustee Troglio expressed his concern that the independent medical examiners were not
questioned about the impact accumulative effects had in this matter.
Trustee Troglio moved to adjourn to executive session pursuant to 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;
seconded by Trustee Nichting.
Motion to go into Executive Session was DEFEATED by roll call vote.
Yeas: Troglio, President Nieukirk - 2;
Nays: Ball, Nichting - 2.
Discussionswere held regarding accumulative effects and whether a date could be set on
when the accumulative effects began.
Trustee Troglio moved to submit to the Independent Medical Examiners a letter asking their
opinion as to how accumulative effects of service affected Mr. Brooks' right knee.
PROCEEDINGS - FIREMEN'S PENSION MEETING SEPTEMBER 26, 2016
PAGE 3
Trustee Troglio expressed his concern that the doctors were not posed with the question
regarding cumulative effects as outlined in the Illinois Pension Code Section 4-110. He said,
going forward, that question should be posed to all IME and doctors involved. He said he
voted in favor of the disability and he said he would not be changing his vote today. He
remarked on the importance of the letter outlining cumulative effects exactly as written within
the Illinois Pension Code.
Trustee Nichting seconded the motion.
Approved by roll call vote.
Yeas: Ball, Nichting, Troglio, President Nieukirk - 4;
Nays: None.
Attorney Dobrovolny said the additional exhibits presented needed to be admitted into the
record.
Trustee Troglio moved to admit into the record Board's Exhibit Nos. 9 through 12 and
Applicant's Exhibit No.1; seconded by Trustee Nichting.
Approved by roll call vote.
Yeas: Ball, Nichting, Troglio, President Nieukirk - 4;
Nays: None.
Public Hearing adjourned at 10:01 A.M.
Applicant Michael Brooks and Attorney Gordon Fiddes left the meeting at 10:02 A.M.
REGULAR BUSINESS
ITEM NO.2 Request to RECEIVE and FILE the MUNICIPAL COMPLIANCE REPORT for
the FIREMEN'S PENSION FUND OF PEORIA for the Year Ended
DECEMBER 31, 2015, Prepared by Lauterbach and Amen, with a Request
to Receive and File.
Trustee Ball moved to receive and file the Municipal Compliance Report for the Firemen's
Pension Fund of Peoria for the year ended December 31, 2015, prepared by Lauterbach and
Amen; seconded by Trustee Troglio.
Approved by viva voce vote.
Mr. McShane reviewed the report and noted clarifications regarding the Fund's cash
investments and net position, which was to the next year to cash position.
Trustee Nichting said the recognition of real estate taxes had changed and he said he
requested Foster & Foster to document that change in the audit for clarification.
Discussions were held regarding the change in recognition of revenue and it was stated that
GASB was unable to provide a ruling on the issue at this time. He stated that after this year, it
would no longer be an issue.
Mr. McShane remarked that the Fund's year-end cash balance was $126.3 million, which
matched with the amount provided by Foster & Foster.
PROCEEDINGS - FIREMEN'S PENSION MEETING SEPTEMBER 26, 2016
PAGE 4
ITEM NO.3 REQUEST to RECEIVE and FILE the TAX LEVY REPORT for ANNUAL
REQUIREMENTS OF THE FUND as Contemplated by Section 4-118 ofthe
Illinois Pension Code, in the Amount of $8,404,575.00.
Trustee Ball provided an overview of the report noting it came from the Illinois Department of
Insurance and reflected a funding amount from the City to the Pension Fund of $8.4 million.
She noted this was the time of year the Fire Pension Board would advise the City Council
regarding the Board's request for funding in the tax levy.
Trustee Nichting said there was a report prepared by Foster & Foster that provided a
recommended funding amount as well. He remarked on the importance of advising the City
Council of the funding amount based on the Board's decision. He stated that the City Council
would be establishing a budget sometime in November or December.
Trustee Troglio suggested deferring this item to the October Fire Pension Board meeting in
order to review the report from Foster & Foster and from the DOL
Trustee Ball said she would put this item on the October Fire Pension Agenda along with the
report from Foster & Foster for review.
Trustee Nichting recommended forwarding the report from Foster & Foster to Attorney
Dobrovolny in order for a letter to be drafted to the City Council with a recommendation from
the Board for funding. He asked that the letter be on the agenda for October for the Board to
review. He said the Board would recommend 100% of funding and the use of entry age normal
versus the 001 recommendation of 90% funding and using projected unit credit (PUC)
Trustee Troglio moved to defer this item to the October 24, 2016, Regular Fire Pension
meeting and for Attorney Dobrovolny to draft a letter to the City Council recommending 100%
funding and the use of entry age normal in order for the Board to review; seconded by Trustee
Ball.
Motion to defer to the October 24, 2016, Regular Fire Pension meeting was approved by
roll call vote.
Yeas: 8all, Nichting, Troglio, President Nieukirk - 4;
Nays: None.
ITEM NO. 4 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, and Discussion and
Review of the Asset Allocations and Possible Consolidation of Fixed
Income Managers 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
August 31,2016, to all members of the Board. The Performance Update showed the portfolio
value at $124,541,710. Since its inception, the total portfolio performance returned 6.29%
versus the custom benchmark of 5.72%.
PROCEEDINGS - FIREMEN'S PENSION MEETING SEPTEMBER 26, 2016
PAGES
Manager Ending Market Value
iShares S&P 500 Index (Large Cap Fund)
Great Lakes (Large Cap Fund)
Premier (Large Cap Fund)
iShares Russell Mid Cap Index (Mid Cap Fund)
Kayne Anderson
Harbor (International Equity)
iShares MSCI EAFE (International Equity)
Segall- Fixed Income
SKBA - Fix Income
McDonnell - Fixed Income
Insured Cash Sweep Account - PCB
$19,002,334
$13,627,900
$ 8,634,850
$ 3,988,342
$ 6,104,797
$18,752,547
$ 7,682,673
$33,188,206
$ 3,528,832
$ 6,092,390
$ 3,938,836
Mr. McShane reviewed the 1-year returns for the Capital Market Indices noting a good return
for August for the market place, noting the S&P was up 16%for the one-year returns. He
reported that volatility decreased significantly. He reviewed REITs and its unexpected returns
in light of the rising interest rates. He reviewed the MSCI Indices EAFE, which had gone up
approximately 3.0% and emerging markets were at 14.7%. He reviewed REITs, utilities, 10-
year treasuries and bonds.
Mr. McShane reviewed the portfolio's returns of 5.11% versus the custom benchmark of
7.59%, noting a 2.5% differential. He reviewed what caused the 2.5% differential reporting,
noting that the managers were off approximately 72 basis points and the rest was from the
Fund's exit from REITs and emerging markets. He said the return for the Fund for the last 7
years was 6.85% versus the benchmark of 7.09%, slightly behind by 24 basis points.
However, he said the Fund met its actual rate of return for the past seven years of 6.75%. He
reviewed the Fund's actual rate of return for the past seven and ten years as it compared to the
Fund's actual returns in comparison to the benchmark. Since inception, he said the Fund's
average rate of return was 6.29% versus the benchmark of 5.72%. He said the decisions the
Board had made met or exceeded the benchmark for a period of time.
Discussionswere had regarding a balanced portfolio and whether it would be feasible to review
the Russell 3000 Index Fund and whether anything warranted the Board changing its current
fixed income policy. Mr. McShane said he would continue the discussion on index funds and
said he would provide an updated report to the Board on how to combine the funds.
Mr. McShane compared the Fund's balance to the index funds benchmark noting had the
Board only invested in the index fund, the portfolio would have come in less $12 million from its
current position. He said the additional $12 million to the positive to the fund was based on the
management the Trustees had done to monitor managers and manage the index funds. He
reviewed the risk/return analysis stating it was a review of risk or standard deviation. He said
the decisions the Board had made provided greater return with less risk.
Mr. McShane reviewed the US Equities Snapshot and Sector Breakdown with a focus on the
Morgan Stanley & Co. 12-month S&P 500 target and he reviewed the US Equity Market
Indicator.
Mr. McShane said you would review International Managers versus other managers with the
Board over the upcoming months and would provide an update of the same.
PROCEEDINGS- FIREMEN'S PENSION MEETING SEPTEMBER 26, 2016
PAGE 6
Trustee Nichting moved to receive and file the Performance Update Report as of August 31,
2016; seconded by Trustee Troglio.
Approved by roll call vote.
Yeas: Ball, Nichting, Troglio, President Nieukirk - 4;
Nays: None.
ITEM NO.5 DISCUSSION Regarding the Fund's Current INVESTMENT POLICY, with a
Request to Receive and File or to Take Other Action.
Trustee Troglio moved to defer this item to the October 24, 2016, Regular Firemen's Pension
Board Meeting; seconded by Trustee Ball.
Motion to defer to the October 24, 2016, Regular Firemen's Pension Meeting was
approved by roll call vote.
Yeas: Ball, Nichting, Troglio, President Nieukirk - 4;
Nays: None.
ITEM NO.6 Report from Fire Marshal Charles Lauss of Pension Fund Contributions,
which were made by payroll deductions during the MONTH of AUGUST
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 When Deducted Amount
July 21, 2016 - August 5, 2016
August 6,2016 - August 20,2016
August 15, 2016
August 31, 2016
$ 67,701.45
$ 67.333.73
$135,035.18
Trustee Ball moved to concur and place on file the Fire Marshal's Report for July 2016;
seconded by Trustee Troglio.
Approved by roll call vote.
Yeas: Ball, Nichting, Troglio, President Nieukirk - 4;
Nays: None.
ITEM NO.7 Request to Approve the following BILLS:
Pensions for September 2016 (dated September 30,2016) $1,023,756.56
Sivertsen Reporting Service - Disability Hearing for Parkmon. 727.00
Lauterbach & Amen, LLP - May Professional Services.. 3,155.00
Lauterbach & Amen, LLP - August Professional Services.. 3,155.00
Stefanie Rice - 3rd Quarter Administrative Services (July - Sept). 1,100.00
GRAND TOTAL FOR SEPTEMBER. $1.031.893.56
PROCEEDINGS - FIREMEN'S PENSION MEETING SEPTEMBER 26, 2016
PAGE 7
Trustee Ball moved to approve the September bills in the grand total amount of $1,031,893.56;
seconded by Trustee Troglio.
Approved by roll call vote.
Yeas: Ball, Nichting, Troglio, President Nieukirk - 4;
Nays: None.
ITEM NO.8 REQUEST to APPROVE the REMOVAL from the PENSION ROLLS of
HELEN ADAMS due to her Death on July 22, 2016, and to make payment to
the Helen Adams Estate in the Amount of $1,159.27 for 22 days of July
2016. Recommendation: Receive and File the Death Certificate upon
Receipt and to Approve the Payment of $1,159.27 for 22 days of July and
to Approve the Request for Reimbursement of Overpayment to the Estate,
in the Amount of $309.14.
Trustee Ball reported that the Fund had not received reimbursement for overpayment to the
estate. She said a family member had contacted Lauterbach and Amen to advise them of the
death. She noted that Life Status 360 (formerly known as Small World) had not reported this
death.
Trustee Ball moved to approve the removal from the pension rolls of Helen Adams due to her
death on July 22, 2016, and to make payment to the Helen Adams Estate in the amount of
$1,159.27 for 22 days of July 2016, to receive and file the death certificate upon receipt and to
request for reimbursement of overpayment to the Estate, in the amount of $309.14; seconded
by Trustee Troglio.
Approved by roll call vote.
Yeas: Ball, Nichting, Troglio, President Nieukirk - 4;
Nays: None.
ITEM NO. 9 MONTHLY FINANCIAL REPORTS from LAUTERBACH & AMEN, LLP for the
Month of AUGUST 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 August 2016, which includes the State of Plan Net Assets, State 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, Troglio, President Nieukirk - 4;
Nays: None.
PROCEEDINGS- FIREMEN'S PENSION MEETING SEPTEMBER 26,2016
PAGE 8
ITEM NO. 10 RECEIPTS and DISBURSEMENTS REPORTS for PEORIA COMMUNITY
BANK and HARRIS BANK from Patrick Nichting, Treasurer, for the Month
of AUGUST 2016, with Recommendation to Receive and File.
Trustee Ball 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 August
2016; seconded by Trustee Troglio.
Approved by roll call vote.
Yeas: Ball, Nichting, Troglio, President Nieukirk - 4;
Nays: None.
ITEM NO. 11 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 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; seconded by Trustee Troglio.
Approved by roll call vote.
Yeas: Ball, Nichting, Troglio, President Nieukirk - 4;
Nays: None.
ITEM NO. 12 STATUS Regarding the DISABILITY APPLICATION of ANGELA ALLEN,
with a Request to Receive and File.
Trustee Ball provided an update on the DisabilityApplication of Angela Allen. She reported
that a number of subpoenas had been sent to the physicians involved in this matter. She said
doctor appointments had not yet been scheduled until responses were received pursuant to the
subpoenas.
Approved by viva voce vote.
Trustee Ball moved to receive and file the status regarding the Disability Application of Angela
Allen; seconded by Trustee Troglio.
UNFINISHED BUSINESS (Continued)
ITEM NO. 13 DISCUSSION Regarding the Purchase of Creditable Service by ROBERT
PARKMON, with Request to Receive and File.
After noting that Robert Parkmon had repaid his creditable service in full, Trustee Ball moved to
receive and file the information regarding the purchase of creditable service by Robert
Parkmon; seconded by Trustee Troglio.
Approved by viva voce vote.
PROCEEDINGS - FIREMEN'S PENSION MEETING SEPTEMBER 26, 2016
PAGE 9
ITEM NO. 14 STATUS Regarding the Annual Appointments Regarding the Disability of
PHYSKIE GREEN, with Request to Receive and File.
Trustee Ball said Physkie Green was due for his annual exam as outlined in Section 5/4-112 of
the Illinois Pension Code. She said an appointment was scheduled for Dr. Kurth in the next
couple of months and that a notice would be sent to Attorney Robert Bach and to Mr. Green.
Trustee Ball moved to receive and file the information regarding the annual appointment
regarding the disability of Physkie Green; seconded by Trustee Troglio.
Approved by viva voce vote.
ITEM NO. 15 STATUS by the Senior Investment Management Consultant Tom McShane
with Graystone Consulting Regarding the Closing of an OLD ACCOUNT
with WELLS FARGO BANK.
Mr. McShane said he received confirmation from Wells Fargo that the old account had been
closed and he asked Trustee Nichting to confirm.
Trustee Ball moved to receive and file the status by the Senior Investment Management
Consultant Tom McShane with Graystone Consulting regarding the closing of an old account
with Wells Fargo Bank; seconded by Trustee Troglio.
Approved by viva voce vote.
NEW BUSINESS
Collective Bargaining Agreements and Benefits
Attorney Dobrovolny provided an overview of Matthews v. Chicago TransitAuthority, 2016 IL
117638wherein the Supreme Court stated that whatever collective bargaining agreement an
employee was hired under, those benefits applied.
The Effect of City Bankruptcy on Public Safety Unions
Attorney Dobrovolny also reviewed the pension of the public safety unions in the City of
Chicago and how those pensions would be affected should the City file bankruptcy.
Affidavit of Status
Attorney Dobrovolny said there was some legislation coming out that would require the Fund to
verify whether a benefit recipient was still alive. He remarked on the importance of possibly
formalizing that procedure.
Trustee Nichting recommended discussing the matter in November where the Fund would
send an affidavit to every pension recipient. It was noted that Lauterbach & Amen already
provides such a service for approximately $3,000.00. Discussions were held on whether it
would be feasible to prepare the affidavits in-house.
Attorney Dobrovolny remarked on the importance of verifying the status of each benefit
recipient.
PROCEEDINGS - FIREMEN'S PENSION MEETING SEPTEMBER 26,2016
PAGE 10
CITIZENS' OPPORTUNITY TO ADDRESS THE BOARD OF TRUSTEES
It was determined there were no citizens to address the Board of Trustees.
EXECUTIVE SESSION
It was determined that an Executive Session was not needed at this time.
ADJOURNMENT
Trustee Nichting moved to adjourn the Regular Firemen's Pension Board Meeting; seconded
by Trustee Troglio.
Approved by viva voce vote.
The meeting adjourned at 11:02 AM.
Beth Ball, MMC, City Clerk
Trustee and Board Secretary,
Firemen's Pension Fund of Peoria, Illinois
/sr
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