Peoria Standard

City of Peoria Firemen's Pension Fund Board of Trustees met January 22.

Here is the minutes provided by the Board:

Roll Call:

Roll Call showed the following Board Members present: Ball, Nichting, Phillips, Treglio, 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; Chief Deputy City Clerk Stefanie Tarr; Attorney John Dundas of Hasselberg Grebe Snodgrass Urban & Wentworth on behalf of the City of Peoria.

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 Special Board Meeting held on November 6,2017, and the Minutes of the Regular Board Meeting held on November 20, 2017, as printed.

Trustee Phillips moved to approve the Minutes of the Special Board Meeting held on November 6,2017, and the Minutes of the Regular Board Meeting held on November 20,2017, as printed; seconded by Trustee Troglio.

Approved by roll call vote.

Yeas: Ball, Nichting, Phillips, Troglio, President Nieukirk - 5;

Nays: None.

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, and Discussion and Review of the Asset Allocations, 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 distributed a copy of the Performance Update for the period ending December 31, 2017, to all members of the Board. The Performance Update showed the portfolio valued at $139,733,735. Since its inception, the total portfolio performance returned 6.33% versus the custom benchmark of 6.21%.

Mr. Tom McShane reviewed the Capital Markets Overview for the fourth quarter of 2017 noting the key global equity market index as follows:

Index In Usd; 12-Month Returns:

MSCI EAFE; $42,809,137

MSCI EAFE Growth; 29.3%

MSCI EAFE Value; 22.1%

MSCI Europe; 26.2%

MSCI Japan; 24.4%

S&P 500; 21.8%

MSCI Emerging Markets; 37.8%

He commented that the growth of all markets have risen, noting that the biggest growth that affected the Fund's portfolio for the last seven years was the S&P 500 with returns of 13.7%, MSCI EAFE with 6.5% and MSCI Emerging Markets with 2.9%. He reported that the Gross Domestic Product increased at an annual rate of 3.2% in the third quarter of 2017 and ended the year at 2.2%; the unemployment rate for November was down slightly at 4.1%; corporate profits related to earnings were up 5.35% for the year and 4.25% for the quarter; inflation was down at 2.0%; the housing market was up compared to last year; construction and trades were busy; the census bureau for retail sales was up; consumer confidence was positive; and the economy was growing and had been for the last year.

Mr. McShane reviewed the Fund's managers as follows:

Manager; Ending Market Value:

iShares S&P 500 Index (Large Cap Fund); $24,063,678

Great Lakes (Large Cap Fund); $17,067,088

iShares S&P Mid Cap Index (Mid Cap Fund); $ 4,948,982

Kayne Anderson; $ 8,405,189

Vanguard FTSE ETF (International Equity); $19,061,364

Thornburg International; $18,807,534

Segall - Fixed Income; $42,809,137

Insured Cash Sweep Account – PCB; $ 4,560,633

He reported that the Fund was up for the last 12 months at 14.58% versus the benchmark of 14.76% with an inception return of 6.33% versus a benchmark of 6.21%. He commented that the Board had made a few changes to the portfolio in the fourth quarter of 2017. He said the S&P 500 was on target, Great Lakes had returns in excess of nearly 4.0%, and Kayne Anderson was up 29.0% versus the benchmark of 14.0%. He continued to review Kayne Anderson reporting a 5-year return of 15.91% versus a benchmark of 14.12%. He said Thornburg had nothing to report since their inception was in November. He said the Board had split their international investments between Thornburg and Vanguard. He reported Segal was up 2.07%, slightly behind benchmark; however, he said Segal historically met and exceeded the benchmark. He reported that the insured cash account returned 1.62% for the year-to- date.

Mr. McShane reviewed the portfolio's activity since inception as follows:

Beginning Market Value

Net contributions

Fee/Expenses

Income

Gain/Loss

Ending Market Value

$76.020 million -$29,070 million -$2,545 million $37,295 million $40,441 million $139,734 million

Since inception, he said the portfolio returned 6.33% versus the benchmark of 6.21%, commenting that there were greater returns than the benchmark and the Board had taken less risk.

Mr. McShane reviewed "On the Markets - 2018 Outlook," noting that the consensus of the market was that equities were the better investment. He commented on the 1O-year treasury returns and how they could impact the stock market. He reviewed a chart entitled Earnings Powered Global Equities in 2017 and he commented that the favorable financial conditions were unlikely to last. He reviewed the International Stocks and commented that they were a cheaper investment, fixed income was a short-term investment, and the savings account was a good investment.

Mr. McShane reviewed the allocations as follows:

Target Allocation; Asset Allocation:

Cash & Cash Equivalents; 2.00%; 3.26%

Fixed Income; 38.00%; 30.64%

Equity; 60.00%; 66.09%

Target Allocation; Asset Allocation:

Cash & Cash Equivalents; 2.00%; 3.26%

Mid Cap Equity; 3.00%; 3.54%

Small Cap Equity; 3.00%; 6.02%

Real Estate Equity; 3.00%; 0.00%

Emerging Markets; 8.00%; 0.00%

International Equity; 16.00%; 27.10%

Large Cap Equity; 27.00%; 29.44%

Fixed Income; 38.00%; 30.64%

He reported that the over allocation in small cap equity was due to appreciation. He inquired whether the Board wanted to re-balance the portfolio in reference to the market. He recommended reallocating $2 million from the S&P 500 Index into International Equities, commenting that the International Stocks were currently a good investment. He said when reallocating, to reallocate $1 million with Vanguard and $1 million with Thornburg.

Discussions were held regarding the re-allocations and how it would be perceived by the Department of Insurance. It was discussed that the Board could move $400,000.00 from the S&P 500 and place it with cash accounts in order to re-balance the equity portfolio.

Trustee Troglio moved to reallocate $400,000.00 from the iShares S&P 500 into the insured cash sweep account to rebalance the portfolio to 65% equities; seconded by Trustee Phillips.

Trustee Nichting recommended leaving the $400,000.00 with the S&P 500, noting that the markets were giving a bit of an edge.

Discussions continued regarding the allocation in equities, noting that the Board wanted equities closer to 65%, which would be about a $1.6 million allocation.

Attorney Dobrovolny advised the Board they could take the advice of Graystone or leave the funds where they were. He said the Fund had gotten where it was due to growth and he recommended reviewing the allocations on an annual basis.

At the conclusion of the discussion, Trustee Treglio rescinded his previous motion.

At the recommendation of Mr. McShane, Trustee Troglio moved to reallocated $2 million from the iShares S&P 500 and put $1 million with Vanguard and $1 million with Thornburg; seconded by Trustee Phillips.

Approved by roll call vote. Yeas: Ball, Nichting, Phillips, Troglio, President Nieukirk - 5; Nays: None.

Mr. McShane commented on corrections in the market noting that one was due.

At the conclusion of the review, Trustee Troglio moved to receive and file the Performance Update Report as of December 31,2017; seconded by Trustee Nichting.

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 November 2017, 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, Receive and File.

Payroll Period:

October 21,2017 - November 5,2017

November 6, 2017- November 20, 2017

When Deducted

November 15, 2017

November 30, 2017

Amount

$ 68,514.95

$ 68,470.63

Total:

$136,985.58

Trustee Phillips moved to concur and place on file the Fire Marshal's Report for November 2017; seconded by Trustee Treglio.

Approved by viva voce vote.

Item No.3 Report from Fire Marshal Charles Lauss of Pension Fund Contributions, which were made by Payroll Deductions During the Month of December 2017, 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:

November 21, 2017- December 5, 2017

December 6, 2017 - December 20, 2017

When Deducted:

December 15, 2017

December 29, 2017

Amount:

$ 66,022.73

$ 65,880.10

Total:

$131,902.10

Trustee Nichting moved to concur and place on file the Fire Marshal's Report for December 2017; seconded by Trustee Troglio.

Approved by viva voce vote.

Item No.4 Discussion Regarding Pension Benefit Increases for 2018,with a Request to Approve.

Trustee Ball said these were the increases for 2018. In response to Trustee Phillips, she said she would review 2017's increases to see what the issues were and to ensure those issues would not carry over for 2018.

Trustee Phillips moved to approve the pension benefit increases for 2018 with a Report Back on the issues that occurred in 2017; 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 Following BILLS:

Ratify Pensions for December 2017 (Dated December 30,2017) ….$ 1,160,510.80

Graystone Consulting -Investment Advisory Fees 10/1/17to 12/31/17….26,814.87

AliiantiMesirow - Fiduciary Liability 11/15/17to 11/15/18….6,475.00

Reimer Dobrovolny & Karlson, LLC - Legal Services Tendered as of 11/17/17….4,830.51

Lauterbach & Amen, LLP - Accounting and Payroll Services for October….3,245.00

Lauterbach & Amen, LLP - Accounting and Payroll Services for November….3,245.00

Advantage Reporting Service - Angela Allen Line of Duty Disability Hearing….2,457.50

Stefanie Tarr - Fourth Quarter 2017Administrative Services ….1,100.00

Lauterbach & Amen, LLP - Municipal Compliance Report for FYended 2016….570.00

City of Peoria - Office Supplies ….28.38

Total For December. $1,209,277.06

Pensions for January 2018 (Dated January 30, 2018)…. 1,169,779.06

Lauterbach &Amen - Professional Services for December 2016….3,245.00

Sub-Total For January 2018 ….1,173,024.06

SKBA Capital Management, LLC - Mgmt Fees 1/7/17 through 9/30/17….1,727.80*

SKBA Capital Management, LLC - Final Mgmt Fees October….587.43*

Total For January 2018 ….$1,175,339.29

Grant Total ….$2,384,616.35

*No check should be processed for this amount. This amount is to be automatically deducted from the account.

Trustee Phillips moved to ratify the bills for December 2017, in the amount of $1,209,277.06, and to approve the bills for January 2018, in the amount of $1,175,339.29, for a grand total of $2,384,616.35; seconded by Trustee Troglio.

Approved by roll call vote.

Yeas: Ball, Nichting, Phillips, Troglio, President Nieukirk- 5;

Nays: None.

Item No.6 Application for Regular Retirement Pension for Fire Battalion Chief Martin Baker to become effective November 30,2017, (last day paid by the City November 29,2017) based on 73.96% of his Annual Salary of $129,290.15 (which includes longevity). Pension to be paid for the remaining 1 day of November, in the Amount of $265.62 and $7,968.58 for every month thereafter with recommendation for the Board to Approve.

Trustee Nichting moved to approve the Application for Regular Retirement Pension for Fire Battalion Chief Martin Baker to become effective November 30,2017, (last day paid by the City November 29,2017) based on 73.96% of his Annual Salary of $129,290.15 (which includes longevity). Pension to be paid for the remaining 1 day of November, in the amount of $265.62 and $7,968.58 for every month thereafter; seconded by Trustee Troglio.

Approved by roll call vote.

Yeas: Ball, Nichting, Phillips, Troglio, President Nieukirk - 5;

Nays: None.

Item No.7 Request to Approve a Non-Final Preliminary Interim Benefit Payment for Denise Stauthammer, Surviving Spouse of Captain Gary Stauthammer, with Benefits to be paid at no less than 71.04% of the Salary Attached to Captain Stauthammer's Rank, in the Amount of $110,059.35 (including longevity), to be Effective September 27,2017. Pension to be paid for the remaining 3 days of September, in the Amount of $868.76 and $6,515.67 for every month thereafter with recommendation for the Board to Approve.

Discussionswere held on the status of the medical records and the disability process. Trustee Ball commented that medical records had been subpoenaed in December and that Denise Stauthammerwould receive back pay.

Trustee Phillips moved to approve a non-final preliminary interim benefit payment for Denise Stauthammer, Surviving Spouse of Captain Gary Stauthammer, with benefits to be paid at no less than 71.04% of the salary attached to Captain Stauthammer's rank, in the amount of $110,059.35 (including longevity), to be effective September 27,2017. Pension to be paid for the remaining 3 days of September, in the amount of $868.76 and $6,515.67 for every month thereafter; seconded by Trustee Troglio.

Approved by roll call vote.

Yeas: Ball, Nichting, Phillips, Troglio, President Nieukirk- 5;

Nays: None.

Trustee Troglio commented that there were children under the age of 18 and he asked to make a note of it to review upon finalization of the matter.

Item No.8 Annual Review of the Disability of Robert Parkmon, with Request to Receive and File or to Take Other Action.

Trustee Ball moved to receive and file the medical report and to approve the continued disability of Robert Parkmon; seconded by Trustee Troglio.

Approved by roll call vote.

Yeas: Ball, Nichting, Phillips,Troglio, President Nieukirk- 5;

Nays: None.

Item No.9 Request to Approve and Adopt and Publish the Application For Disability and Final Decision And Order for a Line Of Duty Disability Pension for Applicant Angela Allen.

Attorney Dobrovolny said he amended the Final Decision and Order to reflect, on Page 2 of the Order, in Paragraph No.2, "In her application, Applicant claimed she suffered injury on July 18, 2015, resulting in 'vestibular/ocular motor disorder."' He said the 35-day time frame to appeal would begin as of today.

Trustee Phillips moved to approve and adopt and publish the Application for Disability and Final Decision and Order for a Line of Duty Disability Pension for Applicant Angela Allen, as amended, to include on Page 2 in Paragraph No.2. "In her application, Applicant claimed she suffered injury on July 18, 2015, resulting in 'vestibular/ocular motor disorder."; seconded by Trustee Troglio.

Approved by roll call vote.

Yeas: Ball, Nichting, Phillips, Troglio, President Nieukirk - 5;

Nays: None.

Item No. 10 Monthly Financial Reports from Lauterbach & Amen, LLP for the Month of November 2017,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 Phillips moved to approve the monthly financial reports from Lauterbach & Amen, LLP for the month of November 2017, 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; seconded by Trustee Troglio.

Approved by roll call vote.

Yeas: Ball, Nichting, Phillips, Troglio, President Nieukirk - 5;

Nays: None.

Item No. 11 Monthly Financial Reports from Lauterbach & Amen, LLP for the Month of December 2017,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 Troglio moved to approve the monthly financial reports from Lauterbach & Amen, LLP for the month of December 2017, 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; seconded by Trustee Phillips.

Approved by roll call vote.

Yeas: Ball, Nichting, Phillips, Troglio, President Nieukirk - 5;

Nays: None.

Item No. 12 Receipts and Disbursements Reports for Peoria Community Bank and Harris Bank from Patrick Nichting, Treasurer, for the Month of November 2017,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 November 2017; seconded by Trustee Phillips.

Approved by roll call vote.

Yeas: Ball, Nichting, Phillips, Troglio, President Nieukirk - 5;

Nays: None.

Item No.13 Receipts and Disbursements Reports for Peoria Community Bank and Harris Bank from Patrick Nichting, Treasurer, for the Month of December 2017,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 December 2017; seconded by Trustee Phillips.

Approved by roll call vote.

Yeas: Ball, Nichting, Phillips, Troglio, President Nieukirk - 5;

Nays: None.

Item no.14 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 Phillips 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 Ball.

Approved by roll call vote.

Yeas: Ball, Nichting, Phillips,Troglio, President Nieukirk- 5;

Nays: None.

Item No. 15 Discussion Regarding the Auditing Services of SIKICH, LLP for Annual Auditing for the Period of January 1,2017, to December 31,2017, with Request to Approve the Engagement Letter.

Discussions were held about coordinating with the Police Pension Fund in order to get combined pricing at a lower rate with Sikich. Trustee Nichting said the Police Pension Fund was using the same auditing firm and both funds were getting a price break.

Trustee Troglio moved to approve the Engagement Letter with Sikich, LLP for annual auditing for the period of January 1, 2017, to December 31, 2017; seconded by Trustee Phillips.

Approved by roll call vote.

Yeas: Ball, Nichting, Phillips, Troglio, President Nieukirk - 5;

Nays: None.

Item No. 16 Discussion Regarding the 20181PPFA Illinois Pension Conference, to be Held May 1 - 4,2018, in East Peoria, Illinois. Recommendation: To Allow Board Members to Attend, if they wish, and to Receive a Per Diem, and Reimbursement for Hotel and Travel Expenses OR to Receive and File.

Trustee Phillips moved to allow Board Members to attend and to receive a per diem and reimbursementfor hotel and travel expenses; seconded by Trustee Troglio.

Approved by viva voce vote.

Unfinished Business:

Physkie Green Update-

Trustee Ball provided an update on the Physkie Green annual review. She said she was able to locate Dr. Kurth at OSF Medical Hospital and said Dr. Kurth was willing to continue meeting with Mr. Green as a patient. She said an appointment had been scheduled for March in Bloomington, Illinois. She said Mr. Green only needed two more physicals before he turned 50 years of age, then annual reviews would no longer be necessary. She said Attorney Reimer's office would contact Mr. Green's attorney, Attorney Bach, to advise him of the date.

New Business:

Conference Call with Foster and Foster for February-

Trustee Nichting asked that the February agenda include a conference call with Mr. Jason Franken of Foster and Foster to discuss any changes in the actuarial assumptions.

RDK Legal and Legislative Update-

Attorney Dobrovolny distributed the January 2018 RDK newsletter. He said page 11 reflected the changes to 001 recommended levy assumptions, noting fund sizes over $10 million would use a return assumption of 6.5%. He said it included a couple of cases that occurred in the 5th District that expanded the definition for "Acts of Duty."

Citizens' Opportunity To Address The Board Of Trustees:

Attorney John Dundas, attorney for the City of Peoria, inquired whether there was a process to follow should the City have additional information for the disability reviews.

Attorney Dobrovolny said any additional information could be filed with Trustee Ball.

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 held 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 held 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 Phillips.

Approved by roll call vote.

Yeas: Ball, Nichting, Phillips, Troglio, President Nieukirk - 5;

Nays: None.

The Board adjourned into Executive Session at 10:51 a.m.

Reconvening Of The Board Of Trustees:

The Board Meeting reconvened in open session at 10:52 a.m.

Roll Call showed the following Board Members physically present: Ball, Nichting, Phillips, Troglio,President Nieukirk- 5. Absent: None.

Others present: Attorney Jim Dobrovolny; Chief Deputy City Clerk Stefanie Rice.

Adjournment:

Trustee Troglio moved to adjourn the Regular Firemen's Pension Board Meeting; seconded by Trustee Phillips.

Approved by viva voce vote.

The meeting adjourned at 10:53 a.m.

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