City of Peoria Board of Trustees of the Firemen’s Pension Fund Met June 22.
Here is the minutes provided by the board:
A Regular Meeting of the Board of Trustees of the Firemen’s Pension Fund of Peoria, Illinois, was held this date via Teleconference, 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, Smith, Tomblin, President Troglio - 5; Absent: None.
Others present: Chief Deputy City Clerk Stefanie Tarr.
INVOCATION
A moment of silence will be held in remembrance of those Firefighters who have served our community.
MINUTES
Recommendation to Approve the Minutes of the Regular Board Meeting held May 22, 2020, as printed.
Trustee Smith moved to approve the Minutes of the Regular Board Meeting held May 22, 2020, as printed; seconded by Trustee Tomblin.
Approved by viva voce vote.
REGULAR BUSINESS
ITEM NO. 1 ELECTION OF OFFICERS – PRESIDENT and SECRETARY.
Trustee Ball said due to COVID-19, the Board did not hold an annual meeting. She said the Board could choose to continue the office of President and Secretary for another year until the 2021 Annual Board meeting, or the Board could nominate and vote on new office holders.
Trustee Nichting said, depending on the Governor’s announcement regarding Phase 4 of the reopening process and whether further restrictions could be imposed due to COVID-19, he said it would be appropriate for the Board to continue the current offices.
Trustee Tomblin said he agreed with continuing the offices until the next annual meeting.
Trustee Ball said Trustee Tomblin’s position as Elected Inactive Trustee would be up for re- election in 2021, noting he fulfilled the term of Jack Nieukirk.
Trustee Nichting moved to continue the terms of President and Secretary until the 2021 Annual Board meeting; seconded by Trustee Smith.
Approved by viva voce voice.
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.
A conference call was placed with Mr. Thomas McShane, First Vice President – Investments, Senior Investment Management Consultant with Graystone Consulting, a business of Morgan Stanley/Smith-Barney in Chicago at 9:42 A.M.
A copy of the Performance Update for the period ending May 31, 2020, was distributed to all members of the Board. The Performance Update showed the portfolio valued at $138,142,840. Since its inception, the total portfolio performance returned 5.94% versus the custom benchmark of 5.58%.
Mr. Tom McShane previously distributed an updated cash flow report stating the report reflected the current balance at Morton Community Bank and at Morgan Stanley. He reported, as of May 31, 2020, the Fund had approximately $3.8 million available in cash. He said assuming contributions would be the same as last year’s contributions, the Fund would be well funded through the end of 2020. He also presented a funding report reflecting no contributions realized.
Discussions were held regarding contributions and Trustee Nichting said the County Board approved dividing the first installment of real estate taxes with the first part of the payment due June 9, 2020, and the second half of the payment due July 9, 2020. He said the second full installment would be due in September. He expressed a concern that several properties had defaulted on taxes with the possibility of more properties defaulting by the end of 2020. He said 2019 had a record number of defaults on real estate taxes and he said he anticipated 2020 to have another record number of defaults. He recommended reviewing the matter at the next meeting and whether the Board wanted to have less cash in the cash accounts. He said the Fund was in a better position now than what it was in March.
Mr. McShane reviewed the cash flow without contributions noting the Fund would have enough money to fund through August. Trustee Nichting agreed with Mr. McShane’s assessment stating the Board could discuss later whether it wanted to proceed to have less cash on hand.
Mr. McShane provided a summary of the Board’s recent actions stating on April 27, 2020, the Board approved exchanging from Vanguard ETF to American EuroPacific, which was completed May 1, 2020. He reviewed the S&P 500 Index ending the first week of June, noting the economy’s recovery had greatly improved since March 2020, which exceeded expectations. He said the vast infusion from the Federal government provided liquidity across the Board.
Mr. McShane reviewed the Asset Class Index Performance as of May 31, 2020. He reported on a worldwide basis, Global Equity one-month returns were 4.4% and one-year returns were 6.0% and the S&P 500 one-year returns were 12.8%. He reported International Equities and Emerging Markets were not as safe with one-year returns of -3.0% and -4.0%, respectively. He reported Investment Grade Fixed Income was up 5.5% year-to-date and 9.4% for the last 12 months. He said the Board needed to review alternative investments, noting the Board recently invested in BlackRock Event Driven Fund, who based its returns upon mergers and acquisitions and positioning themselves for non-risky returns. He said BlackRock was the largest investor worldwide, reporting they wanted a 4-5% return per year on event types of investments. He remarked on the importance of reviewing alternative investments.
Mr. McShane reviewed The GIC Weekly dated June 15, 2020, specifically noting the “Bottom Line”. He said there was improving economic data with the anticipation of a V-shaped recovery. He said the Board was preparing for scenarios such as income inflation protection. He remarked on fixed income and how rising rates would affect the bonds. He commented on reviewing alternative and fixed income investments. He said Inflations Protection Bonds were currently selling at a premium. He remarked on staying fully invested in equities. He reviewed the S&P 500 Earnings Estimates and the price targets for year-end 2020 for each case. He reviewed the Market Factor Data Points for the week ending June 12, 2020, noting all the trends turned upward with the exception of continuing jobless claims and Europe and China productions. He reviewed Intra-Year Declines reporting for 2020 there was a drawdown of - 34% for the year.
Mr. McShane reviewed the Firemen’s Pension Fund portfolio.
He said there was a slight over allocation of cash and cash equivalents, under allocation in fixed income and over allocation in equity but just below the guidelines set forth in State Statutes.
Mr. McShane provided a detailed overview of the allocations.
He reported an over allocation in mid cap and small cap equity due mostly to appreciation. He said fixed income continued to do well even though the Board reallocated money from that position. He said International Equity was over-allocated because that manager provided exposure to the emerging markets as they deemed fit. He said the alternative investments were on target with the potential of making additions to that allocation in the next couple of months.
Mr. McShane reviewed the market value of each manager.
Manager
Vanguard S&P 500 Index (Large Cap Equity) $13,780,146
Aristotle (Large Cap Equity) $22,409,798
Vanguard Mid Cap (Mid Cap Equity) $ 5,018,146
Kayne Anderson (Small Cap Equity) $ 7,827,354
BlackRock Event Driven (Large Cap Equity) $ 1,516,797
American EuroPacific Growth (International Equity) $17,229,738
Thornburg International $21,067,811
Segal (Fixed Income including cash) $45,379,333
Cash & Cash Equivalents $ 3,913,718
Mr. McShane reviewed the portfolio’s returns reporting a year-to-date return of -2.35% versus the benchmark of -5.55% and one-year returns of 8.58% versus the benchmark of 4.22%. He reported the one-year returns for Aristotle of 9.46% versus the benchmark of -1.64%, noting this manager did not get caught in deep value mode. He reported Kayne Anderson provided a one- year returns of 16.91% versus the benchmark of -3.44%, noting this manager provided the best returns to the portfolio. He reported Thornburg provided a one-year return of 15.31% versus the benchmark of 7.37% and Segall provided a return of 7.74% versus the benchmark of 7.60%.
He commented, in light of recent events, managers provided returns for the year-to-date and month-to-date that exceeded the benchmarks.
Mr. McShane reviewed the month-to-month trends of the portfolio, noting the gains and losses for each month. He said the portfolio had gained a lot of ground since March 2020, noting a loss of nearly $19 million and gains of nearly $15 million. He commented on the volatility of the marketplace due to COVID-19, and he remarked on the need to persevere during those times.
Mr. McShane reviewed the portfolio’s activity since its inception date of January 2003 as follows:
Beginning Market Value $76,020 million
Net contributions -$45,028 million
Fee/Expenses -$3,337 million
Income $48,051 million
Gain/Loss $62,436 million
Ending Market Value $138,143 million
He reported the Board’s risk/return represented slightly greater returns with slightly less risk.
Mr. McShane said he anticipated a conference call with Segal Bryant & Hamill at the July Board meeting to review the fixed income portfolio and other investment alternatives.
Trustee Tomblin moved to receive and file the Performance Update Report as of May 31, 2020; seconded by Trustee Smith.
Approved by viva voce vote.
ITEM NO. 3 DISCUSSION Regarding the INVESTMENT POLICY, with a Request to Approve.
Mr. McShane reviewed the Investment Policy stating the investment environment was changing. He previously distributed a redlined version to the Board for review, and he reviewed the proposed changes as followings:
Change in allocation in Fixed Income with a minimum of 20% and a maximum of 78%;
Deletion of a duration; and,
Deletion of zero coupon bond
At the conclusion of the overview, Trustee Nichting moved to approve the Investment Policy, as presented; seconded by Trustee Smith.
Approved by roll call vote.
Yeas: Ball, Nichting, Smith, Tomblin, President Troglio - 5
Nays: None.
In response to Trustee Ball, Mr. McShane said an attorney’s signature was not necessary and the policy would be effective without one. He said once he received the signed document his office would send it to the Department of Insurance.
Conference call with Mr. McShane ended at 10:28 A.M.
Discussions were held regarding the volatility of the marketplace. It was determined that the Board could hold an Emergency Meeting should the matter need addressed.
ITEM NO. 4 DISCUSSION and Request for APPROVAL of the DEPARTMENT OF INSURANCE ANNUAL STATEMENT.
A copy of the Annual Statement was previously distributed to all Trustees.
Trustee Nichting said he gave Mr. Jason Franken of Foster & Foster the approval to proceed with the actuarial report. He said Lauterbach & Amen would file the annual statement with the Department of Insurance. He said he asked Mr. Franken to prepare an actuarial report based upon the Board’s needs and whether assumption changes needed to be made. He remarked on the decline in the marketplace during the first quarter of 2020 and possibly changing the amortization of 10 years to 5 years.
Discussions were held regarding the Consolidation of the Downstate Fire and Police Pensions. It was discussed that a list of active and retiree members was being compiled. Trustee Nichting said if anyone was interested on serving on the Board should send in their interest as soon as possible, stating elections would take place November 1, 2020. He said the elected board would begin January of 2021, and he provided an overview of its duties upon inception. He said the Peoria Firemen’s Pension Board would continue to maintain its own pension files and would continue to hold disability hearings, approve retirements, and transfer funds to pay pensioners.
It was noted that anyone who wanted to run for election for the Consolidated Pension Board needed to inform the Committee of their intent to do so by the end of June.
At the conclusion of the discussion, Trustee Smith moved to approve the Department of Insurance Annual Statement; seconded by Trustee Tomblin.
Approved by viva voce vote.
ITEM NO. 5 Report from Fire Marshal Tony Ardis of Pension Fund Contributions, which were made by payroll deductions during the MONTH of MAY 2020, 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.
Trustee Ball moved to concur and place on file the Fire Marshal’s Report for May 2020; seconded by Trustee Smith.
Approved by viva voce vote.
ITEM NO. 6 Request to Approve the following BILLS:
Pensions for June 2020 (dated June 30, 2020). $1,369,439.23
Sikich – Professional Services through May 31, 2020. 2,000.00
Stefanie Tarr – 2nd Quarter Administrative Services (April – June). 1,350.00
SUB-TOTAL FOR JUNE…………………………………………………… $1,372,789.23
GRAND TOTAL FOR JUNE…….…………………………………… $1,372,789.23
Trustee Tomblin moved to approve the bills for June 2020 in the amount of $1,372,789.23; seconded by Trustee Nichting.
Approved by roll call vote.
Yeas: Ball, Nichting, Smith, Tomblin, President Troglio – 5;
Nays: None.
ITEM NO. 7 QUALIFIED ILLINOIS DOMESTIC RELATIONS ORDER AND CONSENT FOR AN ISSUANCE for Kimberly Gillespie-Connor, Previously Married to Firefighter Mark Connor, with a Request to APPROVE.
Trustee Tomblin moved to approve the Qualified Illinois Domestic Relations Order and Consent for an Issuance for Kimberly Gillespie-Connor, previously married to Firefighter Mark Connor; seconded by Trustee Smith.
Approved by roll call vote.
Yeas: Ball, Nichting, Smith, Tomblin, President Troglio – 5;
Nays: None.
ITEM NO. 8 MONTHLY FINANCIAL REPORTS from LAUTERBACH & AMEN, LLP for the Month of MAY 2020, 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 May 2020, 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 Smith.
Approved by roll call vote.
Yeas: Ball, Nichting, Smith, Troglio, President Troglio – 5;
Nays: None.
ITEM NO. 9 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.
President 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 Tomblin.
Approved by roll call vote.
Yeas: Ball, Nichting, Smith, Tomblin President Troglio – 5;
Nays: None.
UNFINISHED BUSINESS
ITEM NO. 10 STATUS UPDATE on the DISABILITY APPLICATIONS of PAUL EDWARDS and JOHN SCHNIBBEN.
Attorney Rick Reimer previously distributed a status of the disability applications to all Trustees. It was noted that the Board was still waiting on medical records and paperwork from the applicants. Discussions were held regarding the worker compensation claims with the City and the possibility of a Public Employee Disability Act (PEDA) claim.
Widow Application for the Widow of Deceased Firefighter Nicholas Riordan
Discussions were held regarding a widow’s application for the widow of Nick Riordan. It was noted that no paperwork had been filed, but President Troglio said he provided the widow a copy of the application and supporting paperwork. He said the widow was entitled to a pension. It was determined that a letter with the application would be sent by certified mail, and it was also noted that there was a pending worker’s compensation claim with the City. Trustee Nichting said should the widow respond, the Board would still have to hold a hearing.
NEW BUSINESS
IPPFA Education
Discussions were held regarding the hours needed for the Trustee Program, and President Troglio said the IPPFA was offering 16 hours of education, noting there was a fee involved. Trustee Ball said she would forward the information to the rest of the Board.
CITIZENS’ OPPORTUNITY TO ADDRESS THE BOARD OF TRUSTEES
It was determined that there were no citizens to address the Board of Trustees at this time.
EXECUTIVE SESSION
It was determined that an Executive Session was not needed at this time.
ADJOURNMENT
Trustee Tomblin moved to adjourn the Regular Firemen’s Pension Board Meeting; seconded by Trustee Ball.
Approved by viva voce vote.
The meeting adjourned at 11:15 A.M.
http://www.peoriagov.org/content/uploads/2020/03/6-22-20-REGULAR-FIRE-PENSION-MINUTES_1595008338_add.pdf
Alerts Sign-up