Firefighters Pension Board

T{1I85 FIREFIGHTERS'PE SION FUI{D BOARD OF TRUSTEES MEETIT{G 8:I5O DEMPSTER Ntrrs, tr 60714 Mardr 13, 2013 The meeting was called to order at 8:35 a.m. by President Greg Schmidt. Trustees Present: Greg Schmidt Bob Greiner, Wally Blasg James Callero, and Steve Vinezeano. 0fficials Present: Gary Karshna from Capital Gains, lnvestment Advisor to the Fund; Attorney Carolyn Clifford; Rich Scipione, Pension Clerk to the Fund; Brian Blockovich, President & General Counsel of Chicago Clearing; and Scot Neukirch, Village Finance Director. Public Comment: No public comment. Presentation by Chicago Clearing Corporation: Brian Blockovich, President and General Counsel of Chicago Clearing, presented how his company can be beneficial for our Fund. Chicago Gearing files claims on securities class action settlements on behalf of the client. An example is a Bank of America S2.4 billion case; only 2%-4% of shareholders filed a claim against Bank of America netting S2-S3 dollars per share owned. chica8o clearing would file a claim on behalf of the Pension Fund and take a 2096 contingency fee. There is no char8e to the Fund if there is no settlement. There has been over Stlo billion issued between 2005 and 2012 for securities class action settlements. Chica8o Clearing has been associated with IPPFA since August of 2012. Through the IPPFA they have been granted access to the lllinois Department of lnsurance trading records database. Records include stock transactions, bond transactions, and mutual fund transactions. To get started the Fund must sign an Assignment of ABency Agreement. This agreement allows Chica8o Clearing to file claims on behalf of the Fund; it also has a confidentiality and privacy agreement embedded into it. Chicato Clearing is willin8 to sign a separate confidentiality agreement. Once paperwork is filed they would tab the database ofthe Department of lnsuranc€ to look for over 2m past and pending cases, then begin filing paperwork immediately. They would divide claims into pending and late claims, with late claims filed first since the deadline has already passed. Trustee Callero asked who would file claims if a mutual fund was involved. Brian stated the mutual funds would file the paperwork on behalf of the owner of the mutual fund and get the settlement. Chicago Clearing would most likely not be involved in mutual fund cases. Gary Karshna explained that 1  NI1T5 FIREFIGHTERS' PE SION FUND BOARD OF TRUSTEES MEETIT{G &160 DEMPSTER t{trEs, rr 60714 March 13, 2013 we are invested in mutual funds and we don't get a lot of settlement notices. We only got involved in single stock last November. Trustee Callero also clarified how the Bank of America settlement started at three cents a share and ultimately finished higher than the original settlement. Brian confirmed that the attomeys take their fees off the top and the number of filed claims determines how much per share is awarded. Companies would do rolling distributions, such as in Enron's case. Enron had over nine distributions. When check are issued and not cashed, the money is then redistributed to the remaining claimants. Carolyn questioned how Chicago Clearing gets access to the Department of lnsurance trade records. According to Brian that information is public knowledge. Chicago Clearing acquires the database and adds the Niles Firefighters' Pension Fund. Every fiscal year the information is updated in the database. Brian stated the only information received from the Department of lnsurance is the trade records and does not include personal information of Fund members (i.e. social security numbers, date of birth, and names). The standard fee is 2095 regardless of what the settlement is. The contract is a standing contract and Chicago Oearing requests thirty days' notice to terminate the contract. On a motion by Greiner, seconded by Blase, to enter into mntract with Chicago Clearing/Chimicles and Tikellis LLP. AYES: Greiner, Sdrmidt Blase, Vinezeano, and Callero IIAYS: None ABSENT: None Motion canled. callero left mealng at 9:15 a.m. Carolyn is golng to i€view the contract prlor to anybody siSning it, partiodarly the indemnmcatiofl lar4uaSe that is present Prsious Minutes Approral: on a motion by schmidt, seconded by Grciner, to approw the mlnutes from the NovEmber 13, 2012 meeting. AYES: Greiner, Sdrmidt, and Blase l,lAlS: l{one ABSENT: Callero 2  NI]"ES FIREFIGHTERS' PENSION FU D BOARD OF TRUSTEES MEETING 8360 DEMPSTER ]{ttfs, tr 60714 March 13, 2013 ABSTAIN: Vinezeano Motion carried. Callero returned to meetint at 9:25 a.m. lnvestment Adviso/s Report: Gary reviewed the third quarter report, dated January 2013. Januavs topic is North Dakota's ener8y boom. Gary explained how the United States sits on an abundance of untapped energy. This energy may be the next boom for the stock market in the near future. North Dakota is just an example of how this energy is changing their economic outlook. Jim asked if we could purchase bonds in North Dakota, but Gary stated we are unable to purchase them. The stock market continues to climb the "wall of worry." since bonds are so low, the Fund has no other options except equities. The Fund has no alternatives because we cannot directly invest in real estate or options. Jim asked do we ever think about stops in regards to individual stocks? According to Gary the company we deal with does not allow stops but Capital Gains is putting in stops on their own. The economy is showing signs of improvement. The average investor is still out of the market. When the average investor sells bonds and enters equities, bond prices will decrease. This may be a sign to 8et some money out of the market and prepare for a correction. Our equity portfolio is up at 9.05%, compared to the blended equity benchmark of 9.48%. The indiMdual stock portfolio is doing well with a 14% rate of retum. Gary is lookin8 at possibly adding Boeing to our individual portfolio. Matthews Asian Growth and lncome is uP 15% this year, and our small caps are doing very well. Gary stated the market is continuing to increase but would not be surprised with a 5%-1096 correction in the near future. Our bond portfolio is up at Z.U%, compared to the Barclay's lntermediate Govemment Bond lndex benchmark of 0.81%. The Fed is on record stating that they are going to keeP interest rates low. The Federal Reserve is buyin8 over 80% of the Treasury debt. The Fed can't keep on purchasing bonds at this rate without an inflation risk or other countries refusing to purchase United States Bonds, causing an interest rate incfease. Greiner stated that we are at 52% equity investment and that we can even go higher by law. He is uneasy about investing more into equities. Jim believes the job of the Board is to protect the core assets. Carolyn suggested that Gary get a written opinion from the Department of lnsurances on the maximum equity investment percentage, if he wishes to pursue increasinS the equity portfolio to 65%. 3  II.ES FIREFIGHTENS' PET{SIO]I FUT{D BOARD OF TNUSTEES MEEn G SilalDEMP!'IER llllfs, lt 6071t0 I{OVEi/iBEn 13, mfil On a motion by Callero, seconded by Greiner, to restrict equity irwestments ofthe Fund to 55%. AYES: Greiner, Schmidt, Blase, Vinezeano, and Callero NAYS: None ABSET{T: None Motion canied. Callero's opinion is that the Fund should never go above 5596 equitiet arer. We need to protect the funds and not take on more risk. Steve asked where other municipalities' equity le\rels are. Carolyn explained that any Fund with less than 52.5 million could only invest 1095 into mutual funds. Once you reached ten million dollaB in assets, you may in€rease your equities to 35%. There was an Attomey General written opinion that the Fund could add the 10% and 35X together and get a total of 45% invested into equities after the Fund had ten million dollars in assets. The General Assembly then increases the maimum equity holding to 55%. Now the question is how the Attorney's General written opinion affects the 55%. Do you add them together to get a total equity holding of 65%? Following that, another Fund asked for a DOI opinion on the matter, and the DOI opinion was, yes you would add them together and have a maximum equity holding of 65%. 6ary stated he has a few funds over 45% equity levels. Jim asked 6ary to add the number of shares that we own in our individual stock fund portfolio to the monthly newsletters. Carolyn asked what is the bendrmark we are usin8 for our individual stock fund portfolio. Gary stated that we are benchmarking our portfolio to a large cap fund benchmark. The only loss we had in our individual stock market portfolio was Apple, and that was due to a 1096 drop in stock price, Steve asked what the plan for the individual stock market portfolio. Gary looks for large high quality companies that have been 'beat up' and are expected to increase. The portfolio won't go above twenty-five stocks in our individual portfolio. lf there are increased profits, Gary will sell a portion or all of that individual stock and invest elsewhere taking the profit. Over the past twelve months our equity portfolio rate of return is 14.65%, our bond portfolio rate of return is 3.(Xr%, and our entire portfolio rate of return is 7.83%. Gary asked the Board, if there is a market correction does the Board want 6ary to sell some of the stocks by 1O%? The Board stated that they give Gary discretion to take money off the table and take the profits ifthere is a correction. 4  ILES FIREFIGHTERS' PENSIOT{ FU]TD BOARD OF TRUSTEES MEETING 8360 DEMPSTER ]{lES, rt 60714 ItovEMBEn 13, 2012 Treasure/s Report: Scot presented the 2013 Annual Pension lncrease that began.lanuary 1, 2013. The document shows all the scheduled increases for firefighters on regular pension and disability pension. On a motion by schmidt, seconded by Callero, to approve the annual pension lncreases. AYES: Greiner, Blase, Scimidt, Vinezeano, and Callero NAYS: None ABSENT: None Motion carried. Scot went over the fiscrl year 2012 lDOl annual statement. Scot presented the Schedule P to the Board. 95rolyn recommends the Board have someone review the information on the individual members (such as birth dates, years of service, salary etc.) for accuracy. This annual statement was filed on time with the Department of lnsurance. Scot presented the Village's tax levy ordinance and contribution for 2013. How the Mllage levies the pension contribution is through its General Fund levy and then the pension contribution gets expensed out of the General Fund. We have other funding sources including a .25% sales tax. Half the tax is used for storm water relief and the other half gets distributed to the Fire and Police Pension Funds. Whatever is not used for storm water relief is used for pension contributions. The contribution is above the minimum statutory but not quite as high as the actuarial recommended. ln 2014 the Villa8e will contribute the actuarial recommended amount, a S460,mo increase from last year. Carolyn explained how Naperville had a six million dollar surplus and it split the surplus between the police and Fire pension Funds. Naperville decreased its unfunded liability by contributing the funds now and will ultimately be cheaper for the taxpayer down the road. Steve asked how the Village contributes the funds to the Pension Fund. Scot stated that the Village contributes half the funds mid-year and the remaining at the end of fiscal year. This coincides with the property tax collections. old Businessfreasure/s RePort: Scot received the liability insurance quote from Gallagher Risk Management Services. The liability insurance @verage was increased to s2.5 million per Pension fund (Police and Firel for a total of s5 million. The premium was decreased from last year. There is no longer the exclusion for underfunding' The Treasurer has a seParate bond coverint him as an er-officio for the Fund. 5  t{ILES FIREFIGHTERS' PE]ISION FUND BOARD OF TRUSTEES MEEN 6 8:160 DEMPSTER tEs, tr 50714 I{OVEMBER 13, 20UZ On a motlon by Callero, seconded by Greiner, to approve the new fiduciary liability insurance cover:rge starting Mardr 1, 2013 by Alterra America lnsurance Company. AYES: Greiner, Blase, Schmidt, Vinezeano, and Callero NAYS: None ABSENT: None Motion canied. Approval of Bills and Disburcements: Pension cle* Rich Scipione presented checks 2553-2562 for payrnent for a total of 524,749.24. A motion was made by Callero, seconded by Blase, to appro\re the payment of the bills and disbursements as presented. Upon a callofthe roll: AYES: Vinezeano, Greiner, Sdrmidt, Blase, and Callero NAYS: None ABSENT: None Motion carried. New Business: Trustee 6reine/s Pension Board position is up for election next month. The Board is seeking out nominations for the position. Trustee Grclner stated he would accept the nomination for his position. The election willtake place on April 15. 2013 0730-1930 hours at Fire Station 2. Carolyn contacted Woodlake Medical Management Company to inquire about their services. Carolyn spoke with Chris Rock. This company can be used with new disabilities and annual independent medical examinations (lME). Greiner worries about increased costs of physicals, because these docto6 may order more X-rays, MRls, or other medical diagnostic tools due to the fact they are unfamiliar with these patients. woodlake's fee is S30cS70o. A full package costs an average of S1600-S19m per person. The Fund has three disabled firefighters that are under fifty years old who require annual lME. The Board chooses to pick one disabled firefighter to test out Woodlake Medical and evaluate their services. On a motion by Blase, seconded by callero, to use Woodlake Medical to choose an IME doctor for disabled firefighter Joe sanchez and evaluate Woodlake Medicals results. AYES: 6reiner, Blase, Schmidt, vinezeano, and Callero 6  t{ItES FIREFIGHTERS' PEIIISIOII FU D BOARO OF TRUSTEES MEMI{G 8:I5O DEMPSTER Nttrs, tt 60714 NOVEMBER 13, 2O1Z NAYS: None ABSENT: None Motion carried. Carolyn wanted to confirm that all five Pension Board Members are aware they are required to file a Statement of Economic lnterest to Cook County. This is due May ln of this year. Greiner filed the list of Board members with Cook County and each Board Member is required to file their own Statement of Economic lnterest with the County. Carolyn presented the annual change in the attorney retainer for Ottosen Britz Kelly Cooper Gilbert & DiNolfo, LTD. Retainer will be increased to Sl0oo per quarter from 5525 per quarter last year. Annual retainer includes: unlimited telephone calls between the Fund (its Board members, its administrative secretary and staff) and our attorneyS unlimited e-mail exchanges between the Fund (its Board members, its administrative secretary and staff) and our attomeyt and attendance at all four (4) of the Fund's regular quarterly meetings. Carolyn's firm increased its hourly rate to S20o per hour as of January 1, 2013. she states that her firm increases its rates about every couple of years. On a motion by Callero, seconded by Blase, to approve the annual attorney retainer for Ottosen Britz Kelly Cooper Gilbert & DiNolfq LTD. AYES: Greiner, Blase, Sdtmidt Vinezeano, and Callero NA\s: None ABSENT: None Moton canied, lllinois Policy lnstitute requested a FOIA for all of our disability pensions and reasons for their disability pensions. Carolyn advised the Board how to proceed for this FOIA and what information is to be released. Steve Vinezeano is the Village's selection for trustee on the Firefighters' Pension Board. He i5 required to take thirty-two hours of trustee education for his position to be comPleted in eiShteen months' Carolyn reviewed the 2012 filings and annual timeline for 2013. All the 2012 filin8s were completed on time and the Fund is in compliance. Greiner stated he received the annual services certificate from frfth/third Bank and it was filed. 7  lIII.fS FIREFIGHTERS' PEI{SIOI{ FUI{D BOARD OF TRUSTEES MEETING 8:150 DEMPSTER Nl1r5, lt 60714 I{OVEMBER 13, 2OT! Training: Carolyn provided the board with traininS material on QILDRO' liens and judSments, child support orders, and special requests. lf we receive any of these orders we should forward the information to Carolyn to make sure the paperwork is correct. The Board has designated two hours oftraining for this meeting. l{ext Meeting: The next meeting will be scheduled on May 5, 2013 at 8::rc a.m. The meeting was adjourned at 11:20 a.m. on a motion by Schmidt, seconded by Blase, and approved upon a unanimous voice vote. Respectfully submitted, Bob Greiner, Secretary Minutes approved by the Board of Trustees at its meeting on 2013. Minutes prepored by Rich Scipione, Pension Clerk to the Fund 8