Firefighters Pension Board

NITES FIREFIGHTERS' PENSION FUND BOARD OF TRUSTEES MEETING 8360 DEMPSTER NttE rr 60714 August 22, 2018 The meeting was called to order at 8:34 a.m. by President Byron Tull. Trustees Present: Bob Greiner, Byron Tull, John Zeman, and Jim Grammas. Absent was Marimel Lim Officials Present: John Falduto from Sawyer Falduto Asset Management, LLC, lnvestment Advisor to the Fund; Attorney Carolyn Clifford, Ottosen Britz; Rich Scipione, Pension Clerk to the Fund; Jeff Martynowicz, Treasurer to the Fund; Trinette Gardner, Lauterbach & Amen, LLp; and Jessica Fain, Actuary to the Fund, Lauterbach and Amen. Public Comment: No public comment. Previous Minutes Approval: on a motion by Tull, seconded by Greiner, the minutes from the May 24,2or8 meeting were approved by a unanimous voice vote. lauterbach and Amen, LLC Report Trinette Gardner from Latuerbach & Amen presented the July 31, 2018 Monthly Financial Report. At the end of July 2018, the net position held in trust for pension benefits was S33,284,209.95. The Fund paid checks numbered 30175-30189 (Harris account) and 50035 (Schwab account) from May 1, 2018 through July 31, 2018, for a total of 5162,466.41. A motion was made by Tull, seconded by Grammas, to approve the financial report including bills and disbursements as presented. Upon a call of the roll: AYES: Greiner, Tull, Zeman, and Grammas NAYS: None ABSENT: Lim Motion carried. The Department of lnsurance annual statement is in draft format awaiting the Village of Niles audit completion. Lauterbach & Amen are scheduled to file the Department of lnsurance annual statement by the October 31 deadline. 7  NITES FIREFIGHTERY PENSION FUND BOARD OF TRUSTEES MEETING 8350 DEMPSTER NttEs, tL 60714 August 22, 2018 The affidavits of eligibility are ongoing and still waiting for one person to submit the affidavit. The Village of Niles audlt is ongoing and on track to be completed in October. Actuarial Study Jessica Fain, actuary from Lauterbach & Amen, presented the preliminary actuarial valuation as of May 1, 2018. This is a draft document awaiting audited results. Once audited results are received, the final actuarial valuation will be updated for Board approval. The actuarial cost method will continue to be entry age normal. The current method for funding will be 100% funded by the year 2037, as opposed to the lllinois statutory minimum contribution of 90% by the year 2040, using the projected unit cost method. The Village of Niles pension payment will be amortized using level percent funding instead of level dollar cost averaging as in the past with a five-year smoothed market value. The recommended contribution has increased 5230,419 from prior year due to salary increases, demo8raphic changes, assumption changes, funding policy changes, asset return less than expected, and contributions greater than expected. Our current actuarial investment return is 7.25% versus our current return on investment at 6.9% net of administrative expenses. The actuarial value return on investment is 4.7% net of administrative expenses. The actuarial liability is 57&041,058. The actuarial value of assets was 42.]4% and the market value of assets was 41.30%. The recommendation reflects a 6.Lcyo year over year contribution increase. The actuarial value of assets is equal to the fair market value of assets with unanticipated gains/losses recognized over five years. The actuarial value of assets is currently 102% of the market value. lf the actuarial calls of assets increased to over 120% the Fund should consider lowering the actuarial investment return. The employer normal cost contribution is 5584,074, the statutory minimum contribution is 53,25L,7L4, and the actuary contribution recommendation is 54029,2145. The Fire Pension Fund discussed with the Police Pension Fund about decreasing the investment rate of return assumption. The lllinois Department of lnsurance has lowered their investment rate of return assumption to 6.25%. Carolyn advised the Board that our assumption rate is higher than most of the Funds that she represents and recommends considering a lower assumption rate. Jessica discussed different options the Board could use to reduce the assumption rate including a graduated decrease over three to five years. The Police and Fire Pension Boards will meet with the Finance Committee and discuss changing the assumption in the rate. Jessica will provide actuarial data for assumption rates 6.25Yo,6.5/o,6.75To, andT.OYo and the cost difference. 2  NITES FIREFIGHTERS' PENSION FUND BOARD OF TRUSTEES MEETING 8360 DEMPSTER NrrEs, rL 60714 August 22, 2018 Board took a break at 10:20 a.m. Board reconvened at 10:35 a.m. Jessica presented the Niles Firefighters' Pension Fund GASB 6/68 Report. A motion was made by Tull, seconded by zeman, to instruct the Actuary to reduce the actuarial investment rate of return from 7.25% to 6.5%. Upon a call ofthe roll: AYES: Greiner, Tull, Zeman, and Grammas NAYS: Lim ABSENT: None Motion carried. lnvestment Advisor's Report: Tom Sawyer presented the Fund's June 3Q 2018 "second euarterly lnvestment Report.. The 2018 second quarterly ending market value was 532,178,782, with an investment return of 5572,47L. The total account return for the second quarter was 1.79% versus the benchmark of 2-!7%. The equity rate of return for the second quarter was 3.20% versus the blended benchmark of 3.86%. The fixed income rate of return was 0.0O% versus the benchmark of O.1O%. our current portfolio allocation as of June 30, 2018: Equities at 56.3%, Fixed lncome at 42.9%, and cash Equivalent at 0.8%. The Board discussed raising the equity funding target to 62.5% with a range of 55yo-65%. This change gives Sawyer and Falduto some latitude to capitalize on equity gains while keeping a range to reduce liability to the Fund A motion was made by Greiner, seconded by Tull, to adjust the asset allocation parameters and set the target in equities to 62.5% with a range of 55% to 65%. AYES: Greiner, Tull, Zeman, and Grammas NAYS: Lim ABSENT: None A motion was made by Greiner, seconded by Tull, to adjust the asset allocation parameters and set the target in fixed income to 37.5% with a range of 35% to 45%. AYES: Greiner, Tull, Zeman, and Grammas 3  NII.ES FIREFIGHTERS' PENSION FUND BOARD OF TRUSTEES MEETING 8350 DEMPSTER N[..ES, tL 50714 August 22, 2018 NAYS: Lim ABSENT: None A motion was made by Tull, seconded by Grammas, to accept the Quarterly Investment Performance Report, June 30, 2018, as presented. Upon a call of the roll: AYES: Greiner, Tull, Zeman, and Grammas NAYS: Lim ABSENT: None Motion carried. Old Business: We have one disabled member who was sent to a physician for their annual IME: Steve Zook. Steve zook's docto/s appointment was on August 6 and has not received a report as of this meeting. Byron presented the new PSEBA Ordinance that the village passed back in June Carolyn reviewed refunds of Cetera Feet Capital Gains as the investment advisor, to other Pension Funds. Niles Fire and Police Pension Funds were not involved with Cetera. Capital Gains used Securities America for Niles Fire and Police Pension Funds. Carolyn presented a resolution regarding signatory authority. Lauterbach and Amen have the ability to electronically capture the signature and be in compliance. A motion was made by Tull, seconded by Grammat to approve resolution 2018-1 relegating the Treasure/s signatory authority. Upon a call ofthe roll: AYES: Greiner, Tull, Zeman, and Grammas NAYS: Lim ABSENT: None Motion carried. New Business: Carolyn reviewed the negative press that the village of Niles received recently. She stressed that the Board should continue to educate the members of the Fund of the current valuation of our Fund. The Fund may need to reach out to village officials and residents to get the correct message out. 4  NILES FIREFIGHTERS' PENSION FUND BOARD OF TRUSTEES MEETING 8350 DEMPSTER NtLES, tt 60714 August 22, 2018 Training: Carolyn distributed training material for the Board to review. Training article included "The lntercept Process for Article 3 and Article 4 Funds." The Board designates one hour of traininB for the material and actuary review. Next Meeting: The next meeting is scheduled for October 30,2018 at 8:30 a.m. The meeting was adjourned at 11:15 a.m. on a motion by Tull, seconded by Grammas, and approved upon a unanimous voice vote. Respectfully submitted, Q* Bob Greiner, Secretary Minutes approved by the Board of Trustees at its meeting on October 30, 2018. Minutes prepored by Rich Scipione, Pension Clerk to the Fund 5