MINUTES OF SPECIAL MEETING



MINUTES OF QUARTERLY MEETING

City of Saginaw Police & Fire Pension Board

February 1, 2012 City Hall, Council Chambers, 3:30 p.m.

Present: Others Attending:

William McCarthy, Fire Representative Dennis Jordan, Director of Emp. Services

Robert Ruth, Police Representative Jaye Blakely, Citizens Bank

Ronald Reimers, Citizen Rep.resentative Matt Weisenauer, Citizens Bank

Darnell Earley, City Manager Joe Karpinski, Yanni Partners

Gregory Branch, Mayor (arriving 4 p.m.) Mike Strader, MERS

James Vondette, Police Alternate Colleen Kuehnel, MERS

Beth Carson Church, Secretary

Gregory Simmons, Fire Alternate

Tim Morales, Deputy City Manager/CFO

André Borrello, City Attorney

1. The Board reviewed minutes of the December 7th Monthly Meeting. Bill McCarthy made a motion to approve the minutes. Ron Reimers seconded it; all were in favor.

2. Financial Report:

- Tim Morales reported a loss of $1.3M as of December 31st. However $6M was gained during January for total assets of $117.1M as of January 31, 2012.

- Tim updated the board on the status of the monthly transfers to pooled cash. He will work with Yanni Partners to determine the appropriate source of funding. The current source of funding is AEW; however the fund is currently overweighted with C. S. McKee.

3. The board reviewed the Non-Duty Disability pension request of Firefighter Andrew DeLair. Bill McCarthy made a motion to approve his pension. Ron Reimers seconded it and all were in favor. Bill will notify Andrew his pension is effective February 2, 2012.

4. Secretary’s Report:

- Rita Bocade, widow of Fire retiree James Bocade, passed away January 8, 2012 at age 83.

- Dennis Jordan updated the board on the status of the Educational Incentive. This could affect both defined benefit and defined contribution employees, thus imposing a greater financial impact on the budget. The issue is pending a legal opinion from Labor Attorney John Clark.

- Arrangements will be made for those members wishing to attend the upcoming NCPERS conference. There should be no issues with attendance or reimbursements due to the ongoing MERS analysis.

- The board approved scheduling Firefighter Brian LaTarte for an independent medical examination in response to his request for a duty disability pension

- Independent Medical Exams for Police Officers Jason Ball and Laura Carr are scheduled for January 27, 2012.

5. Legal Update: There was no legal report. However the board discussed several issues needing resolution:

- Retired police officer Dennis Browning is currently Mayor Pro Tem. Is it appropriate for him to serve as a voting board member in the absence of the Mayor? A legal opinion will be presented at the March meeting.

- What is an appropriate level of participation for Alternate Representatives in board discussions? Attorney Borrello stated there is no definitive answer and that it is up to the board to determine the appropriate level of participation. Bob Ruth felt it beneficial for them to share their knowledge and experience, as some are long-serving members. Mayor Branch stated while he understood the knowledge factor, their role should be defined. He suggested a sub-committee to draft guidelines and find middle ground. Bob Ruth stated the topic would be revisited after a legal opinion was received.

- Does the current pension ordinance allow for outsourcing the pension system to a third party provider? Attorney Borrello stated the ordinance doesn’t provide or prohibit it. It requires that there be a system and that administration of the system is currently vested with this board. The ordinance would have to be changed by City Council in order to move forward as such. There should also be an examination of police and fire collective bargaining agreements. Bill McCarthy stated there were a lot of legal issues blowing in the wind. He made a motion to retain Michael VanOverbeke as legal council to get the board through these legal issues. Ron Reimers seconded it. Bob Ruth stated there have been recent delays in getting legal opinions and this is an important move. The Board should get the best legal opinion while conserving costs. City Manager Earley stated there would be no decisions made today. We still need to evaluate potential benefits to retirees, employees and the city. Bob Ruth stated the board has a fiduciary responsibility to the system to do the right thing. Attorney Borrello stated Michael VanOverbeke is already involved. A vote was taken on the motion and was not unanimous. A roll call vote indicated Ron Reimers, Bill McCarthy and Bob Ruth were in favor of the motion. Darnell Earley and Greg Branch were opposed. The motion passed 3 to 2.

6. The board heard a presentation from representatives of the Municipal Employees’ Retirement System (MERS). It was a broad presentation of what they could offer. MERS became independent from the State of Michigan in 1997. They service approximately 800 municipalities and have current investments of $6B. They currently service the City’s non-police and fire employees and handle the City’s defined contribution plan. MERS would accommodate all current plan designs and work with the City to incorporate all parameters, as current benefits are part of the union contracts. One change to retirees would be monthly rather than bi-weekly pay dates. There would be a minimum 6-month transition period if approved. More information would follow upon submission of active employee and retiree census data. Additional meetings will be held to allow ample time to address any specific questions the board may have.

7. Citizens Bank presented their annual report. The international component of our funds has been very volatile. Overall international equity fund performance has been 1.86% versus the EAFE Index of (0.95%) since October of 2009. Our portfolio allocation was $29.5M as of January 30th.

Jaye Blakely asked the board to consider Citizens Bank in any future changes in plan administration, i.e. handling any payments of fees or distribution of pension checks, etc. as an additional cost-savings measure. Greg Simmons asked her to copy the Board on any information relative to that. Jaye felt a 60-day transition period would be needed.

8. Joe Karpinski, Yanni Partners, presented their quarterly report to the board. Over the past year, there has been a negative $9M in market value. International equities outperformed its benchmark by 2% however ICC recorded the worst relative performance for the quarter due to their recent stock picks, under performing its benchmark by 5.4%. This was compared to their Three Year performance of 16.7%. C.S. McKee is 3% over their target allocation. Joe also provided the board with information on the Top Ten Manager Evaluations. He applauded the board for taking a hard look at outsourcing. His free advice to the board was to bring in an independent consultant to take one final look before we act on any change.

9. Public Comments. Fire Retiree Earl Burton asked the Board what the annual cost is to administer the plan. We will get this information to him.

10. Other Business: §16.12C of the pension ordinance references if a retiree leaves before achieving their required service age, they must take a reduction in their pension per the accompanying chart. Officer Oscar Lopez asked if this was still in effect. This issue will be clarified for the next meeting.

Bill McCarthy made a motion to adjourn. Darnell Earley seconded it and all were in favor. The meeting was adjourned at 5:58 p.m.

Respectfully submitted by,

Beth Carson Church

Secretary

Police & Fire Pension Board

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