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HomeMy WebLinkAbout1991 Employee's Retirement System Board MinutesOFFICIAL PROCEEDINGS OF THE BOARD OF TRUSTEES CITY OF LANSING EMPLOYEES RETIREMENT SYSTEM Regular Meeting for January January 17,,,19@9- 8th Floor Conference Room Thursday, 8:25� .W- City Hall -r Lansing, Michigan co t- The Board of Trustees met in regular session and was called o order by Chairperson, Ruby White, at 8:25 A.M. :3�,' Present: Trustee Benavides, Jackson, McKane, Moye Perdue, t and White - 7 co -a Absent: Trustee Goodin - 1 Present: Jan Lazar, Acting Secretary; Lesley Ann Seldenright and Doug Rubley, Finance Dept.; Melvin McWilliams, Chief Assist. City Attorney; and Ed Piloske, Internal Audit Dept. It was moved by Trustee Perdue, supported by Trustee Moye that the minutes of the regular meeting for December 13, 1990, be approved. Adopted by the following vote: Unanimously. The Secretary reported 4 new members, 0 reinstatements, 0 refunds and 5 retired. Total Membership: 980. Refunds made since the last regular meeting $.00. Retirement allowances paid for the month of December 1990 amounted to $253,613.82 total number of retirement checks printed ERS 448, total retirement checks printed for all three systems 831. Trustee Jackson arrived at 8:26 A.M. It was moved by Trustee Perdue, supported by Trustee Benavides that the application for Regular Age & Service Retirement. for: Patricia Jacobs, Assessor's Office, 20 years 4 months service credit, effective 1/5/91. Irvin Watson, Parks Dept., 40 years 10 months service credit, effective 2/2/91. be approved, and that the Secretary make the necessary transfer of funds. Adopted by the following roll call vote: Yeas: Benavides, Jackson, Moye, Perdue, Pontz and White - 6 Nays: None 1 Employees Retirement System January 17, 1991 Discussion was held concerning the request for Duty Disability Retirement for Mary Morris, 911 Center, 7 years 1 month service credit. The Board was advised that Ms. Morris has carpal tunnel syndrome and has undergone surgery on both hands. This item is still pending awaiting the results from the Personnel Department and Dr. Chambers, Medical Director. Trustee McKane arrived at 8:43 A.M. Discussion was held concerning the medical report for Robert Ball, Public Service Dept., 22 years 10 months service credit. Dr. Chambers, Medical Director, stated in her report that Mr. Ball's condition is permanent and that he is totally and permanently disabled and incapacitated for work with the City of Lansing. Trustee White wished to relay to the Board that as Retirement Technician she had spoken to Mr. Ball and he had indicated to her that he was not positive that he wanted to be placed on disability retirement and inquired as to his longevity, estimate, etc. and would he be making as much on disability as he is on worker's comp including his sick leave, vacation, etc. Ms. Jackson, Personnel Director, also advised that the City made all types of effort to help Mr. Ball be placed in -a job. It was moved by Trustee Benavides, supported by Trustee Jackson that in accordance with the medical report, Mr. Robert Ball, Public Service Department, be placed on Duty Disability Retirement as of January 18, 1991. Adopted by the following roll call vote: Yeas: Benavides, Jackson, McKane, Moye, Perdue, Pontz and White - 7 Nays: None Discussion was held concerning the request for a Deferred Retirement for Kathy Prange, Finance/Purchasing Department. Ms. Prange is 31 years of age and has 8 years, 4 months of service credit. Trustee White informed the Board that she had personally advised Ms. Prange that, if she desired, she could attend the meetings for the Alternative Retirement Plan to consider whether to transfer. It was moved by Trustee Benavides, supported by Trustee Perdue that the request by Kathy Prange, Finance/Purchasing Dept., for a Deferred Retirement be received and placed on file. Adopted by the following vote: Unanimously. 0 Employees Retirement System January 17, 1991 Melvin McWilliams, Chief Assist. City Attorney, gave an update on the Reciprocal Retirement Act, House Bill No. 5241 highlighting such items as: 1) that the member enters the employ of each succeeding governmental unit within 15 years after the date of leaving the employee of each preceding governmental unit; 2) if the member has withdrawn the accumulated deposits that the re -deposit be made within 5 years after the date the member becomes employed by the succeeding governmental unit; 3) that service credits can be transferred from one unit of government to another unit of government only by entering into an agreement with the reciprocal unit of government., etc. Jan Lazar asked Melvin McWilliams must an employee have 5 years of service with the City of Lansing, as a succeeding reciprocal governmental unit, in order to draw a pension from the City of Lansing? Melvin indicated according to Act 88, yes they do. Jan Lazar also inquired from Melvin McWilliams that if service credit can be transferred from one reciprocal unit to another reciprocal unit of government which unit would write the pension check, due to the problem of a different formula from each unit. Melvin stated. he felt there would need to be an across the Board policy on this item. The Board was advised that Mr. Duarte, Secretary, and Melvin McWilliams will discuss these items on the Reciprocal Retirement Act. Ms. Lazar asked Mr. McWilliams would it be possible for him to prepare a summary sheet of the general guidelines for information to the Board members on the Reciprocal Retirement Act. Melvin responded that he would be able to provide such a summary. Melvin McWilliams, Assist. City Attorney, apprised the Board that he had reviewed Mr. Russ Galvin`s letter which requests retirement benefits from the General Employees Retirement System based upon his interpretation of the Reciprocal Retirement Act and that the Board needs to provide Mr. Galvin with a yes or no answer. Discussion was held by the Board. It was moved by Trustee Moye, supported by Trustee Pontz that Mr. Russ Galvin be denied as ineligible for a pension from the City of Lansing Employees Retirement System based upon the state law, Reciprocal Retirement Act (Public Act 88). Adopted by the following roll call vote: Yeas: Benavides, Jackson, McKane, Moye, Perdue, and Pontz - 6 Nays: None (Trustee White abstained from voting.) 3 Employees Retirement System January 17, 1991 It was moved by Trustee Benavides, supported by Trustee McKane that the Board excuse Trustee Goodin from the Board meeting. Adopted by the following vote: Unanimously. Trustee McKane and Trusteee Moye left the Board meeting at 9:30 A.M. Mr. Doug Rubley distributed to the Board copies of the portfolio summary from the National Bank of Detroit for funds evaluation as of January 17, 1991, and presented an overview of the transactions by the outside money managers. Doug Rubley informed the Board that 1) the City has been keeping a large amount of funds on hand, 2 ) that the City has selected 3 firms to be interviewed by the Board for the hiring of an Index Fund Consultant and that this will take place at a Joint Board meeting in February immediately following a Regular Board meeting and that verification of these arrangements will be mailed next week to the Board, and 3) the procedures have been sent to the Attorneys Office for review. Mr. Rubley also reported there had been a downturn of 5 o in the equity market, however, that may now change due to the war situation. In Addition, Doug stated that he had contacted Mr. Hal Rossen, Prudential Bache, as to what had transpired at the meeting with M.D. Sass, money managers, in relationship to the downgrading of bonds (G.I.CIs) held by First Executive -Parent Company, and that Mr. Rossen had not yet returned that information to him. Mr. Rubley discussed with the Board the current consulting relationship and a need to potentially look at hiring a consultant that is knowledgeable both in the area of defined benefit and defined contribution retirement plans. The Meeting Adjourned at 9:54 A.M. Step'en W. Duarte, Secretary Employees Retirement System 4 a L L: OFFICIAL PROCEEDINGS OF THE BOARD OFB1PU.S.T_EE.S-._ CITY OF LANSING E14PLOYEES RETIREMENT SYSTEM ���N 5 All y UZ Regular Meeting for February February 21, 1991 8th Floor Conference Room Thursday, 8:34 A.M. City Hall Lansing, Michigan The Board of Trustees met in regular session and was called to order by Chairperson, Ruby White, at 8:34 A.M. Present: Trustee Goodin, Jackson, McKane, Moye, Pontz and White - 6 Absent: Trustee Benavides`'and Perdue - 2 Present: Jan Lazar, Deputy Finance Director; Lesley Ann Seldenright and Doug Rubley, Finance Dept.; and Ed Piloske, Internal Audit Dept. It was moved by Trustee McKane, supported Trustee Pontz that the minutes of the regular meeting for January 17, 1991, be approved. Adopted by the following vote: Unanimously. The Secretary reported 1 new member, 0 reinstatements, 3 refunds, 4 transfers and 6 retired. Total Membership: 968. Refunds made since the last regular meeting $3,442.46. Transfer to Defined Contribution Retirement Plan $7,050.47. Retirement allowances paid for the month of January, 1991 amounted to $261,684.24 total number of retirement checks printed ERS 453, total retirement checks printed for all three systems 837. Trustee Jackson arrived at 8:37 A.M. Discussion was held concerning the transfer to the Alternative Retirement Plan and Mrs. Lazar stated that the move to transfer the present value of a City employee had to be personally signed by the employee and was irrevocable. Trustee Moye requested that the total contribution including the City's share be recorded. Trustee White advised that would be recorded in the minutes. The total transfer to the Defined Contribution Plan is as follows: Name Member City Susan Brownlee $ 3,654.25 $ 17,247.75 Jerry Chittenden 1,358.21 1,845.79 Ernest Horace 1,357.72 694.28 Joyce Matheny 680.29 1,182.71 Total Transfer $ 7,050.47 $ 20,970.53 1 Employees Retirement System February 21, 1991 It was moved by Trustee Pontz, supported by Trustee Jackson that the application for Regular Age & Service Retirement for Julius Scott, Parks Department, 25 years 4 months service credit, retirement effective March 1, 1991, be approved, and that the Secretary make the necessary transfer of funds. Adopted by the following roll call vote: Yeas: Goodin, Jackson, McKane, Moye, Pontz & White - 6 Nays: None Ms. Lazar read to the Board the letter from Dr. Chambers, Medical Director, concerning Mary Morris, 911 Center, request for a Duty Disability Retirement. the Specialist (Leslie Wong, M.D.) indicated that there is no objective evidence of pathological findings that would disable her and that Ms. Morris can return to her job as a 911 Technician Operator in the Lansing Police Dept. Discussion was held. It was moved by Trustee Pontz, supported by Trustee Moye that a letter be written to Ms. Mary Morris informing her that the Board has denied her request for a Duty Disability retirement based upon the medical report which advises that she may return to work. Adopted by the following vote: Unanimously. Ms. Lazar advised the Board that a request for a Duty Disability Retirement had been received for Sonia P. Green, 911 Center, and Ms. Ruby White, Retirement Technician, informed the Board that she has sent a letter to Dr. Chambers requesting an appointment for Ms. Green and is awaiting a response from Dr. Chambers. It was moved by Trustee McKane, supported by Trustee Goodin that the Board approve the referral of Ms. Sonia Green to Dr. Chambers, Medical Director. Adopted by the following vote: Unanimously. Trustee Pontz shared with the Board that she had spoken to Gary Findlay from Gabriel, Roeder, Smith & Company, concerning Reciprocal Retirement Agreement, Public Act 88, Douse Bill 52.41, Act 274 re: transferring service credits from one unit of government to another unit of government only by entering into an agreement with the reciprocal unit of government. He advised that the State of Michigan might want to go on record stating that they have a policy on the transferring of funds. Trustee Pontz advised that perhaps the City of Lansing Retirement Boards might also want to go on record stating that they are not adopting a policy for implementing the transferring of funds from one unit of government to another. PA Employees Retirement System February 21, 1991 Discussion was held concerning single parents and selection of Option A. The Chairperson read information from the ordinance Sec. 26-29 and Sec. 26-30 clarifying this item. Trustee Moye asked if Mr. Duarte, Secretary, had advised Mr. Russ Galvin concerning the action taken by the Board at the last meeting denying him as ineligible for a pension based on state law and Trustee White advised Mr. Duarte had sent him a letter. It was moved by Trustee Jackson, supported by Trustee Moye that the Board excuse Trustee Perdue and Benavides from the Board meeting. Adopted by the following vote: Unanimously. Mr. Doug Rubley distributecr to the Board copies of the portfolio summary from the National Bank of Detroit for funds evaluation as of February 21, 1991, and presented an overview of the transactions by the outside money managers. Mr. Rubley informed the Board that the City had transferred assets funds in the amount of $28,021.00 to the Alternative Retirement Plan and will have more to move in the next couple of months since the expired time for transferring the Exempt employees is March 31, and April 30 for the Teamsters employees. Mr. Rubley advised that overall the equity market was up. He also spoke to Mr. Hal Rossen, Prudential-Bache, who advised that basically there had been no change in the situation with M. D. Sass, money managers in relationship to the downgrading of bonds (G.I.C.'s) held by First Executive. However, there have been no defaults and interest is being paid. Mr. Rubley informed the Board that there will be two Joint Board meetings in March immediately following the regular meetings. Mr. Hal Rossen will give his performance evaluation on Tuesday, March 19 in the Finance Dept. Conference room and on Thursday, March 21 a breakfast meeting will be held at Jim's Tiffany to interview three firms that run an index fund. The Meeting Adjourned at 9:25 A.M. `b u,� Stephen W. Duarte, Secretary Employees Retirement System 3 JOINT BOARD MEETING BOARD OF TRUSTEES CITY OF LANSING RETIREMENT SYSTEMS Jim's Tiffany March 19, 1991 Caucus Room Lansing, Michigan The Joint Board of Trustees meeting was called to order by Chairperson, Jack Cushman, at 10:47 A.M. Present: Board Members: Benavides, Barkyoumb, Cushman, Goodin, Jackson, Kus, Luzynski, Moye, and White - 9 Absent: Board Members: McKane and Pontz - 2 Present: Others: Stephen W. Duarte, Secretary; Doug Rubley & Lesley Seldenright, Finance Dept.; Ed Piloske, Internal Audit; Melvin McWilliams, Assist. City Attorney; Hal Rossen & Jo Ann Shanley, Prudential-Bache Mr. Rossen and Jo Ann Shanley gave a presentation on performance measurement services for the quarter ending December 31, 1990 and distributed to the Board for their review articles entitled: "90 market scoreboard", "Money & Investing", and "Investment Consultant's Review". In addition, Prudential-Bache prepared special informational sheets on: "Flash Performance Summary", "Effect of Adding a Growth Manager to Present Equity Structure", "Style Analysis Median Equity Returns Cumulative Periods", and "Effect of a Substitute Fixed Income Manager". Mr. Rossen indicated that we may want to consider our current contract with M.D. Sass and possibly look for a new money manager. Mr. Duarte asked Mr. Rossen to prepare, in writing, what he feels the impact would be concerning the bad decision made by M.D. Sass, money managers, in relationship to the downgrading of bonds (G.I.C;s) held by First Executive. The Joint Boards Adjourned at 11:36 A.M. E) UOL � Stephen W. Duarte, Secretary Retirement Boards -Joint Meeting OFFFICIAL PROCEEDINGS OF THE BOARD OF TRUSTEES CITY OF LANSING EMPLOYEES RETIREMENT SYSTEM Regular Meeting for March Jim's Tiffany Caucus Room Lansing, Michigan March 21, 1991 Thursday, 8:25 A.M. The Board of Trustees met in regular session and was called to order by Chairperson, Ruby White, at 8:25 A.M. Present: Trustee Goodin, Jackson, McKane, Moye, Perdue, Pontz and White - 7 Absent: Trustee Benavides - 1 Present: Jan Lazar, Deputy Finance Director; Lesley Ann Seldenright and Doug Rubley, Finance Dept.; Melvin McWilliams, Chief Assist. City Attorney; and Ed Piloske, Internal Audit It was moved by Trustee McKane, supported by Trustee Goodin that the minutes of the regular meeting for February 21, 1991, be approved. Adopted by the following vote: Unanimously. The Secretary reported 1 new member, 0 reinstatements, 0 refunds, 32 transfers and 3 retired. Total Membership: 934. Refunds made since the last regular meeting $.00. Transfer to Defined Contribution Retirement Plan $131,274.84. Retirement allowances paid for the month of February, 1991 amounted to $266,549.68 total number of retirement checks printed ERS 455, total retirement checks printed for all three systems 839. It was moved by Trustee McKane, supported by Trustee Perdue that the application for Regular Age & Service Retirement for: Edison Sedgeman, Public Service Department, 21 years 8 months service credit, age 61, UAW Member, effective March 4, 1991 Irvin R. Clark, Public Service Department, 24 years 0 months service credit, age 58, Teamster Sup. Member, effective March 8, 1991. Jerald R. Sumerix, Public Service Department, 37 years 7 months sere} e:, bg it , aged 5 5,Ls` Teamster Sup. Member, effective April 2, 19 �l Employees Retirement System March 21, 1991 JLeon Maffett, Jr. , Parks Department, 30 years 7 months service credit, age 64, effective April 1, 1991. Roger Massman, Parks Department, transfer from Deferred to Age & Service Retirement, 12 years 2 months service credit, age 601 F.O.P. Park Police, effective April 1, 1991. be approved, and that the Secretary make the necessary transfer of funds. Adopted by the following roll call vote: Yeas: Goodin, McKane, Moye, Perdue, Pontz & White - 6 Nays: None Abstained: Jackson (had just arrived at 8:39) Ms. Lazar informed the Board concerning re: request for Duty Disability Retirement for Sonia P. Green, 911 Center, 4 years 4 months service credit, that Ms. Green was referred to Dr. Chambers on 3/22/91. Discussion was held re: letter from Stephen W. Duarte, adoption of policy not to transfer funds and service credits from one unit to another as provided by the amendment of the reciprocal retirement agreement, Public Act 88. It was moved by Trustee Moye, supported by Trustee Pontz that the Board adopt a policy indicating that we will not participate in the service credit transfer program. Adopted by the following roll call vote: Yeas: Goodin, Jackson, McKane, Moye, Perdue, Pontz & White - 7 Nays: None The Board was informed that Joan Clark, former City Council employee, had written a letter requesting a refund of her contributions. The Board was also advised that she was on deferred status and since she was not active would be unable to transfer to the Alternative Retirement System. Her letter was received and placed on file. Information was distributed to the Board concerning the upcoming MAPERS Spring Conference to be held May 19, thru May 21, 1991 at Shanty Creek Resort in Bellaire, Mich. Mr. Duarte approved reserving of 4 rooms and if any Trustees desired to attend they were to inform Ms. Seldenright as soon as possible. Trustee Moye inquired if it was possible to transfer or donate service credits to a spouse. Ms. Lazar advised actuarially that this was unable to be done. 2 Employees Retirement System March 21, 1991 It was moved by Trustee Goodin, supported by Trustee Moye that the Board excuse Trustee Benavides from the Board meeting. Adopted by the following vote: Unanimously. Doug Rubley distributed to the Board copies of the portfolio summary from the National Bank of Detroit for funds evaluation as of February 28, 1991, and presented an overview of the transactions by the outside money managers. Mr. Rubley informed the Board that the City had transferred asset funds in the amount of $582,971.00 to the Alternative Retirement Plan (please see attached sheet) and that there were 39 people that had transferred as of March 1, 1991. Trustee Barkyoumb arrived for the next meeting at 8:55 A.M. Trustee Cushman arrived for the next meeting at 8:57 A.M. Mr. Rubley apprised the Board that the market was strong and that both the bonds and equities were up in the month of February. Also, that the bonds for M. D. Sass now ranged in the 33% area, however, it is possible that they may go as high as the 40% to 50% area. Trustee Luzynski arrived for the next meeting at 9:03 A.M. and Trustee Kus at 9:04 A.M. Mr. Rubley also advised that the equity portfolio will transfer approximately 5 to 6 million dollars from both system to the S & P 500 fund. The Meeting Adjourned at 9:21 A.M. W Stephen W. Duarte, Secretary Employees Retirement System 3 JOINT BOARD MEETING BOARD OF TRUSTEES CITY OF LANSING RETIREMENT SYSTEMS Jim's Tiffany Place Caucus Room, 2nd Floor Lansing, Mich. March 21, 1991 Thursday, 9:43 A.M. Chairperson Cushman called the Joint Board meeting to order at 9:43 A.M. Present: Board Members: Barkyoumb, Cushman, Goodin, Jackson, Kus, Luzynski, Moye, Pontz and White - 9 Absent: Board Members: Benavides & McKane - 2 Present: Others: Jan Lazar, Deputy Finance Director; Doug Rubley & Lesley A. Seldenright, Finance Dept.; Ed Piloske, Internal Audit; Jeffrey Kern, Rick Newman, Dan Woodruff & Rita Daboul, NBD Bank; Kevin Seal, Bruce George & Tom Hurley; Manufacturers National Bank of Detroit; and Frank Speno & Steve Manus, ANB Investment Management and Trust Company. Mr. Doug Rubley distributed to the Board a sheet that would aid the trustees in evaluating and reviewing the presentations given by the three firms that handle index funding, and suggested that they should feel free to ask questions. Brochures were distributed by the National Bank of Detroit and in their presentation they provided information on their corporate profile, objective, methodology, characteristics & performance. Trustee Pontz left the meeting at 10:29 A.M. Manufacturers National Bank of Detroit also distributed copies of their brochure and covered such items on index funding as reliable market performance, diversification, cost effective, market exposure, transaction costs, commission expenses, client list, etc. ANB Investment Management & Trust Company handed out their booklet to the Board Trustees as an outline to follow. During their presentation they gave an overview of such items as S & P Fund Operation, performer TTAOR srn"i-M, client list, free -in savings estimate, etc. 1 Joint Board Meeting March 21, 1991 Mr. Rubley advised the Board they should not just consider the firm that has the lowest fee but also look at their net performance. In addition, Mr. Rubley will prepare 2 charts to assist the boards in making a decision. one chart will be prepared for the purpose of comparing the 3 managers net of transaction costs and the other chart will be for the purpose of comparing these three firms to the present active managers. Pending the preliminary information and final information from the charts it was the joint boards general concenus that ANB Investment Management & Trust Company was the most qualfied. The Joint Boards Adjourned at 12:23 A.M. Stephen W. Duarte, Secretary Retirement Boards -Joint Meeting 2 "AMENDED MINUTES" OFFICIAL PROCEEDINGS OF THE BOARD OF TRUSTEES CITY OF LANSING EMPLOYEES RETIREMENT SYSTEM Regular Meeting for April 8th Floor, Conference Room City Hall Lansing, Michigan April 18, 1991 Thursday 8:36 A.M. The Board of Trustees met in regular session and was called to order by the Chairperson, Ruby White, at 8:36 A.M. Present: Trustee Goodin, Jackson, McKane, Moye, Pontz & White - 6 Absent: Trustee Benavides and Perdue - 2 Present: Jan Lazar, Deputy Finance Director; Lesley Ann Seldenright and Doug Rubley, Finance Dept.; Melvin McWilliams, Chief Assist. City Attorney; and Ed Piloske, Internal Audit. It was moved by Trustee McKane, supported by Trustee Pontz that the minutes of the regular meeting for March 21, 1991 and the joint board meetings for March 19, 1991 and March 21, 1991, be approved. Adopted by the following vote: Unanimously. The Secretary reported 0 new members, 0 reinstatements, 2 refunds, 0 transfers and 3 retired. Total Membership: 929.• Refunds made since the last regular meeting $2,483.38. Total transfer to Defined Contribution Retirement Plan in 1991 is $1,035,623.00. Retirement allowances paid for the month of March, 1991 amounted to $270,102.68 total number of retirement checks printed ERS 457, total retirement checks printed for all three systems 841. Ms. Lazar distributed to the Board copies of the medical report on Sonia P. Green, 911 Center, and discussion was held. Trustee Karen Jackson related a few points to the Board 1) no therapy had been recommended early on, 2) Sonia can not do essential functions of her job, 3) the City is not required to send her to college, 4) a rehab report is requested by Ms. Jackson, etc. The Board was advised that Sonia will receive 2.0o formula (500 of pay plus workers comp which will give her approximately 1000 of her pay.) It was moved by Trustee Moye, supported by Trustee Jackson that the Board concur with Dr. Chambers, D.O., Medical Director, and place Sonia P. Green, 911 Center, on a Duty Disability Retirement and waive the 10 year requirement. In addition, there will be a medical review in one year. Adopted by the followin roll call vote: Yeas: Goodin, Jacksk, CmdAnd,,T W, 6[&Pontz & White - 6 Nays: None l� C Employees Retirement System April 18, 1991 A letter was received from Joan Clark, Deferred, re: withdrawing her request for a refund of her accumulated contributions. It was moved by Trustee McKane, supported by Trustee Pontz that the Board receive the letter from Joan Clark and place it on file. Adopted by the following vote: Unanimously. Discussion was held on selection of the index fund manager. Mr. Rubley distributed to the Board 2 charts re: 1) future value calculations for fees based on 6 and 15 million for National Bank of Detroit, Manufacturers Bank of Detroit and ANB and the other chart was for comparing the current Equity Returns. Ms. Lazar advised that the Police & Fire Board had chosen ANB Investment Management & Trust Company for their index fund manager stating that they had the best performance, best competitive fees, and had been in business for 18 years with an established fund of 14.1 billion dollars. It was moved by Trustee Moye, supported by Trustee Jackson that the Board approve ANB Investment Management & Trust Company as the index fund manager and decide at a later date the amount of money to be placed in this index fund. Adopted by the following roll call vote: Yeas: Goodin, Jackson, McKane, Moye, Pontz & White - 6 Nays: None Trustee Pontz advised the Board concerning the amendment to Act 88 stating that previously an employee had to have 30 months in the preceding unit of government for vesting and 5 years in the succeeding unit; and that has now been lowered to 30 months in the succeeding unit. Ms. Lazar stated that she would like a copy of the new Act 88 amendment. Trustee Moye inquired where the City stands on the prefunding of health care and Ms. Lazar advised that a draft was in the proceedings for modification to the ordinance on the language. Also Ms. Lazar advised that there will be a report at the next Board meeting on the individuals who have moved to the Alternative Retirement System. It was moved by Trustee Moye, supported by Trustee Goodin that the Board excuse Trustee Benavides and Perdue from the meeting. Adopted by the following vote: Unanimously. Trustee Jackson left the meeting at 9:47 A.M. and returned at 9:51 A.M. 0 Employees Retirement System April 18, 1991 Mr. Doug Rubley apprised the Board that he will need $250,000 of assets transferred in the month of May to meet costs, and will pull funds from M.D. Sass. Mr. Rubley distributed to the Board copies of the portfolio summary from the National Bank of Detroit for funds evaluation as of April 18, 1991, and presented an overview of the transactions by the outside money managers. Also, Doug added that attached to the report in the back was a letter he had written to Hugh Lamle, M.D. Sass, an article titled "First Executive Deficit Totaled 465.9 million dollars" and a memo from M.D. Sass to clients re: taxable municipal -Executive Life conservatorship. In addition, Mr. Rubley advised that M. D. Sass will make a presentation during the month of June. Trustee McKane and Jackson left the meeting at 9:59 A.M. and the meeting was adjourned due to a lack of a quorum. Mr. Rubley finished his report on investments and stated that he is sending out RFPQ's for a performance evaluation manager before mid -May. In addition, Mr. Rubley informed the Board we are now paying Mr. Hal Rossen, Prudential-Bache, in soft dollars and that the City may switch to hard dollars. The Meeting adjourned at 9:59 A.M. Stephen W. Duarte, Secretary Employees Retirement System 3 OFFICIAL PROCEEDINGS OF THE BOARD OF TRUSTEES CITY OF LANSING EMPLOYEES RETIREMENT SYSTEM Regular Meeting for May 8th Floor, Conference Room City Hall Lansing, Michigan May 16, 1991 Thursday, 8:38 A.M. The Board of Trustees met in regular session and was called to order by the Chairperson, Ruby White, at 8:38 A.M. Present: Trustee Benavides, Goodin, Jackson, McKane, Moye, Perdue, Pontz and White - 8 Absent: None Present: Stephen W. Duarte, Secretary; Lesley Ann Seldenright and Doug Rubley, Finance Dept.; Melvin McWilliams, Chief Assist. City Attorney; and Ed Piloske, Internal Audit. It was moved by Trustee Pontz, supported by Trustee Jackson that the minutes be approved, as amended, clarifying that there will be a medical review in one year for Sonia P. Green. Adopted by the following vote: Unanimously. The Secretary reported 2 new members, 0 reinstatements, 2 refunds, 0 transfers and 3 retired. Total Membership: 926. Refunds made since the last regular meeting $6,352.41. The final amount transferred to the Defined Contribution Retirement Plan will be reported at the next meeting. Retirement allowances paid for the month of April, 1991 amounted to $273,931.87 total number of retirement checks printed ERS 460, total retirement checks printed for all three systems 848. Trustee McKane arrived at 8:40 A.M. It was moved by Trustee Moye, supported by Trustee McKane that the application for Regular Age & Service Retirement for Mudite Upatnieks, Finance/Accounting Dept., 11 years 6 months service credit, retirement effective June 1, 1991, be approved, and that the Secretary make the necessary transfer of funds. Adopted by the following roll call vote: Yeas: Benavides, Goodin, Jackson, McKane, Moye, Perdue, Pontz and White - 8 Nays: None gE g WY OC HU jS, It was moved by Truste A4ey-e;---supporteikby Trustee McKane that the Employees Retirement System May 16, 1991 application for Regular Age & Service Retirement for James H. Garrison, Public Service Dept., 12 years 11 months service credit, retirement effective June 1, 1991, be approved, and that the Secretary make the necessary transfer of funds. Adopted by the following roll call vote: Yeas: Benavides, Goodin, Jackson, McKane, Moye, Perdue, Pontz and White - 8 Nays: None Mr. Duarte advised the Board that it was time to mail out the "Certification of Annual Earnings" forms for the 1990 calendar year to the duty disability retirees. It was moved by Trustee McKane, supported by Trustee Perdue that the Board approve the Secretary to mail to the duty disability retirees the "Certification of Annual Earnings" form for calendar year 1990. Adopted by the following vote: Unanimously. Mr. Duarte, Secretary, informed the Board that once a year duty disability retirees were to come up for a possible medical review. He recommended that the Board not send the 4 duty disability retirees for a medical exam, since they have already been reviewed. It was moved by Trustee Benavides, supported by Trustee McKane that the Board not send the duty disability retirees back to the Medical Director for a medical review. Adopted by the following vote: Unanimously. Trustee Moye inquired about worker's comp in connection with coordination of other benefits and Mr. McWilliams, Chief Assist. City Attorney, advised that this is based on language in the ordinance. It was moved by Trustee Moye, supported by Trustee Jackson that the Board request Melvin McWilliams, Chief Assist. City Attorney, to research information concerning worker's compensation in connection with coordination of other benefits. Adopted by the following vote: Unanimously Mr. Doug Rubley informed the Board that $709,000 has been transferred to the Alternative Retirement Plan during the month of May and that 8 additional individual will be moved to the Alternative Retirement Plan. $154,000 is the estimated amount for these 8 people. In addition, Mr. Rubley indicated that he will need a total of $475,000 from M.D. Sass to meet costs which is up from the original request of approximately $250,000 for the month of May. 2 Employees Retirement System May 16, 1991 Mr. Rubley also informed the Board that there will be a joint board meeting held on June 6, 1991, at 9:00 A.M. for the purpose of having M. D. Sass give a presentation to explain the situation on how the (G.I.C's), bonds held by First Executive, are affecting M.D. Sass's performance, and to invite Mr. Hal Rossen of Prudential-Bache to provide his performance evaluation. The Meeting Adjourned at 8:59 A.M. Stephen W. Employees 3 Duarte, Secretary Retirement System JOINT BOARD MEET;VG BOARD OF TRUSTE4 JUL Z Rn 8 27 CITY OF LANSING RETIREMENT SYSTEMS 8th Floor Conference Room June 6, 1991 City Hall Thursday 9:10 A.M. Lansing, Michigan The Joint Board meeting was called to order at 9:10 A.M. Present: Barkyoumb, Braun, Cushman, Goodin, Jackson, Kus, Luzynski, Moye, Perdue, Pontz and White - 11 Absent: Benavides and McKane - 2 Present: Others: Stephen W. Duarte, Secretary; Doug Rubley, Jan Lazar & Lesley Ann Seldenright, Finance Dept.; Ed Piloske, Internal Audit; Hal Rossen, Prudential-Bache; Hugh Lamle, M.D. Sass; and Ed Belles, Roney & Company Mr. Hugh Lamle provided an investment portfolio total fund performance report touching upon such items as: .portfolio diversification, current coupon treasury notes & bonds, interest rates, capital gains, fixed income government bonds, etc. Mr. Lamle advised the Board on the status of M.D. Sass in the area of the G.I.C.'s, issued by First Executive, stating that their portfolio contained a large proportion of junk bonds that went down in value. This led to a downgrade of the G.I.C's from AAA to A. To protect its clients from financial loss, M.D. Sass decided to hire an attorney, started a bond holder's rights committee, tried to get other firms to join in the process and share the cost, and applied to the court to have legal expenses defrayed; however, at the present time, M. D. Sass is bearing all legal costs. It is M. D. Sass' position that the holders of these G.I.C.'s should be treated the same as any other policyholder. The meeting recessed at 10:44 A.M. and reconvened at 10:51 A.M. Mr. Hal Rossen of Prudential-Bache presented the quarterly investment performance report ending March 31, 1991 and distributed to the Board copies of the Fixed Income Performance Analysis as of December 31, 1990 on M.D. Sass and, also, passed out articles entitled "Growth -Stock Investors Stand Pat Despite Recent Surge for Cyclicals" and " Why Growth Now Mr. Duarte, Secretary, asked Mr. Rossen to inform him who the key 1 Joint Board Meeting June 6, 1991 players for each of the money managers were, how the communication process is working, who is handling this and, in addition, that the managers are to be put on notice that the City wishes to be notified of significant changes. The Meeting Adjourned at 11:57 A.M. Stephen W. Duarte, Secretary Retirement Boards -Joint Meeting r ANN OFFICIAL PROCEEDINGS OF THE BOARD_ OF TRUSTEES CITY (OF LANSING- EMPLOYEES ')1F EMTTHMY:8T19 Regular Meeting for June 8th Floor, Conference Room City Hall Lansing, Michigan June 20, 1991 Thursday 8:35 A.M. The Board of Trustees met in regular session and was called to order by the Chairperson, Ruby White, at 8:35 A.M. Present: Trustee Goodin, Jackson, Moye, Perdue, and White - 5 Absent: Trustee Benavides, McKane and Pontz - 3 Present: Stephen W. Duarte, Secretary; Lesley Ann Seldenright and Doug Rubley, Finance Dept.; and Ed Piloske, Internal Audit It was moved by Trustee Perdue, supported by Trustee Moye that the minutes of May 16, 1991, be approved. Adopted by the following vote: Unanimously The Secretary reported 0 new members, 0 reinstatements, 1 refund, 89 transfers and 0 retired. Total Membership: 836. Refunds made since the last regular meeting $533.07. Total transfer to Defined Contribution (Employee Share) $333,834.96 - 88.80 of APVCPB includes employee share of $1,898,938.00. Retirement allowances paid for the month of May, 1991 amounted to $273,768.60 total number of retirement checks printed ERS 458, total retirement check printed for all three systems 846. Mr. Duarte, Secretary, informed the Board that all 4 duty disability retirees have returned their Earnings Report. Mr. Macklin P. Fleming, John W. Lipka, Robert Goodsell and John Luks, Jr. have all reported -0- earnings. This concludes the 1990 earnings reports. Discussion was held re: list of all the members who transferred to the Alternative Retirement Plan (Money Purchase Plan). Mr. McWilliams, Chief Assist. City Attorney, will advise whether this list is to be made available for public information. It was moved by Trustee Perdue, supported by Trustee Jackson that the Board excuse Trustee Benavides, McKane and Pontz from the meeting. Adopted by the following vote: Unanimously. 1 Employees Retirement System June 20, 1991 Mr. Rubley distributed to the Board copies of the portfolio summary from the National Bank of Detroit for funds evaluation as of June 20, 1991, and presented an overview of the transactions by the outside money managers. Mr. Rubley advised that $475,000 from the fixed income manager, M.D. Sass, was transferred in May, and that $260,000 will be needed in June from the investment bond managers. In addition, Mr. Rubley informed the Board that the (G.I.C's) bonds held by First Executive, through M.D. Sass are valued at 21 cents on the dollar, and during the month of April they were valued at 27 cents on the dollar. Mr. Rubley, also, indicated that the firms involved in this legal case are all working on their own and filing individual law suits. The Meeting Adjourned at 8:50 A.M. Stephen W. Duarte, Secretary Employees Retirement System 2 OFFICIAL PROCEEDINGS OF THE BOARD OF TRUSTEES CITY OF LANSING EMPLOYEES RETIREMENT SYSTEM Regular Meeting for July 8th Floor, Conference Room City Hall Lansing, Michigan July 18, 1991 Thursday 8:40 A.M. The Board of Trustees met in regular session and was called to order by the Vice Chairperson, Robert Moye, at 8:40 A.M. Present: Trustee Goodin, Jackson, McKane, Moye, Perdue and Pontz - 6 Absent: Trustee Benavides and White - 2 Present: Jan Lazar, Deputy Finance Director; Lesley Ann Seldenright and Doug.Rubley, Finance Dept.; Ed Piloske, Internal Audit Dept.; and Melvin McWilliams, Chief Assist. City Attorney It was moved by Trustee Perdue, supported by Trustee Goodin that the minutes of June 20, 1991, be approved. Adopted by the following vote: Unanimously. Mrs. Lazar reported 1 new member, 0 reinstatements, 0 refunds, 0 transfers and 2 retired. Total Membership: 835. Refunds made since the last regular meeting $.00. Retirement allowances paid for the month of June, 1991 amounted to $275,169.11 total number of retirement checks printed ERS 457, total retirement checks printed for all three systems 843. Trustee McKane arrived at 8:45 A.M. Status of Legal Opinion re: release of data relative to individuals that transferred to the Alternative Retirement Plan. Mr. McWilliams, Chief Assist. City Attorney, informed the Board that this information could be released, however, for the purpose of the minutes he preferred that the list reflect only the names involved and a grand total, and any additional information would be made available only upon request. Attached to the minutes, is a list of all the names of employees who have made an "irrevocable election to terminate membership in the General Employees Retirement System and transfer to a successor plan". Total number of employees transferring out is 89. Funded present value of accrued hteiGej# Ir-gGQwas transferred to successor plan is $1,898,938.00. ---- __. _.._ :).v 1 Employees Retirement System July 18, 1991 Mr. McWilliams, Chief Assist. City Attorney, addressed the Board concerning the status of the legal opinion re: workers compensation in relation to -coordination of other benefits, advising there was an opinion in one case relating to adjusting benefit offsets which were figured incorrectly and as that stands, it is now in an appeal and no final decision has been made at this time. Mr. McWilliams will keep the Board informed. The Board congratulated Trustee Rita Pontz upon her reappointment as Citizen Trustee to the Employees Retirement System Board. Her term of office will run from 7/1/91 through 6/30/95. It was moved by Trustee Jackson, supported by Trustee Goodin that the Board excuse Trustees Benavides and White from the Board meeting. Adopted by the following vote: Unanimously. Trustee McKane left the Board meeting at 8:55 A.M. Mr. Rubley distributed to the Board copies of the portfolio summary from the National Bank of Detroit for funds evaluation as of July 18, 1991, and presented an overview of the transactions by the outside money managers. Mr. Rubley advised that he pulled funds in the amount of $260,000 from the fixed income managers in the month of June and that the bonds held by M. D. Sass are now in legal default. Mr. Rubley also advised that the average out flow each month is $305,000 and will be growing and currently this system has funds due in each month of approximately $240,000 and that he intended to match current cash out flow with current cash in flow. Mr. Rubley informed the Board that the City's contribution to the index fund will be 3 million dollars. Also, he indicated that the index fund manager will start on approximately Sept. 2nd. and that there will be a separate summary page in the monthly report on the index fund since these assets are not held by NBD. The Meeting Adjourned at 9:13 A.M. Stephen W. Duarte, Secretary Employees Retirement System 2 MEMBERS i,ANSFERRED TO THE ALTERNATIVE RE'jj.REMENT PLAN MONEY PURCHASE PLAN Name ABERLY BARBARA ALBAREZ JOHN BALLARD CAROL BAYLIS KELLY BEALS ANGELIA BELEN LUCILE BELL-ANDERSON PAT SLOUGH PAMELA BOYD CLEOPHUS BRITTON MURRAY BROWNLEE SUSAN CANNON MICHELLE CANTLON SUSAN CHITTENDEN JERRY COIN KENNETH CROFF ESTHER DABNEY SONJA DELANEY JOSEPH DODGE VADA DOWLING JON DROSTE TED DYKEMA PAUL EIROSIUS FRANK ERDMAN KARI FARNUM SHAWN FERNHOL'Z BRENDA FLANNERY WADE FOGG ERIC FOSTER ANTONIA GLASSCOE TONI GOMOLL KIP GRAHAM IRIS HAARER JEFF HARTLEY CLIFFORD HARVEY THEOPHILIS HAYES RATANA HORACE ERNEST IDE SHEILA JOHNSON DONALD KAISER WILLIAM KELLY DOUGLAS KEYTON TRACEY KING CYNTHIA KNIFFEN-OATES TRACY KNUPP SENGA LAYNE PATRICIA LENHARD JOAN LETTS RICHARD LONDON BETH LOOTENS VICTOR LOPEZ GUILLERMO MARES ROSAMARIA MATHENY JOYCE TOTAL AMOUNT TRANSFERRED $1,898,938.00 " Name MCCAUSLAND CATHY MCCONNELL SHERRILL MCWILLIAMS MELVIN MOORE KEVIN MORGAN ANGELA OVIEDO KONICA PARKS MELVIN PARRISH ANTOINETTE PATINO RUTH PATTERSON JEANETTE PETERSON JAMIE PINTARICH DEBORAH PULLEN CHRISTINE PUTNEY RICHARD READUS MELISSA RIDDLE ROSLYN RODRIGUEZ DOROTHY ROSSMAN LINDA SALAZAR NANETTE SCHOENING DORIS SHEPARD SUSAN SMITH TINA TEIGELER COLEEN TOPPING SUSAN VLAHAKIS JAMES WAECHTLER ROBIN WALTON CAROL WALTON CHAUNDRA WATSON JOEL WEATHERS JILL WILLIAMS KRISTA WILSON DALE WOHLFERT TAMMARA WILSON MARGARITA YALAMANCHI ANITA ZEHNDER LESLIE OFFICIAL PROCEEDINGS OF THE BOARD OF TRUSTEES CITY OF LANSING EMPLOYEES RETIREMENT SYSTEM Regular Meeting for August 8th Floor, Conference Room City Hall Lansing, Michigan August 22, 1991 Thursday 8:33 A.M. The Board of Trustees met in regular session and was called to order by the Chairperson, Ruby White, at 8:34 A.M. Present: Trustee Benavides, Goodin, Jackson, McKane, Moye, Perdue, Pontz and white - 8 Absent: None Present: Stephen W. Duarte, Secretary; Lesley Ann Seldenright and Doug Rubley, Finance Dept.; Melvin McWilliams, Chief Assist. City Attorney It was moved by Trustee Moye, supported by Trustee Goodin that the minutes of July 18, 1991, be approved. Adopted by the following vote: Unanimously. Trustee Perdue arrived at 8:34 A.M. The Secretary reported 1 new member, 0 reinstatements, 0 refunds, 0 transfers and 1 retired. Total Membership: 835. Refunds made since the last regular meeting $.00. Retirement allowances paid for the month of July, 1991 amounted to $277,746.05 total number of retirement checks printed ERS 459, total retirement checks printed for all three systems 849. It was moved by Trustee Benavides, supported by Trustee Moye that the application for Regular Age & Service Retirement for William D. Jacobs, P.S./Parking Div., 18 years 11 months service credit, retirement effective August 17, 1991, be approved, and that the Secretary make the necessary transfer of funds. Adopted by the following roll call vote: Yeas: Benavides, Goodin, Jackson, Moye, Perdue & White - 6 Nays: None Mr Duarte addressed the item on resolution 4458 regarding the amendment of the Reciprocal Retirement Act pertaining to public employees (Act 88 of 1961) with copies of the resolution being presented to the Board. The Secretary reviewed the process advising: inasmuch aLto tp ] g lation allows, but does not require, municipal governin o'd OU69nter agreements to provide for the actual transfZ!Y'---of monies and credited service from Employees Retirement System August 22, 1991 preceding retirement systems, and inasmuch as this may create an additional unfunded liability that is not the best interest of the retirement system, the Secretary, pursuant to a Board resolution requested that Mr. McWilliams, Chief Assist. City Attorney, draft the language for resolution #458, and this language was recommended to Council and adopted accordingly. This item was received and placed on file. Trustee Pontz arrived at 8:36 A.M. Mr. Duarte had copies of the legal opinion re: Qualified Domestic Relations Order, distributed to the Board members advising the purpose of this legislation is to adopt at the state level several of the concepts embodied in the Federal Retirement Equity Act and ERISA, including the requirement that retirement plans split checks for the benefit of ex -spouses. This legislation has now been adopted and is the law of the state of Michigan. Mr. Duarte also informed the Board that he had forwarded this item on to Mr. Alan Sonnanstine of Gabriel, Roeder, Smith and Company, Actuary, for additional information. Mr. Sonnanstine informed him we will be receiving a newsletter covering this subject. The Secretary concurred that the City will be subject to the eligible domestic relations orders and that the implementation will be quite detailed. Some questions and answers followed. Mr. Duarte advised the Board that the 1991 MAPERS Fall Conference will be held October 6 thru 8, 1991, at the Amway Grand Plaza in Grand Rapids, Michigan. Also that room reservations have been arranged and those wishing to attend the conference are to inform Mrs. Seldenright within a week. It was moved by Trustee Benavides , supported by Trustee Goodin that Trustee McKane be excused from the Board meeting. Adopted by the following vote: Unanimously. Mr. Rubley distributed to the Board copies of the portfolio summary from the National Bank of Detroit for funds evaluation as of August 22, 1991, and presented a brief over view of transactions by the outside money managers. In addition, he provided an update on investments stating that last month he transferred back $250,000 into the system and that both the bond and equity markets were good. He also advised that there was a proposed buy-out on Executive Life, however, this case is still pending in court. Trustee McKane arrived at 8:50 A.M. Mr. Hal Rossen of Prudential-Bache 2 provided to the Board a Employees Retirement System August 22, 1991 performance evaluation for the quarter ended June 30, 1991 for the Employees Retirement System. Mr. Rossen handed out articles entitled "Investment Consultant's Review" and also two sheets on the "Selected Comparisons of Equity Only Management" and "Rankings in a Universe 45% Equity and 55% Fixed Income" and reviewed them with the Board. In addition, he proposed that since the fund is bigger he felt the Board could handle adding an additional growth manager and discussion followed on fees, how will this effect risk, how is return built in, etc. Trustee McKane and Benavides left the meeting at 9:24 A.M. and Trustee Benavides returned at 9:32 A.M. Mr. Rubley informed the Board that he would make arrangements for the managers to address the Board in October and Mr. Rossen will be providing a report to the Board on the risk of adding a third growth manager. Trustee Jackson left the meeting at 9:45 A.M. The Meeting Adjourned at 9:47 A.M. Stephen W. Duarte, Secretary Employees Retirement System 3 OFFICIAL PROCEEDINGS OF THE BOARD OF TRUSTEES CITY OF LANSING EMPLOYEES RETIREMENT SYSTEM Regular Meeting for October October 17, 1991 loth Floor, Council Conference Room Thursday 8:33 A.M. City Hall Lansing, Michigan The Board of Trustee met in regular session and was called to order by the Chairperson, Ruby White, at 8:33 A.M. Present: Trustee Benavides, Goodin, Jackson, McKane, Perdue, Pontz and White - 7 Absent: Trustee Moye - 1 Present: Stephen W. Duarte, Secretary; Lesley Ann Seldenright and Doug Rubley, Finance Dept.; and Daniel Woodruff and Rita Daboul, National Bank of Detroit It was moved by Trustee Perdue, supported by Trustee Goodin that the minutes of the regular meeting for September 19, 1991, be approved. Adopted by the following vote: Unanimously. The Secretary reported 1 new member, 0 reinstatements, 1 refund, 0 transfers and 1 retired. Total Membership: 834. Refunds made since the last regular meeting $3,180.98. Retirement allowances paid for the month of September, 1991 amounted to $278,747.15 total number of retirement checks printed ERS 460, total retirement checks printed for all three systems 849. It was moved by Trustee Goodin, supported by Trustee Perdue that the application for Regular Age & Service Retirement for Lonne C. Hill, Administrative Service/Central Garage, 20 years 7 months service credit, age 50 (under 65 point qualifier), effective November 1, 1991 be approved, and that the Secretary make the necessary transfer of funds. Adopted by the following roll call vote: Yeas: Benavides, Goodin, Perdue, Pontz and White - 5 Nays: None Trustee Jackson arrived at 8:26 A.M. It was moved by Trustee Perdue, supported by Trustee Pontz that Audrey J. Dube, Police CiviliarZ0 j[ rid � � ,,We & Service, 10 years 1 month service credit and of e ve r ra ack to August 1, 1991, as she was unaware she could-d-r-aw-her pension while working Employees Retirement System October 17, 1991 for the State. Adopted by the following roll call vote: Yeas: Benavides, Goodin, Perdue, Pontz and White - 5 Nays: None Abstained: Jackson - 1 Mr. Duarte, Secretary, advised the Board that Mr. Richard Putney, Labor Relations Director, had been requested to contact Mr. Leon Hilton of the U.A.W. concerning the prefunding of health care as an effort is always made to come to a unified agreement between all parties involved. Trustee White addressed an issue that had been discussed at the MAPERS Fall Conference concerning utilization of retirement monies as it relates to exempt status for investments. Trustee McKane arrived at 8:40 A.M. Mr. Duarte advised that this issue had come up after the last MAPERS conference. At that time, Mr. Duarte verified this item with Mr. Alan Sonnanstine of Gabriel, Roeder, Smith & Company, Actuary, and Mr. Sonnanstine assured Mr. Duarte that this would not, in any way, affect the exempt status. The Secretary will again review this item and return to the Board with additional information. Mr. Daniel Woodruff and Ms. Rita Daboul of the National Bank of Detroit provided a presentation to the Board on security lending. They distributed to the Board. members three items entitled: Securities Lending Questionnaire, Money Market Desk and Institutional Investment Management booklet. Mr. Woodruff reviewed the following items: terms used when working with securities; securities lending overview; history and recent events; transactions; risks in areas of broker, investment & settlement; risk control; and servicing responsibilities. Trustee McKane left the meeting at 9:00 A.M. Mr. Woodruff stated that some items covered in the service fee were: locate borrower, negotiate loan terms, allocate loans equitably, deliver & receive securities, approve & monitor dealers, maintain collateral and report generation. Also, he added that the gross revenues would be divided on a 60/40 basis. 600 of income for the City of Lansing and 40% to NBD. In addition, Mr. Woodruff reviewed an "Estimated Securities Lending Income chart with the Board and advising that as of August 30, 1991, a conservative annual investment earnings estimate of 60 o would be $21, 414 for the General Employees Retirement System. 4 Employees Retirement System October 17, 1991 Ms. Rita Daboul reviewed with the Board some additional charts entitled: Securities Lending Customers Earnings Statements Transaction Acronyms; Summary Earnings Statement; Earnings Statement; and Account Collateral Statement. Also, discussed was a list of approved broker/dealers and the letter/agreement which defines the terms and conditions of the securities lending activities. The Board was advised they could stipulate the type of securities they can lend and the dollar amount my be limited. Mr. Duarte informed the Board that he and Mr. Rubley had visited with National Bank of Detroit, and several areas were addressed. Both Mr. Duarte and Mr. Rubley felt that security lending was very controlled and a low risk. It was moved by Trustee McKane, supported by Trustee Beneavides that the Board authorize the staff to negotiate a contract with NBD and that this Board be provided with a draft contract at the next Board meeting after the City Attorney has approved the legality of the concept and the legality of the form of the contract, and after the City Controller has certified as to availability of funds, and further to amend the present contract/agreement with NBD. Adopted by the following vote: Unanimously It was moved by Trustee Perdue, supported by Trustee Pontz that the Board excuse Trustee Moye from the Board meeting. Adopted by the following vote: Unanimously. Mr. Rubley distributed to the Board copies of the portfolio summary from the National Bank of Detroit for funds evaluation as of October 17, 1991, and presented a brief overview of the transactions by the outside money managers. Mr. Rubley also handed out to the Board members a copy of the, "Assets Managed by External Managers Returns After Management Fees" and that he had available for any of the Board members a copy of the following items: Index Fund Management; The Roll of an Investment Consultant; and Glossary of Investment Terms. Mr. Rubley informed the trustees that the "Request for Qualifications" for an investment consultant is completed and will be sent out early next week. The Purchasing Department is waiting on a list of vendors and Mr. Hal Rossen of Prudential Bache will be contacted. Mr. Rubley advised that Mr. Rossen, investment consultant for Prudential Bache, will be unable to attend the November Board meeting at which the two equity managers will provide a presentation, however, he will be available for the December meeting for the presentation by the bond managers with an update on M.D. Sass. 3 Employees Retirement System October 17, 1991 In addition, Mr. Rubley shared with the Board that there were numberous articles in newspapers in the last month concerning M.D. Sass and the proposed buy-out of GIC's held with Executive Life. M.D. Sass feels that if they lose in the lower court, on the status of the GIC's as insurance, they will appeal to the higher court. Mr. Rubley advised that the City will determine whether other options are available regarding our legal status, in this case. Also, Mr. Rubley advised that M.D. Sass has been sued by some of its former clients regarding these positions in securities backed by Executive Life. Mr. Rubley apprised the Board that he and Mr. Melvin McWilliams, Chief Assist. City Attorney, would review how the assets were handled by M.D. Sass, what the parameters of the fiduciary responsibilities are, and what options might be available in the area of law suits. Copies of the City of Lansing, Employees Retirement System, Annual Report for December 31, 1991, was distributed to the Board members. The Meeting Adjourned at 10:15 A.M. Stephen W. Duarte, Secretary Employees Retirement System 2 OFFICIAL PROCEEDINGS OF THE BOARD OF TRUSTEES CITY OF LANSING EMPLOYEES RETIREMENT SYSTEM Regular Meeting for September September 19, 1991 10th Floor, Council Chambers Thursday 8:42 A.M. City Hall Lansing, Michigan The Board of Trustees met in regular session and was called to order by the Chairperson, Ruby White, at 8:42 A.M. Present: Trustee Goodin, Jackson, McKane, Moye, Pontz & White - 6 Absent: Trustee Benavides and Perdue - 2 Present: Stephen W. Duarte, Secretary; Lesley Ann Seldenright and Doug Rubley, Finance Dept.; Ed Piloske, Internal Audit; and Alan Sonnanstine and Mark Tyszkiewicz, Gabriel Roeder, Smith & Co. It was moved by Trustee Goodin, supported by Trustee Pontz that the minutes of regular meeting for August 22, 1991, be approved. Adopted by the following vote: Unanimously The Secretary reported 1 new member, 0 reinstatements, 0 refunds, 0 transfers and 1 retired. Total Membership: 835. Refunds made since the last regular meeting $.00. Retirement allowances paid for the month of August, 1991 amounted to $276,399.14 total number of retirement checks printed ERS 460, total retirement checks printed for all three systems 852. Trustee McKane arrived at 8:44 A.M. Mr. Alan Sonnanstine of Gabriel, Roeder, Smith & Company gave a presentation to the Board on the report of the Fiftieth Annual Actuarial Valuation ending December 31, 1990 of the City of Lansing Employees' Retirement System. Mr. Sonnanstine touched upon such items as: contributions computed to meet the financial objective of the retirement system for the fiscal year beginning July 1, 1991, adding; 1) the computed City contribution requirement, 13.600, is a weighted average of the computed contribution to the Retirement System and to the Alternate Retirement Plan. The contribution rate is designed to be a level percentage of the combined payroll of all City employees, members of both the Retirement system and the Alternate Retirement Plan.; 2) the. computed effective City contribution rate to the Retirement System alone is 14.49% and will increase as the membership in the Retirement System declines.; and 3) unfunded actuarial accrued liabilities were amortized as a level percent of active member �ByEotWo92nJ'JSJ8riod of 30 years. Employees Retirement System September 19, 1991 Mr. Sonnanstine also reported on; 1) determining the dollar contributions of $3,146,245 which is the City's 9/1/91 contribution to the Retirement System; 2) Financial Objective Achievement Tests - comparative statement 3) computed and actual city contributions - comparative statement; 4) the contingency reserve in the Reserve for Retired Benefit Payments which amount to $2,663,538 (If future experience is exactly as assumed, the contingency reserve will grow at a rate of 7% per year, and fluctuations in the rate of growth will likely occur from year to year due to mortality gains or losses and the timing of reserve transfers.); and 5) the retirement system is now a partially closed plan due to most new employees becoming members of the Alternate Retirement Plan. As of June 30, 1991, 89 former members of the Retirement system elected tc terminate their membership and to be covered by the Alternate Retirement Plan. Trustee White left at 9:40 A.M. and returned at 9:45 A.M. Mr. Sonnanstine advised that he will prepare additional charts and graphs for the Board Trustees review. In addition, Mr. Sonnanstine discussed with the Board the EDRO's (Eligible Domestic Relations Orders - Act No. 46 of the Public Acts of 1991 - effective June 27, 1991) which the City is now bound by State law to follow. Mr. Sonnanstine distributed to the Board copies of the EDRO illustrations and advised that, 1) the ex -spouse can draw at the earliest possible eligible date even though the member is not retired, 2) there may be a splitting of the pension check payment, and 3) health insurance benefits are completely excluded, etc. The actuarial calculation fees for a typical EDRO will be in the range of $200-$500. Mr. Duarte, Secretary, informed the Board that the annual contract agreement with Gabriel, Roeder, Smith & Company for fees would be approximately 4.7% higher than last year and that he recommended that the Board accept the contract. The proposed annual fee includes an additional $2,100 to cover the costs associated with the annual actuarial valuation of the two -tiered retirement arrangement. It was moved by Trustee Jackson, supported by Trustee Pontz that the Board approve the contract with Gabriel, Roeder, Smith & Company for normal actuarial and consulting services for the year beginning July 1, 1991 which will be $12,320, payable in quarterly installments of $3,080 and that the Board authorizes the Chairperson to sign the contract pending approval as to form by the City Attorney and certification of availability of funds by the City Controller. 2 Employees Retirement System September 19, 1991 Adopted by the following vote: Unanimously. It was moved by Trustee Moye, and supported by Trustee Goodin that the application for Regular Age & Service Retirement for: Paul R. Carr, Public Service Dept., 24 years 4 month service credit, effective October 23, 1991 Doloris M. Cipicchio, Parks Dept., 22 years 2 months service credit, effective Oct. 15, 1991 be approved, and that the Secretary make the necessary transfer of funds. Adopted by the following roll call vote: Yeas: Goodin, Jackson, McKane, Moye, Pontz and White - 6 Nays: None It was moved by Trustee Moye, supported by Trustee Pontz that the application for non -duty death benefits for the spouse of: Vivian Preston, Human Relations Dept., 16 years 5 months service credit, retro to 8/15/91 Franklin Skutt, Public Service Dept., 13 years 8 months service credit, retro to 8/31/91 be approved, and that the Secretary make the necessary transfer of funds. Adopted by the following roll call vote: Yeas: Goodin, Jackson, McKane, Moye, Pontz and White - 6 Nays: None The Secretary informed the Board that Liane M. Zimny, due to an oversight when she terminated employment with the City on February 11, 1985 forget to send a letter to the Board requesting a deferred retirement status. She is now requesting that her retirement be deferred and interest posted retro to the date of termination. It was moved by Trustee McKane, supported by Trustee Moye that the Board approve the request for a Deferred Retirement Status for Liane M. Zimny, Planning Dept., to age 58. Adopted by the following vote: Unanimously. The Secretary advised the Board that Roger Massman, Parks Department retiree, who transferred from deferred retirement status to active retirement status effective April 1, 1991, has received an overpayment in his pension from the City in error. Discussion followed. 3 Employees Retirement System September 19, 1991 Trustee McKane left the meeting at 10:03 A.M. It was moved by Trustee Goodin, supported by Trustee Moye that the City recoup from Mr. Roger Massman the overpayment in his pension in a one lump sum payment, for the full amount, or in payments of 1/12's in accordance with past practice. However, if Mr. Massman is unable to financially handle these payments, that information is to be returned to the Board for further review. Adopted by the following vote: Unanimously. Trustee Jackson left the meeting at 10:10 A.M. and, due to a lack of a quorum, the meeting was adjourned. Mr. Doug Rubley distributed to the remaining Trustees copies of the portfolio summary from the National Bank of Detroit for funds evaluation as of September 19, 1991, and presented a brief overview of the transactions by the outside money managers. Mr. Rubley shared with the Trustees that there was no additional information on the current court case with M.D. Sass concerning the proposed buy-out of GIC's held with Executive Life. In addition, Mr. Rubley informed the Trustees that Hal Rossen, Prudential Bache, was now fully aware of the Board's intention to hire an index manager and, in addition, he advised that the RFP to review the investment consultant will be written up and sent to be typed and then mailed out for advertising. Mr. Rubley will plan to bring in NBD in the month of October for the purpose of a report on security lending and he will bring in the equity managers for the November Board meeting. The Meeting Adjourned at 10:10 A.M. Stephen W. Duarte, Secretary Employees' Retirement System 4 OFFICIAL PROCEEDINGS OF THE BOARD OF TRUSTEES=- o �. CITY OF LANSING -` Jlil I u I i'i �k• EMPLOYEES' RETIREMENT SYSTEM CITY (;L[;;1 Regular Meeting for November November 14, 1991 8th Floor, Conference Room Thursday 8:58 A.M. City Hall Lansing, Michigan The Board of Trustees met in regular session and was called to order by the Chairperson, Ruby White, at 8:31 A.M. with The Secretary narrating. Present: Trustee Brewington, Goodin, Pontz, McKane & White - 5 Absent: Trustee Benavides, Moye & Perdue - 3 Present: Stephen W. Duarte, Secretary; Ruby White and Doug Rubley, Finance Dept.; Melvin McWilliams, Chief Assist. City Attorney It was moved by Trustee Goodin, supported by Trustee McKane that the minutes of October 17, 1991, be approved. Adopted by the following vote: Unanimously. The Secretary reported 1 new member, 0 reinstatements, 1 refund and 2 retired. Total Membership: 832. Refunds made since the last regular meeting amounted to $2,111.51. Retirement allowances paid for the month of October, 1991 amounted to $279,117.04, total retirement checks printed for ERS System 462, total retirement checks printed for all three systems 851. It was moved by Trustee McKane, supported by Trustee Pontz that the Secretary send a letter to the widow of Judge Charles N. Murphy explaining that due to the fact the Board of Trustees has a fiduciary responsibility to follow the Ordinance that was in effect and further they lack the legal ability to take on additional liabilities for the system. And further, suggested she may want to contact her local legislator to request that they support the proposed bill re: health care proposal that the state pay 750 of the cost of retired Judges' health care. Adopted by the following vote: Unanimously. It was moved by Trustee McKane, supported by Trustee Brewington, that the application for Regular Age and Service for Retirement for Mr. Frank Cena, Public Service/Traffic, 8 years 3 months service credit, age 65, effective January 21, 1992, be approved, and that the Secretary make the necessary transfer of funds. 1 Employees Retirement System November 14, 1991 Yeas: Brewington, Goodin, McKane, Pontz and White - 5 Nays: None Mr. Rubley reported that they were in the process of rewriting the contract for Security Lending and that within a week it should be ready and the list of holdings that are lendable, along with the revised contract, will be brought back to the next board meeting. Mr. McWilliams, Chief Assistant City Attorney, addressed the question raised about the Board's fiduciary responsibility under Act 55 with respect to the GIC backed bonds purchased by M.D. Sass. He met with the Secretary, Mr. Duarte, and Mr. Rubley about a week ago to review the developments with Executive Life. Mr. McWilliams advised that it is within the parameters of the Board's fiduciary responsibility to: 1) Take steps to minimize loss to protect the system's interest in the GIC's held with Executive Life. 2) Explore whether there was a basis for liability on the part of our Money Manager. Right now efforts are being undertaken in a conservatorship proceedings in California to protect policy holders. The California Court is considering potential buyers who have bid on Executive Life assets. Additionally, the State of Mighigan Insurance Commissioner is looking at liquidating Executive Life's deposit held by the State of Michigan, to protect the residents, policy holder's & other interested persons in Michigan. Also, First Tennessee (Bond Trustee) is looking at a possible class action suit. First Tennessee and M.D. Sass have requested permission to disclose our name and asset holdings in any court cases and proceedings. Presently, we are not listed by name because assets are held in the name of NBD. Mr. McWilliams, recommends that we honor their request. The Board may want to take a look at hiring an expert financial consultant to look at the issues concerning our Money Managers' liability, if any. Mr. McWilliams advises that at the present without such expert analysis, there is no basis for concluding that our consultants have breached any duties as investment fiduciaries. Mr. Duarte addressed the possibility of outside expert financial consultants that might be utilized to explore if there was some cause for litigation due to lack of research and due diligence by M.D. Sass. Was there something that should have triggered an investigation on their part, and should this have been investigated further by our consultants? Mr. Rubley advised that we have written off 50 cents on the dollar and that this system had $1.250 million invested in bonds backed by the GIC's. A lengthy discussion continued with respect to continuation with our current manager. 2 Employees Retirement System November 14, 1991 It was moved by Trustee Brewington, supported by Trustee McKane that the secretary and legal department take steps to reveal our identity to the court and First Tennessee and that the Secretary be directed to aggressively research the issue and be authorized to hire expert person(s) to work closely with the attorneys to establish the facts that are associated with M.D. Sass' involvement with this investment, and make a recommendation at the next board meeting. Adopted by the following vote: Unanimously. It was moved by Trustee McKane, supported by Trustee Pontz that the Board adopt the retirement board meeting schedule as presented with one exception change November 19 to November 12, for calendar year 1992. Adopted by the following vote: Unanimously. It was moved by Trustee McKane, supported by Trustee Goodin that Trustee Benevides, Moye and Perdue be excused from the meeting. The motion carried by the following vote: Unanimously. Trustee McKane left the meeting at 9:38 A.M. the Board officially adjourned due to the lack of a quorum. Mr. Doug Rubley distributed to the Board copies of the portfolio summary from the National Bank of Detroit for funds evaluation as of October 31, 1991 for the Board's review. Discussion was held with respect to modifying the asset summary to include the index manager and including a 5 year period in order for the Board to look at the long term horizon. The Board was in agreement. Mr. Duarte stated that he is comfortable with our current earnings given they are reflective of the market, and returns in general. Mr. Rubley pointed out the heavy tilt towards value managers since both Equity Managers are quite conservative. The Board was advised that Mr. Hal Rossen from Prudential Bache had been notified that RFQ's had gone out in our search for an investment consultant. Mr. Rossen advised he would like an opportunity to present the Board with new services available through their firm. Mr. Rubley advised the board of the educational seminar, for Trustees, on investments which has been scheduled for November 22, 1991, at 9:00 A.M., 8th floor conference room. This will be a joint informational seminar for any Trustee that wishes to attend. 3 Employees Retirement System November 14, 1991 The Meeting Adjourned at 9:38 A.M. Stephen W. Duarte, Secretary Employees' Retirement System OFFICIAL PROCEEDINGS OF THE BOARD OF TRUSTEES CITY OF LANSING EMPLOYEES' RETIREMENT SYSTEM Regular Meeting for December December 12, 1991 Radisson Hotel Thursday 8:38 A.M. Regency Room II Lansing, Michigan co n-; The Board of Trustees met in regular session and was cal2ed' to order by the Chairperson, Ruby White, at 8:38 A.M. Present: Trustee Erewington, Goodin, McKane, Moye, Pont-- &j!4-1ite 6 co Absent: Trustee Benavides & Perdue - 2 I Present: Stephen W. Duarte, Secretary; Doug Rubley and Lesley Ann Seldenright, Finance Dept.; Melvin McWilliams, Chief Assist. City Attorney; and Ed Piloske, Internal Audit; Jack Cushman and Paul Luzynski, Fire Dept. It was moved by Trustee McKane, supported by Trustee Moye that the minutes of November 15, 1991, be approved. Adopted by the following vote: Unanimously The Secretary reported 3 new members, 0 reinstatements, 1 refund, 0 transfers and 2 retired. Total Membership; 832. Refunds made since the last regular meeting $2,111.51. Retirement allowances paid for the month of October, 1991 amounted to $283,131.38, total number of retirement checks printed ERS 462, total retirement checks printed for all three systems 852. Mr. Duarte, Secretary, informed the Board that he sent a letter to Ms. Teresita Murphy, widow of Judge. Charles N. Murphy, advising that he is unable to offer any direct financil relief and that due to his fiduciary responsibility and that of the Board. Further, he informed her that its the Board's responsability to safeguard the System's assets in order to be able to pay its legally required retirement obligations. Finally, we have no authority to grant or increase benefits apart from those defined in ordinances and contracts. It was moved by Trustee Moye, supported by Trustee McKane that the application. for Regular Age & Service Retirement for: Gerald D. Erzen, Administrative Services, 25 years 1 month service credit, age 55, effective February 15, 1992. --.' (. � s Page 2 William F. Jipson, Administrative Services, 13 years 9 months service credit, age 63, effective January 4, 1992. Cynthia J. Wheatley, Planning, 16 years 6 months service credit, age 50, effective January 11, 1992. be approved, they having qualified with the above age and service, and that the Secretary make the necessary transfer of funds. Adopted by the following roll call vote: Yeas: Brewington, Goodin, McKane, Moye, Pontz and White - 6 Nays: None It was moved by Trustee Moye, supported by Trustee Brewington that the Board approve the correction on the date of retirement for Frank P. Cena, Public Service/Traffic Department from Jan. 21, 1991 to January 22, 1991. Adopted by the following vote: Unanimously Copies of the EDRO procedures were distributed to the Board members for their review, and Melvin McWilliams, Chief Assist. City Attorney, addressed this item stating that the first form was the most important because it took you step by step through the checklist procedures and, also, that the other forms help make the procedure easier. A review of the procedures will be completed by the staff and then the Board should approve. Mr. Duarte advised that there was only one EDRO order implemented and it has been reviewed directly by Gabriel Roeder, Actuary. In addition, he stated that he had no final recommendation and asked that the Board review these procedures and that this item be discussed at the next Board meeting. Mr. McWilliams, Chief Assist. City Attorney, was concerned as to what we are to do in the interim and Mr. Rubley asked the Board to recommend using the procedures that we presently have until final approval. They did approve. Trustee Pontz added that there is possibility of legislation being introduced on Act 46 concerning who will pay for the additional cost associated with EDRO's. Mr. Duarte, read a letter to the Board from Linda Villarreal, Fire Department, requesting an early refund of accumulated contributions and discussion held. It was moved by Trustee McKane, supported by Trustee Pontz that the Board approve an early refund of accumulated contributions for Linda Villarreal after clearing payroll. Adopted by the following vote: Unanimously. It was moved by Trustee Moye, supported by Trustee McKane that the Board excuse Trustee Benavides and Perdue from the meeting. Adopted by the following vote: Unanimously. Page 3 Mr. Rublev advised he did not have all the November data available from the Bank for this month's summary on investments, however, he will mail this report to the Board and, in addition, that the RFQ for an investment consultant is due January 9, 1992. The Meeting Adjourned at 9:00 A.M. Stephen W. Duarte, Secretary Employees Retirement System 0 JOINT BOARD MEETING BOARD OF TRUSTEES CITY OF LANSING RETIREMENT SYSTEMS Radisson Hotel Regency Room II Lansing, Michigan December 10, 1991 TheJoint Board of Trustees meeting was called to order at 9:21 A. M . Present: Board Members: Barkyoumb, Braun, Brewington, Cushman, Goodin, Kus, Luzynski, McKane & White - 9 Absent: Board Members: Benavides, Moye, & Pontz - 3 Present: Others: Stephen W. Duarte, Secretary; Doug Rubley & Lesley Seldenright, Finance Dept.; Ed Piloske, Internal Audit; Melvin McWilliams, Chief Assist. City Attorney; Hal Rossen & Karen Smith, Prudential Securities; and John Hyll & Shari Sakall, Loomis, Sayles Mr. Rossen and Karen Smith of Prudential Securities gave a 'nerformance measurement report for the quarter ending September 30, 1991, and distributed to the Board for their review a small booklet entitled "Strategy Weekly" and the "Investment Consultant's Review" pointing out such articles as "Documenting Investment Policy", "Trustees' Corner", etc. Mr. Rossen in his report touched upon the summary sheet, cash flow, asset allocation, management styles, composite performance, equity managers performance, etc. Also, he quickly highlighted Section 3 - Change in Asset Mix, etc., and Section g - Public Retirement fund Indexing Mr. Duarte asked Mr. Rossen how much does a manager have to earn to be superior to an index fund and he suggested 1/2 o and, also, what the gap was between bid and asking. Mr. Rossen stated 75 points. Trustee MCKane left the meeting at 9:53 A.M. At this time, the Board took a short break and reconvened at 10:00 A.M. Mr. John Hyll and Shari Sakall of Loomis, Sayles & Co. gave a presentation highlighting Section 1 - Investment Results 1) total returns for periods 9-30-91; Section 2 - Investment Review 1) Historical Yield Curve, 2) industrial ratios, etc.; Section 3 - Portfolio Characteristics 1) Sector Analysis of Fixed -Income Issues, 2) Quality Analysis of Fixed -income Issues, and 3) Maturity Distribution of Fixed -Income Issues; Section 4 - Economic Outlook reviewing some charts, and Section 5 - Appraisal of Assets. Mr. Hyll stated that inflation is down and it will take time, the Federal Reserve controls interest rates, leadership must come from Washington, trade policy -bringing down merchandise trade deficit, etc. Mr. Hyll explained that since our last meeting with Loomis that they had lengthened the average maturity of the portfolio and moved from government securities to a larger representation in corporate bonds. They believe that there could develop a shortage in quality corporate debt as corporations issue stock over the next few years to reduce debt. Loomis has our portfolio in bonds with good "call protection" for this reason. With a weal: economic outlook for the next two quarters and only a moderate recovery they feel that the yield curve will flaten with long rates moving downward expecting bonds to return 8-10% over the next year. The Joint Boards Adjourned at 10:43 A.M. o�. Stephen W. Duarte, Secretary Retirement Boards -Joint Meeting The minutes for the presentation of M.D. Sass are under separate cover. Meeting of December 10, 1991 Joint Board Meeting, Part 2 Radisson Hotel, Regency Room II M.D. Sass Presentation Marty Sass & Hugh Lamle Information: They manage 1/2 Billion in Governmental Funds They predict 3% inflation with interest rate coming further down. After Desert Storm the economy bounced up, hit a wall and stayed. Consumers, the day after Thanksgiving, more looking rather than buying. Consumers not buying homes rather refinancing existing homes due to interest rates. Two thirds of the market driven by consumers currently at a 10 Year low in consumers confidence. Unemployment at 6.8o however disappointed workers are not part of the statistics. In November employment was down 241 thousand. Consumers installment defaults are up with 1 million filling bankruptcy in 1992 due to unemployment. Credit is tight among those that need the money. Interest rates are slightly down for those that do not need it. Mr.. Sass stated that he doesn't have a crystal ball however, he feels interest rates will go down shortly being cut by Christmas. Possible FED 4 o discount rate if it doesn't happen before Christmas then in January. The polls shows that Bush has to do something to stimulate the economy in order to get reelected. He feels it will be a sluggish & slow recovery. Section I Page 5 (of Sass Report) shows 3 months to 30 years interest rate spreads. They are not buying industrial bonds but staying with Treasuries & G.N.M.A's with seven year area.. He advised we were in good shape as we had a 7 acturial projected rate of return over some systems that had 8 to 8 1/2o and had to scramble in order to raise the money to reach the goal. It may have looked good to be at 8 to 8 1/2o projected return in order to cut contribution in short term however, they may have problems now. Hugh gave a brief overview about the GIC backed bonds and the conservatorship proceedings in California to protect policy holders and how the lower court had ruled in favor of our holdings being Page 2 .lassified as policies of insurance. The bonds were valued prior to the decision by the court at 20 cents on the dollar and went to 51 to 52 cents on the dollar. They are currently valued at 43 cents on the dollar due to the uncertainty associated with an appeal. They feel we are on t'.e road tc recovery. Not sure of the time frame. The supreme court came out with a ruling that in case of financial securities the statue of limitation would be one year for fraud. This has been corrected through legislative action which extends the period for seeking recovery. Additional law suits are possible by M.D. Sass against Drexel, Merrill Lynch and etc. (bond underwriters) due to perceived lack of investigation into the GIC's prior to sale. They felt that there was a good possibility that we would be made whole due to the courts decision which they were confident would be upheld. This includes the law suit and percentage of funds that we have not received in interest. They felt a reasonable time would be about 6 months. Thev stated that some systems had gotten out of the GIC's against their advise and had :.offered a great loss as they sold at the lowest point and they felt bad about that. They valued our very strong support and stic]�ing with them. Question by Trustee Luzynski, how far will they take the other case? (referring to the cases with Drexel & Merrill Lynch) The attorneys intend to take it as far as we can. They felt we should get an additional 4-5 o interest income that has been deferred that we haven't received with a good likelihood that we will recover 100%. No guarantees. Mr. Mcgilliams asked if they were following the State of Michigan Insurance commissioner who is filing for liquidating Executive Life's deposit held by the State of Michigan? They stated they were not. However, if he would provide them with a docket number they may be able to get some information, they gave him their card. Jack asked M.D. Sass if they you were fooled by faulty information how do we keep from making the same mistake again in the future. Mr. Sass stated clearly we made a mistake. "To prevent it from happening in the future we will buy only Government & Government agency & mortgage backed securities. our portfolio has some Utilities they inherited. You can count on Government and Agencies. They are safe. The Government can print money to pay. Huqh stated that he is sending a memo to Steve & Doug summarizing series of everts & etc. The Taxable Municipal Bonds were rated AAA and were backed by GIC's that were FAA rated at the time ,and they Page 3 were issued by the 5th largest Insurance Company.uture they believe industrial will see more u more defaults in the sector. Stephen W. Duarte, Secretary Retirement Boards Joint Meeting C:\WP\DATA\LETTERS\MEETING.JNT JOINT BOARD MEETING BOARD OF TRUSTEES CITY OF LANSING RETIREMENT SYSTEMS Radisson Hotel Regency Room II Lansing, Michigan December 12, 1991 The Joint Board of Trustees meeting was called to order at 9:37 A.M. Present: Board Members: Barkyoumb, Braun, Brewington, Cushman, Goodin, Kuz, Luzynski, Moye, Pontz, and White - 10 Absent: Board Members: Benavides, McKane and Perdue - 3 Present: Others: Stephen W. Duarte, Secretary; Doug Rubley and Lesley Ann Seldenright, Finance De_ot.; Melvin McWilliams, Chief Assist. City Attorney; Ed Piloske, Internal Audit; Hal Rossen & Vic Rosasco, Prudential-Bache; and Fred Thorne, Alan Fields, & Stanley Schlozman, Harbor Capital Management Co. Harbor Capital gave their presentation covering the following areas as: 1) performance summary, 2) relative ranking of portfolio performance vs. Prudential Securities equity manager universe, 3) total cash hoard & yield curve, 4) consumer confidence, 5) misery index, 6)median family income in 1991 dollars, 7) U.S. Treasury bond yield curve, 8) Asset Mix, etc. Also, discussed was the strategy and outlook covering charts showing: 1) A Core, Dual Approach Manager, 2) Equity Segment Breakdown, 3) Big and Median Cap Growth, 4) Equity Strategy and 5) Top Ten Growth and Value Holdings. Harbor Capital summarized stating that the recession will slowly bottom out and a modest economic recovery should begin and for this reason they are in "special situation" value stocks versus traditional value such as auto stocks. They will probably maintain a 50o allocation to both "growth & value" in 1992. Political uncertainty will be a major cross -current in this upcoming election year. Money will continue to flow into the stock market from C.D. and bond rollovers. Harbor Capital completed their presentation and the Board recessed at 10:40 A.M. The meeting reconvened at 10:50 A.M. 'age 2 Mr. Tom Franzese and Peter McCarthy of Lazard Freres gave a presentation on their September 30, 1991 report highlighting: 1) the Plan is fully invested, 2) the plan has increased by $2.9 million for this 9 month period. This equates to an 18.7% return, 3) for the current up -cycle, 12/1/87 to 9/30/91, the Plan has a 17.6`- annual. return. This outperforms the first investment goal of _2.5% and the second investment goal of 7.0% (CPI + 8% and actuarial assumption), 4) value style management is expected to return to favor, 5) their current strategy focuses on small to medium size companies which are chosen through our value identification process. Trustee Brewington left at 11:26 A.M. and Trustee Pontz left at 11:30 A.M. In their future outlook they see continued modest inflation and therefore increasing reliance on unit growth and/or reduced expenses to drive earnings. The economies in the U.S., UK and Canada appear to be bottoming and we expect a modest recover in 1992. In addition, Germany and ,japan both appear to be slowing. over the next 6-12 months we would anticipate a renewed upward move in the dollar against European currencies. Lazard Freres completed their presentation at 11:34 A.M. Mr. Duarte, Secretary, asked if the Board could stay for a few more minutes so that a discussion could be held with Hal Rossen and Vic Rosasco of Prudential-Bache concerning their recommendations on the money managers. Mr. Duarte asked if Prudential Bache still stands by their recommendation of going into the growth area? They indicated that growth as a long term has been best over the years and still a winner, however, the Board might hold off on hiring an aggressive growth manager for a while at least until after March. Mr. Duarte also asked how do they feel about the money managers? Mr Rossen responded that Loomis Sayles was not looking good since they under -performed last year but now feeling better about them since the added depth to the Detroit office. M.D. Sass since they are so busy traveling around putting out fires of the GIC's has lost about 1/2 of their accounts, in addition, bares watching due to the lack of soft dollars to purchase, research and layoffs and, also, that Mr. Tom Mackel, Marketing Director, left the firm, however, suggested they are not uncomfortable with either manager and that we keep them as fixed income managers. Also, the Secretary inquired since the turnover in M.D. Sass who is handling our money. He was informed that Hugh Lamle is still taking care of our investments. In addition, since M.D. Sass is buying government & agencies & mortgage backed funds how do you feel about this keeping us safe? They stated they felt the spread Page 3 narrowed & is defensive since Loomis Sayles was investing in corporates and Sass staying in government & agencies. Mr. Rosasco suggested we may want to review our goals (in effect since 1984) as they may be too aggressive for today's market. Mr. Rubley indicated that since 1984 M.D. Sass has been primarily in U.S. governments with the exception of the municipal bonds, and not taking a ri sk. Prudential-Bache suggested that if the Board is looking at another area of investing they should interview firms in the small cap value area. The Joint Boards Adjourned at 12:07 P.M. Stephen W. duarte, Secretary Retirement Boards -Joint Meeting