Board of Trustee Minutes
CHARTER TOWNSHIP OF BLOOMFIELD
BOARD OF TRUSTEES
Study Session
November 1, 2007
PRESENT: Payne, Devine, Stefanes, Buckley, Barnett,
Roncelli, Savoie
Also present, Ray Perkins, Finance Director, Edward and
Wally Schwartz, Schwartz and Co., Inc., Matthew Whitty and
Andrew Bearre, Schwartz and Co., Inc.
ABSENT: None
The purpose of this study session was for the Township
Board to receive a report on the performance of the assets
under the management of Gregory J. Schwartz and Co. in the
defined benefit pension plan portfolio and the bond proceeds
for the new Capital Building Program.
DEFINED BENEFIT PENSION PORTFOLIO:
For much of the past year the market has experienced
increasing returns on fixed income investments. The rate of
inflation has been averaging about three percent for the past
several years, which is very comparable to the long-term
average rate of inflation. Within the equity markets the small
cap stock funds have slumped somewhat recently after several
years of very favorable returns.
On December 21, 2006, the Township was required to move
some defined benefit retirement fund assets from the equity
portion of the portfolio to fixed income in order to fund the
annuity guarantees for 2006 retirees. The total portfolio has
earned a positive return of 10 – 11 percent on average for the
year. Treasurer Devine explained that each year in April an
annual contribution is made to the pension plan from the
various operating funds; this entire contribution is deposited
into the equity portfolio. In December 2007, it was noted that
additional assets would need to be moved to the fixed asset
portfolio to fund the guaranteed annuities for 2007 retirees.
For the most recent three-month period, the portfolio has
out-performed the various benchmark funds. This trend is also
true for the last year. The portfolio’s overall level of risk
as compared to the benchmarks remains within very acceptable
parameters. The level of risk (beta factor) was discussed for
each fund within the equity portfolio with each fund’s rate of
return comparing favorably to the level of risk taken.
Compared to the S&P, the overall portfolio has lagged for the
most recent three months as the large cap segment (S&P) has
performed very well during this period. For the past year,
however, the overall portfolio has performed better than the
S&P.
The Board was provided employer pension contribution
projections from 2007 through 2017. These projections
submitted by the Prudential actuary indicated that even with
the defined contribution benefit pension plan closed to new
hires, the employer contribution to the plan will still be 28
percent of covered payroll in 2017. However, with new hires
being enrolled in the defined contribution plan, the
Township’s overall pension expenses will decrease as a
percentage of payroll over time.
CONSTRUCTION BOND PROCEEDS INVESTMENT PORTFOLIO
RECOMMENDATION:
The Township has established a new construction fund to
account for the bond money to be received on November 6, 2007
that will be used to pay construction bills for the Capital
Building Program as they become due. The bond proceeds
($26,000,000.00) will be invested in the following manner:
32.7 Percent Money Market Funds
30.8 Percent Treasury Bonds
30.8 Percent U.S. Government Securities Funds
5.7 Percent Bank CD’s
These monies will be invested with Gregory J. Schwartz and
Co. as advisor to the Township. The monies will be held in the
investment accounts as long as possible and then transferred
to the Township’s Operating Account as the bills become due.
The transfer of money will likely occur every two weeks
coinciding with the bi-monthly Township board meetings. Board
members will receive a separate voucher report to examine and
approve. In the unlikely event that more than 2-3 days are
needed to transfer the invested funds, the Township will be
able to cover the expenses via the General Fund until the
money can be moved.
CD investments within the portfolio will be invested in
$100,000.00 increments in order to maximize FDIC insurance.
The overall portfolio is projected to average a return of four
percent or better. The Township bond investments were compared
to the Library bond investments and it was noted that the
Township portfolio should perform significantly better as
interest rates are much more favorable than when the library
invested in 2004.
Supervisor Payne advised the Board that the site plan for
the new Senior Services Center will be brought before the
Planning Commission for approval on November 7, 2007.
Meeting adjourned at 11:58 a.m.
_________________________
JANET RONCELLI
TOWNSHIP CLERK
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Charter Township of Bloomfield
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P.O. Box 489
Bloomfield Hills, MI 48303-0489
248.433.7700
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