February 2017 Monthly Board Report

BOARD WILL LIKELY VOTE ON MORE HEALTH CARE CHANGES THIS SPRING

Much of the discussion at the Ohio Police & Fire Pension Fund Board of Trustee Spring Retreat focused on the future of the retiree health care plan. Both actuarial and health care consultants delivered presentations to the Board that showed that without significant changes that funding will be exhausted in less than 10 years. Options were presented to the Board that could extend the life of the health care plan up to 15 years. The Board will examine these options and likely vote on changes before summer, with an effective date targeted for Jan. 1, 2019. Funding for a retiree health care plan beyond 15 years is likely not available without a significant new funding stream dedicated to health care.

OP&F SURPASSES INVESTMENT RETURN ASSUMPTION FOR 2016

OP&F’s general investment consultant, Wilshire Associates, reported that net of fees investment return for 2016 was 10.9 percent. The report was given during the Board of Trustees meeting on Feb. 22. The assumed rate of return on investments is 8.25 percent. The investment portfolio was valued at $14.45 billion on Dec. 31, 2016, and most recently was valued at $14.8 billion.

PORTFOLIO UPDATE
OP&F's investment portfolio value:

Board of Trustees Committee Notes
(Motions approved by the Board are listed separately)

• DISABILITY: In addition to the regularly scheduled hearings, the Committee and staff discussed information regarding the reporting of potential disability fraud.
• FINANCE: The Committee received the 4th Quarter Budget-to-Actual Report for 2016 and asked for adjustments to the charts to show additional data. The Committee also reviewed the Status of Past Due Employers Report, specifically the City of Norwood and Paint Creek.
• HEALTH CARE: The Committee heard an update on the Health Care Stabilization Fund through the end of 2016, and associated net costs for the health care plan. The Committee also reviewed participation numbers for the most recent Annual Change Period. The Committee had significant discussions about the future of the retiree health care plan and specifically the prescription drug plan currently in place.
• INVESTMENT: In addition to the monthly portfolio update, the Board received a presentation from ISS on the process used for proxy voting, a review of the 2016 proxy season and a preview of significant 2017 proxy voting issues. Wilshire Associates presented the Investment Performance Report for the period ending Dec. 31, 2016 and representatives from UBS gave an overview of their outlook for real estate and an update on OP&F’s investment in the Trumbull Property Fund.
  
  Motions:
  At its February 2017 meeting, the OP&F Board of Trustees voted on the following motions:
• Approved staff’s and TorreyCove’s recommendation to commit up to $30 million to the KKR Asia Fund III, L.P. Motion passed by unanimous vote (Investment Committee). Approved several revisions to the Derivatives Policy Statement as recommended by Staff and Wilshire Associates. Motion passed by unanimous vote (Investment Committee).
• Approved staff’s recommended manager ratings for Causeway, Fidelity ACWI ex-US, and PIMCO. Motion passed by unanimous vote (Investment Committee).
• Approved the Committee recommendations for the initial determination of disability for the members as identified in the initial determination hearings list presented to the Board on Feb. 22, 2017. Motion passed by unanimous vote. (Disability Committee).
• Approved the Committee recommendation for reconsideration for the members identified in the reconsideration hearings list presented to the Board on Feb. 22, 2017. Motion passed by unanimous vote (Disability Committee).
• Approved the Committee recommendations for appeal hearings for the members identified in the appeals list presented to the Board on Feb. 22, 2017. Motion passed by unanimous vote (Disability Committee).
• Approved the Committee recommendation for Death Fund benefits for the members identified. Motion passed by unanimous vote (Disability Committee).
• Waived the mandatory medical evaluation and filing of annual earnings statements for future years for the members identified in the disability reporting waivers list presented to the Board on Feb. 22, 2017. Motion passed by unanimous vote (Disability Committee).
• Approved requiring the disability benefit recipient in staff’s memorandum dated Feb. 21, 2017 to undergo a medical examination, for the reasons outlined in that memorandum. Motion passed by unanimous vote (Disability Committee).
• Approved the travel recommendations as presented to the Board on Feb. 21, 2017. Motion passed by unanimous vote (Health Care Committee).
  

NEXT BOARD OF TRUSTEES MEETINGS: March 28-29, 2017