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Meeting Date:
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2/24/2022 - 5:30 PM
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Category:
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Report of the Committee on Accountability, Finance, and Personnel
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Type:
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Action
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Subject:
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3. Action on the Milwaukee Board of School Directors Supplemental Early Retirement Plan for Teachers (the Teacher’s Plan) and the Milwaukee Board of School Directors Early Retirement Supplemental and Benefit Improvement Plan (the Administrator’s Plan) Investment Management Services.
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Strategic Plan Compatibility Statement:
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Goal 3 Effective and Efficient Operations
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Attachments
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1. Callan Memorandum to MPS February 2022
2. MPS Early Retirement Supplement and Benefit Improvement Plan - Investment Policy Statement
3. MPS Supplemental Early Retirement Plan for Teachers - Investment Policy Statement
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File Attachment:
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Background:
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On December 2, 2021 BMO Harris Bank, N.A. (BMO Financial Group) notified Milwaukee Public Schools that, due to the transfer of part of BMO’s asset management business to another entity (Ameriprise Financial, Inc.), BMO would no longer provide investment management services to the Milwaukee Board of School Directors Supplemental Early Retirement Plan for Teachers (the Teacher’s Plan) and the Milwaukee Board of School Directors Early Retirement Supplemental and Benefit Improvement Plan (the Administrator’s Plan) as of December 31, 2021. This unanticipated development would have left portions of these two supplemental pension plans, both of which have been frozen for years but still retain significant assets and will require administration for years to come, without an investment manager following less than a full month’s warning.
The Milwaukee Public Schools Office of Human Resources worked with the City Attorney’s office and the plans’ current investment advisors, Callan LLC, to negotiate an extension of BMO’s deadline through February 28, 2022. BMO indicated that this was the absolute latest deadline to which it could agree. In the attached memo, Callan LLC has presented a recommendation for a path forward that would meet the guidelines of the current investment policy statement.
The assets in question represent a relatively small portion of each plan’s total assets, but are important in that they provide liquidity that allows for benefit payments to occur in a timely and efficient manner. Administration seeks approval to invest these assets in the Baird Intermediate Bond Fund, as described in Callan’s memo. This approach will provide a stable and cost-effective solution in the coming months, during which the Administration will work to evaluate the best long-term strategy for these plans, including the potential issuing of Request(s) for Proposal (RFP) regarding necessary investment management and advisory services. Obviously, if and when vendors are selected the Administration will present any resulting contracts to the Board for approval.
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Fiscal Impact Statement:
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This item does not authorize expenditures
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Implementation and Assessment Plan
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Upon approval by the Board, the Administration will direct BMO Financial Group to transfer 100% of the Teacher’s Plan and Administrator’s Plan assets currently under BMO management to the Baird Intermediate Bond Fund on March 1, 2022.
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Recommendation:
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Your Committee recommends that the Board approve the recommendation presented by Callan to invest 100% of the Teacher’s Plan and Administrator’s Plan assets currently under BMO management in the Baird Intermediate Bond Fund, which meets the guidelines of the current Investment Policy Statement.
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Approvals:
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Recommended By:
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Signed By:
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Jacqueline M. Mann, Ph.D. - Board Clerk/Chief Officer
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