Bloomfield Township investment policies okayed

By Dana Casadei

Bloomfield Township Treasurer Michael Schostak presented three different investment policies – general investment, pension trust investment, and retired employees’ healthcare benefits trust at the board of trustees meeting on Monday, February 12, all of which were approved by the board.

The first policy brought up, general investment, dictates how Bloomfield Township’s surplus funds can be invested, and the policy proposed will conform their current policy to Public Act 20. It currently does not. Conforming the policy to the public act will allow for the township’s policy to automatically change with it.

“I appreciate you bringing it to us now…we’ll continue to be abreast in the best way to do things,” said trustee Chris Kolinski, who made the motion to approve the general investment policy.

Next on the agenda was for the board to consider the approval of the pension trust investment policy, which was also passed unanimously.

This category of investments focuses on the pension trust, and sets certain criteria for the different asset classes Bloomfield Township can hold, as well as how much they can hold of certain asset classes. All of this is dictated by Michigan Public Act 314.

Schostak said they’re a little hamstrung with this specific policy not because of the law itself, but because of a contract signed decades ago by former township supervisor Homer Case regarding the guaranteed deposit account (GDA).

The GDA accounts for roughly 60 percent of the total pension trust, and was contracted with Prudential Retirement Insurance and Annuity Company, now Empower Annuity Insurance Company. Because of this, the township has no control over what the GDA money is invested in or what the return will be.

While they don’t have control over what’s in the GDA, thanks to Public Act 314, the township does have control over the investment of additional funds they’ve put into the trust – including the bonds sold 10 years ago – that totals about $100 million, roughly 40 percent of the total pension trust.

The biggest change within the approved policy about the pension trust is the addition of the basket clause. Said clause allows the township to put alternative investments into the portfolio which may have a higher risk and into the asset class allocation schedule. Alternative investments are less liquid and potentially offer higher yields.

Currently, Schostak has only put five percent in alternative investments for the pension trust, and because the township only has control of 40 percent of said trust, it’s actually only amounts to two percent of the entire trust. 

Much like the approved general investment policy, the approved pension trust policy will automatically be adjusted if there are any amendments made by the state legislature. 

“We’ve come a long ways from originally how vanilla it was as far as the options that you had for the policy,” said trustee Neal Barnett. “I’m glad to see we’re compliant and making some progress where we have some other opportunities to make investments.”

The last policy discussed by Schostak focused on the healthcare benefits trust for retired Bloomfield Township employees. 

This trust has its own law, Public Act 149, and allows for the township to fund a health care investment plan to support promises made for retiree health care. Anything related to the investments goes back to Public Act 314 though. The two policies are virtually the same because they rely on the same law. The only difference between the pension trust and the retirees’ trust is that since there is no GDA type investment for healthcare, they’ll have to be more cognizant of their investments.

“It’s keeping us informed with the state law that governs these vehicles but also gives us a little bit more of a conservative bend,” Schostak said.