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Minutes - 07/30/2014 - Firefighter's Pension Fund BoardMINUTES OF A REGULAR MEETING OF THE BOARD OF TRUSTEES OAK BROOK FIREFIGHTERS’ PENSION FUND July 30, 2014 A regular meeting of the Board of Trustees of the Oak Brook Firefighters’ Pension Fund was held on Wednesday, July 30, 2014 at 9:00 a.m., at the Butler Government Center, Upper Level Conference Room located at 1200 Oak Brook Road, Oak Brook, IL 60523, pursuant to notice, to conduct regular business. CALL TO ORDER BY PRESIDING OFFICER President Michael Erickson called the meeting to order at 8:10 a.m. ROLL CALL Upon roll call the following answered: Present: President Michael Erickson, Secretary John Fagan, Trustee Mark Fleishman, Trustee Timothy Schlindwein and Trustee George Kouba Absent: None Also Present: David Russell of Investment Performance Services, LLC (IPS); Arrived later: Becky Davis of Lauterbach & Amen, LLP (L&A); Amber Powers and Robert Thompson of MB Financial; Treasurer Sharon Dangles; Cathy Doczekalski, Asst. Acting Village Manager TRUSTEES’ CONTINUING EDUCATION SESSION – 8:00 a.m. to 9:00 a.m. Mr. Russell conducted a review of Asset and Liability modeling – forecasting risk and return, methods and shortcomings. This was a one hour session to provide the Trustees with continuing education credit. Ms. Davis arrived at 8:30 a.m., Ms. Powers arrived at 8:53 a.m., Ms. Dangles arrived at 9:02 a.m. and Mr. Thompson arrived at 9:03 a.m. PUBLIC COMMENT –There was no public comment. APPROVAL OF THE PRIOR MEETING MINUTES The Board reviewed the prior meeting minutes presented in the Board meeting packet. • A motion was made by Trustee Kouba and seconded by Trustee Schlindwein to approve the 04/25/2014 regular meeting minutes. Motion carried by unanimous voice vote. • A motion was made by Trustee Kouba and seconded by Trustee Schlindwein to approve the 06/06/2014 special meeting (Schoppe hearing) minutes as written. Motion carried by unanimous voice vote. The Board discussed the review of any closed session minutes, and determined there were none at this time. INVESTMENT PERFORMANCE SERVICES Mr. Russell resumed his review of Asset and Liability modeling – forecasting risk and return, methods and shortcomings to finish up the trustee training session. Ms. Doczekalski arrived at 10:00 a.m., and Ms. Dangles stepped out of the meeting at 10:02, returning at 10:13 a.m. The Board took a break at 10:13 a.m. and reconvened at 10:22 a.m. Trustees present: President Michael Erickson, Secretary John Fagan, Trustee Mark Fleishman, Trustee Timothy Schlindwein and Trustee George Kouba Absent: None Also Present: David Russell of Investment Performance Services, LLC (IPS); Becky Davis of Lauterbach & Amen, LLP (L&A); Amber Powers and Robert Thompson of MB Financial; Treasurer Sharon Dangles Mr. Russell distributed the quarterly investment report and reviewed it with the Board. As of 06/30/2014, the Fund was up 2.7% for the quarter, and 4.4% year-to-date. The ending market value was $24,863,321. The portfolio return was slightly under the benchmark which was up 3.3% for the quarter and 5.3% year-to-date. Second quarter investment earnings were $655,897. As of 06/30/2014, asset allocations were: Domestic Equity 22.9%, International Oak Brook Firefighters’ Pension Fund Minutes of Meeting – July 30, 2014 Page 2 of 3 Equity 15.2%, Fixed Income 37.0%, REIT Mutual Funds 11.0%, Global Tactical Asset Allocation 8.4%, and total Cash 5.6%. The portfolio performance reported a 10.6% return for one year, and 6.8% for three years. Since inception (January 2010), the portfolio return was 7.9%. Mr. Russell discussed his recommendations regarding asset allocation alternatives, cash balances and mutual fund reinvestment options, and indexation of US large cap equity allocation. • A motion was made by Trustee Kouba and seconded by Trustee Schlindwein to direct MB Financial to reinvest mutual fund dividends and capital gain options back into the same mutual fund. AYES: Trustees Erickson, Fagan, Schlindwein, Fleishman and Kouba NAYS: None ABSENT: None • A motion was made by Trustee Kouba and seconded by Trustee Fagan to terminate Black Rock and Main Stay Large Cap Growth and reinvest proceeds into the Guggenheim S&P 500 Index ETF. Trustee Fleishman disclosed that he has investments in Guggenheim, and Trustee Kouba disclosed that he has investments in Black Rock. AYES: Trustees Erickson, Fagan, Schlindwein, Fleishman and Kouba NAYS: None ABSENT: None Mr. Russell discussed his recommendations for investment policy changes related to Schedule B, and a benchmark change for Vanguard REIT Index fund. • A motion was made by Trustee Kouba and seconded by Trustee Schlindwein to change the benchmark from the Wilshire REIT to the FTSE NAREIT All Equity REIT. AYES: Trustees Erickson, Fagan, Schlindwein, Fleishman and Kouba NAYS: None ABSENT: None Ms. Powers distributed and reviewed the MB Financial quarterly report and discussed the economic overview. As of 06/30/2014, the effective duration of the fixed income portfolio was 2.78 years. Recommended changes to the benchmarks were discussed. Mr. Russell recommended adding the Merrill Lynch 13 benchmark and removing the BofAML Treas. 2Yr. Ms. Powers and Mr. Thompson answered all the Board’s questions. A motion was made by Trustee Schlindwein and seconded by Trustee Kouba to accept the investment report as presented. Motion carried by unanimous voice vote. At 11:38 a.m. the following were excused and left the meeting: Mr. Russell, Mr. Thompson and Ms. Powers. ACCOUNTANT’S REPORT The Board noted that the 12/31/13 IDOI Annual Statement was finalized, and the Certification Form filed on 07/07/14. The Board reviewed the financial report summary presented in the Board meeting packet. For the six months ended 06/30/2014, the net position held in trust for pension benefits was $24,953,857.87. A motion was made by Trustee Erickson and seconded by Trustee Fagan to accept the 06/30/2014 financial report as prepared by L&A. Motion carried by unanimous voice vote. Ms. Dangles noted that the Village raised the contributions from 38.83% to 43.46%. The Board reviewed the disbursements presented in the Board meeting packet. A motion was made by Trustee Fagan and seconded by Trustee Kouba to approve the net payroll payouts and vendor payouts for April, May and June 2014. The vendor payouts totaled $131,871.38 (see attached detail). AYES: Trustees Erickson, Fagan, Schlindwein, Fleishman and Kouba NAYS: None ABSENT: None INFORMATIONAL ITEMS AND UNFINISHED BUSINESS • Trustee Training Summary: the Board reviewed the certificates received and recorded in the summary. Oak Brook Firefighters’ Pension Fund Minutes of Meeting – July 30, 2014 Page 3 of 3 • Annual Affidavits of continued eligibility: Ms. Davis reported that the affidavits are due back from the pensioners on 07/31/14, and are currently being received. Ms. Davis will report on the results at the next meeting. • Review and update membership records: the Board noted that the Fund will send out letters in January 2015 for active members to update the pension files, as needed. • Conduct annual medical evaluations of disabled members under 50: the Board determined there were no annual medical examinations required this year. • Discussion of the Oak Brook Board of Trustees’ decision on the actuary studies: the Board discussed a study of the differences between the DOI actuarial report, the Foster and Foster report, the Tim Sharpe report, the Village’s contributions, and the minimum contribution amounts. • FF Jennifer White’s disability application: the Board discussed the current status and potential hearing date scheduled for 09/02/14 at 1:00 p.m. FF White has completed the three medical examinations through INSPE and is currently on Worker’s Compensation/TTD. The Board noted that deliberations for Lt. Mark Schoppe’s disability hearing will be held on 09/02/14 at 9:00 a.m. NEW BUSINESS The Board discussed the ratification of the non-duty disability benefit calculation for Lt. Mark Schoppe. • A motion was made by Trustee Schlindwein and seconded by Trustee Fleishman to ratify Lt. Mark Schoppe’s non- duty disability benefit calculation, as follows, pending the outcome of the 09/02/14 hearing: date of entry was 10/01/1990, date of disability was 03/19/2013, effective date of pension was 03/20/2013; at the age of 53 years, and with 22 years and 5 months of creditable service earned; at 50% of his applicable salary of $97,966.00, the amount of his originally granted monthly pension is $4,081.92, until his first increase in January of 2021. Lt. Schoppe will receive a retroactive payment of $58,726.98 (March 20, 2013 – May 31, 2014). AYES: Trustees Erickson, Fagan, Schlindwein, Fleishman and Kouba NAYS: None ABSENT: None The Board discussed the acceptance of new members into the Fund. • A motion was made by Trustee Schlindwein and seconded by Trustee Fagan to accept the following members into the Fund: Chief Barry Liss, hired on 05/13/2014 with Tier 1 status; and FF Sarie Turner, hired on 07/07/2014 with Tier 2 status. Motion carried by unanimous voice vote. Ms. Dangles left the meeting at 12:24 p.m. The Board noted the following special meetings being held on 09/02/14: at 9:00 a.m. deliberations on Lt. Mark Schoppe’s disability application, and at 1:00 p.m. for the disability hearing for FF Jennifer White. The next regular meeting is scheduled for 10/31/2014 at 9:00 a.m. CLOSED SESSION – The Board agreed there was no need to hold a closed session. ADJOURNMENT A motion was made by Trustee Schlindwein and seconded by Trustee Kouba to adjourn the meeting at 12:43 p.m. Motion carried by unanimous voice vote. Respectfully submitted, Michael Erickson, President John Fagan, Secretary Minutes prepared by Pension Services Administrator, Becky Davis Oak Brook Firefighters' Pension Fund OAKBRKFIREAll Checkbooks Vendor Checks Report Page 104/01/14-06/30/14 07/24/14 04:50 PM Vendor NameChk. No.Check DateAmount FOSTER & FOSTER INC2012204/14/143,500.00 INVESTMENT PERFORMANCE SERVICES,2012304/14/148,620.68 JOHN FAGAN *2012404/14/14122.32 LAUTERBACH & AMEN, LLP2012504/14/143,900.00 MARK FLEISHMAN *2012604/14/14150.00 MESIROW INSURANCE SERVICES INC2012704/14/143,895.00 REIMER & KARLSON LLC2012804/14/141,520.82 Subtotal21,708.82 OAK BROOK BANK/IRS-EFTPS1220104/30/1417,469.61 VILLAGE OF OAK BROOK405004/30/1411,061.77 Subtotal28,531.38 GEORGE KOUBA*2012905/14/14140.00 REIMER & KARLSON LLC2013005/14/141,080.95 Subtotal1,220.95 ILLINOIS STATE TREASURER2013105/28/144,672.95 OAK BROOK BANK/IRS-EFTPS1223905/30/1417,469.61 VILLAGE OF OAK BROOK405505/30/1411,061.77 Subtotal28,531.38 INSPE ASSOC LTD2013206/12/141,152.00 LAUTERBACH & AMEN, LLP2013306/12/141,350.00 REIMER & KARLSON LLC2013406/12/14551.58 VLG OF OAK BROOK*2013506/12/142,297.00 Subtotal5,350.58 MB FINANCIAL BANK5005706/30/141,288.98 MB FINANCIAL BANK5005606/30/145,756.11 OAK BROOK BANK/IRS-EFTPS1227906/30/1423,748.46 VILLAGE OF OAK BROOK406006/30/1411,061.77 Subtotal41,855.32 TOTAL131,871.38