Minutes - 10/22/2014 - Police Pension Fund BoardVILLAGE OF OAK BROOK
BOARD OF TRUSTEES OF THE POLICE PENSION FUND - Minutes
October 22, 2014
UNOFFICIAL UNTIL APPROVED AS WRITTEN √
OR AS AMENDED BY BOARD OF TRUSTEES OF THE
POLICE PENSION FUND ON January 28, 2015
1. CALL TO ORDER:
The Regular Meeting of the Board of Trustees of the Oak Brook Police Pension Fund was
called to order by President Vel Torlo at 7:01 p.m. in the Upper Level Conference Room of the
Samuel E. Dean Board Room of the Butler Government Center, 1200 Oak Brook Road, Oak
Brook, Illinois.
2. ROLL CALL:
The roll was called with the following persons
PRESENT: President Vel Torlo, Vice President Alan Feldman, Secretary Edward Caspers,
Trustee Hitesh Patel, Trustee Ben Kadolph
ABSENT:
IN ATTENDANCE: Courtney Cervantes (via teleconference), Jeff Kowalczyk and Bill Lowery of
Lowery Asset Consulting, LLC, Bob Thompson of MB Financial, Finance Director/Treasurer
Sharon Dangles, Derek Flessner of Lauterbach & Amen, Village Trustee Don Adler, Pension
Clerk Rose Kane
4. PRESIDENT’S COMMENT: None presented
5. APPROVAL OF MINUTES:
a. Approval of Board of Trustees Regular Board Meeting Minutes of July 23, 2014
Motion by Secretary Caspers, seconded by Trustee Kadolph, to approve the Minutes of
the July 23, 2014 Special Board Meeting as amended. VOICE VOTE: Motion carried.
6 CONSENT AGENDA:
All items on the Consent Agenda are considered to be routine in nature and will be enacted in
one motion.
a. Approval of July 1-31, 2014 checks in the total amount of $186,106.81
b. Approval of August 1-31, 2014 checks in the total amount of $193,422.94
c. Approval of September 1-30, 2014 checks in the total amount of $190,692.31
d. Approval of Lowery Asset Consulting, LLC's invoice in the amount of $7,000.00, dated July
29, 2014, for Second Quarter, 2014 services
e. Approval of Mesirow Financial statement in the amount of $3,635.00, dated August 1, 2014
for Fiduciary Liability Insurance
f. Approval of Reimbursement to Pension Clerk Kane’s for Fall Pension Conference
registrations and lodging in the total amount of $1,196.10
g. Approval of Pension Clerk Kane’s timesheet in the total amount of $606.25 for services
rendered March through July, 2014
h. Approval of Reimer & Karlson, LLC’s invoices, dated July 13, 2014 and September 8, 2014,
in the total amount of $578.63
Motion by Secretary Caspers, seconded by Trustee Kadolph, to approve the Consent
Agenda.
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 1 of 3 October 22, 2014
ROLL CALL:
Ayes: 5 – Vice President Feldman, Secretary Caspers, Trustee Patel, Trustee Kadolph,
President Torlo
Nays: 0 – None
Absent: 0 – Motion carried.
7. ITEMS REMOVED FROM CONSENT AGENDA – None presented.
8. UNFINISHED BUSINESS – None presented.
9. NEW BUSINESS
a. Lowery Asset Consulting, LLC Report for Third Quarter, 2014
Mr. Lowery referred to the Economic Overview on page 6 of Lowery’s Quarterly Report
(“Report”) and discussed the markets both domestically and globally and the GDP
actual/forecasted percentages. Regarding the Financial Markets Overview on page 7, he
remarked that Health Care continues to have a strong performance and also referred to the
stocks and bonds on page 10. Per Section II. Executive Summary of the Report:
The Fund investment assets at MB Financial had a value of approximately
$32,176,191 as of September 30, 2014. The current allocation is 61.4% Equity and
38.6% Fixed Income and Cash as defined by the Illinois State Statute. The current
portfolio allocation:
40.7% Fixed Income (includes PIMCO Mutual Fund)
25.8% S&P500
6.1% Russell 2000
18.2% MSCI EAFE
3.0% S&P Nat Resources
4.5% Wilshire REIT
1.7% Cash
Mr. Lowery discussed the Manager Performance by Strategy, starting on page 19, and
remarked that Mitchell Group Energy was down a bit since inception in September, 2014. He
stated that the REITs (page 21) have the absolute strongest asset class in the portfolio, a big
beneficiary of rates going lower. Mr. Kowalczyk commented that the housing market was up
2.4% just in September and that is new/existing home sales. Mr. Lowery stated that they do not
have any changes to recommend at this time.
Mr. Kowalczyk reported that Master Limited Partnerships, according to the Department of
Insurance, are not an allowable investment because they are not a corporation. He discussed
ETFs which are allowable because it is a stock, but still not a corporation, and also remarked
about publicly-traded REITs being allowed. He added that he brought this information to the
Department of Insurance, with the only recourse being litigation.
b. MB Financial Investment Management Performance Report on Third Quarter, 2014
Mr. Thompson referred to page 11 of the MB Report and stated that the portfolio is just shy of
$12,000,000 for the Third Quarter. He discussed the allocations on page 12 and remarked
about the performance of the taxable municipal bonds, which were detailed on page 14. He
stated that they were disappointed with the performance of the corporate bonds and will
continue to watch them as well as the taxable municipal bonds.
c. Approval of Investment Transactions for Third Quarter, 2014
Motion by Secretary Caspers, seconded by Trustee Kadolph, to approve the Investment
Transactions for the Third Quarter, 2014.
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 2 of 3 October 22, 2014
ROLL CALL:
Ayes: 5 – Secretary Caspers, Trustee Patel, Trustee Kadolph, President Torlo, Vice President
Feldman
Nays: 0 – None
Absent: 0 – Motion carried.
d. Discussion regarding Pension Board credit card
President Torlo discussed the need for a Board credit card to pay for trustee training seminars
and conferences so that it would not be on anyone’s personal credit card. Discussion ensued
regarding the best way to handle this. Finance Director/Treasurer Dangles discussed that there
is a credit card policy she can forward to the Board. Mr. Thompson from MB offered to put
Clerk Kane in touch with someone at the bank to set this up.
e. Discussion/update regarding Village Actuarial Results and Pension Funding
Finance Director/Treasurer Dangles updated the Pension Board members on the Village
Board’s decisions regarding the actuarial results. She explained that the Village Board is given
three actuarial reports, one from the Village’s actuary, Foster & Foster, one from the Police
Pension Board’s actuary, Lauterbach & Amen, and one from the Illinois Department of
Insurance. She discussed the differences between the three reports and stated that Lauterbach
& Amen’s numbers came in lower than the Department of Insurance numbers. She stated that
the differences are in the 90-100% amortization and different mortality tables used and stated
that the Village Board voted on the number from the Department of Insurance, which is about
$71,500 higher than the Police Pension Board’s actuary’s number. Finance Director/Treasurer
Dangles stated that the Village’s actuary recommended $1.5 million, Lauterbach & Amen was
$1.2 million and the Department of Insurance was $1.3 million. She inquired whether the
Pension Board would like to use the same actuary as the Village Board, but the Pension Board
receiving its own report. Discussion ensued regarding the value of having different actuaries for
different viewpoints and the Pension Board’s fiduciary responsibilities to their membership.
Trustee Kadolph discussed that a representative from Foster & Foster talked at the Fall Pension
Conference about a new mortality table coming out (2014). Finance Director/Treasurer Dangles
stated that the Village is looking at $15 million in unfunded liability just for Police Pension.
Lengthy discussion ensued.
10. INFORMATION & UPDATES
a. Scheduling of first quarterly meeting in 2015:
Consensus to meet January 28, 2015.
11. ADJOURNMENT:
Motion by Secretary Caspers, seconded by Trustee Kadolph, to adjourn the Board of
Trustees of the Police Pension Fund meeting at 8:24 p.m. VOICE VOTE: Motion carried.
ATTEST:
Edward J. Caspers /s/
Edward J. Caspers, Secretary
Board of Trustees of the Police Pension Fund
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 3 of 3 October 22, 2014