Minutes - 02/01/2006 - Firefighter's Pension Fund BoardMINUTES OF THE FEBRUARY 1, 2006 REGULAR
MEETING OF THE BOARD OF TRUSTEES OF THE
OAK BROOK FIREFIGHTERS' PENSION FUND
APPROVED AS WRITTEN ON APRIL 26, 2006.
1. CALL TO ORDER
The Meeting of the Board of Trustees of the Oak Brook Firefighters' Pension
Fund was called to order by President Ekkert at 8:35 a.m. in the Upper Level
Conference Room of the Butler Government Center, 1200 Oak Brook Road,
Oak Brook, Illinois.
2. ROLL CALL
Recording Secretary Gonnella called the roll with the following persons
PRESENT: President Clifford Ekkert, Secretary Thomas Stanfa, Trustees
James Bodony, Linda K. Gonnella, Scott Harris, Thomas McEllm
and Kevin Quinlan.
ABSENT: Trustees Kenneth T.Kubiesa and Darrell J. Langlois.
IN ATTENDANCE: Richard J. Reimer, Board Attorney; Brian Speers, Merrill
Lynch; Executive Vice President Tom Sawyer and John Falduto, Oak Brook
Bank; Sharon Dangles, Village Accounting Manager and Actuary Timothy
Sharpe.
3. APPROVAL OF MINUTES
a. October 19, 2005
Motion by Secretary Stanfa, seconded by Trustee Quinlan, to approve the
Minutes of the October 19, 2005 Regular Meeting as presented. VOICE
VOTE: Motion carried.
4. CONSENT AGENDA
All items on the Consent Agenda are considered to be routine in nature and will
be enacted in one motion.
Motion by Trustee Bodony, seconded by Trustee McEllin, to approve the
Consent Agenda and authorize expenditures as presented. ROLL CALL
VOTE:
Ayes: 7 — President Ekkert, Secretary Stanfa, Trustees Bodony, Gonnella,
Harris, McEllin and Quinlan.
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4. Nays: 0 — None.
Absent: 2 — Trustees Kubiesa and Langlois. Motion carried.
a. Approval of September 1 -30, 2005 checks #3159 -3169 and #6315 -6335 in
the total amount of $93,165.14
b. Approval of October 1 -31, 2005 checks #2261, #3170 -3182 and #6336-
6356 in the total amount of $97,610.04
c. Approval of November 1 -30, 2005 checks #3183 -3193 and #6357 -6377 in
the total amount of $93,165.14
5. ITEMS REMOVED FROM THE CONSENT AGENDA — None presented.
6. UNFINISHED BUSINESS
a. Ratification of Matthew Mieszala's Application for Membership to the Oak
Brook Firefighter's Pension Fund
President Ekkert asked for a motion to ratify Matthew Mieszala's
Application for Membership to the Oak Brook Firefighter's Pension Fund as
Dr. Fagan's medical examination has found him fit for duty.
Motion by Trustee McEllin, seconded by Secretary Stanfa, to ratify
Matthew Mieszala's Application for Membership to the Oak Brook
Firefighter's Pension Fund as Dr. Fagan's medical examination has found
him fit for duty. ROLL CALL VOTE:
Ayes: 7 — President Ekkert, Secretary Stanfa, Trustees Bodony, Gonnella,
Harris, McEllin and Quinlan.
Nays: 0 — None.
Absent: 2 — Trustees Kubiesa and Langlois. Motion carried.
b. Attorney Richard Reimer — Transfer of Creditable Service
Attorney Reimer addressed the Board members of the transfer of creditable
service of former Fire Chief Robert Cronholm and Firefighter Robert
Robertson that took advantage of HB599. He explained that the first house
bill enacted allowed payment to the Pension Fund of 1 /12th of 1 % of
monthly salary. As soon as the bill was passed, the legislature realized that
the law was incorrect and amended the bill to clarify it was 1% of monthly
salary. He was asked to render an opinion to the Board of Trustees whether
1/12" of 1% or 1% should be used. In his legal opinion, if the legislation is
altered or appealed, the Illinois Constitution prohibits applying the new
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6. b.
legislation to the previous people whose rights were vested. He previously
had indicated to the Board, as he was asked to give his legal opinion, that
during that window of time, before the legislation was amended, that they
should apply 1/12"' of 1% for these two members of the Pension Fund. He
remarked that he disagreed with the Illinois Department of Insurance's
opinion, which regulates the pension board, that I% should have been used.
He believes that this issue will not be resolved until it is challenged it in a
court of law. He indicated that he previously had given the Board several
options: apply 1 /12th of 1% to the two members or the second option of
applying 1%. He suggested that Robertson and Cronholm may or may not
challenge it. The Board of Trustees voted to apply the 1/12 1h of 1% based
on its advice of its legal counsel. He stands by his legal opinion to the
Board of Trustees and he carries malpractice insurance if the pension board
is found to be in non - compliance by the Illinois Department of Insurance
and has to go to a hearing on this issue.
President Ekkert noted that Attorney Robert Trevarthan had indicated in a
written article that a municipality had settled a workmen's compensation
claim with a firefighter or police officer. Then it came to the pension board
and the pension board disagreed and would not give a disability pension.
Attorney Reimer explained no matter what happens with workmen's
compensation, the Board of Trustees is free to apply its own standards for
duty related disability.
Trustee Bodony inquired about the interpretation of the new State Statute
that changes the composition of the Firefighter's Pension Board. The
staggered terms of office are to be determined by the individual Boards.
Attorney Reimer explained, even though the State Statute does not clarify
this, the Illinois Department of Insurance suggests that the terms be
staggered. Some boards have posted during the election that the firefighter
who has the most votes has the longer term in office and the second
firefighter has the lowest term in office. Or you indicate on the nomination
petition whether a candidate wishes to run for a two or three year term. The
Village President should stagger the terms of office also. The terms for
civilians are one and two year terms of office and every successor term is
three years. The terms for active firefighter /disabled firefighter are three
terms. The election has to be by Australian ballot or secret ballot. He also
indicated that if only one person runs that an election does not need to be
held but the person wins by acclamation.
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7. NEW BUSINESS
a. Discussion of Actuarial Study
Trustee Gonnella remarked that Finance Director Langlois had indicated that
the impact of the Board's decision of 1 /12th of 1% for Cronholm and
Robertson was $160,000 to The Fund. Actuary Sharpe explained that this is
the actual impact of the transfer itself not this 1 /12th issue. It would only
impact The Fund by $500.00 a year. The issue is Shoppe and Robertson
brought six and five years of service respectively from prior fire departments
and their pension is based upon $20,000 at their prior fire service. Now their
salary is $80,000 and Oak Brook has the $60,000 salary differential for those
five years of prior service.
Actuary Sharpe gave an actuarial review of the Oak Brook Firefighter's
Pension Fund. The investment return was less than expected at 5.45% and
salaries increased more than expected. There were also two service transfers.
The increase in accrued liability to the Pension Fund for the two transfers is
$160,000 thus the percent funded decreased and the Village's contribution
has increased. The annual payroll increased 6.1 % with an average increase
of 7.5 %. There were three new members, no terminations, two retirements
and no incidents of disability. The percent funded decreased from 80.0% to
77.0 %. The Village's contribution increased from $492,598 to $577,661 or a
17.3% and the percentage increased from 21.43% to 23.68 %.
Motion by Trustee Gonnella, seconded by Trustee Quinlan, that the Board
direct Actuary Sharpe to complete the 2006 Actuarial Study of the Oak
Brook Firefighter's Pension Fund using an interest rate assumption of 7.5%
and a salary increase assumption of 5.25 %, which will result in a Village
contribution of approximately 23.68% of payroll, the final results which shall
be determined once final 2005 investment data is available from the
accounting firm. ROLL CALL VOTE:
Ayes: 7 — President Ekkert, Secretary Stanfa, Trustees Bodony, Gonnella,
Harris, McEllin and Quinlan.
Nays: 0 — None.
Absent: 2 — Trustees Kubiesa and Langlois. Motion carried.
b. Discussion of Public Act 94 -0079 Prohibition on Sudan Investments
President Ekkert explained that Finance Director Langlois requested that the
Oak Brook Firefighter's Pension Fund investment managers respond to this
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7. b.
at the next quarterly meeting. Tom Sawyer, Oak Brook Bank, indicated that
they will review this further and give a presentation at the next quarterly
meeting.
c. Oak Brook Bank Investment Presentation
Tom Sawyer, Oak Brook Bank, gave the investment management
presentation. Value added from the investments for the fourth quarter totaled
$58,919, the money market return was 0.95 %, fixed income 0.57% with a
total account return of 0.57 %. The year -to -date value added from
investments totaled $247,347, year -to -date total account return was 2.47 %,
stocks were 4.91 %, bonds 2.66% and T -bills were 3.07 %.
The fixed income section allocations were U. S. Treasury Securities 27 %, US
Government Agency Notes/Bonds non - callable 28 %, US Government
Agency Notes /Bonds callable 30 %, Taxable Municipal Bonds 9% and US
Government Agency Mortgage backed securities 6 %. Mr. Sawyer indicated
that they would like to extend the duration of the portfolio but patience is
more important in this process.
d. Approve Investment Transactions
Motion by Secretary Stanfa, seconded by Trustee Bodony, to approve the
investment transactions from October 1, 2005 through December 31, 2005
as indicated in Tab 5 of Oak Brook Bank's Investment Management
Presentation. ROLL CALL VOTE:
Ayes: 7 — President Ekkert, Secretary Stanfa, Trustees Bodony, Gonnella,
Harris, McEllin and Quinlan.
Nays: 0 — None.
Absent: 2 — Trustees Kubiesa and Langlois. Motion carried.
e. Merrill Lynch Investment Presentation
Brian Speers, Merrill Lynch, gave an investment management presentation
of The Fund indicating the balance at the beginning of the year was
$9,403,045. $750,000 was taken out of The Fund and The Fund earned
approximately $805,000 in dividends and appreciation. The market value of
The Fund at the end of the quarter was $9,463,252. He explained that they
review the funds in order to outperform the benchmark in the future. They
have been reviewing the Allianz Fund and Goldman Sachs Small Cap Funds
using the historical data of their five and ten year performances. The rest of
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7. e.
the funds have performed well within their respective index. The Goldman
Sachs Fund has been under review and there appears to be a turn in their
performance. They have over weighted the large cap funds in the allocation
as they have historically given The Fund the most consistent returns.
John Falduto, Oak Brook Bank, indicated that the Department of Insurance
sent a December 29, 2005 Siren addressing the prohibition on Sudan
investments that included a sample letter that should be sent to all of our
investment managers and the January siren indicates that the investment
providers sign off on the letters and the forms they designated. Tom Sawyer
explained that the this was poorly drafted legislation on the Sudan
investments and the certification forms may be challenged based on a
Supreme Court decision that they may be unconstitutional but the Board
should comply with this.
f. Approve Investment Transactions
Motion by Trustee Bodony, seconded by Secretary Stanfa, to approve the
investment transactions as indicated in Merrill Lynch's Report as of
December 31, 2005. ROLL CALL VOTE:
Ayes: 7 — President Ekkert, Secretary Stanfa, Trustees Bodony, Gonnella,
Harris, McEllin and Quinlan.
Nays: 0 — None.
Absent: 2 — Trustees Kubiesa and Langlois. Motion carried.
President Ekkert noted that Finance Director Langlois had included in the
agenda packet the Asset Summary of The Fund. Sharon Dangles,
Accounting Manager, explained that Director Langlois highlighted on the
target allocation sheet that the Equity Fund is 45% but it is presently at
47.2 %. He recommended that in July that the re- allocation of The Fund be
discussed in July. It was agreed by the Board that this be discussed at the
April meeting also.
g. Discussion and Approval of 2006 Pension Increases
President Ekkert requested a motion to approve the 2006 pension increases
as recommended by Finance Director Langlois and retroactive pay for Sean
Smyth.
Trustee McEllin explained that status reports are sent annually to the pension
recipients requesting if there are any changes. Unfortunately Sean Smyth did
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7. g.
not notify Director Langlois that he had a child in 1997 and Watkins also had
two children and that pension changes need to be made. The pension forms
need to be changed and highlighted if a change occurs to indicate.
Motion by Trustee Bodony, seconded by Trustee Harris, to approve the 2006
pension increases as indicated by Finance Director Langlois and the
retroactive pay for Sean Smyth. ROLL CALL VOTE:
Ayes: 7 — President Ekkert, Secretary Stanfa, Trustees Bodony, Gonnella,
Harris, McEllin and Quinlan.
Nays: 0 — None.
Absent: 2 — Trustees Kubiesa and Langlois. Motion carried.
h. Approval of Lauterbach & Amen Professional Services
President Ekkert requested a motion to approve the 2006 accounting services
of Lauterbach & Amen for the Oak Brook Firefighter's Pension Fund.
Motion by Secretary Stanfa, seconded by Trustee McEllin, to approve the
2006 Accounting Services of Lauterbach & Amen for the Oak Brook
Firefighters' Pension Fund. ROLL CALL VOTE:
Ayes: 7 — President Ekkert, Secretary Stanfa, Trustees Bodony, Gonnella,
Harris, McEllin and Quinlan.
Nays: 0 — None.
Absent: 2 — Trustees Kubiesa and Langlois. Motion carried
i. Discussion of Pension Board Election
President Ekkert discussed the election process for the newly formed pension
board as formulated by new legislation. Trustee Gonnella remarked that
President Quinlan is aware of the election and there is a process that the
Village Board requires to be followed and candidate names brought before
the Board of Trustees for approval. President Ekkert explained that a
mailing is going to the pension recipients for nominations and ballots will be
mailed. The active firefighters will be e- mailed and paged to them if anyone
is interested in running for office. A meeting is held for nominations from
the floor.
President Quinlan returned to the Board meeting and indicated that he would
like to approach Alan Feldman to serve on this Board. He would notify the
public that the Village is looking for candidates for this Board. Trustee
Yusuf, liaison for public safety, and Manager Boehm will review any
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7. i.
candidate names submitted and interview individuals. Then he will
recommend to the Village Board of Trustees, with the endorsement of the
Trustee liaison, their recommendation of candidates for the pension board.
President Ekkert suggested February 1St nominations be requested. The
firefighter that receives the most votes would be for a three year term and the
other would be a two year term. A run -off election will be held if there is a
tie. A notice of the election will be posted at the fire houses and the Village
Hall. The deadline for nominations will be Monday, February 20th. The
nominations will be mailed out by the end of the week. By law, on April 17th
the Board has to have all members appointed or elected. On Tuesday, April
14th the election will be held.
Trustee McEllin asked if Village Clerk Gonnella could be the pension clerk
for the Oak Brook Firefighter's Pension Fund. The new Board will have to
decide if they wish to hire her as their pension clerk.
The Board discussed a meeting date of the newly appointed and elected
Pension Board. The Board discussed the date of April 26th for the next
pension board meeting.
President Ekkert reviewed the election process as follows: the nomination
forms with prepaid envelopes must be returned postmarked by February 24tH
They will be mailed out by this weekend. The ballots will be mailed out
March l 01h and then returned postmarked by April 1St. The first two weeks in
April a meeting will be conducted to hold the election and announce the
retiree's election. Trustee Bodony indicated that according to Illinois
Department of Insurance Scott Brandt, for the official election, the current
incumbent Board will establish the election procedures to fill each elected
position accordingly. These election procedures must be voted on by the
sitting Board and be included in the minutes of a scheduled meeting. This is
in reference to the terms of office of the three vacancies that are being filled.
Motion by Trustee Bodony, seconded by Trustee McEllin, that the election
for new members of the Oak Brook Firefighter's Pension Board include that
a retiree's term of office be for a three year term, the two active firefighters
position be for a two and one year term and to be placed on the ballot
accordingly. VOICE VOTE: Motion carried.
Trustee Bodony commented that a few members of The Fund had
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a
am
i.
approached him on the diligence in confirming the duty disability status of
pension recipients. They wanted to know what the Board does to insure that
the current duty disability recipients of The Fund are disabled and that fraud
is not occurring. The Board discussed this issue as Oak Brook has such a
high incidence per capita of duty disability and is one of the highest in the
state. Trustee Gonnella commented that the Board's Attorney Reimer stated
if a firefighter cannot perform the duties then the Board must give him/her
duty disability. If on duty, the firefighter cannot perform his /her function as
a firefighter then the Board must give them a duty disability. If the Board
relies on an attorney for disability procedures, you should accept his legal
opinion.
INFORMATION & UPDATES — It was a consensus of the Board of Trustees
that the next meeting be held April 26, 2006.
ADJOURNMENT
Motion by Trustee Body, seconded by Secretary Stanfa, to adjourn the regular
meeting at 10:58 a.m. to the regular meeting. VOICE VOTE: Motion carried.
ATTEST:
s /John Fagan
Secretary
s /Linda K. Gonnella
Recording Secretary
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