Minutes - 04/26/2012 - Firefighter's Pension Fund BoardMINUTES OF A REGULAR MEETING OF THE BOARD OF TRUSTEES
OAK BROOK FIREFIGHTERS' PENSION FUND
APRIL 26, 2012
A regular meeting of the Board of Trustees of the Oak Brook Firefighters' Pension Fund was held
on April 26, 2012 at 9:OOAM at the Butler Government Center, West Wing Training Room located
at 1200 Oak Brook Road, Oak Brook, IL 60523 pursuant to notice, a copy of which is attached to
their minutes.
CALL TO ORDER BY PRESIDING OFFICER
President Michael Erickson called the meeting to order at 9:10 a.m.
ROLL CALL
Upon roll call the following answered:
Present: President Michael Erickson, Secretary John Fagan, Trustee Mark Fleishman, Trustee
Timothy Schlindwein, Trustee George Kouba
Absent: none
Also Present: Treasurer Sharon Dangles, David Russell of Investment Performance Services, LLC
(IPS), Robert Thompson and James Hrabak of MB Financial, Becky Davis of
Lauterbach & Amen, LLP (L &A)
PUBLIC COMMENT — none at this time
APPROVAL OF THE PRIOR MEETING MINUTES
a. February 29, 2012 special meeting minutes: The Board reviewed the prior meeting minutes as
presented in the board meeting packet. A motion was made by Schlindwein to approve the
February 29, 2011 minutes as presented, seconded by Fagan. Motion unanimously carried
by voice vote.
CONSENT AGENDA
The Board reviewed and discussed the first quarter 2012 disbursements Consent Agenda and follow
up detail as presented in the board meeting packet. A motion by Fagan to approve the Consent
Agenda stating net payroll payouts and vendor payouts for January, February and March
2012 of $500,903.84, seconded by Fleishman. Roll Call Vote: Erickson — yes, Fagan — yes,
Schlindwein — yes, Fleishman — yes, Kouba — yes. Motion unanimously carried.
a. Approve IDOI Compliance fee: The Board noted that the IDOI Compliance fee invoice would
be received in May and payment is due in June. A motion was made by Fagan to authorize
payment of the IDOI Compliance fee invoice upon receipt, seconded by Fleishman. Roll
Call Vote: Erickson — yes, Fagan — yes, Schlindwein — yes, Fleishman — yes, Kouba — yes.
Motion unanimously carried.
INVESTMENT PERFORMANCE SERVICES
• Review portfolio quarterly performance: Russell distributed copies of the 03/31/2012
Investment report and discussed it with the Board. As of 03/31/2012, the Fund was up 6.0% for
the quarter (and YTD), with a total market value of $23,256,853. Portfolio growth from
investment earnings was $1,278,361 for the quarter. Asset allocations were: total domestic
equity 36.3 %, total international equity 15.0 %, total fixed income 45.7% and total cash 2.9 %.
Russell reviewed the quarterly compliance report (tab 3) and recommended amending the
investment policy to reflect allocation to mid -cap equity. MB recommended amending the
investment policy to allow corporate bond investment as permissible by the Illinois Statutes. A
motion was made by Schlindwein to increase the equity allocation to 55% as per the
Illinois Statutes on July 1, 2012, by moving funds from fixed income, seconded by Fagan.
Roll Call Vote: Erickson — yes, Fagan — yes, Schlindwein — yes, Fleishman — present,
Kouba — yes. Motion carried 4 — yes, 1— present.
The Board took a break at 10:10 a.m.
The Board reconvened at 10:15 a.m.
MB discussed bond options and their recommendations. A motion was made by Schlindwein
to amend the investment policy statement to allow 30% investment in corporate bonds as
of July 1, 2012, per the Illinois Statutes, seconded by Fagan. Roll Call Vote: Erickson —
yes, Fagan — yes, Schlindwein — yes, Fleishman — yes, Kouba — yes. Motion unanimously
carried.
Fixed income benchmark strategies to compare /contrast yields: Russell distributed a survey of
various fixed income managers' recommended bond portfolio allocations under the IL Pension
Code and discussed it with the Board offering his recommendation to remain with MB based on
their conservative cost and allocation strategies; discussion to consider GTAA. MB distributed
their 03/31/12 quarterly fixed income performance report and discussed it with the Board. Total
Fund is up 0.73 for the latest quarter (outperforming the benchmark which was down 1.10 %),
change due to investment is $78,778; ending market value is $10,634,763. Asset allocations
are: fixed income 96.51 %, cash & equiv. 3.49 %. A broader discussion regarding corporate
bonds will be presented at the next meeting. MB indicated that even with permission to go with
corporate bonds, this will happen in a very prudent manner over a 6 -12 month process, with a
well balanced portfolio built very cautiously. MB distributed a comparison summary on
government agencies, treasuries and taxable municipals. Russell will work with MB and come
back to the Board at the next meeting for further discussion and analysis.
Dangles briefly left the meeting at 11:09 a.m., returning shortly thereafter.
A motion was made by Schlindwein to change the Asset Allocation to 55% in Equity, with
an allocation of 10% to GTAA and to reduce the allocation of Fixed Income to 45% as of
July 1, 2012, seconded by Fleishman. Roll Call Vote: Erickson — yes, Fagan — yes,
Schlindwein — yes, Fleishman —yes, Kouba — yes. Motion unanimously carried.
A motion was made by Schlindwein to amend Schedule A of the Investment Policy.
Statement to allocate 10% to Large Cap Equity Funds (range 6-14 %) and create a 5%
allocation to Mid Cap Equity Funds (range 3 -8 %) per investment advisor's (IPS)
recommendation, seconded by Fleishman. Roll Call Vote: Erickson — yes, Fagan — yes,
Schlindwein — yes, Fleishman — yes, Kouba — yes. Motion unanimously carried.
* *Noted for the next agenda: The amended Schedule A of the Investment Policy Statement will
be presented by IPS at the next meeting for formal adoption by the Trustees. * *
Hrabak was excused and left the meeting at 11:21 a.m.
A motion was made by Fagan to accept the investment reports as presented, seconded by
Schlindwein. Motion unanimously carried by voice vote.
Russell was excused and left the meeting at 11:24 a.m.
a. Rules and Regulations: The Board reviewed the media/outside organization relations steps
presented in the board meeting packet. After review and discussion, the Board agreed to
remove item #6 and present the listing to Board Attorney for counsel. A motion was made by
Fagan to present the Board media response steps as an addition or addendum to the Board
Rules and Regs (omitting #6) subject to Board Attorney counsel, seconded by Kouba. Roll
Call Vote: Erickson — yes, Fagan — yes, Schlindwein — yes, Fleishman — yes, Kouba — yes.
Motion unanimously carried.
b. RFP Actuarial Services 04/30/2012: The Board discussed the responses received to the RFP.
Costs ranged as follows: L &A $2,150, Foster & Foster $3,500, Tepfer $3,000; no RFP response
from Tim Sharpe or Goldstein. The Board directed Davis to follow up with a final request for
response from Sharpe and Goldstein giving 10 days for their reply. TABLED until the next
meeting. (Post Meeting Note: Davis emailed final request responses to both Sharpe and
Goldstein on 04126112.) '
NEW BUSINESS
a. Treasurer's Report - Asset Summary of the Fund: The Board agreed that since the investment
advisor's report includes this information, the asset summary included in the Treasurer's report
is no longer needed and will now be a part of the Investment Performance Services presentation.
b. Anprove retirement benefits for Mark C. Bahnsen: The Board reviewed the L &A calculation
for Bahnsen's retirement benefits as presented in the board meeting packet. A motion was
made by Fleishman to approve the L &A calculations for Mark C. Bahnsen's retirement
benefits effective 04/01/2012, with 32 years, 6 months of service, at 75% of the applicable
salary of $79,716.00, the amount of originally granted monthly pension of $4,982.25,
amount of annual pension $59,787.00, seconded by Kouba. Roll Call Vote: Erickson —
yes, Fagan — yes, Schlindwein — yes, Fleishman — yes, Kouba — yes. Motion unanimously
carried.
c. Election results for active and retired member: The Board reviewed the notices of election
results presented in the board meeting packet. Retired member election: L &A conducted the
election and tallied the 26 ballots received; the results were as follows: Mark Fleishman
received 16 votes and Konrad Weis received 10 votes. Having received the majority of votes,
Mark Fleishman was elected to another 3 year term, ending May 2015. The Board requested a
copy of the retiree election results be sent to the retired members via email. Erickson will
provide the current email listing to Davis. Active member election: John Fagan ran unopposed
and was elected by acclamation to another 3 year term, ending May 2015. A motion was made
by Erickson to certify the election results as stated, seconded by Schlindwein. Motion
unanimously carried by voice vote.
d. Appointed member terms: The Board discussed the Village Board's appointment of George
Kouba for a 2 year term (expiring May 2014) and Tim Schlindwein for a 3 year term (expiring
May 2015). The Board welcomed new trustee, Mr. George Kouba, to the Board and thanked
Tim Schlindwein for his continued participation. Treasurer, Sharon Dangles, will continue as
the Treasurer, but not as a voting member on the Board; the Board expressed their gratitude for
her continued support and participation with the Fire Pension Board.
e. Board Officer Position elections: The Board discussed keeping Board positions the same. A
motion was made by Fleishman to elect the same slate of officers: President — Mike
Erickson, Secretary — John Fagan, seconded by Schlindwein. Motion unanimously carried
by voice vote.
f. Bonus inclusion in pension benefits: The Board discussed questions regarding bonuses and if
they are included in the pensionable salary amounts. Dangles indicated that bonuses are not
typically pensionable; Davis was requested to seek a response from Allison Barrett from L &A
asking if this is addressed in the statutes. (Post Meeting Note: Barrett responded with salary
definitions from the IDOI, which were emailed to Dangles and Fagan on 04/27/2012)
g. Quarterly financials distribution: The Board discussed a question presented regarding
distribution of quarterly financial reports. The Board agreed that the investment information
reported in the minutes of the Board meetings provides the desired information to the retired
members. Davis was directed to send the approved minutes via email to all pensioners with
available email addresses. Harris Bank services: The Board reviewed the announcement from
L &A regarding the new level of services offered to L &A clients as presented in the board
meeting packet. The Board discussed that current account services are with MB Bank and no
change is needed at this time. A motion was made by Schlindwein requesting MB account
online access for Treasurer Sharon Dangles, seconded by Fleishman. Motion unanimously
carried by voice vote. Thompson indicated he will follow up.
INFORMATION & UPDATES
a. Municipal Compliance Report (MCR) update: The Board discussed the recent negotiation
between Dangles and L &A to reduce MCR costs from $500 to $250 per annual report.
b. Trustee Training Summary The Board reviewed the trustee training summary as presented in
the board meeting packet. Board members with past year shortages will apply current year
credit hours until complete and up -to -date.
C. 2012 trustee training plans: The Board noted that training requirements must be met on a yearly
basis, and effective this year, Open Meetings Act (OMA) must be completed by all Board
members. Davis will email the web link to assist members to complete the training as soon as
possible. Kouba indicated that he will attend the IPPFA 12 -5 CTP beginning 08/15/2012. The
Board affirmed that all registration fees for required trustee training are pre- approved for
payment.
The Board discussed the Village minutes regarding the tax levy recommendation. Davis distributed
a handout from L &A, `Discussion and Analysis — Developing a Sound Funding Policy'. Davis
briefly discussed the three meeting presentation given by L &A to assist the Pension Fund(s) and the
Village to come together on a funding policy that enhances the overall health of the Pension Fund(s)
and to understand the key aspects of the actuarial process to ensure informed decisions are made
and future events anticipated that could be crucial. This discussion and analysis prepared and
presented by L &A has proven to assist in a beneficial dialogue with the Village officials to develop
and support a sound funding policy for the long -term sustainability of the Fund(s). No action was
taken at this time.
CLOSED SESSION — none needed
ADJOURNMENT
A motion was made by Schlindwein to adjourn the meeting at 12:39 p.m., seconded by Kouba.
Motion unanimously carried by voice vote.
Respectfully submitted,
Attest: Michael Erickson, President
John Fagan, Secretary
Minutes prepared by Pension Services Administrator, Becky Davis