Minutes - 04/28/2005 - Firefighter's Pension Fund BoardMINUTES OF THE APRIL 28, 2005 REGULAR
MEETING OF THE BOARD OF TRUSTEES OF THE
OAK BROOK FIREFIGHTERS' PENSION FUND
APPROVED AS WRITTEN ON JULY 27, 2005.
1. CALL TO ORDER:
The Meeting of the Board of Trustees of the Oak Brook Firefighters' Pension
Fund was called to order by President McEllin at 8 33 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 Thomas McEllin, Secretary Clifford Ekkert, Trustees
Robert Cronholm, Linda K. Gonnella, Kenneth Kubiesa, Darrell J.
Langlois and Thomas Stanfa.
ABSENT: Trustee Kevin Quinlan.
IN ATTENDANCE: Retired Firefighter Raymond Petter; Firefighter Robert
Robertson; Richard Reimer, Board Attorney; Brian Speers and Jim Brolin,
Merrill Lynch; Vice Presidents Tom Sawyer, Terese Krafcheck and John
Falduto, Oak Brook Bank.
President McEllin announced that an election occurred for retired members to
the Board. He thanked Trustee Ray Petter who has served twelve years on the
Board of Trustees of The Fund as a retired firefighter and also served twelve
years as an active firefighter. He also announced that Fire Chief Robert
Cronholm has accepted a Fire Chief position with another Fire Department and
will be leaving and thanked him for his many years of service on the Board. He
then announced that Scott Harris was elected to the Board of Trustee as the
representative to the pension recipients of The Fund.
- _- _Pre sident McEllin- explained -that he- wishes to- -help the new Fire- Chief - -when- the - - - - -- -- — - - -- - - - - --
appointment occurs and therefore he is stepping down as President of the Board
of Trustees.
3. ELECTION OF OFFICERS:
President McEllin requested a motion to elect a President of the Board of
Trustees.
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3. Motion by Trustee Cronholm, seconded by Trustee Langlois, to elect Clifford
Ekkert, as President of the Oak Brook Firefighters' Pension Fund Board of
Trustees. Nominations were closed as no further nominations were made.
VOICE VOTE: Motion carried.
Trustee McEllin requested a motion to elect a Secretary of the Oak Brook
Firefighters' Pension Fund Board of Trustees.
Motion by Trustee Cronholm, seconded by President Ekkert, to elect Thomas
Stanfa as Secretary of the Oak Brook Firefighters' Pension Fund Board of
Trustees. Nominations were closed as no further nominations were made.
VOICE VOTE: Motion carried.
President Ekkert then presided at the meeting. He stated that a request has been
made requesting that the Board address Agenda Item 7. a., Discussion and
Possible Action of Credible Service – Robert Cronholm & Robert Robertson.
The Board concurred with this recommendation.
7. a. Discussion and Possible Action of Credible Service – Robert Cronholm &
Robert Robertson.
Trustee Cronholm explained that last July legislation was passed that
changed the benefits of reciprocity. The language that was prepared did not
mean the intent of the legislation. Notably the difference of the 1/ 12t1' of the
1 % contribution of payroll. In an effort to correct the situation, on March
11 t" the Governor signed new legislation trying to re -coop the 11/12 th of 1%
of payroll contributions for firefighters that have not retired but have
submitted a request to gain that reciprocity.
Attorney Reimer addressed the Board on this subject. He explained that an
initial HB599 was passed in July with an error that basically relates how
much it would cost a firefighter to buy previous service. The legislators that
drafted the bill wanted it to be 1% of payroll as this is a significant amount
of- -money. —An- amendatory -act was - approved- effective -March 4 -1; 2005: –The -- - - - - --
question is what happens to the firefighters that tried to take advantage of
the old law of the 1/12'h of 1 %. It was debated when the act was being
amended whether there would be any constitutional implications. When the
bill was enacted, the remedy was that anyone that took advantage of HB599
and was paid 1 /12th of 1% had an option to get his/her money refunded.
They did not believe there was a constitutional issue. The Department of
Insurance's opinion is that there aren't any constitutional implications for
those changing the benefit.
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7. a.
Trustee Cronholm stated that he spoke with Department of Insurance and
they read it as the letter of the law. Attorney Reimer stated when you
become a member of The Fund that your rights are vested and the
legislature cannot change those rights and diminish them by subsequent
legislation. He believes that there is a problem with applying the law that
went into affect with the amendments dated March 11, 2005 of those who
applied under the old law. He stated that the Board has to decide for those
firefighters that applied to the Board, under the law, will the Board apply
the new amendments HB619 or apply the initial HB599. It will be a
significant amount of money to The Fund and to the participant's
beneficiaries.
Trustee Langlois stated from the constitutionality perspective, he spoke with
the Department of Insurance and in their opinion the Board should apply the
1% in the new law. The Department indicated that they are not changing
the benefits, as they have not been diminished, but they changed the amount
to be paid.
Attorney Reimer indicated that the Department of Insurance is leaving out
the rights of individuals. The courts will have to enforce the law according
to its language without considering intent of the legislators that they made in
the language. The only time a court may consider a mistake in the intent of
the law, if the court states that it does not understand what it means by
looking at the Statute. Now they look at legislative intent, which would
include what they meant as they clearly did not mean to put in the 1 /12th of
Attorney Reimer suggested that anyone that applied should be locked in at
the 1 /12th of 1 %. President Ekkert noted that he attended a pension seminar
in January and it was explained that there were two laws. With the previous
law of 1 /12th, they stated they would not ask for retroactive pay when they
knew there would be new legislation coming in as that law came in March
-1 -1; 2005 -- Anyone -- who - appl -ied -and- r- etired- will -be- under -the old - law.. - -- - - -- -- - --
Attorney Reimer reiterated that his legal opinion regarding the law is that if
anyone applied that you have to apply the law before the changes as he
represents over 100 pension boards.
Trustee Cronholm noted that he has applied for this benefit. Trustee
Langlois asked if this isn't done with the firefighters now, would the Board
lose the ability to go back and get the 1 /12th. Attorney Reimer stated yes
that if the Board renders a decision. If the Board applies the old law, it
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7. a.
would trigger the thirty -five day administrative review, allowing the
firefighters to pay under the old law. After the thirty -five days, the Board
loses the jurisdiction to alter, amend or modify its decision.
Trustee Kubiesa suggested keeping the options open. Trustee Langlois
suggested using I% and if it is found unconstitutional, then refund the funds
with 6% interest. Trustee Langlois explained that the two firefighters that
have expressed interest in this, the cost at 1% is approximately $29,000.
11 /12t" of $29,000 is the impact to The Fund. Fire Chief Cronholm and
Firefighter Robertson applied for this. Fire Chief Cronholm remarked that
Actuary Timothy Sharpe stated to him that actuarially this is insignificant to
The Fund.
Attorney Reimer suggested that if the Board did not follow the law, that a
potential lawsuit could be filed. Trustee Kubiesa stated the safest way to go
to insure that there are not going to be any lawsuits from the members of
The Fund is to go the 1 /12th. He indicated that it is the fiduciary
responsibility of the Board to protect The Fund and the consequences are
less costly in this respect to avoid litigation. Attorney Reimer agreed that he
believes he could defend the Board in this respect.
Trustee Langlois again reiterated that everyone could be made whole by
using the 1 % and agree to refund with interest and for whatever they want to
pay and let someone else fight the battle. If a participant does not want to
wait, then they could sue the Board. The Board then discussed what would
happen if any of the membership would join in a class action lawsuit against
the Board with this option.
Motion by Trustee Kubiesa, seconded by Trustee Harris, to apply provisions
of HB599 to firefighters Robert Cronholm and Robert Robertson for
reciprocity. ROLL CALL VOTE:
Ayes: 5 – President Ekkert, Secretary Stanfa, Trustees Harris, Kubiesa and
McEllin.
-- -- Nays1 --- Trustee- L -anglois. - -- — — — - --
Abstain. 1 – Trustee Gonnella.
Pass. 1 – Trustee Cronholm.
Absent: 1 – Trustee Quinlan. Motion carried.
Trustee Langlois asked how to proceed. Trustee Cronholm indicated that
the Statute provides for a ten year repayment of past contribution. Would
the Board consider a maximum of a ten -year pay back at 6% payments or
negotiate a shorter term or lump sum He suggested that the Board work
with the two applicants before the Board or anyone subsequently that
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7. a.
applies to arrange from a minimum of a lump sum payment to a maximum
of a ten year repayment of a monthly payment with interest. Trustee
Langlois stated that he would develop the payment if the Board would agree
that the payment would not exceed ten years with each individual at 6 %.
Motion by Trustee Kubiesa, seconded by Secretary Stanfa, that the payment
for reciprocity for Robert Cronholm and Robert Roberston range from a
minimum of a lump sum payment to a maximum of a ten year repayment of
monthly payments with 6% interest. VOICE VOTE: Motion carried.
Abstain: Trustee Cronholm.
7 b. Accept Letter of Credible Service - Richard Sander and Mark Schoppe
President Ekkert requested that this agenda item be addressed at this time
The Board concurred with this recommendation. President Ekkert
explained that the Board has already established that both applicants would
be at the 1% since they both applied after the March 11, 2005 change in the
law.
Trustee McEllin noted that the document from Mark Schoppe applied as of
April 27, 2005 as he also sent a letter to the Board of Trustees March 25,
2005 in which he applied. Richard Sander applied March 31, 2005. Trustee
Langlois explained that their reciprocity calculation would be at I%
Motion by Trustee Langlois, seconded by Trustee Cronholm, to accept
Mark Schoppe's application for credible service and require the 1%
contribution of $11,155.48 with interest calculated through May 1, 2005
which would change depending upon the payment terms agreed upon.
VOICE VOTE Motion carried.
-- - -- — -T -r- ustee -L- anglois- explained -that with- Richard-- Sander -he- has -to- return - his - - - --
refund with interest and request the President of the Board of Trustees to
write a letter to Richard Sander indicating the amounts that are owed and
request his terms of repayment. He owes with interest calculated through
May 1, 2005 he owes back contributions of $2,378.16 and a return of his
refund plus 6% interest of $18, 464.25.
Motion by Trustee Langlois, seconded by Trustee Cronholm, to accept
Richard Sander's application for credible service and request President
Ekkert to write a letter indicating the amounts owed and request his terms of
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7. b.
repayment of his back contributions of $2,378.16 and return of his refund of
$18,464.25 plus 6% interest as of May 1, 2005. VOICE VOTE: Motion
carried.
President Ekkert recessed the meeting at 9:27 a.m. The meeting reconvened at
9:33 a.m. He recommended that the Board address Agenda Item 8. a. at this
time The Board concurred with his recommendation.
8. NEW BUSINESS
a. Oak Brook Bank Investment Management Presentation
Tom Sawyer indicated that this was the second full quarter that the bank has
a second full performance of The Fund. The beginning of the first quarter
the market value of The Fund was $9,611,706 and the value added from
investments were $- 34,468. Interest rates increased during that period with
bond prices decreased as a result. The portfolio performance of the money
market return was 0.55 %, fixed income was -0.35% with a total account
return of - 0.34 %. The duration at the beginning of their managing was 3.3
years and now the duration of The Fund is 4.17 as they have extended this
according to the investment policy. The yield to maturity has increased from
3.86% to 4.26% which accounts for the income earned and price change in
the bonds owned. The fixed income sector allocations are US Treasury
Securities 25 %, US Government Agency Notes /Bonds non - callable 38 %, US
Government Agency Notes/bonds callable 20 %, taxable Municipal Bonds
9% and 8% US Government Agency Mortgage Backed Securities.
8. b. Approve Investment Transactions
Motion by Trustee Cronholm, seconded by Secretary Stanfa, to approve the
investment transactions of January 1, 2005 through March 31, 2005 in
Section 5 of the Oak Brook Bank investment presentation ROLL CALL
-- VOTE : - -- - - - - -- -- - --- - -- ------ - - - - --
Ayes: 8 - President Ekkert, Secretary Stanfa, Trustees Cronholm,
Gonnella, Harris, Kubiesa, Langlois and McEllin.
Nays: 0 -None.
Absent: 1 - Trustee Quinlan. Motion carried.
c. Merrill Lynch Investment Management Presentation
Brian Speers gave their investment presentation of the individual funds that
have been purchased. He noticed that the Pimco Value Fund is now called
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8. the Alliance Fund because there has been a merger between the two funds
With that merger there has been some change in management. They do not
see any major changes with that fund or long term impact with The Fund.
Most of the funds have outperformed their benchmarks and some have under
performed a little but nothing that they are overly concerned about. No
repositioning of the funds is necessary at this time. The Federal government
is pushing up the short term rates and oil prices have remained relatively
high and had a huge move over the last eighteen months. When those two
things happen, historically a majority of the time it leads to an economic
slowdown and they are watching for that now. They are not overly
optimistic for the equity markets for the next several quarters He believes
that the Board's decision to take the $300,000 and reallocate it at the last
meeting was a good move as their overall feeling of the market in general is
a note of caution. The one thing in the portfolio that probably has more risk
than the rest is the real estate as it pertains to interest rates.
Trustee Langlois asked if the Goldman Sachs Fund, which most of the
performance is lagging their indexes, is there another fund. Mr. Speers
indicated they can review this but they are confident with the management of
that fund over the long term as they are more conservative than the index
They would recommend holding that fund as they are confident with their
long term track record. They will bring to the Board for their next meeting
recommendations for other funds if they determine it is appropriate. The
Board then discussed their investments. Mr. Speer recommended that the
Board might wish to consider selling some of their real estate funds in the
near future due to interest rate increases at their next quarterly meeting.
Trustee McEllin asked the Board to consider the target allocations should be
within 2.5% and that the investment manager lighten up on real estate and go
into a safer equity.
Motion by Trustee Kubiesa, seconded by Trustee Cronholm, to allow the
investment manager to reduce up to 2.5% at their discretion in the real estate
- -- portion of- the - per- tfolio- ROL- L -- C- AL-- L-- V- O- T -E = - -- — -
Ayes: 8 - President Ekkert, Secretary Stanfa, Trustees Cronholm, Gonnella,
Harris, Kubiesa, Langlois and McEllin.
Nays: 0 - None.
Absent: 1 - Trustee Quinlan. Motion carried.
d Approve Investment Transactions
Motion by Trustee Cronholm, seconded by Trustee Kubiesa, to accept the
performance portfolio review as of March 31, 2005 as presented by Merrill
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8. d.
Lynch. ROLL CALL VOTE:
Ayes: 8 – President Ekkert, Secretary Stanfa, Trustees Cronholm, Gonnella,
Harris, Kubiesa, Langlois and McEllin.
Nays: 0 –None.
Absent: 1 – Trustee Quinlan. Motion carried.
e. Accept Sean Kelly's Application for Membership to The Fund
President Ekkert requested a motion to accept Sean Kelly's application for
membership to The Fund, Trustee Cronholm stated that his physician
indicated that Sean Kelly needs to be re- evaluated but once he is hired there
is no discretion by the Board on this issue.
Motion by Trustee Cronholm, seconded by Secretary Stanfa, to accept Sean
Kelly's application for membership to the Oak Brook Firefighters' Pension
Fund. ROLL CALL VOTE:
Ayes: 8 – President Ekkert, Secretary Stanfa, Trustees Cronholm, Gonnella,
Harris, Kubiesa, Langlois and McEllin.
Nays: 0 –None.
Absent: 1 – Trustee Quinlan. Motion carried.
f. Accept David Kaczmarczyk's Application for Membership to The Fund
President Ekkert requested a motion to accept David Kaczmarczyk's
application for membership to The Fund
Motion by Trustee Cronholm, seconded by Trustee McEllin, to accept David
Kaczmarczyk's application for membership to The Fund. ROLL CALL
VOTE:
Ayes: 8 – President Ekkert, Secretary Stanfa, Trustees Cronholm, Gonnella,
Harris, Kubiesa, Langlois and McEllin.
Nays: 0 –None.
Absent: 1-- Tr- ustee- Quin -lan— Motion - Carr- ied - -- — --
g. Update of Department of Financial and Professional Regulation Audit of
The Fund
Trustee Langlois explained that two weeks ago the Department of Insurance
came for a compliance examination of The Fund. The last audit occurred in
1994 and they examined all of the records from that point forward. The
examiner will now issue a report of their findings.
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8. h. Approval of the Actuarial Report of the Oak Brook Firefighters' Pension
Fund
Trustee Langlois explained that Actuary Sharpe indicated that the value of
the assets increased a small amount and he recommended a Village
contribution of 2143% of payroll retroactive of January 1, 2005 Once
approved by the Firefighters' Pension Board and the Police Pension Board
he will bring these requests for consideration of approval by the Village
Board of Trustees at a meeting in May.
Motion by Trustee Cronholm, seconded by Trustee Kubiesa, to request a
Village contribution of 21.43% of payroll retroactive to January 1, 2005 and
will be presented to the Village Board of Trustees for their consideration of
approval. ROLL CALL VOTE:
Ayes: 8 — President Ekkert, Secretary Stanfa, Trustees Cronholm,
Gonnella, Harris, Kubiesa, Langlois and McEllin.
Nays: 0 — None.
Absent: 1 — Trustee Quinlan. Motion carried.
President Ekkert then returned to the regular schedule of the Agenda for the
meeting.
4. APPROVAL OF MINUTES•
a. Board of Trustees Meeting of February 9, 2005
It was noted that there was an error in the date of the minutes listed on the
agenda as February 3, 2005. The minutes were of the meeting of February 9,
2005.
Motion by Trustee Cronholm, seconded by Secretary Stanfa, to approve the
Board of Trustees meeting of February 9, 2005 as presented. VOICE VOTE:
Motion carried.
5. 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 Langlois, seconded by Secretary Stanfa, to approve the
Consent Agenda and authorize expenditures as presented. ROLL CALL
VOTE:
Ayes: 8 — President Ekkert, Secretary Stanfa, Trustees Cronholm, Gonnella,
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5. Harris, Kubiesa, Langlois and McEllin.
Nays: 0 — None.
Absent: 1 — Trustee Quinlan.
a. Approval of January 1 -31, 2005 Warrants #3051 -3062 and #6151 -6170 in
the total amount of $89,011.80
b. Approval of February 1 -28, 2005 Warrants #2215, #3063 -3073 and #6171-
6190 in the total amount of $88,964.30
6. ITEMS REMOVED FROM THE CONSENT AGENDA — None presented.
9. ADJOURNMENT:
Fire Chief Cronholm remarked that this would be his last Pension Board
meeting and that it has been a pleasure for him serving on the Board. Trustee
Langlois asked how his reciprocity worked going back to Lockport The day
that he leaves Oak Brook's contribution to his pension will be locked in based
on his service to Oak Brook.
Motion by Trustee Cronholm, seconded by Trustee McEllin, to adjourn the
regular meeting at 10:18,a.m. to the regular meeting. VOICE VOTE: Motion
carried.
ATTEST.
Thomas Stanfa
Secretary
Linda K Gonnella
Recording Secretary
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