Minutes - 03/11/2015 - Police Pension Fund BoardVILLAGE OF OAK BROOK
BOARD OF TRUSTEES OF THE POLICE PENSION FUND - Minutes
March 11, 2015
UNOFFICIAL UNTIL APPROVED AS WRITTEN X
OR AS AMENDED BY BOARD OF TRUSTEES OF THE
POLICE PENSION FUND ON April 22, 2015
1. CALL TO ORDER:
The Special Meeting of the Board of Trustees of the Oak Brook Police Pension Fund was called
to order by Vice President Alan Feldman at 7:00 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: Vice President Alan Feldman, Secretary Edward Caspers, Trustee Hitesh Patel,
Trustee Benjamin Kadolph
ABSENT: President Vel Torlo (arrived at approximately 8:19 p.m.)
IN ATTENDANCE: Village Trustee Candidate-Charles Thompson II, Jessica Fain and Todd
Schroeder of Lauterbach & Amen, Pension Clerk Rose Kane
3. NEW BUSINESS:
a. Discussion and action regarding 2015 Actuarial Assumptions
Mr. Schroeder and Ms. Fain presented the Actuarial Valuation report and referred to page 6. Ms.
Fain discussed the changes in the valuation from last year and stated that the projected valuation
for 2015 was a little less, due to demographic changes, specifically, the death of a retiree and the
death of a surviving spouse. She also stated that assets were less this year, but that they are
deferring the loss to smooth things out. She added that contributions were a little higher than
expected, so that the net effect resulted in a current valuation of about $1.2 million.
Mr. Schroeder then referred to page 10 of the report and discussed that the contribution went up
about $7,000 or $8,000 due to investment performance. He stressed that using the five-year
averaging on the assets for investment performance is taking into account pieces of the last four
years and discussed the volatility effects. Discussion ensued regarding the contribution
recommendation.
Mr. Schroeder stated that they looked at all the assumptions and updated them and he also
discussed the different mortality tables, especially the Lauterbach 2012 and the RP2000 that the
Village utilized. He referred to page 6 of the report and stated that the contribution last year was
$60,000 higher than the recommendation and served to decrease the unfunded liability by about
the same amount. He affirmed that the Entry-Age Normal Method was used and that the
recommendation was with 100% funding in 2040.
Trustee Kadolph inquired regarding “accrued liability” and Mr. Schroeder explained that it is an
actuarial term for where the assets are expected to be from the start of the fund. He stated that it
is almost $48 million at this point. Mr. Schroeder stated that the main differences between the
actuarial assumptions is that Foster & Foster is using the RP2000 and also the expected increase
in total payroll. He explained how he calculated this, coming in at 4%, based on historical data.
Mr. Schroeder stated that he utilized data from about 150 different Illinois police departments to
develop the Lauterbach 2012 Mortality Table used in calculating the recommendation.
Discussion ensued regarding the presentation of the Village’s actuary at the Village Board last
night. Mr. Schroeder remarked that the RP2014 table has been released, but the public sector
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 1 of 2 March 11, 2015
data has been pulled out of it. He suggested projecting the assumptions out 20 years and using
the RP2000 table as a comparison to the Lauterbach 2012 Mortality Table.
Mr. Thompson discussed the idea of putting out a $5 million pension obligation bond to get ahead
of the unfunded liability. Lengthy discussion ensued regarding same and ways to reduce the
under-funded pension liability. It was suggested that State requirements and market volatility are
major factors which have added to the under-funded pension liability.
Vice President Feldman remarked that with a higher percentage of payroll growth, more money
will come into the Fund faster and will help the calculation to reduce the unfunded liability. Mr.
Schroeder explained how the 4% affects the unfunded liability and that it was brought down from
5.5%. Trustee Kadolph discussed the differences in past payroll increases and that the active
members of the pension fund are contributing 9.91% of their pay toward their pensions. Mr.
Schroeder stated that they do a full scale review on all assumptions every five years, but that they
are going to be doing that on a more frequent basis.
In response to an inquiry by Vice President Feldman regarding the Total Normal Cost valuations
listed on page 14 of the report, Mr. Schroeder replied that Total Normal Cost represents the
portion of liability expected to increase for the year because the active employees have another
year of service. He stated that in the contribution recommendation the interest on the normal cost
is included – the expected payroll ($3,618,976) is added to 6.75% of the total normal cost
($728,190).
Vice President Feldman discussed offering an explanation of the differences in the actuarial
assumptions at a quiet sit down meeting. Discussion regarding the misconceptions about
employee contributions and a perception that public safety employees are receiving
“sweeteners”.
President Torlo entered the meeting at approximately 8:19 p.m.
Discussion ensued regarding possibly meeting with the Village Manager and two Village Trustees
to help the Village Board understand the basic differences in the actuarial assumptions.
Motion by Trustee Kadolph, seconded by Vice President Feldman, to approve
Lauterbach’s Actuarial Valuation Report.
ROLL CALL:
Ayes: 5 –Secretary Caspers, Trustee Patel, Trustee Kadolph, President Torlo, Vice President
Feldman
Nays: 0 – None
Absent: 0 – Motion carried.
Pension Clerk Kane inquired regarding when to hold the annual dinner meeting. Trustee Patel
stated that he would prefer Tuesdays or Fridays. Consensus to hold the meeting at the Bath &
Tennis Club in May and to avoid May 22nd and May 26th.
4. ADJOURNMENT:
Motion by Trustee Kadolph, seconded by Secretary Caspers, to adjourn the Board of
Trustees of the Police Pension Fund meeting at 8:32 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 2 of 2 March 11, 2015