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Minutes - 02/16/2011 - Police Pension Fund Board (2)VILLAGE OF OAK BROOK BOARD OF TRUSTEES OF THE POLICE PENSION FUND - Minutes UNOFFICIAL UNTIL APPROVED AS WRITTEN J OR AS AMENDED BY BOARD OF TRUSTEES OF T POLICE PENSION FUND ON April 27, 2011 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 Birdsall at 6:59 p.m. in 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 Robert Birdsall, Vice President Vel Torlo, Secretary Alan Feldman, Trustee Edward Caspers, Trustee Hitesh Patel ABSENT: None IN ATTENDANCE: Finance Director Sharon Dangles, Board Attorney Rick Reimer, Allison Barrett from Lauterbach & Amen, LLP, Phillip Kosmala and Jeff Grenchik from Lowery Asset Consulting, LLC 3. PRESIDENT'S COMMENTS: President Torlo discussed Senate Bill 1679, current pension legislation. Board Attorney Reimer explained that this legislation would turn the investments of all the pension funds over to the Illinois Municipal Retirement Fund, appointing one police and one fire representative State -wide. He stated that this bill is not expected to pass right now. Discussion ensued regarding this issue. 4. APPROVAL OF MINUTES: a. Approval of Board of Trustees Regular Meeting Minutes of October 20, 2010 Motion by Secretary Feldman, seconded by Vice President Birdsall, to approve the Minutes of the October 20, 2010 Regular Board Meeting. 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 Patel, seconded by Trustee Caspers, to approve the Consent Agenda. ROLL CALL: Ayes: 5 — President Torlo, Secretary Feldman, Trustee Caspers, Trustee Patel, Vice President Birdsall Nays: 0 — None Absent: 0 — None. Motion carried. a. Approval of October 1 -31, 2010 checks in the total amount of $148,780.96 b. Approval of November 1 -30, 2010 checks in the total amount of $145,299.64 c. Approval of December 1 -31, 2010 checks in the total amount of $142,143.16 d. Approval of Lowery Asset Consulting, LLC's invoice in the amount of $7,000.00, dated January 31, 2011 e. Approval of Inspe Associates, Ltd. Invoices in the total amount of $4,407.40 f. Approval of Contravisory Investment Management, Inc. invoice for the period October through December 31, 2010 in the amount of $2,370.00. g. Approval of Lauterbach & Amen, LLP's invoices in the total amount of $1,800.00, for September and October, 2010. h. Approval of Richard J. Reimer & Associates, LLC's invoices in the total amount of $1,612.03 BOARD OF TRUSTEES OF THE POLICE PENSION FUND Minutes Page 1 of 4 February 16, 2011 i. Approval of Pension Clerk Kane's invoices in the total amount of $981.25 for the months of July through December, 2010 and January, 2011, including reimbursement for Trustee Training Registrations (4 @ $175.00 each). j. Approval of invoice for Illinois Public Pension Fund Association 2011 Dues in the amount of $775.00 k. Approval of Dillon Reporting Service invoice in the amount of $342.20 1. Approval of Vice President Birdsall's reimbursement for Trustee Training in the amount of $190.00 6. ITEMS REMOVED FROM CONSENT AGENDA— None presented. 7. UNFINISHED BUSINESS— None Presented 8. NEW BUSINESS a. Discussion of 2011 Actuarial Study An attempt was made to contact Actuary Timothy Sharpe with no success. Finance Director Dangles informed the Board that Lauterbach & Amen, LLP also offers actuarial services. She agreed to contact Timothy Sharpe and pass along the Board's wishes to provide calculations for interest at 6.75% and salary at 3.75 %. At the end of the meeting, she reported her discussion with Timothy Sharpe about his valuations and legislative changes. Discussion ensued regarding the assumptions and possibly utilizing another actuarial service. Finance Director Dangles informed the Board that this matter will be discussed at the March 22 n Village Board meeting. It was suggested that when the above requested assumptions are provided, they could be discussed at the upcoming disability hearing on February 24`n. It was requested that Mr. Sharpe provide the assumptions in regarding to Option 2 on his handout and also that Finance Director Dangles obtain a quote for actuarial services from Lauterbach & Amen, LLP for next year. b. Discussion regarding Military Service Purchase Board Attorney Reimer explained that a police officer can purchase up to two years of military service (prior to being a police officer). He explained that nothing in the statute to preclude lump sum or time payments. He explained that any eligible applicants should submit an application which would get turned over to Lauterbach & Amen for processing. He stated that the Board needs to determine whether they would require lump sum payments or accept time payments, and, if so, how much time. He discussed the similarity between transferring creditable service from other plans and some pension boards are suggesting a five -year payment plan and by payroll deduction. He stated that it is important to have the Village handle this for if agreed to. Board Attorney Reimer further explained that the third aspect is interest in paying over time and stated that the portability statute is six percent over five years. Allison Barrett of Lauterbach & Amen stated that it is important to be consistent and that is why boards often parrot the portability statute. She stated that this payroll deduction is not to be deducted pre- taxation. Board Attorney Reimer also brought up individuals who are in the Reserves and not active duty and Ms. Barrett stated that there is a formula for converting the points to time. Discussion ensued regarding interested officers and what would be entailed. At this time, no one has submitted an application, just inquiries. Discussion ensued regarding offering a consistent plan, but that most officers would probably not be able to afford doing this. Motion by Vice President Birdsall, seconded by Secretary Feldman, to allow a military service credit following the guidelines set by the portability rules, with five years or less being the time to be paid back at six percent interest as a payroll deduction or lump sum, as allowed, which includes Reserves' calculations when available. ROLL CALL: Ayes: 5 — Secretary Feldman, Trustee Caspers, Trustee Patel, Vice President Birdsall, President Torlo Nays: 0 — None Absent: 0 — None. Motion carried. Ms. Barrett suggested that Lauterbach & Amen could send letters and then the applicants would sign a formal agreement. Board Attorney Reimer stated that he could create an agreement for this. C. Discussion regarding Village Board's inquiry regarding Police and Fire Pensions BOARD OF TRUSTEES OF THE POLICE PENSION FUND Minutes Page 2 of 4 February 4, 201 0 President Torlo discussed splitting the cost with the Firefighters Pension Board of having Board Attorney Reimer address the Village Board to answer questions regarding police and fire pensions. President Torlo stated that after meeting with the Village Manager, the questions will be direct. Discussion ensued regarding this. Motion by Vice President Birdsall, seconded by Trustee Caspers, to approve the cost, if there is one, for Attorney Rick Reimer attend the Village Board meeting on February 22"". ROLL CALL: Ayes: 5 — Trustee Caspers, Trustee Patel, Vice President Birdsall, President Torlo, Secretary Feldman Nays: 0 — None Absent: 0 — None. Motion carried Board Attomey Reimer and Ms. Barrett exited the meeting at approximately 7:39 p.m. d. Lowery Asset Consulting, LLC/MB Financial Investment Management Performance Reports as of December 31, 2010 Phil Kosmala, of Lowery Asset Consulting, LLC, discussed the recent economical events and recommended maintaining a semi - bullish stance in equities and would not change anything from an asset allocation perspective. Referring to the Executive Summary, he stated that the portfolio returned 3 %, the blended benchmark of 40% stocks, 60% treasury securities returned 2.8 %, pretty good outperformance for the year. He stated that there was a little bit of a drag in the bond portfolio and they had talked to MB Financial about being more defensive. Discussion ensued regarding the fixed income for this year and also corporate bond exposure and utilizing other fixed income managers. Mr. Kosmala also discussed some changes in the Pension Code. (Assistant Village Manager Blaine Wing came briefly into the meeting at around 7:59 p.m. to answer the inquiry regarding whether the payroll deduction option would be allowed for eligible applicants for the military service credit and he affirmed that it would be. [Agenda Item 8. b.] Jeff Grenchik, of Lowery Asset Consulting, LLC, discussed the summary of performance and quarterly returns of the managers. e. Approval of Investment Transactions (fourth quarter, 2010) Motion by Secretary Feldman, seconded by Trustee Caspers, to approve the Investment Transactions from October 1, 2010 through December 31, 2010. ROLL CALL: Ayes: 5 — Trustee Patel, Vice President Birdsall, President Torlo, Secretary Feldman, Trustee Caspers Nays: 0 — None Absent: 0 — None. Motion carried Ratification of 2011 Police Pension Increases Motion by Vice President Birdsall, seconded by Trustee Caspers, to approve the 2011 Pension Benefit Increases as presented. ROLL CALL: Ayes: 5 — Vice President Birdsall, President Torlo, Secretary Feldman, Trustee Caspers, Trustee Patel Nays: 0 — None Absent: 0 — None. Motion carried g. Discussion of Investment Policy Mr. Kosmala stated that they are going to amend the provisions (allowed by the State) of the Investment Policy when the new restrictions of the equity policy kicks in. Trustee Patel suggested that when Lowery BOARD OF TRUSTEES OF THE POLICE PENSION FUND Minutes Page 3 of 4 February 4, 2010 drafts the amended Investment Policy it could be forwarded to the Board for their review and discussion at the next meeting. Copies of a new pensioner packet were handed out and Vice President Birdsall explained the procedure of approval after the individual retires. a. Scheduling of second quarterly meeting in 2011 Agreement to set second quarterly meeting for 7:00 p.m. on Monday, April 25, 2011. 9. ADJOURNMENT: Motion by Trustee Patel, seconded by Trustee Caspers, to adjourn the Board of Trustees of the Police Pension Fund meeting at 8:47 p.m. VOICE VOTE: Motion carried. ATTEST: Alan Feldman /s/ Alan Feldman, Secretary Board of Trustees of the Police Pension Fund BOARD OF TRUSTEES OF THE POLICE PENSION FUND Minutes Page 4 of 4 February 4, 2010