Minutes - 04/25/2013 - Police Pension Fund BoardVILLAGE OF OAK BROOK
BOARD OF TRUSTEES OF THE POLICE PENSION FUND - Minutes
April 25, 2013
UNOFFICIAL UNTIL APPROVED AS WRITTEN X
OR AS AMENDED BY BOARD OF TRUSTEES OF THE
POLICE PENSION FUND ON July 17. 2013
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 6:48 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, Trustee Hitesh Patel, Trustee Benjamin Kadolph
ABSENT: President Val Torlo, Secretary Edward Caspers (who arrived shortly after roll
call),
IN ATTENDANCE: Finance Director Sharon Dangles, Teresa Krafchek and James Hrabak from
MB Financial, Jeff Kowalczyk, Courtney Cervantes and Jeff Gabrione from Lowery Asset
Consulting, LLC
3. PRESIDENT'S COMMENTS: None presented.
4. APPROVAL OF MINUTES:
a. Approval of Board of Trustees Special Meeting Minutes of March 21, 2013
Motion by Trustee Kadolph, seconded by Trustee Patel, to approve the Minutes of the
March 21, 2013 Special Board Meeting as amended. VOICE VOTE: Motion carried.
Secretary Caspers arrived at approximately 6:49 p.m.
5 CONSENT AGENDA:
All items on the Consent Agenda are considered to be routine in nature and will be enacted in
one motion.
a. Approval of January 1 -31, 2013 checks in the total amount of $172,805.28
b. Approval of February 1 -28, 2013 checks in the total amount of $170,201.01
c. Approval of March 1 -31, 2013 checks in the total amount of $176,557.26
Motion by Trustee Patel, seconded by Trustee Kadolph, to approve the Consent Agenda.
ROLL CALL:
Ayes: 4 — Secretary Caspers, Trustee Patel, Trustee Kadolph, Vice President Feldman
Nays: 0 — None
Absent: 1 — President Torlo. Motion carried.
6. ITEMS REMOVED FROM CONSENT AGENDA: None presented.
7. UNFINISHED BUSINESS: None presented.
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 1 of 3 April 25, 2013
8. NEW BUSINESS:
a. Lowery Asset Consulting, LLC Report on First Quarter, 2013
Jeff Kowalczyk updated the Board on his discussions with the Department of Insurance and he
said he received an email from the compliance officer stating that any mutual fund that has the
ability by prospectus to own something outside of the code, then this is outside what is allowable.
Mr. Kowalczyk discussed his opinion regarding this and how it would affect all mutual funds. He
then introduced Jeff Gabrione, Director of Research for Lowery.
Mr. Gabrione discussed that the first quarter's theme was a rally in risk assets and that the U.S.
had a fantastic quarter, but a tough quarter for higher quality fixed income bonds. He said there
was renewed momentum in the U.S. economy, housing prices are firming and starting to turn
positive, auto sales are improving, unemployment is down and consumer confidence has been
up. He added that the Fed is a big part of this rally and that U.S. companies are in better shape.
He stated that the allocation the Pension Fund made to U.S. equities helped during the quarter,
but international equities are still 30% off of their high and discussed the international markets
and situations. Mr. Gabrione also discussed the performance of equities in general.
Discussion ensued regarding the percentage the Pension Fund has in equities and the
government policies regarding same and that low unemployment needs to be in place for growth.
It was stated that up to 55% may be invested in equities, but if an overage is market - driven, it
does not have to be reallocated, but the Pension Fund cannot add to it. It was suggested to
move to 54% perhaps in three stages and Mr. Kowalczyk and Mr. Gabrione suggested that
additional allocations be in domestic equities.
Mr. Hrabak stated that as money is raised to fund the equity purchases, they have been selling
longer -dated bonds as a defense mechanism. It was brought up by Ms. Krafchek that the
Pension Fund might already be over the 55% and it was discussed whether to liquidate the Pimco
Fund purchase to be in compliance if that Fund is considered an equity. It was then suggested
that the 10% extra could be allowable because Pimco is a mutual fund if covered in the
investment policy. It was stated that the Pension Fund is at 27% in corporate bonds. Trustee
Patel inquired regarding how to get a catalyst for growth at this low interest rate, whether in high
quality or risk equities and Mr. Gabrione agreed to check into this. It was affirmed that the Fund's
policy states currently that it must stay at 55% in equities and it was suggested to amend the
policy at the next meeting to allow for the extra 10 %.
Mr. Gabrione referred to page 13 of their report and stated that the total portfolio is up 3.6, but
with the dynamic benchmark it is almost 4.1 and he stated that the managers in general did pretty
well. He mentioned that they are trying to find more small cap managers. General discussion
ensued. Mr. Hrabak stated that they do not spend a lot of time looking at peer groups, rather,
they concentrate on the benchmark. Mr. Gabrione expressed that it seems that the managers
who are doing well now are going down in quality.
b. MB Financial Investment Management Performance Report on First Quarter, 2013 —
discussion included in above paragraphs
c. Approval of Investment Transactions for First Quarter, 2013
Motion by Trustee Kadolph, seconded by Secretary Caspers, to approve the Investment
Transactions for First Quarter, 2013.
ROLL CALL:
Ayes: 4 — Trustee Patel, Trustee Kadolph, Vice President Feldman, Secretary Caspers
Nays: 0 — None
Absent: 1 — President Torlo. Motion carried
Lowery and MB Financial representatives exited the meeting at approximately 7:44 p.m.
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 2 of 3 April 25, 2013
d. Discussion of 2013 Actuarial Assumptions' Recommendations to Village Board and Village
Board Action
Finance Director Dangles updated the Pension Board on what had occurred since the last
meeting and explained that Lauterbach's actuarial report was different from Tim Sharpe's report
in that Tim Sharpe recommended the projected unit cost method and going from the 1984
mortality table to the RP2000, so when he did his calculations the percentage of salary was
33.06% and Lauterbach "s was approximately 30 %. She stated that the Village Board voted to go
with the higher amount recommended by Tim Sharpe.
e. Approval of Application for Members Pension Benefits Retirement Pension of Jeffrey R.
Arendt
Motion by Trustee Kadolph, seconded by Secretary Caspers, to approve the Application
for Members Pension Benefits Retirement Pension of Jeffrey R. Arendt
ROLL CALL:
Ayes: 4 — Trustee Kadolph, Vice President Feldman, Secretary Caspers, Trustee Patel,
Nays: 0 — None
Absent: 1 — President Torlo. Motion carried
f. Approval of Application for Admission to the Oak Brook Police Pension Fund of Jeffrey B.
Swegler
g. Approval of Application for Admission to the Oak Brook Police Pension Fund of Deanne
Wasielewski
General discussion regarding authorized positions and process for creating an entry-level police
officer eligibility list and eventual hiring.
Motion by Secretary Caspers, seconded by Trustee Kadolph, to approve the Applications
for Admission to the Oak Brook Police Pension Fund of Jeffrey B. Swegler and Deanne
Wasielewski
ROLL CALL:
Ayes: 4 —Vice President Feldman, Secretary Caspers, Trustee Patel, Trustee Kadolph
Nays: 0 — None
Absent: 1 — President Torlo. Motion carried
9. INFORMATION & UPDATES
a. Scheduling of third quarterly meeting in 2013
Agreement to set third quarterly meeting for 7:00 p.m. on Wednesday, July 17, 2013.
9. ADJOURNMENT:
Motion by Secretary Caspers, seconded by Trustee Patel, to adjourn the Board of Trustees
of the Police Pension Fund meeting at 8:02 p.m. VOICE VOTE: Motion carried.
ATTEST:
Edward Caspers /s/
Edward Caspers, Secretary
Board of Trustees of the Police Pension Fund
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 3 of 3 April 25, 2013