Minutes - 04/27/2006 - Police Pension Fund BoardMINUTES OF THE APRIL 27, 2006 REGULAR
MEETING OF THE BOARD OF TRUSTEES OF THE
OAK BROOK POLICE PENSION FUND APPROVED AS
WRITTEN ON AUGUST 15, 2006.
1. CALL TO ORDER
Due to the temporary absence of President Birdsall, Recording Secretary
Gonnella requested a motion from the floor to appoint a temporary Chairman
for the meeting.
Motion by Assistant Secretary Clingen, seconded by Secretary Feldman, to
appoint Trustee Badowski as the temporary Chairman of the meeting. VOICE
VOTE: Motion carried.
The Regular Meeting of the Board of Trustees of the Oak Brook Police Pension
Fund was called to order by Chairman Badowski at 7:20 p.m. in the Upper
Level Conference Room of the Butler Government Center, 1200 Oak Brook
Road, Oak Brook, IL.
2. ROLL CALL
Recording Secretary Gonnella called the roll with the following persons
PRESENT: Secretary Alan Feldman, Assistant Secretary Clingen and Trustee
Richard Badowski.
ABSENT: Vice President Hall.
IN ATTENDANCE: Darrell J. Langlois, Finance Director; Thomas Sawyer,
Executive Vice President and Terese M. Krafcheck, Vice
President, Oak Brook Bank.
President Birdsall arrived at 7:25 p.m.
3. APPROVAL OF MINUTES
a. Regular Meeting Minutes of February 2, 2006
Motion by Assistant Secretary Clingen, seconded by Secretary Feldman, to
approve the Minutes of the Regular Meeting of February 2, 2006 as presented.
VOICE VOTE: Motion carried.
4. CONSENT AGENDA
All items on the Consent Agenda are considered to be routine in nature and will
be enacted in one motion.
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Motion by Secretary Feldman, seconded by Assistant Secretary Clingen, to
approve the Consent Agenda and authorize expenditures as presented. ROLL
CALL VOTE:
Ayes: 3 - Secretary Feldman, Assistant Secretary Clingen and Trustee
Badowski.
Nays: 0 - None.
Absent: 2 - President Birdsall and Vice President Hall. Motion carried.
a. Approval of December 1 -30, 2005 checks #3180 -3192 and #6210 -6228 in
the total amount of $104,769.62
b. Approval of January 1 -31, 2006 checks #2236, #3193 -3207 and #6229-
6248 in the total amount of $131,973.62
c. Approval of February 1 -28, 2006 checks #2237, #3208 -3221 and #6249-
6267 in the total amount of $131,465.86
d. Approval of Adele M. Fahey & Associates Invoice in the amount of
$112.86
e. Approval of Pension Clerk Hour for the month of December, 2005 thorugh
February, 2006 in the total amount of $425.73
5. ITEMS REMOVED FROM CONSENT AGENDA - None presented..
6. UNFINISHED BUSINESS
a. Approval of Division of Insurance Compliance Audit
Finance Director Langlois explained to the Board that the Division of Insurance
Compliance Audit had several mistakes in the report and it took a year to
correct the final audit. He recommended that the Board propose a motion to
approve the report as corrected.
Motion by Assistant Secretary Clingen, seconded by Secretary Feldman, to
approve the Division of Insurance Compliance Audit Report as presented.
VOICE VOTE: Motion carried.
President Birdsall entered the meeting at 7:25 p.m.
b. Approval of Investment Policy Revision
Finance Director Langlois explained that there was a drafting error in the
proposed Investment Policy revisions that was given to the Board at their last
meeting. He indicated that the Investment Policy had been reviewed by Oak
Brook Bank. The range of allocations was adjusted so that the investments
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6. b.
were in compliance with the Investment Policy.
Motion by Assistant Secretary Clingen, seconded by Secretary Feldman, to
approve the Investment Policy as presented. ROLL CALL VOTE:
Ayes: 4 - President Birdsall, Secretary Feldman, Assistant Secretary Clingen
and Trustee Badowski.
Nays: 0 - None.
Absent: 1 - Vice President Hall. Motion carried.
c. Board of Trustees Election Results
Secretary Feldman, who was appointed to supervise the election of new
members to the Oak Brook Police Pension Fund Board of Trustees, reported
that Richard Badowski was re- elected as the pension recipient representative
and Robert Birdsall and Michael Hall were re- elected to the Board representing
active officers of The Fund.
7. NEW BUSINESS
a. Discussion of Public Act 94 -0079 Prohibition on Sudan Investments
Tom Sawyer, Oak Brook Bank, explained that there were three key deadlines
for this Act. One being January 26, 2006 in which the Board was to provide the
bank with a form from the State Treasurer's Office for all investment managers
to certify that they would not make any new investments at that point in time.
January of 2007 no more than 60% of investments should be in these entities.
In July of 2007, public funds are to be 100% divested of the prohibited entities.
He explained that the bank is in the process of complying with the Act. The
bank has sought outside counsel for clarification of the certification required.
He has requested a legal opinion of what it means "in good faith ", interpretation
of "a forbidden entity" and how does one balance the responsibility as a
fiduciary? He commented that the Act may be challenged by the National
Foreign Trade Union. A similar law was found unconstitutional in
Massachusetts which indicates there is strong case law against this type of
legislation. The pension funds will have to adhere to the law as the Department
of Insurance may request the certifications obtained from each pension fund.
Finance Director Langlois suggested that there is a high likelihood that several
of the investments that are currently owned by The Fund would be in violation
of the Sudan Act. These investments will be in violation when the 100%
standard is applied in July, 2007 and will have to be changed and the
investment policy amended. He recommended that Attorney Reimer discuss
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7. a.
this issue at the next Board meeting. Assistant Secretary Clingen asked if there
are companies that will fit the standard and Mr. Sawyer responded that there are
companies available. The Board recommended that Attorney Reimer speak to
this issue to the Board members.
b. Oak Brook Bank Investment Management Presentation
Mr. Sawyer presented Oak Brook Bank's investment management
performance review. The values added to the investments for the first quarter
of 2006 were $701,099. The portfolio performance review indicated the money
market return was 1.05 %, fixed income return - 0.38 %, equity return 7.29% and
the total account return of 2.85 %. The long term portfolio performance for the
annual performance since inception is 6.11%, stocks 4.79 %, bonds 5.86% and
T -bills 3.49 %.
The portfolio current allocation for the money market is 1%, fixed income
securities 55% and equity securities 44 %. The equity sector current allocations
for large capitalization U.S. stocks is 58 %, small capitalization U.S. stocks
21%, international stocks 16% and REIT Fund is 5 %. The fixed income sector
allocations for U.S Treasury securities is 25 %, U.S. Government agency
notes /bonds non - callable is 43 %, U.S. Government agency notes /bonds callable
is 22 %, taxable municipal bonds is 6 %, U.S. Government agency mortgage
backed securities is 3% and certificates of deposits is 1 %. Finance Director
Langlois indicated that The Fund would need to be re- allocated once a year.
President Birdsall suggested July or October for the Board to consider re-
allocation of funds.
c. Approval of Investment Transactions
President Birdsall requested a motion to approve the investment transactions as
indicated on Tab 5 of the Oak Brook Bank's Investment Performance Report
from January 1, 2006 through March 31, 2006 as presented.
Motion by Trustee Badowski, seconded by Assistant Secretary Clingen, to
approve the investment transactions as indicated on Tab 5 of the Oak Brook
Bank's Investment Performance Report from January 1, 2006 through March
31, 2006 as presented. ROLL CALL VOTE:
Ayes: 4 - President Birdsall, Secretary Feldman, Assistant Secretary Clingen
and Trustee Badowski.
Nays: 0 - None.
Absent: 1 - Vice President Hall. Motion carried.
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7. d. Approval of Terri McCarthy's Application for Membership to the Oak Brook
Police Pension Fund
President Birdsall requested a motion to accept Terri McCarthy's Application
for Membership to the Oak Brook Police Pension Fund as presented.
Motion by Trustee Badowski, seconded by Secretary Feldman, to accept Terri
McCarthy's Application for Membership to the Oak Brook Police Pension
Fund as presented. ROLL CALL VOTE:
Ayes: 4 - President Birdsall, Secretary Feldman, Assistant Secretary Clingen
and Trustee Badowski.
Nays: 0 - None.
Absent: 1 - Vice President Hall. Motion carried.
8. UPDATES AND INFORMATION
Finance Director Langlois discussed the actuarial interest rate as the Pension
Board recommended reducing the assumed rate from 7.50% to 7.25 %. He
explained that he reviewed the Board's recommendation with the Village
Manager and Village President. They elected to delay completion of the
actuarial study pending a discussion with the Village Board. At the Village
Board meeting of April 11, 2006, there was discussion by the entire Village
Board and Actuary Tim Sharpe attended the meeting. The final vote of the
Village Board was to leave the rate unchanged at 7.50 %. Actuary Sharpe is
now completing the study and once this is done the Village Board will approve
the final study. The Village contribution rate in effect for 2006 will be
approximately 18.59% of payroll retroactive to January 1, 2006. For 2005, the
Village rate was 17.66 %.
President Birdsall explained that the Board needed to determine the date for the
annual membership meeting. The newly elected Board members will need to
be sworn into office and the Board will need to elect their officers. Oak Brook
Bank will also give an investment management presentation. The swearing in
ceremony and election of officers will occur before the dinner, recess for dinner
and then have Oak Brook Bank give their presentation after dinner. The
meeting will begin at 6:00 p.m. Assistant Secretary Clingen indicated that he
would have sponsors for an open bar. President Birdsall explained that the
sponsor would have to be someone that is not doing business with The Fund.
Finance Director Langlois remarked that it is acceptable to accept donations to
The Fund to defray costs of the annual membership meeting. The buffet menu
will be "Dinner at 6." The Board then discussed their next regular meeting date
for Monday, July 24th. The Pension Clerk will contact the Board members to
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8. determine if the date is acceptable.
9. ADJOURNMENT
Motion by Assistant Secretary Clingen, seconded by Trustee Badowski, to
adjourn the meeting at 8:30 p.m. VOICE VOTE: Motion carried.
ATTEST:
s /Alan Feldman
Secretary
s /Linda K. Gonnella
Recording Secretary
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