Minutes - 07/25/2012 - Police Pension Fund BoardVILLAGE OF OAK BROOK
BOARD OF TRUSTEES OF THE POLICE PENSION FUND - Minutes
OR AS AMENDED X BY BOARD OF TRUSTEES OF THE
POLICE PENSION FUND ON August 13 2012
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 Pro -Tem Alan Feldman at 7:00 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: Vice President Alan Feldman, Secretary Edward Caspers, Trustee Hitesh Patel
ABSENT: President Val Torlo, Trustee Ben Kadolph
IN ATTENDANCE: Finance Director Sharon Dangles, Teresa Krafchek and Jim Hrabak of MB Financial,
Bill Lowery, Jeff Kowalczyk and Courtney Cervantes of Lowery Asset Consulting, LLC, Pension Clerk Rose
Kane
Pension Clerk Kane stated that President Torlo was unable to attend the meeting and had expressed his
desire for Vice President Alan Feldman to serve as President Pro-Tern in President Torlo's absence.
3. PRESIDENT'S COMMENTS
Vice President (President Pro -Tem) Feldman inquired regarding the changes at Lowery Asset Consulting,
LLC and Mr. Lowery explained the reasons for the departure of Phil Kosmala and Jeff Grenchik from
Lowery. Mr. Kowalczyk explained his and Ms. Cervantes' backgrounds.
4. APPROVAL OF MINUTES:
a. Approval of Board of Trustees Special Meeting Minutes of May 17, 2012
Motion by Secretary Caspers, seconded by Trustee Patel, to approve the Minutes of the May 17,
2012 Special Board Meeting as amended. 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 Secretary Caspers, to approve the Consent Agenda.
ROLL CALL:
Ayes: 3 —Vice President (President Pro -Tem) Feldman, Secretary Caspers, Trustee Patel
Nays: 0 — None
Absent: 2 — President Torlo, Trustee Kadolph. Motion carried.
a. Approval of April 1 -30, 2012 checks in the total amount of $167,332.91
b. Approval of May 1 -31, 2012 checks in the total amount of $169,288.57
c. Approval of June 1 -30, 2012 checks in the total amount of $162,754.36
d. Approval of Lowery Asset Consulting, LLC's invoice in the amount of $7,000.00, dated
March 19, 2012
e. Approval of Illinois Department of Insurance Compliance Fee of $5,687.56
f. Approval of Lauterbach & Amen, LLP's invoices in the total amount of $3,900.00, for
services in February and March, 2012, and including preparation of: Illinois
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 1 of 4 April 18, 2012
Department of Insurance Annual Pension Report, year end 2011, and year end
auditor's work papers
g. Approval of Contravisory Investment Management, Inc. invoice for the period April 1 —
June 30, 2012 in the amount of $3,428.00.
It. Approval of Pension Clerk Kane's invoices in the total amount of $660.55 for the
months of January through May, 2012, including reimbursement for Birdsall plaque
and cake and election envelopes
i. Approval of Richard J. Reimer & Associates, LLC's March 14, 2012 invoice in the
amount of $87.50
6. ITEMS REMOVED FROM CONSENT AGENDA —None presented.
7. UNFINISHED BUSINESS— None presented.
8. NEW BUSINESS
a. Lowery Asset Consulting, LLC /MB Financial Investment Management Performance Reports for Second
Quarter, 2012
Mr. Kowalczyk discussed Lowery's public fund experience. He stated that the Fund has a value of
approximately $28,000,000 as of June 30, 2012 and the current allocations are 40% equity and 59.3%
fixed income and cash. He stated that the target allocation for equity would be a move toward 55 %. He
was not aware of what had occurred in the markets since June 30'", but believed that they were down a bit.
Vice President (President Pro -Tem) Feldman inquired as to the reason for the underperforming to the
benchmark and Mr. Kowalczyk stated that there were a couple investments which they were going to
recommend changing. Discussion ensued regarding the benchmark and Vice President (President Pro -
Tem) Feldman referred to page 38 of Lowery's report and asked whether the benchmark had been
changed. He expressed his concerns regarding the discrepancy with past performance and requested a
response regarding this. Mr. Kowalczyk agreed to review this and get back soon to the Board.
Mr. Kowalczyk referred to the Recommendations & Tasks' page and stated that the Fund has a positive
cash flow, which is a rarity in Illinois. It was affirmed that the target for equity allocation in the investment
policy was listed at 55, but the Fund is actually at 45, which Vice President (President Pro -Tem) Feldman
stated was due to being conservative. Mr. Lowery referred to the benchmark listed on page 34 which may
account for part of the drag and discussed the performance.
Mr. Kowalczyk discussed their proposed Addendum: Watch List Criteria to execute and attach to the
Investment Policy. Discussion ensued regarding the watch list and turnovers of those funds that do not
meet the criteria and process. Vice President (President Pro -Tem) Feldman reiterated his concerns and
Mr. Lowery agreed to check the benchmark and affirmed that the only fund to be concerned about is Ivy
Asset Strategy. He discussed the market at length, both current and historically.
Vice President (President Pro -Tem) Feldman commented that Lowery's presentation is one of a very
negative nature and suggested that Lowery present what is actually reflects the Fund's performance as
opposed to what it is at a future meeting.
Mr. Hrabak discussed the fixed market and handed out a Performance Report as of June 30, 2012. He
discussed the recent election in Greece and the European markets, including a Spanish bank bailout. He
stated that the Fund has a defensive portfolio. Mr. Hrabak discussed the Fed interest rates and stated that
the economy has moved from monetary policy being a stabilizing factor to needing something to happen. It
was discussed that the country needs people to go to work and uncertainty to be taken out of the business
environment. Mr. Hrabak also discussed that there is not a lot of optimism in the financial community, but
that the Fund has a very defensive portfolio. Ms. Krafchek stated that the diversification in the bond
portfolio is a good plan to have more options. Mr. Hrabak stated that high -yield bonds and merging market
bonds are areas of the market which could possibly provide additional income, as well as taxable municipal
bonds in Illinois. He stated that the Fund is 1% below the benchmark but looking at a 7.25% return of fixed
income.
b. Approval of Investment Transactions for Second Quarter, 2012
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 2 of 4 July 25, 2012
Motion by Secretary Caspers, seconded by Trustee Patel, to approve the Investment Transactions
for the Second Quarter, 2012.
ROLL CALL:
Ayes: 3 — Secretary Caspers, Trustee Patel, Vice President (President Pro -Tem) Feldman
Nays: 0 — None
Absent: 2 — President Torlo, Trustee Kadolph. Motion carried.
Mr. Lowery agreed to review the policy and verify that the benchmark is consistent and return for a special
meeting. Consensus to meet after August 11`n
All Lowery and MB Financial representatives exited the meeting at approximately T45 p.m.
Trustee Patel explained the circumstances around Mr. Kosmala and Mr. Grenchik's departure from Lowery
Asset Consulting, LLC and stated that Mr. Kosmala had formed a new firm named Kosmala and
Associates. He expressed the opinion that he does not believe including the watch list as an addendum to
the policy would be good for the Fund and commented on the discrepancy with the benchmark and referred
to Leuthold and Ridgeworth.
Discussion ensued regarding possibly going out for Request for Proposal again because of the change in
Lowery's management and suggestions were made regarding firms to invite to bid.
Pension Clerk Kane agreed to provide copies of Lowery's contract and the draft Request for Proposal.
c. Ratification of Transfer of Creditable Service from Roselle to Oak Brook for James R. Kruger, Jr.
Vice President (President Pro -Tem) Feldman inquired about the calculation for this transfer and potential
liability. Finance Director/Treasurer Dangles affirmed that there is no liability for the Pension Fund.
Motion by Secretary Caspers, seconded by Trustee Patel, to ratify James R. Kruger, Jr.'s Transfer
of Creditable Service.
ROLL CALL:
Ayes: 3 — Trustee Patel, Vice President (President Pro -Tem) Feldman, Secretary Caspers
Nays: 0 — None
Absent: 2 — President Torlo, Trustee Kadolph. Motion carried.
d. Approval of Timothy Walsh's Application for Admission to the Police Pension Fund
Motion by Secretary Caspers, seconded by Trustee Patel, to approve Timothy Walsh's Application
for Admission to the Police Pension Fund.
ROLL CALL:
Ayes: 3 —Vice President (President Pro -Tem) Feldman, Secretary Caspers, Trustee Patel
Nays: 0 — None
Absent: 2 — President Torlo, Trustee Kadolph. Motion carried.
e. Approval of Martin S. Zelisko's Application for Members Pension Benefits Retirement
Pension
Motion by Secretary Caspers, seconded by Trustee Patel, to approve Martin Zelisko's Application
for Member's Pension Benefits Retirement Pension
ROLL CALL:
Ayes: 3 — Secretary Caspers, Trustee Patel, Vice President (President Pro -Tem) Feldman
Nays: 0 — None
Absent: 2 — President Torlo, Trustee Kadolph. Motion carried.
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 3 of 4 July 25, 2012
f. Ratification of Patricia Colomer's Surviving Spouse Benefit Calculations
Motion by Secretary Caspers, seconded by Trustee Patel, to ratify Patricia Colomer's Surviving
Spouse Benefit Calculations.
ROLL CALL:
Ayes: 3 — Trustee Patel, Vice President (President Pro -Tem) Feldman, Secretary Caspers
Nays: 0 — None
Absent: 2 — President Torlo, Trustee Kadolph. Motion carried.
9. INFORMATION & UPDATES
a. Scheduling of fourth quarterly meeting in 2012
Agreement to possibly meet for a special meeting on August 15" and tentatively hold the fourth quarterly
meeting on October 24, 2012.
10. ADJOURNMENT:
Motion by Secretary Caspers, seconded by Trustee Patel, to adjourn the Board of Trustees of the
Police Pension Fund meeting at 9:00 p.m. VOICE VOTE: Motion carried.
ATTEST:
Edward J. Gaspers /s/
Edward J. Caspers, Secretary
Board of Trustees of the Police Pension Fund
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 4 of 4 July 25, 2012