Minutes - 07/27/2011 - Police Pension Fund BoardVILLAGE OF OAK BROOK
BOARD OF TRUSTEES OF THE POLICE PENSION FUND - Minutes
UNOFFICIAL UNTIL APPROVED AS WRITTEN y
OR AS AMENDED BY BOARD OF TRUSTEES OF THE
POLICE PENSION FUND ON October 26. 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 7:07 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 Val Torlo, Secretary Alan Feldman (arrived at
7:24 p.m.), Trustee Edward Caspers, Trustee Hitesh Patel (attended via teleconference)
ABSENT: None
IN ATTENDANCE: Finance Director Sharon Dangles, Board Attorney Rick Reimer, Todd Schroeder from
Lauterbach & Amen, LLP, Tim Bowen from Mesirow Financial Services, Phillip Kosmala and Jeff Grenchik
from Lowery Asset Consulting, LLC
3. PRESIDENT'S COMMENTS: None
4. APPROVAL OF MINUTES:
a. Approval of Board of Trustees Regular Meeting Minutes of April 27, 2011
Motion by Trustee Caspers, seconded by Vice President Birdsall, to approve the Minutes of the
April 27, 2011 Regular Board Meeting. VOICE VOTE: Motion carried.
5 CONSENTAGENDA:
All items on the Consent Agenda are considered to be routine in nature and will be enacted in one motion
Motion by Vice President Birdsall, seconded by Trustee Caspers, to approve the Consent Agenda.
ROLL CALL:
Ayes: 5 —President Torlo, Trustee Caspers, Trustee Patel (via teleconference), Vice President Birdsall
Nays: 0 — None
Absent: 1 — Secretary Feldman. Motion carried.
a. Approval of April 1 -30, 2011 checks in the total amount of $221,194.96
b. Approval of May 1 -31, 2011 checks in the total amount of $171,302.35
c. Approval of June 1 -30, 2011 checks in the total amount of $158,476.22
d. Approval of Lowery Asset Consulting, LLC's invoice in the amount of $7,000.00, dated March 24, 2011
e. Approval of Illinois Department of Insurance Compliance Fee of $5,280.50
f. Approval of Lauterbach & Amen, LLP's invoices in the total amount of $3,900.00, for services in
February and March, 2011, and including preparation of Illinois Department of Insurance Annual
Pension Report, year ended 2010, and year end auditor's work papers
g. Approval of Contravisory Investment Management, Inc. invoice for the period April 1 — June 30, 2011 in
the amount of $2,937.00
h. Approval of Dillon Reporting Service invoices in the total amount of $1,469.95
i. Approval of Richard J. Reimer & Associates, LLC's invoice in the amount of $858.90
j. Approval of Reimbursement to Pension Clerk Kane for Illinois Public Pension Fund Association
Conference Registrations (Birdsall and Torlo) in the total amount of $550.00
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
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July 27, 2011
k. Approval of Pension Clerk Kane's invoice in the amount of $466.75 for the months of February and
April, 2011
I. Approval of Reimbursement to Vice President Birdsall for lodging at conference in the amount of
$132.10
6. ITEMS REMOVED FROM CONSENT AGENDA: None presented.
7. UNFINISHED BUSINESS:
a. Discussion regarding Fiduciary Insurance Contract
Tim Bowen of Mesirow Financial Services discussed the fiduciary liability insurance proposal and stated
that Ullico is the most aggressive in pricing and that Chub, Travelers and Hartford specialize in much larger
pension funds and have higher premiums and deductibles. He stated that the fiduciary insurance comes
into play for non - indemnifiable claims where the Trustees are covered and covers the Plan in indemnifiable
claims. He recommended starting off with a $1 million policy. When a claim is actually made the insurance
takes over, but the alleged wrongdoing could have occurred prior to the insurance policy being in place.
Mr. Bowen stated that Ullico is the only carrier which allows choice of counsel. Discussion ensued
regarding amount of coverage. He stated that the insurance carrier cannot subrogate against the Trustees
and that allegations of fraud are defended up until the allegations are proven to be fraudulent. It was
questioned whether different pension plans could combine under one policy. Mr. Bowen also stated that
Mesirow is the insurance broker and represents the Pension Fund Board. It was discussed combining with
the Firefighters Pension Fund Board for cost savings, but Mr. Bowen cautioned that the liability coverage
would be shared and one fund could use up all the liability coverage. Discussion ensued regarding $2
million coverage versus $1 million coverage; agreement to stay at $1 million at this time.
Motion by Trustee Caspers, seconded by Secretary Feldman, to accept the Fiduciary Liability
Insurance proposal as presented by Mr. Timothy Bowen of Mesirow, effective August 1, 2011.
ROLL CALL:
Ayes: 5 — Secretary Feldman, Trustee Caspers, Trustee Patel (via teleconference), Vice President
Birdsall, President Torlo
Nays: 0 — None
Absent: 0 — Motion carried.
Mr. Bowen exited the meeting at 7:45 p.m.
b. Discussion regarding Actuarial Services
Todd Schroeder of Lauterbach & Amen, LLP explained the actuarial service proposal and affirmed that he
would be able to attend the first quarterly meeting in 2012, with no extra cost and everything being included
in the proposed fee. He discussed the changes made at the State level and how these are budgeted for
each year. He stated that Lauterbach would also provide a funding strategy and provide statements
regarding GASB compliance. Discussion ensued regarding whether the costs of the service shared by the
Village and Firefighters Pension Fund. When questioned, Mr. Schroeder stated that Lauterbach is planning
on creating a study showing what's going on with other Funds, regarding rate of return and long -term
expectations. Concerns were expressed about decisions being made in the best interests of both the
Board and the Village and that the actuary should be representing the Pension Fund Board. Mr. Schroeder
discussed the historical report and that this would be an additional charge of $3,000 and $5,000. He also
discussed the projection report, not just staying with the State minimums, to put the Plan in the best
position to succeed. Discussion ensued regarding when to go forward with Lauterbach's proposal.
Motion by Secretary Feldman, seconded by Trustee Caspers, to approve the proposal provided by
Lauterbach & Amen for actuarial consulting services.
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ROLL CALL:
Ayes: 5 — Trustee Caspers, Trustee Patel (via teleconference), Vice President Birdsall, President Torlo,
Secretary Feldman
Nays: 0 — None
Absent: 0 — Motion carried.
Mr. Schroeder stated that they will amend the existing Lauterbach & Amen contract to include actuarial
services.
Mr. Schroeder exited the meeting at approximately 8:09 p.m.
c. Ratification of Investment Policy as Amended
Trustee Patel expressed possibly including a securities lending clause in the Custody and Safekeeping
section of the Policy on page 7, suggesting an amendment to include that the Board should be kept abreast
of securities lending practices of the custody bank. Phil Kosmala of Lowery Asset Consulting agreed to
make this amendment. He also discussed taking some of the fixed income allocation from MB Financial's
control and hiring a separate investment manager, such as Dolan & McEniry Capital Management (hand-
out), with more fixed income expertise; he stated that they could come out and make a presentation to the
Board. Trustee Patel suggested reviewing the Policy each year. Mr. Kosmala discussed an amendment
on page 6 regarding Small Cap and Foreign Securities, such as dropping the percentages to 15% +/ -15 %.
Motion by Trustee Patel, seconded by Vice President Birdsall, to ratify the investment policy with an
amendment on page 7 for the section of Custody and Safekeeping of the Investments at the third
point, which will say that the Board of Trustees of the Pension Fund shall be kept abreast with
respect to any security lending practices, whether it is fixed income or equities by the safekeeping
bank, -and- on page 6, an amendment with the allocations in the equities, the U.S. Small Cap will be
15% with a range of +/ -15% and Foreign Securities' normal allocation of 15% +/ -15 %.
ROLL CALL:
Ayes: 5 — Trustee Patel (via teleconference), Vice President Birdsall, President Torlo, Secretary Feldman,
Trustee Caspers
Nays: 0 — None
Absent: 0 — Motion carried.
8. NEW BUSINESS:
a. Lowery Asset Consulting, LLC /MB Financial Investment Management Performance Reports for
Second Quarter, 2011
Phil Kosmala, of Lowery Asset Consulting, LLC, discussed that the quarter was very tumultuous with what
happened with the European markets and banking systems — a very good April, but bad May and June. He
stated that the bond portfolio did what it was supposed to do, though.
Jeff Grenchik of Lowery Asset Consulting, LLC, provided an updated sheet — "Asset Allocation and
Manager Returns as of 7126/11" and referred to page 44 of the main report regarding the equity volatility.
b. Approval of Investment Transactions for Second Quarter, 2011
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Motion by Vice President Birdsall, seconded by Trustee Caspers, to approve the Investment
Transactions from April 1 through June 30, 2011.
ROLL CALL:
Ayes: 5 —Vice President Birdsall, President Torlo, Secretary Feldman, Trustee Caspers, Trustee Patel
(via teleconference)
Nays: 0 — None
Absent: 0 —None. Motion carried
9. INFORMATION & UPDATES:
a. Scheduling of fourth quarterly meeting in 2011
Agreement to set fourth quarterly meeting for 7:00 p.m. on October 26, 2011.
10. ADJOURNMENT:
Motion by Trustee Caspers, seconded by Vice President Birdsall, to adjourn the Board of Trustees of the
Police Pension Fund Board meeting at 8:52 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
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