Minutes - 01/31/2017 - Police Pension Fund BoardVILLAGE OF OAK BROOK
BOARD OF TRUSTEES OF THE POLICE PENSION FUND - Minutes
JANUARY 31, 2017
UNOFFICIAL UNTIL APPROVED AS WRITTEN √
OR AS AMENDED BY BOARD OF TRUSTEES OF THE
POLICE PENSION FUND ON April 28, 2017
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 Vel Torlo at 6:30 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: President Vel Torlo, Vice President Alan Feldman, Trustee Hitesh Patel, Secretary
Edward Caspers, Trustee Ben Kadolph
ABSENT: None
IN ATTENDANCE: Police Pension Clerk Rose Kane, Finance Director Jason Paprocki, Bob
Thompson, Frank Fanelli, and Spencer Klein of MB Financial, Phil Kosmala of Taiber, Kosmala,
Todd Schroeder and Derek Flessner of Lauterbach & Amen.
3. PUBLIC COMMENTS: None presented
4. APPROVAL OF MINUTES:
a. Approval of Board of Trustees Regular Board Meeting Minutes of October 27, 2016
Motion by Secretary Caspers, seconded by Trustee Kadolph, to approve the Minutes of the
October 27, 2016 Regular Board Meeting as written. 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.
a. Approval of October 1-31, 2016 expenditures in the total amount of $198,795.96
b. Approval of November 1-30, 2016 expenditures in the total amount of $244,576.10
c. Approval of December 1-31, 2016 expenditures in the total amount of $203,412.99
d. Approval of Taiber Kosmala & Associates, LLC’s invoice dated November 25, 2016 in the
amount of $5,390.00
e. Approval of Lowery Asset Consulting, LLC's invoice dated September 21, 2016 in the amount
of $1,656.00, for services July 1-22, 2016
f. Approval of Lauterbach & Amen, LLP’s invoices in the total amount of $4,520.00, for services
rendered May, August, September, October, 2016, and FYE15
g. Approval of The Mitchell Group’s invoice dated October 6, 2016, in the amount of $3,349.17
h. Approval of Illinois Public Pension Fund Association’s 2017 membership dues’ invoice in the
amount of $795.00
i. Approval of Pension Clerk Kane’s timesheet in the total amount of $262.50 for services
rendered July through November, 2016
j. Approval of Reimer, Dobrovolny & Karlson, LLC invoice dated October 26, 2016 in the
amount of $150.00
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 1 of 4 January 31, 2017
Motion by Secretary Caspers, seconded by Vice President Feldman, to approve the
Consent Agenda. VOICE VOTE: Motion carried.
6. ITEMS REMOVED FROM CONSENT AGENDA – None presented.
7. UNFINISHED BUSINESS – None presented.
8. NEW BUSINESS
a. Taiber Kosmala & Associates, LLC Report on Fourth Quarter, 2016
Prior to reviewing the quarterly report, Phil Kosmala Kosmala discussed capital market trends
during the quarter and the firm’s outlook for 2017. In his market review, he discussed the
changing status of the markets prior to and after the Presidential election.
He stated that the euphoria of the President-Elect, with a Republican controlled Congress,
pushing pro-growth policies including tax reform, de-regulation, and fiscal spending drove the
S&P 500, Dow Jones Industrial Average, NASDAQ, and Russell 2000 Index to new all-time
highs. Mr. Kosmala further explained: the S&P 500 returned 3.8%; driven by financials (+14%),
industrials (+9%), and energy (+8%); interest rate sensitive and defensive sectors lagged; REITs
(-2.3%), consumer staples (-2.0%), healthcare (-4%); small caps (+8.8%) and value oriented
styles outperformed their large cap and growth counterparts. He added that unlike the U.S.
market, international equities struggled on the quarter, with the international indices posting
modestly negative returns, and that weakening foreign currency was the primary driver with a
7.8% difference between MSCI EAFE (-0.7%) and MSCI EAFE local currency index (7.1%).
Mr. Kosmala stated that interest rates rose dramatically in the quarter in anticipation of President-
Elect Trump’s stimulus measures and tax cut proposals, and that the rise in the ten-year yield
was the largest quarterly increase since 1994. He discussed that the Barclay’s Capital Aggregate
lost 2.98% on the quarter, and all taxable and municipal investment grade sectors finished the
quarter with negative returns. Mr. Kosmala noted that the Pension Fund’s bond managers
performed well on a relative basis.
On page 6 of the Taiber, Kosmala Report the portfolio activity was listed as follows:
Portfolio Activity
Market Value on 09/30/2016 33,226,605
Net Cash Flow -111,055
Net Increase/Decrease 97,536
Market Value on 09/30/2016 33,213,087
OUTLOOK: Next, Mr. Kosmala commented that the post-election rally hinges on significant fiscal
spending, major tax reform, business friendly regulatory relief, and a rebound in corporate
earnings. He stated that three of the four drivers (Washington policies) have yet to take shape
and, even when they do, clearly fall into a 2018 timeframe, which meaningfully elevates the
importance of 2017 corporate earnings to carry the weight. He reported that despite full
valuations and an abundance of geopolitical risks, complacency reigns in US markets; market
volatility is approaching all time low levels and will likely create opportunities in what looks like a
year with ample risk including: global trade protectionism, unconventional foreign policy, FOMC
tightening, Chinese capital flight, European bank balance sheets, and pivotal upcoming elections
in France, Germany, Italy, and the Netherlands. Mr. Kosmala stated that they were not of the
view that any of the aforementioned risks warrant an overly defensive risk posture at this time, but
more likely will represent short term opportunities amidst a back drop of modest global growth
expectations and supportive monetary and fiscal policies globally.
Mr. Kosmala concluded that they were not recommending any changes in asset allocation
decisions at this time, but would keep the Board informed.
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 2 of 4 January 31, 2017
b. MB Financial Investment Management Performance Report on Fourth Quarter, 2016
Spencer Klein inquired regarding the Board having MB’s quarterly reports electronically, and it
was affirmed that it would be preferable to have an electronic copy in advance of the meeting.
Per page 15 of MB’s report, the Portfolio Composition as of December 31, 2016:
Total Fund: 11,382,530
Fixed Income: 10,778,638
Cash & Equiv: 603,892
Mr. Klein discussed the blended index being down 3+ basis points, but for the year the Fund
managed to beat the benchmark. He remarked that the Cash amount above is much higher than
usual because of the uncertainty of the election campaign, which caused the Fund to lose less.
He stated that the bond portfolio is looking flat-ish for January, and discussed the market in
general.
c. Approval of Investment Transactions for Fourth Quarter, 2016
Motion by Secretary Caspers, seconded by Trustee Kadolph, to approve the Investment
Transactions for the Fourth Quarter, 2016.
ROLL CALL:
Ayes: 5 –Trustee Kadolph, President Torlo, Vice President Feldman, Secretary Caspers,
Trustee Patel
Nays: 0 – None
Absent:0 – Motion carried.
d. Ratification of 2017 Pension Increases
Motion by Trustee Kadolph, seconded by Trustee Patel, to ratify the 2017 Pension
Increases. VOICE VOTE: Motion carried.
e. Discussion/Action regarding 2017 Actuarial Assumptions
Todd Schroeder discussed the 2017 actuarial assumptions and stated that they are trying to ride
the full-scale review conducted last year for the next few years, and discussed the changes from
last year, specifically, the updates in the mortality improvement factors from Social Security data.
Mr. Schroeder stated that they are going to update the mortality improvement factors to reflect the
2016 study, but that it’s not a dramatic change, just a small change on the demographic side. He
then discussed economic assumptions, rate of return of 6.75%. He stated that most of the Funds
they represent which are over $10 million are between 6.75% and 7%. It was suggested that a
comparison spreadsheet might be helpful in predicting the rate of return. Mr. Klein remarked that
they often used a GASB report for same. Discussion ensued regarding views from the Village
Board in relation to the rate of return, and Mr. Klein discussed historical events affecting this.
Questions were addressed by Mr. Schroeder and Mr. Klein and discussion ensued.
Finance Director Paprocki stated that he did not believe there would be a need for a special
actuarial meeting prior to the April pension meeting. Mr. Schroeder affirmed that he could get
assumptions’ information out to the Board in March prior to the April meeting.
9. INFORMATION & UPDATES
Pension Clerk Kane informed the Board that a police officer who was not vested has resigned. At
this time, the officer has not made a decision regarding disbursement of the contributions.
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 3 of 4 January 31, 2017
a. Scheduling of Second quarterly meeting in 2017:
Potential April dates: April 17th, 18th, 20th 24th, 25th, 27th
Consensus to meet on Friday, April 28, 2017 at 10:30 a.m.
10. ADJOURNMENT:
Motion by Trustee Patel, seconded by Secretary Caspers, to adjourn the Board of Trustees
of the Police Pension Fund meeting at 7:45 p.m. VOICE VOTE: Motion carried.
ATTEST:
Edward J. Caspers /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 January 31, 2017