Minutes - 07/28/2016 - Police Pension Fund BoardVILLAGE OF OAK BROOK
BOARD OF TRUSTEES OF THE POLICE PENSION FUND - Minutes
July 28, 2016
UNOFFICIAL UNTIL APPROVED AS WRITTEN √
OR AS AMENDED BY BOARD OF TRUSTEES OF THE
POLICE PENSION FUND ON October 27, 2016
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 11:07 a.m. in the Upper Level Conference 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, Secretary Edward Caspers, Trustee
Hitesh Patel, Trustee Ben Kadolph
ABSENT: None
IN ATTENDANCE: Phil Kosmala of Taiber Kosmala and Associates, LLC, Bob Thompson, Spencer
Klein, and Patrick Swaney of MB Financial, Assistant Village Manager/Finance Director Sharon
Dangles, Assistant Finance Director Jason Paprocki, Pension Clerk Rose Kane
3. ELECTION OF OFFICERS:
Pension Clerk Kane requested a motion from the floor for nominations for President.
Motion by Trustee Feldman, seconded by Trustee Kadolph, to nominate Vel Torlo for President.
VOICE VOTE: Motion carried.
Motion by Trustee Caspers, seconded by Trustee Patel, to elect Vel Torlo as President.
VOICE VOTE: Motion carried.
President Torlo then opened up nominations for Vice President and Secretary.
Motion by Trustee Kadolph, seconded by Trustee Caspers, to nominate Alan Feldman for Vice
President. VOICE VOTE: Motion carried.
Motion by Trustee Patel, seconded by Trustee Caspers, to elect Alan Feldman as Vice President
Motion by Trustee Kadolph, seconded by Trustee Patel, to nominate Edward Caspers for
Secretary. VOICE VOTE: Motion carried.
Motion by Vice President Feldman, seconded by Trustee Kadolph, to elect Edward Caspers as
Secretary. VOICE VOTE: Motion carried.
4. PRESIDENT’S COMMENTS: None presented.
5. APPROVAL OF MINUTES:
a. Approval of Board of Trustees Regular Board Meeting Minutes of April 27, 2016
Motion by Secretary Caspers, seconded by Trustee Patel, to approve the Minutes of the April 27,
2016 Regular Board Meeting as written. VOICE VOTE: Motion carried.
b. Approval of Board of Trustees Special Board Meeting Minutes of June 10, 2016
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 1 of 4 July 28, 2016
Motion by Secretary Caspers, seconded by Trustee Kadolph, to approve the Minutes of the June
10, 2016 Special Board Meeting as written. VOICE VOTE: Motion carried.
6 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 April 1-30, 2016 checks in the total amount of $207,376.48
b. Approval of May 1-31, 2016 checks in the total amount of $201,451.35
c. Approval of June 1-30, 2016 checks in the total amount of $204,730.00
d. Approval of Lowery Asset Consulting, LLC’s invoices, dated March 29, 2016 and June 23, 2016, in
the total amount of $14,000.00
e. Approval of Lauterbach & Amen, LLP’s invoices in the total amount of $7.725.00 for professional
services in: January, February, March, April, 2016, including Illinois Department of Insurance, Year-
End, and Actuarial Reports (FYE 2015)
f. Approval of Illinois Department of Insurance FY 2017 Compliance Fee in the amount of $6,596.13
g. Approval of The Mitchell Group’s invoices, dated April 9, 2016 and July 7, 2016, in the total amount
of $5,869.16
h. Approval of Pension Clerk Kane’s reimbursements and timesheet for the period of January through
June 2016, in the total amount of $682.47
i. Approval of Reimer, Dobrovolny & Karlson, LLC’s invoices, dated March 16, 2016 and June 5,
2016, in the total amount of $127.96
Motion by Trustee Kadolph, seconded by Secretary Caspers, to approve the Consent Agenda as
presented.
ROLL CALL:
Ayes: 5 – Vice President Feldman, Secretary Caspers, Trustee Patel, Trustee Kadolph, President Torlo
Nays: 0 – None
Absent: 0 – Motion carried.
7. ITEMS REMOVED FROM CONSENT AGENDA – None presented.
8. UNFINISHED BUSINESS
a. Ratification of Contract with Taiber Kosmala and Associates, LLC
Motion by Secretary Caspers, seconded by Trustee Patel, to ratify the contract with Taiber Kosmala
and Associates, LLC. VOICE VOTE: Motion carried.
9. NEW BUSINESS
a. Taiber Kosmala and Associates, LLC Report for Second Quarter, 2016 (attached)
Phil Kosmala stated that he is still waiting for data from Lowery Asset Consulting, LLC to complete the
report on the Second Quarter, 2016. It was requested to include as much of the Fund’s historical data as
possible in his reports.
Mr. Kosmala discussed the market activity and decisions from the Fed Chairman over the last two
quarters. On page 8 of the Taiber, Kosmala Report the portfolio activity was listed as follows:
Portfolio Activity
Market Value on 03/31/2016 31,709,471
Net Cash Flow -83,726
Net Increase/Decrease 850,567
Market Value on 06/30/2016 32,476,312
Mr. Kosmala stated that the portfolio gained 2.57% for the quarter, slightly over the benchmark, and he
discussed the performance of REITs and utilities. He added that there were a few manager issues (page
9), specifically, T. Rowe Price, PRIMECAP, and William Blair.
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 2 of 4 July 28, 2016
On page 9 of the Report the asset class weights were listed as follows:
Asset Class Weight
Equities 57.81
Fixed Income 36.35
Cash 0.02
Real Estate 5.82
Mr. Kosmala talked about the Equity Large Caps on page 10 and the ‘sector’ funds, specifically T. Rowe
Price New America Growth and PRIMECAP Odyssey Stock. He also discussed the Equity–International,
Equity–Emerging Markets, and Equity–Other performances on page 11. Brief discussion ensued
regarding the Emerging Markets and Pimco Income. On page 12 Mr. Kosmala remarked about Mitchell
Group Energy and the surges in the oil market, and recommended standing pat for now on the Fixed
Income–High Quality. Brief discussion ensued regarding the REITs.
b. MB Financial Investment Management Performance Report on Second Quarter, 2016 (attached)
Spencer Klein discussed the “New Mediocre, Lower for Longer” trend, and provided the Second Quarter,
2016 Performance Report, as well as an internal bond portfolio report, projecting a one year horizon. He
then discussed the gross and net returns on page 11 of the regular Performance Report.
Per page 11 of MB’s regular Performance Report:
• Market Value of the Total Fund - $11,903,187
• Fixed Income - $11, 691,189
• Cash and Equivalents - $212,001
In response to an inquiry, Mr. Klein stated that he believes interest rates will go up, but very slowly. Brief
discussion ensued.
Assistant Village Manager/Finance Director Sharon Dangles, Assistant Finance Director Paprocki, and
the MB representatives exited the meeting at approximately 12:02 p.m.
c. Approval of Investment Transactions for Second Quarter, 2016
Motion by Secretary Caspers, seconded by Trustee Patel, to approve the Investment Transactions
for the Second Quarter, 2016.
ROLL CALL:
Ayes: 5 – Secretary Caspers, Trustee Patel, Trustee Kadolph, President Torlo, Vice President Feldman,
Nays: 0 – None
Absent: 0 – Motion carried.
d. Discussion/Action regarding Acting Village Treasurer
Pension Clerk Kane explained that Assistant Village Manager/Finance Director Dangles will be leaving
the employment of the Village and that Assistant Finance Director Paprocki will be appointed Acting
Finance Director (Treasurer) as of August 9, 2016. Discussion ensued regarding President Torlo being
able to sign checks in the interim and action for the Board to take.
Motion by Trustee Patel, seconded by Secretary Caspers, that effective August 9th, Jason
Paprocki will be approved as the second signee. VOICE VOTE: Motion carried.
Pension Clerk Kane discussed a recent request from Derek Flessner of Lauterbach to complete and sign
a required Security Administrator form for the Illinois Department of Insurance. Consensus to have
President Torlo sign as Security Administrator.
Mr. Kosmala provided a subsequent hand-out with recommended transactions and discussed same in
regard to purchases and liquidations.
Motion by Vice President Feldman, seconded by Trustee Patel, to go with Taiber Kosmala’s
recommended transactions.
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ROLL CALL:
Ayes: 5 – Trustee Patel, Trustee Kadolph, President Torlo, Vice President Feldman, Secretary Caspers
Nays: 0 – None
Absent: 0 – Motion carried.
Vice President Feldman requested that Mr. Kosmala keep track of these changes and how the changes
affect the Fund. Brief discussion ensued regarding the recommendations and Mr. Kosmala stated there
would be no separate fees. He also discussed Small Caps on page 16 of the quarterly report.
Mr. Kosmala next discussed the basis points and custodial fees MB is charging to manage the bonds and
custody of the portfolio. Discussion ensued that the cost of custody and bond management for the Fund
should be about $20,000, instead of the $40,000 being charged, and traditional banks or a manager such
as TD Ameritrade were discussed as options. A suggestion was made to still retain MB for bond
management and have TD Ameritrade for custody of the equity, where fees are charged when
transactions are made. Mr. Kosmala agreed to discuss with MB the possibility of raising the basis fees for
bond management and waiving the custodial fees to make the fees more competitive. He also agreed to
discuss same with Chase Bank.
10. INFORMATION & UPDATES
a. Fourth quarterly meeting in 2016 and possible dates: Weeks of October 17th and 24th
After brief discussion regarding availability, October 27, 2016 at 6:30 p.m. was chosen as the fourth
quarterly meeting date and time.
11. ADJOURNMENT:
Motion by Trustee Kadolph, seconded by Trustee Patel, to adjourn the Board of Trustees of the
Police Pension Fund meeting at 12:40 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 July 28, 2016