HomeMy WebLinkAboutMinutes - 04/17/2018 - Police Pension Fund BoardBOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 1 of 4 April 17, 2018
VILLAGE OF OAK BROOK
BOARD OF TRUSTEES OF THE POLICE PENSION FUND - Minutes
April 17, 2018
UNOFFICIAL UNTIL APPROVED AS WRITTEN √
OR AS AMENDED BY BOARD OF TRUSTEES OF THE
POLICE PENSION FUND ON July 19, 2018
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 7:19 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, , Secretary Ed Caspers, Trustee Ben
Kadolph
ABSENT: Trustee Hitesh Patel
IN ATTENDANCE: Phil Kosmala and Zach Pearsall of Taiber, Kosmala, Bob Thompson and Spencer
Klein of MB Financial, Bob Rietz of Lauterbach & Amen, Finance Director/Treasurer Jason Paprocki,
Pension Clerk Rose Kane
3. PUBLIC COMMENTS: None presented.
4. APPROVAL OF MINUTES:
a. Approval of Regular Meeting Minutes of January 30, 2018
Motion by Secretary Caspers, seconded by Vice President Feldman, to approve the Minutes
of the January 30, 2018 Regular Board Meeting as presented.
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 January 1-31, 2018 expenditures in the total amount of $197.949.88
b. Approval of February 1-28, 2018 expenditures in the total amount of $197,195.26
c. Approval of Lauterbach & Amen, LLP’s invoices in the total amount of $1,170.00, for services
rendered November and December 2017
d. Approval of Reimer, Dobrovolny & Karlson LLC invoice in the amount of $233.05
e. Approval of reimbursement to Pension Clerk Kane for election envelopes in the amount of $65.23
f. Approval of Pension Clerk Kane’s timesheet in the total amount of $143.75 for administrative
services rendered between July and December 2017
Motion by Secretary Caspers, seconded by Trustee Kadolph, to approve the Consent Agenda.
ROLL CALL:
Ayes: 4 – Vice President Feldman, Secretary Caspers, Trustee Kadolph, President Torlo
Nays: 0 – None
Absent: 1 – Trustee Patel
Motion carried.
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6. ITEMS REMOVED FROM CONSENT AGENDA – None presented.
7. UNFINISHED BUSINESS
a. Discussion/Action regarding Actuarial Assumptions
Mr. Rietz discussed the updated copy of the 2018 Actuarial Assumptions, starting on page 3 of the
report. He then referred to page 7 of the report which show ed the contribution recommendation –
reconciliation, and also to page 9 regarding the assets of the Fund. Mr. Reitz discussed the Fund’s
assets’ gain/loss data on pages 10 and 11 and the historical asset performance on page 12. He then
talked about the statutory minimums listed on page 19.
Discussion ensued regarding the Village’s actuarial assumptions and Finance Director/Treasurer
Paprocki provided input regarding the Village’s recommendation.
Motion by Trustee Kadolph, seconded by Vice President Feldman, to approve the actuarial
report of Lauterbach & Amen. VOICE VOTE: Motion carried.
8. NEW BUSINESS
a. Taiber Kosmala and Associates, LLC Report on First Quarter, 2018
Prior to reviewing the quarterly report, Mr. Kosmala discussed capital market trends during the quarter
and the firm’s outlook for the balance 2018.
Global Economic Review
He stated that business confidence has remained high post the 2016 presidential election as the Trump
administration continues to execute a business -friendly agenda including tax reform and deregulation.
He added that, combined with better global GDP growth, these policies have contributed to a
resurgence in domestic business activity and capital spending.
He remarked that, unfortunately, the upbeat economic releases stoked concerns the market has not
faced since the Great Financial Crisis: 1. The S&P fell 10% in late January amid fears of inflation after
wage data indicated upward pressure; 2. Further exacerbating inflationary pressures were fears of a
global trade war. Mr. Kosmala stated that, ultimately, the first quarter concluded with the S&P 500 index
snapping several prestigious streaks, including: 16 consecutive monthly gains for the Index, 9
consecutive positive quarterly returns, the longest period without a 3% correction since 1926, and the
second longest rally without a 5% correction for the S&P 500 Index.
He stated that the Federal Open Markets Committee (FOMC) met twice during the quarter, which
included its first meeting under new chairman, Jerome Powell: 1. Powell’s initial meeting, the second
of two occurring in March, resulted in a vote to raise the lending rate target range to 1.50% to 1.75%;
2. The hike was a continuation of the Fed’s plan for a steady, well -telegraphed removal of monetary
accommodation; 3. Projections from the central bank leaned modestly hawkish as median Fed Funds
rate forecasts were unchanged for 2018 (two more), but increased for 2019 and 2020
Market Review
Mr. Kosmala discussed the broad market overview highlighting that after nine consecutive quarters of
positive returns, equity markets closed the first quarter with a modest decline (S&P 500 -0.8%, Russell
2000 -0.1%). He remarked that fears over higher interest rates and inflation led to heightened volatility
and sent indexes tumbling from January’s all-time highs into correction territory. He said that stocks
rallied back in March on solid economic data and accelerating earnings growth but suffered another
drop due to fears of potential technology regulation and global trade wars.
Mr. Kosmala discussed that earnings in the developed international markets have grown 38% over the
past year and are expected to grow by double digits again over the next 12 months; that despite this
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 3 of 4 April 17, 2018
rapid growth, non-US stocks overall have not undergone any multiple expansion. He said that during
the first quarter, international equity investors were jolted out of complacency in February by a spike in
volatility and a sharp drop in prices, brought on by concern that stronger economies and rising inflation
pressures would lead central banks to tighten prematurely or excessively. He added that markets
became newly unsettled in March over the potential for a trade war between the US and China, sparked
by the US government’s imposition of new tariffs on imported steel and aluminum. He said that this led
to escalating tariff announcements by the two countries as April began and that the net result for the
quarter was a modest decline (-1.53%) for the MSCI EAFE index and a 1.42% advance for the MSCI
Emerging Markets index.
Outlook
Mr. Kosmala stated that despite volatility returning to a more normal level, TKA remains cautiously
constructive on risk assets based on a supportive global growth backdrop and strong corporate
earnings. He said that the combination of aggressive fiscal stimulus (lower corporate taxes) and
regulatory reform are projected to significantly benefit corporate earnings growth as we move towards
the back half of 2018. He remarked that waning geopolitical risks (Brexit, Italy, North Korea) are also
bolstering confidence, but that on the cautionary side, TKA continues monitoring the impact of less
accommodative monetary policy and the potential for rising yields and inflation.
Oak Brook Pension Performance
On page 6 of the Taiber, Kosmala Report, the portfolio activity was listed as follows:
Mr. Kosmala stated that in the first quarter, the Oak Brook Police pension portfolio declined by 0.23%
(net of fees), but managed to outperform its benchmark by over 1%. He said that an overweight to
equities relative to bonds was the primary contributor to outperformance for qua rter as stocks
outperformed fixed income securities in a difficult environment for both asset classes. He remarked that
for the trailing one year period, the pension portfolio generated a return of 9.2% and outperformed its
benchmark which gained 7.3%.
Discussion ensued regarding sales tax and retail sales/consumer spending and how they affect the
market, especially in relation to online spending. Discussion ensued also about the housing market.
Mr. Kosmala did not recommend any allocation or manager shifts at this time.
b. MB Financial Investment Management Performance Report on First Quarter, 2018
Mr. Klein talked about focusing on the number 3; he stated that 3% in GDP growth rates, 3% inflation
rates, and 3% yields on 10-year U.S. Treasuries are all important milestones for the economy and
markets. He also discussed that another “3” to consider – the number of rate hikes expected this year.
He then referred to page 11 of the MB report and discussed the portfolio composition.
MARKET VALUE % OF TOTAL TARGET
TOTAL FUND $12,550,098 100.00 100.00
FIXED INCOME $12,081,893 96.27 99.00
CASH & EQUIV. $468,212 3.73 1.00
Mr. Klein stated that they are trying to keep the bond portfolio as fully invested as possible and referred
to page 13 of their report.
c. Approval of Investment Transactions for First Quarter, 2018
Summary of Cash Flows
Beginning Market Value First Quarter 2018 $37,687,679
Net Cash Flow ($81,304)
Net Investment Change ($85,945)
Ending Market Value on 3/31/18 $37,520,429
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Motion by Secretary Caspers, seconded by Trustee Kadolph, to approve the Investment
Transactions for First Quarter, 2018.
ROLL CALL:
Ayes: 4 –Trustee Kadolph, President Torlo, Vice President Feldman, Secretary Caspers
Nays: 0 – None
Absent: 1 – Trustee Patel,
Motion carried.
d. Approval of Transfer of Creditable Service for Thomas Russell from the Oakbrook Terrace
Police Pension Fund to the Oak Brook Police Pension Fund
President Torlo briefly explained Officer Russell’s service transfer.
Motion by Secretary Caspers, seconded by Trustee Kadolph, to approve the transfer.
VOICE VOTE: Motion carried.
e. Approval of Refund of Pension Contributions made by Francisco Adame
President Torlo explained the reason for this refund.
Motion by Secretary Caspers, seconded by Trustee Kadolph, to approve the Adame refund.
VOICE VOTE: Motion carried.
f. Approval of Application for Line-of-Duty Disability
President Torlo discussed this item.
Motion by Trustee Kadolph, seconded by Trustee Caspers, to approve the disability
application. VOICE VOTE: Motion carried.
Pension Clerk Kane asked the Board whether it would be beneficial to have Attorney Reimer attend
a special meeting. Discussion ensued as to what is entailed in the disability process. Consensus to
have a special meeting for Attorney Reimer to explain the disability process and an update to the
Administrative Rules.
9. INFORMATION & UPDATES
a. Scheduling of special meeting in May 2018 and third quarterly meeting in July 2018
Consensus to meet July 19, 2018 at 7:00 p.m. for the regular meeting, pending Trustee Patel’s
availability. Board members provided non-available May dates to meet and Pension Clerk Kane was
directed to contact Attorney Reimer to check his availability.
10. ADJOURNMENT:
Motion by Secretary Caspers, seconded by Trustee Kadolph, to adjourn the Board of Trustees
of the Police Pension Fund meeting at 8:10 p.m. VOICE VOTE: Motion carried.
ATTEST:
Edward J. Caspers /s/
Edward J. Caspers, Secretary
Board of Trustees of the Police Pension Fund