HomeMy WebLinkAboutMinutes - 01/22/2019 - Police Pension Fund BoardBOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 1 of 5 January 22, 2019
VILLAGE OF OAK BROOK
BOARD OF TRUSTEES OF THE POLICE PENSION FUND - Minutes
January 22, 2019
UNOFFICIAL UNTIL APPROVED AS WRITTEN √
OR AS AMENDED BY BOARD OF TRUSTEES OF THE
POLICE PENSION FUND ON April 25, 2019
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 Torlo at 7:02 p.m. in the West 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 Ed Caspers, Trustee
Ben Kadolph
ABSENT: Trustee Hitesh Patel
IN ATTENDANCE: Phil Kosmala and Zach Pearsall of Taiber, Kosmala, Ted Kirpach of MB
Financial, Derek Flessner and Bob Rietz of Lauterbach and Amen, Pension Clerk Rose Kane
3. PUBLIC COMMENTS: None presented.
4. APPROVAL OF MINUTES:
a. Approval of Regular Meeting Minutes of October 25, 2018
Motion by Secretary Caspers, seconded by Trustee Kadolph, to approve the Minutes of
the October 25, 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 expenditures for month ended September 30, 2018 in the amount of $243,103.26
b. Approval of expenditures for month ended October 31, 2018 in the amount of $239,497.04
c. Approval of expenditures for month ended November 30, 2018 in the amount of $225,257.29
d. Approval of expenditures for month ended December 31, 2018 in the amount of $239,097.65
e. Approval of Reimer & Dobrovolny, PC invoices in the amount of $1,051.04 for legal services
rendered in June through August 2018
f. Approval of Lauterbach & Amen, LLP invoices for professional services regarding FYE17
MCR and October 2018 Accounting Service fees in the total amount of $1,435.00
g. Approval of INSPE Associates, Ltd. Invoice in the total amount of $8,540.40
h. Approval of reimbursement to Pension Clerk Kane in the amount of $264.75 for pension
conference lodging for President Torlo
i. Approval of Illinois Public Pension Fund Association 2019 Membership Dues in the amount of
$795.00
j. Approval of Taiber Kosmala third quarter investment consulting fees’ invoice in the amount of
$7,000.00
Motion by Secretary Caspers, seconded by Vice President Feldman, to approve the
Consent Agenda.
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 2 of 5 January 22, 2019
ROLL CALL:
Ayes: 4 – President Torlo, Secretary Caspers, Vice President Feldman, Trustee
Kadolph
Nays: 0 – None
Absent: 1 – Trustee Patel
Motion carried.
6. ITEMS REMOVED FROM CONSENT AGENDA – None presented.
7. NEW BUSINESS
a. Taiber Kosmala and Associates, LLC Report for Fourth Quarter 2018
Global Economic Review
Mr. Kosmala commented on the overall economic backdrop and global financial markets. He
discussed that the fourth quarter selloff was eerily similar to the correction that occurred at the en d
of 2015 and beginning of 2016, that the December correction was attributed to a slowdown in
China, the world’s second largest economy, and increased US trade sanctions that led to fears of
an economic recession. He mentioned that investors were also fearful that the Fed would be too
aggressive in regards to interest rate normalization, killing the bull market and pulling the economy
into recession.
Market Review
In his review of the market, Mr. Kosmala mentioned key takeaways for the quarter:
Fourth quarter GDP read at 3.4%, EPS grew at 25%, and sales growth was greater that
6%; this was 25% above street estimates.
Despite the positive earnings growth, markets experienced the worst December calendar
month performance since 1931, (Great Depression) and mutual fund flows experienced
the largest single period outflow since the ’08-’09 financial crisis.
Algorithmic trading firms accounted for 90% of all trade volume that occurred during the
month of December.
Outlook
Mr. Kosmala concluded that the three key pillars of support for risk assets remained intact:
corporate earnings, U.S. economic backdrop, and supportive policy (monetary and fiscal). He
stated that geopolitics (especially trade), tighter monetary conditions, and global economic
slowdown are all material considerations looking forward for the OBPP portfolios; but that following
the December sell-off, markets began to refocus their attention on strong market fundamentals and
equities rebounded as a result.
He stated that the foundation underperformed in the fourth quarter in part due to an overweight to
risk assets and underperformance within the non-US equity allocation; that the portfolio declined
(8.99%) for the three months ending December 31st; global equities declined (15.50%) relative to
the broad market index decline of (12.65%); and that US equities performed in-line with their
designated benchmarks, underperformance was primarily driven by Non-US equity investments.
Mr. Kosmala added that fixed income investments were positive for the quarter as investors sold
out of risk assets and transitioned into quality fixed income, and that the fixed income portion of the
portfolio returned a positive 1.13%, but lagged the broader fixed income market index slightly.
Oak Brook Pension Performance
Kosmala commented on portfolio performance for the quarter. He stated that Nationwide Bailard
International Equity has been placed on the watchlist for extended underperformance.
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 3 of 5 January 22, 2019
On page 6 of the Taiber, Kosmala Report, the portfolio activity was listed as follows:
Mr. Kosmala stated that the calendar year-end through January 22nd, the portfolio had rebounded
significantly – returning 3.84% relative to the policy benchmark return of 3.72%.
b. MB Financial Investment Management Performance Report on Fourth Quarter 2018
Mr. Kirpach referred to page 11 of the MB report and discussed the economic outlook for 2019.
MARKET VALUE % OF TOTAL TARGET
TOTAL FUND 12,562,632 100.00 100.00
FIXED INCOME 11,780,617 93.78 99.00
CASH & EQUIV. 782,019 6.22 1.00
c. Approval of Investment Transactions for Fourth Quarter 2018
Motion by Trustee Kadolph, seconded by Secretary Caspers, to approve the Investment
Transactions for First Quarter, 2019.
ROLL CALL:
Ayes: 4 – President Torlo, Secretary Caspers, Vice President Feldman, Trustee
Kadolph
Nays: 0 – None
Absent: 1 – Trustee Patel
Motion carried.
d. Ratification of 2019 Pension Increases
Motion by Vice President Feldman, seconded by Secretary Caspers, to ratify the 2019
Pension Increases. VOICE VOTE. Motion carried.
Finance Director Paprocki entered the meeting at approximately 7:37 p.m.
e. Discussion/action regarding 2019 Actuarial Assumptions
Mr. Flessner and Mr. Rietz discussed the actuarial study that was conducted for the 2019
assumptions. Discussion ensued regarding all of the actuarial assumptions used in the report. The
Board elected to change the Total Wage Increase assumption from 4.00% to 3.75%. The
preliminary results of the actuarial valuation was also discussed. It was noted that all other items
remained unchanged from the prior year. There was some additional discussion about the new
mortality tables related to public pension funds that were released toward the end of 2018, and how
they may be implemented in the upcoming year or two.
Motion by Trustee Kadolph, seconded by Secretary Caspers, to approve the 2019 Actuarial
Assumptions, with the total payroll percentage being amended to 3.75%.
VOICE VOTE. Motion carried.
f. Discussion/action regarding Lauterbach & Amen, LLP Engagement Letter for services
2019-2023
Portfolio Activity
Beginning Market Value Fourth Quarter 2018 38,161,554
Net Cash Flow 354,413
Net Investment Change - 3,456,294
Ending Market Value on 12/31/2018 35,059,673
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 4 of 5 January 22, 2019
Mr. Flessner provided a brief explanation of the services for 2019-2023.
Motion by Trustee Kadolph, seconded by Secretary Caspers, to approve Lauterbach &
Amen LLP Engagement Letter for services 2019-2023.
ROLL CALL:
Ayes: 4 – President Torlo, Secretary Caspers, Vice President Feldman, Trustee
Kadolph
Nays: 0 – None
Absent: 1 – Trustee Patel
Motion carried.
Discussion ensued with Mr. Flessner, Finance Director Paprocki and the Board regarding
contributions made by disability applicant.
Finance Director Paprocki exited the meeting at approximately 8:00 p.m.
g. Ratification of Application for Members Pension Benefits Retirement Pension of Parry
Barnes
Motion by Secretary Caspers, seconded by Trustee Kadolph, to ratify the Application for
Members Pension Benefits Retirement Pension of Parry Barnes.
ROLL CALL:
Ayes: 4 – President Torlo, Secretary Caspers, Vice President Feldman, Trustee
Kadolph
Nays: 0 – None
Absent: 1 – Trustee Patel
Motion carried.
h. Approval of Application for Membership in the Oak Brook Police Pension Fund of Ryan
White (hired 1/2/2019)
Motion by Trustee Kadolph, seconded by Secretary Caspers, to approve the Application
for Membership of Ryan White.
ROLL CALL:
Ayes: 4 – President Torlo, Secretary Caspers, Vice President Feldman, Trustee
Kadolph
Nays: 0 – None
Absent: 1 – Trustee Patel
Motion carried.
Mr. Kirpach, Mr. Kosmala and Mr. Pearsall exited the meeting at approximately 8:13 p.m.
Mr. Flessner and Mr. Rietz exited the meeting at approximately 8:15 p.m.
8. PENDING BUSINESS
a. Discussion/action regarding disability matter
Attorney Rick Reimer was contacted via teleconference at approximately 8:20 p.m. regarding
status and scheduling of disability hearing. Teleconference ended at approximately 8:59 p.m.
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 5 of 5 January 22, 2019
9. INFORMATION & UPDATES
a. Scheduling of second quarterly meeting in 2019
Consensus to meet April 25, 2019 at 7:00 p.m. for the regular meeting.
10. ADJOURNMENT:
Motion by Secretary Caspers, seconded by Trustee Kadolph, to adjourn the Board of
Trustees of the Police Pension Fund meeting at 9:15 p.m. VOICE VOTE: Motion carried.
ATTEST:
Edward J. Caspers /s/
Edward J. Caspers, Secretary
Board of Trustees of the Police Pension Fund