HomeMy WebLinkAboutMinutes - 04/22/2021 - Police Pension Fund BoardBOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 1 of 7 April 22, 2021
VILLAGE OF OAK BROOK
BOARD OF TRUSTEES OF THE POLICE PENSION FUND - Minutes
April 22, 2021
UNOFFICIAL UNTIL APPROVED AS WRITTEN
OR AS AMENDED BY BOARD OF TRUSTEES OF THE
POLICE PENSION FUND ON July 29, 2021
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 6:41 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 Hitesh
Patel, Trustee Reid Foltyniewicz (all attended in-person)
ABSENT: None
IN ATTENDANCE: Phil Kosmala of Taiber Kosmala and Associates (in-person), Patrick Swaney of
Fifth Third Bank (via Zoom), Michelle Rice and Stephanie Bay of Lauterbach & Amen (via Zoom),
Pension Clerk Rose Kane (in-person)
3. PUBLIC COMMENTS None presented.
4. APPROVAL OF MINUTES
a. Approval of Regular Meeting Minutes of January 20, 2021
b. Approval of Special Meeting Minutes of February 11, 2021
c. Approval of Special Open Disability Hearing Minutes of March 31, 2021
Motion by Trustee Reid Foltyniewicz, seconded by Vice President Feldman, to approve the
Meeting Minutes of the January 20, 2021, February 11, 2021 and March 31, 2021 Board
Meetings 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, 2021 expenditures in the total amount of $278,111.94
b. Approval of February 1-28, 2021 expenditures in the total amount of $278,609.31
Village Finance Director/Treasurer Jason Paprocki joined the meeting at approximately 6:45 p.m.
Motion by Secretary Caspers, seconded by Vice President Feldman, to approve the Consent
Agenda.
ROLL CALL:
Ayes: 5 – President Torlo, Vice President Feldman, Secretary Caspers, Trustee Patel,
Trustee Foltyniewicz
Nays: 0 – None
Absent: 0 – None
Motion carried.
6. ITEMS REMOVED FROM CONSENT AGENDA – None presented.
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 2 of 7 April 22, 2021
7. UNFINISHED BUSINESS
a. Discussion/action regarding engagement with Lauterbach and Amen for administrative services
Ms. Rice explained that the proposal for administrative services from the February 11, 2021 meeting
had been revised to reflect:
• Fiscal Year 2021 - $550.00 per month (prorated to start May 1st)
• Fiscal Year 2022 - $675 per month
• Fiscal Year 2023 - $800.00 per month
She clarified that the one-time setup fee, which would include scanning the active member files, setting
up the portal, etc., would be $750.00. She stated that a line item would be added to the regular
accounting engagement letter for the administrative services. She added that Lora Murphy is the
supervisor who will be the initial contact and then a staff member will be assigned to the Board as their
administrative person.
Motion by Secretary Caspers, seconded by Trustee Foltyniewicz, to engage with Lauterbach
and Amen for administrative services which will be an addendum to the current agreement.
ROLL CALL:
Ayes: 5 – Secretary Caspers, Trustee Patel, Trustee Foltyniewicz, President Torlo, Vice
President Feldman
Nays: 0 – None
Absent: 0 – None
Motion carried.
President Torlo requested that Pension Clerk Kane remain as a consultant during the transition period
with Lauterbach and Amen’s administrative services. It was agreed that the current $25.00 hourly
amount remain in force for any work done by Pension Clerk Kane in transitioning the pension files to
Lauterbach and Amen. Pension Clerk Kane stated that she would like to continue sortin g through the
file cabinets for any records which are eligible to apply for destruction with the State and there was
consensus for her to continue to do so. Ms. Rice agreed to forward the revised engagement letter and
to contact Ms. Murphy so that the setup of the administrative services may begin.
b. Discussion/Action regarding Actuarial Assumptions
Ms. Bay reviewed the Actuarial Assumption Report presented at the first quarter 2021 meeting. In
reply to a question, she stated that the request to the Village for their contribution is on page 2 of the
report - $2.6 million. She added that these numbers are preliminary as there might be changes due
to audited financials. Finance Director/Treasur er Paprocki stated in reply to a question that the
Village’s contribution was at the minimum statutory amount in 2020. Discussion ensued and Ms. Bay
brought up the 2018 actuarial valuation and contribution, which reflected that the Village contributed
slightly higher than the statutory minimum at the time. Ms. Bay stated that the statutory minimum
contribution is $2.2 million, listed on page 10 of the report. Finance Director/Treasurer Paprocki
affirmed that the Village does not levy a tax so there is no lag from what is reflected in the report.
Discussion ensued regarding there being a 5-6% reduction in Village revenues and a 15-16%
reduction in contribution to the police pension fund in 2020. Finance Director/Treasurer Paprocki
stated that revenues are not back to normal, but they are definitely bouncing back faster than
expected. He affirmed that there should be no audit adjustments in regard to the actuarial valuations.
Motion by Secretary Caspers, seconded by Trustee Patel, to approve the Lauterbach and
Amen Actuarial Assumption Report.
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 3 of 7 April 22, 2021
ROLL CALL:
Ayes: 5 –Trustee Patel, Trustee Foltyniewicz, President Torlo, Vice President Feldman,
Secretary Caspers
Nays: 0 – None
Absent: 0 – None
Motion carried.
Ms. Bay exited the Zoom meeting at approximately 7:17 p.m.
8. NEW BUSINESS
a. Taiber Kosmala and Associates, LLC Report on First Quarter, 2021
Mr. Kosmala summarized the first quarter which included discussion about vaccinations and record
stimulus payments. He referred to page 17 of the Taiber Kosmala and Associates ’ report. He stated
that the Federal Reserve is willing to let inflation run hot for the course of this year, above their normal
historical 2% target, and remarked that the portfolio is placed accordingly for this and is overweight in
equities (near the statutory maximum) and underweight in fixed income. He stated that as of April 21,
2021, the portfolio was up another 3% in April; for the quarter the portfolio was up 3.50%, 50 basis
points ahead of the benchmark. He discussed the disruption in the fixed income bond markets, and
stated that equities are carrying the water for the portfolio given the low interest rates. He stated that
for the quarter the portfolio appreciated about $1.5 million and another $1+ million through the first
three weeks of April.
Mr. Kosmala remarked that the portfolio from the end of the first quarter 2020 to the end of the first
quarter 2021 was up 34.5%, so the Board staying the course was good and not giving into panic as
a lot of institutions did. He stated that he has a couple of recommendations because the portfolio with
the appreciation during April is butting up to the 65% equity statutory limit, similar to what was done
last quarter. He recommended taking $600,000 off of the Large Cap allocation - $300,000 from the
Large Cap Value manager and $300,000 from the Large Cap Growth manager, respectively, Ceredex
and MFS. He also recommended trimming the Small Cap manager, because of great performance
over the past six months - $400,000 from Zacks. Mr. Kosmala said that with these recommendations
it puts the equities back to about 63%, and that the $1 million would be deployed back to Fifth Third’s
Fixed Income portfolio.
Discussion ensued regarding the progress of vaccination.
Oak Brook Pension Performance
On page 17 of the Taiber Kosmala Report, the portfolio activity was listed as follows:
Summary of Cash Flows Fourth Quarter
Beginning Market Value $44,609,244
Net Cash Flow -$ 325,849
Net Investment Change $ 1,550,385
Ending Market Value on 3/31/2021 $45,833,780
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 4 of 7 April 22, 2021
b. Fifth Third Report on First Quarter, 2021
Mr. Swaney discussed that looking at the first quarter last year and the first quarter this year, there was
the exact opposite trading activity; first quarter last year, risk assets sell off, demand for high quality,
safety of government bonds; and first quarter this year, the classic risk -on rotation, with the expectation
of corporate earnings to pick up, and, subsequently, inflation to pick up. He added that investors have
been dumping bonds, specifically elongated treasuries and moving into risk assets. Mr. Swaney stated
that across the board the fixed income portfolio, minus high yield bonds, is in the red, but these are
paper losses because they are going to hold these bonds to maturity and earn a positive rate of return.
He added that going forward they definitely will need to bring in return expectations for fixed income,
starting yields are quite low, so they will be doing everything they can without taking on new risk in the
portfolio. From a performance standpoint, Mr. Swaney stated that the fixed income portfolio for the
quarter was down, -1.7% versus -1.9% for the Bloomberg Barclays US Intermediate Gov/Credit. He
said that he sees durations staying pretty close to the short end, rates will rise eventually, whether that
is a year from now or two - three years from now. He reiterated that they will continue to try to generate
as much yield as they can in a low rate environment without taking on new risk.
In response to a question, Mr. Swaney replied that the portfolio owns about 5% in Illinois municipal
bonds.
EQUITY MARKET OVERVIEW
Index 1-Month 3-Months YTD 1-Year 3-Years* 5-Years*
MSCI ACWI (Net) 2.67 4.57 4.57 54.60 12.06 13.20
S&P 500 4.38 6.17 6.17 56.33 16.75 16.27
S&P 400 Mid-Cap 4.67 13.47 13.47 83.44 13.37 14.35
Russell 2500 1.64 10.92 10.92 89.38 15.30 15.90
MSCI EAFE (Net) 2.30 3.48 3.48 44.57 6.02 8.84
MSCI Emerging Mkt (Net) -1.51 2.29 2.29 58.39 6.47 12.06
*Annualized return
FIXED INCOME MARKET OVERVIEW
Index 1-Month 3-Months YTD 1-Year 3-Years* 5-Years*
BC U.S Intm Gov/Credit -0.78 -1.86 -1.86 2.01 4.35 2.75
BC Global Agg excl. USD -2.42 -5.29 -5.29 7.15 1.15 2.13
BC U.S. TIPS -0.19 -1.47 -1.47 7.54 5.67 3.86
BC U.S. Municipal Bonds 0.62 -0.35 -0.35 5.51 4.91 3.49
BC U.S. High Yield Bonds 0.15 0.85 0.85 23.72 6.84 8.05
*Annualized return
Asset Allocation vs. Target
Current Current Target Target Range Difference % Within
Range
Large Cap $14,824,284 32.34 25.00 10.00 – 40.00 $3,365,839 7.34 Yes
Small Cap $5,212,587 11.37 10.00 5.00 – 15.00 $629,209 1.37 Yes
Non-US
Equity $7,500,038 16.36 15.00 5.00 – 25.00 $624,971 1.36 Yes
Fixed
Income $15,964,117 34.83 40.00 20.00 – 60.00 -$2,369,395 -5.17 Yes
Public Real
Estate $1,141,378 2.49 5.00 0.00 – 10.00 -$1,150,311 -2.51 Yes
Cash &
Equivalents $1,191,377 2.60 5.00 0.00 – 10.00 -$1,100,312 -2.40 Yes
Total $45,833,780 100.00 100.00 0.00
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 5 of 7 April 22, 2021
REAL ESTATE AND ALTERNATIVE INVESTMENTS OVERVIEW
Index 1-Month 3-Months YTD 1-Year 3-Years* 5-Years*
S&P US REIT 4.43 8.72 8.72 37.54 9.43 5.08
HFRX Global Hedge Fund -0.06 1.29 1.29 16.15 3.46 3.95
S&P Global Infrastructure 4.41 3.00 3.00 37.00 5.65 6.72
S&P GSCI Gold Total
Return -0.76 -9.47 -9.47 7.45 8.92 6.78
Thompson Reuters/Core
Commodity -2.87 10.24 10.24 52.03 -0.45 2.80
*Annualized return
ALLOCATION SUMMARY: ASSET CATEGORY
%
HOLDINGS MARKET VALUE
ESTIMATED
ANNUAL
INCOME
CURRENT
YIELD
Marketable Holdings
Traditional Asset Classes 100.00% $13,573,912.18 $441,499.54 3.25%
Cash and Equivalents 2.50% $339,957.52 $34.00 0.01%
Fixed Income 97.50% $13,233,954.66 $441,465.55 3.34%
Total Marketable Holdings 100.00% $13,573,912.18 $441,499.54 3.25%
Total Holdings $13,573,912.18 $441,499.54 3.25%
RECONCILLIATION SUMMARY
Total Holdings on 01/01/2021 $11,744,706.01
Beginning Marketable Holdings on 01/01/2021 $11,648,527.81
Beginning Accrued Income $96,178.20
Beginning Value $11,744,706.01
Contributions
Cash Contributions $2,989,548.95
Asset Receipts $ 0.00
Other Contributions $ 0.00
Total Contributions $2,989,548.95
Withdrawals
Cash Withdrawals ($807,182.22)
Asset Delivery $0.00
Fees ($5,136.99)
Total Withdrawals ($812,319.21)
Income Earned
Interest Collected $76,135.92
Dividends Collected $0.00
Other Income $0.00
Net Accrued Income $30,668.47
Total Income Earned $106,804.39
Net Change ($327,981.29)
Ending Marketable Holdings on 03/31/2021 $13,573,912.18
Ending Accrued Income $126,846.67
Ending Value $13,700,758.85
Total Holdings on 03/31/2020 $13,700,758.85
Total Earnings ($221,176.90)
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 6 of 7 April 22, 2021
FIXED INCOME INDIVIDUAL HOLDINGS
Category
% Total
Fixed
Income
Market Value Estimated
Annual Income
Current
Yield
Domestic Fixed Income
Corporate Bonds 47.76% $5,367,171.10 $170,061.16 3.17%
Domestic Fixed Income
Government Bonds 37.13% $4,172,689.45 $186,727.00 4.47%
Intl Developed Mkt
Bonds 15.10% $1,696,791.00 $48,730.50 2.87%
Domestic Fixed Income
Mortgage Backed 0.00% $92.12 $6.88 7.47%
Total Indiv Fixed
Income Holdings
100.00%
$11,236.743.67
$405,525.54
3.61%
Total Fixed Income
Holdings
100% $11,236,743.67 $405,525.54 3.61%
Motion by Secretary Caspers, seconded by Trustee Foltyniewicz, to follow the
recommendations of Taiber Kosmala, in taking $300,000 from Ceredex, $300,000 from MFS
Growth, and $400,000 from Zacks Small Cap, and moving it to the Fifth Third fixed income
account
ROLL CALL:
Ayes: 5 – Trustee Patel, Trustee Foltyniewicz, President Torlo, Vice President Feldman,
Secretary Caspers
Nays: 0 – None
Absent: 0 – None
Motion carried.
c. Approval of Investment Transactions for First Quarter, 2021
Motion by Secretary Caspers, seconded by Trustee Patel, to approve the Investment
Transactions for First Quarter 2021. VOICE VOTE: Motion carried.
d. Approval of Application for Membership in the Oak Brook Police Pension Fund of Jordan Smith
(hired 3/22/2021)
President Torlo stated that this is a new officer who came over from the Chicago Police Department.
Motion by Secretary Caspers, seconded by Trustee Patel, to approve the Application for
Membership in the Oak Brook Police Pension Fund of Jordan Smith.
VOICE VOTE: Motion carried.
e. Approval of Transfer of Creditable Service for Joseph Kieca from Sandwich Police Pension Fund
President Torlo remarked that this officer has been here for about two years and is bringing over Tier
II money from the Sandwich Police Pension Fund.
Motion by Trustee Foltyniewicz, seconded by Secretary Caspers, to approve the Transfer of
Creditable Service for Joseph Kieca from Sandwich Police Pension Fund.
VOICE VOTE: Motion carried.
BOARD OF TRUSTEES OF THE POLICE PENSION FUND
Minutes Page 7 of 7 April 22, 2021
9. INFORMATION & UPDATES
a. Scheduling of third quarterly meeting 2021
Consensus to meet for the third quarterly meeting on July 29, 2021 at 6:15 p.m.
10. ADJOURNMENT
Motion by Secretary Caspers, seconded by Trustee Patel, to adjourn the Board of Trustees of
the Police Pension Fund meeting at 7:41 p.m. VOICE VOTE: Motion carried.
ATTEST:
Edward J. Caspers, Secretary
Board of Trustees of the Police Pension Fund