Chicago City Wire

Laborers' & Retirement Board Employees' Annuity Benefit Fund of Chicago Board of Trustees met August 22.

Here is the minutes provided by the Board:

Report of Meeting No. 988 held on August 22, 2017, starting at 1:05 p.m. at the office of the Laborers’ and Retirement Board Employees’ Annuity and Benefit Fund of Chicago (“Fund” or “LABF”). The following notes attendance:

Board Members: Erin Keane – Vice President (City Comptroller, City of Chicago)

Michael LoVerde – Secretary (Active Employee Elected Member)

Kurt Summers, Jr. – Trustee (City Treasurer, City of Chicago) entered at 1:10 pm.

Carol Hamburger – Trustee (Managing Deputy Comptroller, City of Chicago)

James Capasso, Jr. – Trustee (Annuitant Elected Member)

Carole Brown – Trustee (Chief Financial Officer, City of Chicago)

James Joiner – Trustee (Active Employee Elected Member)

Staff & Consultants: Graham Grady – Taft Stettinius & Hollister LLP, Fund’s Counsel

Dr. Terence Sullivan – Fund’s Physician

James Wesner – Marquette Associates, Investment Consultant

Kweku Obed – Marquette Associates, Investment Consultant

Neil Capps – Marquette Associates, Client Analyst

Gregory Leonberger – Marquette Associates, Investment Consultant

Tim Bowen – Alliant/Mesirow Insurance

Michael Walsh – Executive Director and Chief Investment Officer

Peggy Grabowski – Comptroller

Sheila Jones – Administrative Coordinator

Nadia Oumata – Manager of Accounting and Investments

Tina Rhoten – Benefits Manager

Nicole Evangelista – Payment Services Coordinator

Irene Velazquez – Payment Services Assistant

Absents: Victor Roa – President (Union Appointed Member)

Observers: William Irving – LABF Member

Angela Myers – Loop Capital

Vice President Keane determined that a quorum was present after Trustee LoVerde took attendance.

Laborers’ and Retirement Board Employees’

Annuity and Benefit Fund of Chicago

Board Members:

I am transmitting herewith the minutes for the meeting of the Retirement Board which was held on August 22, 2017.

The minutes are comprised of the following:

• Public Participation

• Approval of Minutes From Prior Meetings

• Schedule A: Applications for Refunds

1. Refund of Contributions Due to Separation from Service

2. Miscellaneous Refunds

• Schedule B: Applications for Annuities

1. Employee Annuities

2. Spouse and Child Annuities

• Schedule C: Adjustment Refunds to New Annuitants

• Schedule D: Applications for Duty Disability Benefits

• Schedule E: Applications for Ordinary Disability Benefits

• Schedule F: Applications for Extension of Duty Disability Benefits

• Schedule G: Applications for Extension of Ordinary Disability Benefits

• Schedule H: Payment of Uncashed Checks of Deceased Members

• Schedule I: Payment of Administrative Expenses

• Fiduciary Liability Insurance Renewal Presentation

• Investments Report

• Executive Session No. 1

• Executive Session No. 2

• Investments Report (continued)

• Administrative Report

• Legal Report

• Executive Session No. 3

• Executive Session No. 4

• Executive Session No. 5

• Executive Session No. 6

• Adjournment

All the foregoing matters were checked upon receipt into the office of the Retirement Board and were found to be hereinafter set forth.

Public Participation:

None.

Approval of Minutes from Previous Meetings:

It was moved by Trustee LoVerde, seconded by Trustee Joiner, that the regular minutes of Meeting No. 987 held on July 18, 2017 be approved as submitted.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger, Capasso, Brown and Joiner.

Against -- None.

It was moved by Trustee Hamburger, seconded by Trustee LoVerde, that the minutes of executive sessions 1, 2 and 3 of Meeting No. 987 held on July 18, 2017 be approved as submitted.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger, Capasso, Brown and Joiner.

Against -- None.

Schedule A – Applications for Refunds

1. Refund of Contributions Due to Separation from Service

It was moved by Trustee LoVerde, seconded by Trustee Hamburger, that the Refunds of Contributions Due to Separation from Service be approved and ordered paid.

Roll-call: For-- Trustees Keane, LoVerde, Summers , Hamburger, Capasso, Brown and Joiner.

Against -- None.

2. Miscellaneous Refunds

It was moved by Trustee Capasso, seconded by Trustee LoVerde, that applications presented for Miscellaneous Refunds be approved and ordered paid.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger, Capasso, Brown and Joiner.

Against -- None.

Schedule B – Applications for Annuities

1. Employee Annuities

It was moved by Trustee LoVerde, seconded by Trustee Hamburger, that the applications for Employee Annuities be approved and ordered paid.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger, Capasso, Brown and Joiner.

Against -- None.

Trustee Summers entered at 1:10pm. Trustee Summers later cast an affirmative vote for all previous motions.

2. Spouse and Child Annuities

It was moved by Trustee LoVerde, seconded by Trustee Joiner, that the applications for Spouse and Child Annuities be approved and ordered paid.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger, Capasso, Brown and Joiner.

Against -- None.

Schedule C – Adjustment Refunds To New Annuitants

It was moved by Trustee LoVerde, seconded by Trustee Capasso, that Adjustment Refunds to New Annuitants be approved and ordered paid.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger, Capasso, Brown and Joiner.

Against -- None.

Schedule D – Applications For Duty Disability Benefits

It was moved by Trustee Joiner, seconded by Trustee LoVerde, that the applications for Duty Disability Benefits be approved and ordered paid.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger, Capasso, Brown and Joiner.

Against -- None.

Schedule E – Applications For Ordinary Disability Benefits

It was moved by Trustee Brown, seconded by Trustee LoVerde, that the applications for Ordinary Disability Benefits be approved and ordered paid.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger, Capasso, Brown and Joiner.

Against -- None.

Schedule F – Extension Of Duty Disability Benefits

It was moved by Trustee LoVerde, seconded by Trustee Summers, that the applications for Extension of Duty Disability Benefits, be approved and ordered paid.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger, Capasso, Brown and Joiner.

Against -- None.

Schedule G – Extension of Ordinary Disability Benefits

It was moved by Trustee Brown, seconded by Trustee Joiner, that the applications for Extension of Ordinary Disability Benefits be approved and ordered paid.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger, Capasso, Brown and Joiner.

Against -- None.

Schedule H – Payment of Uncashed Checks of Deceased Members

It was moved by Trustee LoVerde, seconded by Trustee Summers, that the applications for Payment of Uncashed Checks of Deceased Members be approved and ordered paid.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger, Capasso, Brown and Joiner.

Against -- None.

Schedule I – Payment of Expenses

It was moved by Trustee LoVerde, seconded by Trustee Joiner, that Administrative and Investment Invoices be approved and ordered paid.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger, Capasso, Brown and Joiner.

Against -- None.

Alliant/Mesirow Fiduciary Liability Insurance Presentation Tim Bowen of Alliant/Mesirow Insurance Services presented a proposal for the renewal of the LABF’s fiduciary liability and cyber liability insurance policies.

It was moved by Trustee LoVerde, seconded by Trustee Capasso, to approve the recommended fiduciary liability and cyber liability insurance policies.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger, Capasso, Brown and Joiner.

Against -- None.

See attached document.

Investments Report:

July 31, 2017 Preliminary Performance Report

Mr. Obed and Mr. Wesner reviewed the July 31, 2017 Performance Report. 2nd Quarter 2017 Performance Report Mr. Wesner reviewed the second quarter performance report. Asset Allocation Discussion This topic was discussed in executive session.

Executive Session No. 1:

At 1:47 p.m., Trustee LoVerde requested an executive session under 5 ILCS 120/2(c)(7) to discuss the sale or purchase of securities, investments or investment contracts. Trustee Hamburger seconded the motion.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger Capasso, Brown and Joiner.

Against -- None.

At 2:21 p.m., Trustee LoVerde made a motion, seconded by Trustee Summers, that the executive session be adjourned and that the Board return to open session.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger Capasso, Brown and Joiner.

Against -- None.

The Trustees took no action.

Index Manager RFP

This topic was discussed in executive session.

Executive Session No. 2:

At 2:22 p.m., Trustee LoVerde requested an executive session under 5 ILCS 120/2(c)(7) to discuss the sale or purchase of securities, investments or investment contracts. Trustee Hamburger seconded the motion.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger Capasso, Brown and Joiner.

Against -- None.

At 2:45 p.m., Trustee LoVerde made a motion, seconded by Trustee Summers, that the executive session be adjourned and that the Board return to open session.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger Capasso, Brown and Joiner.

Against -- None.

The Trustees took no action.

Mr. Obed invited the Board and LABF staff to attend Marquette’s upcoming investment symposium scheduled for Friday, September 29, 2017.

Cash Needs

Mr. Walsh reported the cash needs for September 2017 and the source of the funds.

Administrative Report:

Updated 2018 Funding Resolution

Mr. Walsh reviewed the events that transpired following LABF’s adoption of a funding resolution at the June 20, 2017 Board meeting. Mr. Walsh reminded the Board that due to: (1) the introduction of the ordinance seeking to amend the Municipal Code of the City of Chicago to authorize the City to make additional employer pension contributions, (2) the enactment of Public Act 100-0023, and (3) a request from Trustee Brown at the July 18, 2017 Board meeting to provide additional time to consider the matter, the Fund temporarily refrained from sending a funding request to the City. Mr. Walsh asked the Board how they would like to proceed with respect to the request. In light of the new legislation, the Board discussed whether certain financial obligations of the City were already included in the actuarially-based funding that is included in Public Act 100-0023, which became law on July 6, 2017. Trustee Brown recommended that the Fund draft a letter to Corporation Counsel seeking an opinion on the matter.

It was moved by Trustee LoVerde, seconded by Trustee Brown, to approve Draft 1 of the funding resolution and simultaneously seek an opinion from Corporation Counsel regarding pension contributions associated with members receiving duty disability benefits. See attached document.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger Capasso, Brown and Joiner.

Against -- None.

Legislative Matters/Discussion of Potential Administrative Rules

Mr. Walsh proposed adopting administrative rules over the course of the next several months to address administrative challenges that the Fund faces as a result of Public Act 100-0023 (PA 100-0023) becoming law.

It was moved by Trustee LoVerde, seconded by Trustee Joiner, to adopt rules 1 and 2. See attached document.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger, Capasso, Brown and Joiner.

Against -- None.

Separately, Mr. Walsh discussed issues and ambiguities that exist concerning the determination of employer contributions associated with members who have taken leaves of absence from the City to work for local labor organizations.

Finally, Mr. Walsh informed the Trustees of an addition to Charter 65 of the Illinois Compiled Statues included in PA 100-0023 that allows the City to assign all or a portion of any revenues or taxes received by the City from the State to a separate legal entity (corporation, trust, etc.) established for the sole purpose of issuing debt obligations for the benefit of the City. Mr. Walsh explained that the assignment is irrevocable and that the City has no legal right to any funds once assigned. Mr. Walsh expressed concern that this could interfere with the Fund’s new ability under PA 100-0023 (40 ILCS 5/11-169) to intercept State funds, if needed, and that it could result in fewer dollars available in the City’s General Fund to meet the City’s future obligations to the pension funds and other creditors. Mr. Walsh recommended that the Trustees seek clarification regarding the mechanics of these new provisions. Trustee Brown, in her capacity as CFO of the City of Chicago, provided some clarification explaining that: (1) the “intercept” language only referred to State grant money and no other types of revenue or tax payments, (2) the City has always had the ability to pledge revenue streams for the purpose of issuing and making debt service payments on debt instruments, (3) the sales tax money and personal property replacement tax (PPRT) money flowing through the State to the City is currently used to back special revenue obligations and, therefore, do not flow into the City’s General Fund and (4) no other taxes or revenues flow through the State into the City’s General Fund. Questions remained as to the impact the law may have on the Fund. The discussion served to introduce the matter to the Trustees and the matter will be discussed further at a later Board meeting.

LABF Staff/Annuitant Health Insurance

Mr. Walsh discussed the upcoming renewal dates for the two separate healthcare plans covering LABF employees and retirees that will expire in December 2017 and January 2018. He explained that the Fund expects to have the exact numbers by the upcoming Board meeting at which time the Board can discuss the matter in greater detail.

Miscellaneous

Payment Advices - The Trustees discussed changing the frequency at which payment advices are sent to annuitants from the current 12 times per year to 3 times per year. This change could save the Fund approximately $21,000 per year. The Trustees requested to see sample of the payment advice and decided to further discuss this matter at an upcoming meeting.

Fraud Matter

This topic was discussed in executive session.

Executive Session No. 3:

At 4:00 p.m., Trustee LoVerde requested an executive session under 5 ILCS 120/2(c)(11) to discuss current or potential litigation of the Fund. Trustee Joiner seconded the motion.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger Capasso, Brown and Joiner.

Against -- None.

At 4:04 p.m., Trustee Brown made a motion, seconded by Trustee LoVerde, that the executive session be adjourned and that the Board return to open session.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger Capasso, Brown and Joiner.

Against -- None.

It was moved by Trustee Brown, seconded by Trustee Summer, to notify the Cook County State’s Attorney regarding a situation in which a reasonable suspicion of fraud exists.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger Capasso, Brown and Joiner.

Against -- None.

Legal Report:

The legal topics were conducted in executive session.

Executive Session No. 4:

At 4:05 p.m., Trustee LoVerde requested an executive session under 5 ILCS 120/2(c)(11) to discuss current or potential litigation of the Fund. Trustee Capasso seconded the motion.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger Capasso, Brown and Joiner.

Against -- None.

At 4:09 p.m., Trustee LoVerde made a motion, seconded by Trustee Hamburger, that the executive session be adjourned and that the Board return to open session.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger Capasso, Brown and Joiner.

Against -- None.

Executive Session No. 5:

At 4:09 p.m., Trustee Hamburger requested an executive session under 5 ILCS 120/2(c)(11) to discuss current or potential litigation of the Fund. Trustee LoVerde seconded the motion.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger Capasso, Brown and Joiner.

Against -- None.

At 4:19 p.m., Trustee Hamburger made a motion, seconded by Trustee LoVerde, that the executive session be adjourned and that the Board return to open session.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger Capasso, Brown and Joiner.

Against -- None.

The Trustees took no action.

Executive Session No. 6:

At 4:19 p.m., Trustee LoVerde requested an executive session under 5 ILCS 120/2(c)(21) to discuss minutes of meetings lawfully closed under the Open Meetings Act. Trustee Joiner seconded the motion.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger Capasso, Brown and Joiner.

Against -- None.

At 4:21 p.m., Trustee LoVerde made a motion, seconded by Trustee Hamburger, that the executive session be adjourned and that the Board return to open session.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger Capasso, Brown and Joiner.

Against -- None.

It was moved by Trustee LoVerde, seconded by Trustee Hamburger, to approve the recommendations of Fund staff and Fund counsel to make available for public inspection items 1-12 of Section 1 of the memo that was reviewed with the Trustees. Copies of the memo are on file with the Fund office.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger Capasso, Brown and Joiner.

Against -- None.

It was moved by Trustee LoVerde, seconded by Trustee Joiner, that all remaining executive session minutes of the memo remain closed.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger Capasso, Brown and Joiner.

Against -- None.

Adjournment:

With no further business, at 4:22 p.m., Trustee LoVerde made a motion to adjourn the meeting. Trustee Brown seconded the motion.

Roll-call: For-- Trustees Keane, LoVerde, Summers, Hamburger Capasso, Brown and Joiner.

Against -- None.

http://www.labfchicago.org/assets/1/33/August_22_2017_Meeting_Minutes_with_Attachments.pdf