Laborers' & Retirement Board Employees' Annuity Benefit Fund of Chicago Board met July 24.
Here is the agenda provided by the Board:
Board Members: Victor Roa – President (Union Appointed Member)
Erin Keane – Vice President (City Comptroller, City of Chicago) Michael LoVerde – Secretary (Active Employee Elected Member) Carol Hamburger – Trustee (Managing Deputy Comptroller, City of Chicago) James Capasso, Jr. – Trustee (Annuitant Elected Member)
Staff & Consultants: Graham Grady – Taft Stettinius & Hollister LLP, Fund’s Counsel Cary Donham – Taft Stettinius & Hollister LLP, Fund’s Counsel Dr. Terence Sullivan – Fund’s Physician James Wesner – Marquette Associates, Fund’s Investment Consultant Kweku Obed – Marquette Associates, Fund’s Investment Consultant Neil Capps – Marquette Associates, Fund’s Investment Consultant Michael Walsh – Executive Director and Chief Investment Officer John Carroll – Compliance Administrator Sheila Jones – Administrative Coordinator Nadia Oumata – Manager of Accounting and Investments Tina Rhoten – Benefits Manager Paul Rzeszutko – Assistant Benefits Manager Nicole Evangelista – Payment Services Coordinator Tracey Oates – Payment Services Assistant Kim Dougherty – Benefits Counselor
Absent: Kurt Summers, Jr. – Trustee (City Treasurer, City of Chicago)
Carole Brown – Trustee (Chief Financial Officer, City of Chicago) James Joiner – Trustee (Active Employee Elected Member)
Observers: Ariya Humphries, Chicago Summer Business Institute Summer Intern
Jabari Porter, City of Chicago Treasurer’s Office Angela Meyers, Loop Capital Tylon Jones, Loop Capital Dahlia Ronen, Esq., Kahn Swick & Foti, LLC
President Roa determined that a quorum was present after Secretary LoVerde took attendance.
Board Members:
I am transmitting herewith the minutes for the meeting of the Retirement Board which was held on July 24, 2018. 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
• Investments Report
• Executive Session No. 1
• Administrative Report
• Legal Report
• Executive Session No. 2
• Executive Session No. 3
• Executive Session No. 4
• Adjournment
All the foregoing matters were checked upon receipt in 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 Capasso, that the regular minutes of Meeting No. 998 held on June 19, 2018 be approved as submitted.
Roll-call: For -- Trustees Roa, Keane, LoVerde, Hamburger and Capasso.
Against -- None.
It was moved by Trustee LoVerde, seconded by Trustee Hamburger, that the minutes of Executive Sessions 1, 2, 3 and 4 of Meeting No. 998 held on June 19, 2018 be approved as submitted.
Roll-call: For -- Trustees Roa, Keane, LoVerde, Hamburger and Capasso.
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 Capasso, that the applications presented for Refunds of Contributions Due to Separation from Service be approved and ordered paid.
Roll-call: For -- Trustees Roa, Keane, LoVerde, Hamburger and Capasso.
Against – None.
2. Miscellaneous Refunds It was moved by Trustee Hamburger, seconded by Trustee LoVerde, that the applications presented for Miscellaneous Refunds be approved and ordered paid.
Roll-call: For -- Trustees Roa, Keane, LoVerde, Hamburger and Capasso.
Against – None.
SCHEDULE B – APPLICATIONS FOR ANNUITIES
1. Employee Annuities It was moved by Trustee Hamburger, seconded by Trustee Capasso, that the applications for Employee Annuities be approved and ordered paid.
Roll-call: For -- Trustees Roa, Keane, LoVerde, Hamburger and Capasso.
Against -- None.
2. Spouse and Child Annuities It was moved by Trustee LoVerde, seconded by Trustee Capasso, that the applications for Spouse and Child Annuities be approved and ordered paid.
Roll-call: For -- Trustees Roa, Keane, LoVerde, Hamburger and Capasso.
Against -- None.
SCHEDULE C – ADJUSTMENT REFUNDS TO NEW ANNUITANTS
It was moved by Trustee LoVerde, seconded by Trustee Capasso, that the Adjustment Refunds to New Annuitants be approved and ordered paid.
Roll-call: For -- Trustees Roa, Keane, LoVerde, Hamburger and Capasso.
Against -- None.
SCHEDULE D – APPLICATIONS FOR DUTY DISABILITY BENEFITS
It was moved by Trustee LoVerde, seconded by Trustee Hamburger, that the applications for Duty Disability Benefits be approved and ordered paid.
Roll-call: For -- Trustees Roa, Keane, LoVerde, Hamburger and Capasso.
Against -- None.
SCHEDULE E – APPLICATIONS FOR ORDINARY DISABILITY BENEFITS
It was moved by Trustee LoVerde, seconded by Trustee Capasso, that the applications for Ordinary Disability Benefits be approved and ordered paid.
Roll-call: For -- Trustees Roa (with respect to numbers 2 and 3) Keane, LoVerde, Hamburger and Capasso.
Against -- None. Abstain -- Trustee Roa (with respect to number 1).
SCHEDULE F – EXTENSION OF DUTY DISABILITY BENEFITS
It was moved by Trustee LoVerde, seconded by Trustee Capasso that the applications for Extension of Duty Disability Benefits, be approved and ordered paid.
Roll-call: For -- Trustees Roa, Keane, LoVerde, Hamburger and Capasso.
Against -- None.
SCHEDULE G – EXTENSION OF ORDINARY DISABILITY BENEFITS
It was moved by Trustee LoVerde, seconded by Trustee Hamburger, that the applications for Extension of Ordinary Disability Benefits be approved and ordered paid.
Roll-call: For -- Trustees Roa, Keane, LoVerde, Hamburger, Capasso.
Against -- None.
SCHEDULE H – PAYMENT OF UNCASHED CHECKS OF DECEASED MEMBERS
It was moved by Trustee LoVerde, seconded by Trustee Capasso, that the applications for Uncashed Checks of Deceased Members be approved and ordered paid.
Roll-call: For -- Trustees Roa, Keane, LoVerde, Hamburger and Capasso.
Against -- None.
SCHEDULE I – PAYMENT OF EXPENSES
It was moved by Trustee Capasso, seconded by Trustee LoVerde, that Administrative Expenses be approved and ordered paid.
Roll-call: For -- Trustees Roa, Keane, LoVerde, Hamburger and Capasso.
Against -- None.
INVESTMENTS REPORT
Mr. Wesner invited the Board to attend Marquette’s upcoming investment symposium scheduled for Friday, September 28, 2018.
Market Tracker Mr. Obed reviewed the June 2018 market performance.
June 30, 2018 Preliminary Performance Report Mr. Wesner reviewed the Fund’s June 30, 2018 Preliminary Performance Report.
Open-Ended Core Real Estate Fund RFP This topic was discussed in executive session.
EXECUTIVE SESSION NO. 1
At 1:30 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 Roa, Keane, LoVerde, Hamburger and Capasso.
Against -- None.
At 3:13 p.m., Trustee Hamburger made a motion, seconded by Trustee Capasso, that the executive session be adjourned and that the Board return to open session.
Roll-call: For -- Trustees Roa, Keane, LoVerde, Hamburger and Capasso.
It was moved by Trustee LoVerde, seconded by Trustee Capasso, to award the Core Real Estate allocation to J.P. Morgan Asset Management’s JPMCB Strategic Property Fund contingent on contract negotiations.
Roll-call: For -- Trustees Roa, Keane, LoVerde, Hamburger and Capasso.
Against -- None.
ADMINISTRATIVE REPORT
Election Rules Mr. Walsh reviewed a draft of the 2018 Active Employee Trustee Election Rules and noted the tentative date for the election was Wednesday, October 17, 2018 from 6:00 a.m. to 6:00 p.m. The Trustees agreed to have Trustees Roa, Hamburger and LoVerde serve as the members of the Election Committee for the upcoming election.
It was moved by Trustee LoVerde, seconded by Trustee Capasso, to adopt the 2018 Trustee Election Rules as amended in the meeting. See attached document.
Roll-call: For -- Trustees Roa, Keane, LoVerde, Hamburger and Capasso.
Against -- None.
Tier 3 Normal Cost Calculations Mr. Walsh reported that Aon Consulting had completed its calculations of the Tier 3 Normal Cost used in establishing the employee contribution rate as required under Public Act 100-0023 for affected employees. Aon’s calculations concluded the combined Normal Cost as a percentage of pensionable payroll for Tier 3 members, and Tier 2 members who have elected the Tier 3 benefit and contribution structure, is 16.78%. Mr. Walsh noted that since this percentage of pensionable salary is greater than 11.5%, the contribution rate for Tier 3 members should be 11.5% in 2019. See attached exhibit.
Legislative Matters This item was taken out of order. Mr. Walsh informed the Board that House Bill 4811, which includes provisions affecting LABF, had been sent to the governor on June 22, 2018 and that the governor has 60 days to act upon the bill otherwise it will automatically become law.
Tier 3 Receivables Mr. Walsh updated the Board on the Tier 3 receivable matter which came about as a result of the implementation of Public Act 100-0023. Mr. Walsh noted that, to date, just over half of the affected members had paid the retroactive receivable. After discussing the matter, the Board decided against charging interest to the members who had not yet paid the receivable and gave direction for Fund staff to offset at future dates the receivables for members who had not yet paid.
Collection of Overpayments Mr. Carroll updated the Board regarding the utilization of Markoff Law, hired on a contingency basis to assist LABF in the collection of certain overpayments. Mr. Carroll reported on the outcomes of the first batch of cases which were sent to Markoff.
Mr. Walsh requested that the Board give LABF staff permission to proceed in this manner with additional cases and to grant staff the authority to collect overpayments in this manner as part of LABF’s normal collection process.
The Board gave direction to proceed with this process and requested Fund staff provide periodic reports on collection status. The Board also requested that LABF staff continue to notify the Board of any suspicion of fraud involving overpayments.
Miscellaneous Member Transfer Matter - Mr. Walsh discussed a letter from an LABF member who requested to transfer some of his pension service credits from LABF to the General Assembly Retirement System pursuant to Section 11-125.1 of the Illinois Pension Code. The Board reviewed the applicable sections of the law and discussed the matter with staff and with Fund Counsel. Following the discussion, the Trustees directed Fund Counsel to prepare a formal write-up on the matter and report back to the Board at a future meeting. The Board directed staff to reply to the member stating that the LABF is further reviewing the matter.
LEGAL REPORT
Johnson Litigation Mr. Donham reported that Fund Counsel had filed a brief on behalf of the Fund regarding Mr. Krislov’s request to the court to receive attorney fees in the Johnson Litigation. Mr. Donham said that Mr. Krislov was asking for a portion of the annuitant’s 3% automatic annual increase to cover his fees. Mr. Donham noted that Plaintiffs in the Johnson case are opposed to Mr. Krislov’s request for fees in this matter.
Carmichael Litigation Mr. Donham reported that oral arguments were set to be heard by the Illinois Supreme Court in the Fall of 2018.
Underwood Litigation This topic was discussed in executive session.
EXECUTIVE SESSION NO. 2
At 4:08 p.m., Trustee LoVerde requested an executive session under 5 ILCS 120/2(c)(11) to discuss current or potential litigation involving the Fund. Trustee Hamburger seconded the motion.
Roll-call: For -- Trustees Roa, Keane, LoVerde, Hamburger and Capasso.
Against -- None.
At 4:13 p.m., Trustee LoVerde made a motion, seconded by Trustee Capasso, that the executive session be adjourned and that the Board return to open session.
Roll-call: For -- Trustees Roa, Keane, LoVerde, Hamburger and Capasso.
Against -- None.
The Trustees took no action.
Fraud Matter This topic was discussed in executive session.
EXECUTIVE SESSION NO. 3
At 4:13 p.m., Trustee LoVerde requested an executive session under 5 ILCS 120/2(c)(11) to discuss current or potential litigation involving the Fund. Trustee Hamburger seconded the motion.
Roll-call: For -- Trustees Roa, Keane, LoVerde, Hamburger and Capasso.
Against -- None.
At 4:33 p.m., Trustee LoVerde made a motion, seconded by Trustee Capasso, that the executive session be adjourned and that the Board return to open session.
Roll-call: For -- Trustees Roa, Keane, LoVerde, Hamburger and Capasso.
Against -- None.
The Trustees took no action.
Appeal of Denied Benefits This topic was discussed in executive session.
EXECUTIVE SESSION NO. 4
At 4:33 p.m., Trustee LoVerde requested an executive session under 5 ILCS 120/2(c)(11) to discuss current or potential litigation involving the Fund. Trustee Hamburger seconded the motion.
Roll-call: For -- Trustees Roa, Keane, LoVerde, Hamburger and Capasso.
Against -- None.
At 4:34 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 Roa, Keane, LoVerde, Hamburger and Capasso.
Against -- None.
The Trustees took no action.
ADJOURNMENT
With no further business, at 4:34 p.m., Trustee Capasso made a motion to adjourn the meeting. Trustee LoVerde seconded the motion.
Roll-call: For -- Trustees Roa, Keane, LoVerde, Hamburger and Capasso.
Against -- None.
http://www.labfchicago.org/assets/1/33/July_24_2018_LABF_Reg_minutes_F_With_Attachments_Redacted.pdf
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