February
20
2001
REPORT
OF THE PROCEEDINGS
OF
THE
Board of Trustees
OF
THE
Public School Teachers'
Pension and
Retirement Fund of
Chicago
__________
Regular
Meeting - Official Report
Tuesday,
February 20, 2001
__________
A
regular meeting of the Board of Trustees of the Public School Teachers' Pension
and Retirement Fund of Chicago was held Tuesday, February 20, 2001.
The
President, Ms. Mary Sharon Reilly, called the meeting to order at 9:20 a.m.
PUBLIC
PARTICIPATION
Mr.
John Lowery, a retired teacher, expressed his dissatisfaction with the
prescription drug policy of his health insurance carrier relating to
reimbursement.
Mr.
Stuart Galesburg, attorney for Karen Hennessy, a disability applicant, briefed
the Trustees on Ms. Hennessy’s disability situation.
Mr.
Joseph D. Pellegrino, a retired teacher, presented issues for additional service
credit for other public employment. He
suggested that the Trustees consider a legislative remedy.
ROLL
CALL
Members
present: Ms. Anderson, Ms. Knazze,
Mr. O'Brill, Dr. Pilditch, Ms. Reilly, Ms. Rodriguez, Mr. Silver, Mr. Ward--8.
Members
absent: Mr. Mayo, Ms. Nolan, Mr.
O’Farrell, Mr. Saffold--4.
Also
in attendance were Mr. Kevin Huber (Chief
Financial Officer), Mr. Joseph Burns of Jacobs, Burns, Orlove, Stanton and
Hernandez (Legal Counsel), Mr. Brad
Blalock and Ms. Stephanie Grieser of Mercer Investment Consulting, Inc. (Investment
Consultant), Mr. Terry Ahern and Ms. Michele Dinn of The Townsend Group (Real
Estate Consultant) Mr. Sandor Goldstein of Goldstein and Associates (Consulting
Actuary), Mr. Mitch Bramstaedt,
Mr. Auntone Kelly and Mr. Andrew Sherman of The Segal Company (Insurance
Consultant), Mr. Jeff Markert and Ms. Julie Barrientos of KPMG (Independent
Auditor), Ms. Kathy Stevenson of the Northern Trust Company (Custodian),
and various observers and staff members.
REPORT
OF THE ACTUARY
Mr.
Sandor Goldstein of Goldstein and Associates distributed copies of the actuarial
report based on the June 30, 2000 actuarial valuation of the Fund and provided a
summary of the results of the valuation.
Mr.
Goldstein indicated that, based on an experience analysis over the period
1997-1999, some changes had been made in the actuarial assumptions used for the
valuation from the assumptions that had been used for the June 30, 1999
valuation.
He
indicated that as of June 30, 2000, the total actuarial liability amounted to
$9,940,371,587 and the actuarial value of assets was $9,612,202,813, resulting
in an unfunded liability of $328,168,773 and a funded ratio of 96.7%.
In comparison, as of June 30, 1999, the actuarial value of assets
exceeded the total actuarial liability by approximately $68 million, and the
Funded ratio was 100.8%. The
actuary indicated that the changes made in the actuarial assumptions used for
the June 30, 2000 valuation had the impact of increasing the total actuarial
liability by approximately $525 million.
The
actuary stated that on the basis of the results of the June 30, 2000 valuation
and taking into account the funding plan currently in effect for the Fund, there
is no Board of Education contribution requirement for Fiscal Year 2002.
CONTINUATION
OF PUBLIC PARTICIPATION
Mr.
Michael Williams, a retired teacher, raised questions about his eligibility for
the Early Retirement Option.
REPORT
OF THE INVESTMENT CONSULTANT
Brokerage
Presentation
Mr.
Paul Sachs of Mercer Investment Consulting, Inc. gave an educational
presentation on Institutional Brokerage.
Included in the brokerage presentation was Mercer’s recommendation on
international directed brokerage. Mr.
Sachs addressed questions raised by Trustees during his presentation.
Minority
Brokerage Policy Extended
A
motion was made by Mr. Silver, seconded by Mr. Ward, that the minority brokerage
policy be extended to cover international assets, and further that Mercer’s
recommendation of an amount not to exceed 25% of international brokerage be
commission recapture, and that a minimum of 10% be given to minority brokers.
The motion passed by the following vote:
Ayes:
Ms. Knazze, Mr. O’Brill, Dr. Pilditch, Ms. Reilly, Ms. Rodriguez, Mr.
Silver, Mr. Ward--7.
Nays:
Ms. Anderson--1.
Investment
Performance Evaluation
Mr.
Brad Blalock and Ms. Stephanie Grieser of Mercer Investment Consulting, Inc.
reviewed the Investment Performance Evaluation for periods ended December 31,
2000. Mr. Blalock and Ms. Grieser
addressed questions raised by Trustees during their presentation.
REPORT
OF THE REAL ESTATE INVESTMENT CONSULTANT
Presentation
of Private Real Estate Portfolio
Mr.
Terry Ahern and Ms. Michele Dinn of The Townsend Group reviewed the private real
estate portfolio and presented their recommendations.
They also asked for direction on presenting new investment opportunities
to the Trustees.
Approval
of Portfolio Rebalancing and Manager Interviews
A
motion was made by Mr. Ward, seconded by Dr. Pilditch, and unanimously passed,
to accept the recommendation by The Townsend Group to rebalance and reconstitute
the portfolio of core open-end commingled funds, and further to interview one or
more managers as recommended.
REPORT
OF THE HEALTH INSURANCE CONSULTANT
Discussion
of Transitioning Pensioners from Non-Medicare to Medicare Plan
Mr.
Mitch Bramstaedt of The Segal Company reported that a number of pensioners who
are over age 65 have not yet enrolled in Medicare. He reported that Fund staff has identified those members and
has attempted communication via phone calls and letters. The Trustees discussed alternate ways of communicating to
those who have not responded to the communications by staff.
Domestic
Partners Feasibility Study
Mr.
Andrew Sherman of The Segal Company prepared a feasibility study for providing
health insurance benefits for domestic partners. Following his review, Mr. Sherman addressed questions raised
by Trustees.
Consultant
Authorized to Implement Recommendations for Domestic Partner
Health
Insurance Coverage
A
motion was made by Mr. Silver, seconded by Mr. Ward, to authorize The Segal
Company to take the next steps as outlined in the feasibility study with regard
to making available the Fund’s health insurance coverage for domestic
partners, at a cost not to exceed $15,000.
Fund staff would also be included in coverage.
The motion passed unanimously by the following roll call vote:
Ayes:
Ms. Anderson, Ms. Knazze, Mr. O’Brill, Dr. Pilditch, Ms. Reilly, Ms.
Rodriguez, Mr. Silver, Mr. Ward--8.
Feasibility
Study for Self-Insuring Blue Cross Blue Shield Medical PPO Benefits Tabled
A
motion was made by Mr. Silver, seconded by Mr. O’Brill, and unanimously
passed, to table the discussion of self-insuring Blue Cross Blue Shield Medical
PPO benefits.
Ayes:
Ms. Anderson, Ms. Knazze, Mr. O’Brill, Dr. Pilditch, Ms. Reilly, Ms.
Rodriguez, Mr. Silver--7.
Nays:
Mr. Ward--1.
APPROVAL
OF MINUTES
On
a motion by Mr. Ward, seconded by Ms. Rodriguez, and by unanimous vote, the
minutes of the meetings on November 21, 2000 and January 18, 2001 were approved,
as amended, and ordered printed.
REPORT
OF THE INDEPENDENT AUDITOR
Presentation
of Financial Statements
Mr.
Jeff Markert and Ms. Julie Barrientos of KPMG presented the following reports:
Statement of Auditing No. 61 Letter, the Fund’s Financial Statements
and Schedules for the fiscal year June 30, 2000, and their 2000 Management
Letter. Mr. Markert and Ms.
Barrientos addressed questions raised by Trustees regarding their reports.
REPORT
OF THE COMMITTEE ON CLAIMS AND SERVICE CREDITS
Disability
Pension of Karen Hennessy Approved
The
Trustees reviewed the disability application for Karen Hennessy.
Following discussion, a motion was made by Dr. Pilditch, seconded by Mr.
Silver, and unanimously passed, to grant Ms. Hennessy’s request for a
disability pension.
EXECUTIVE
SESSION
A
motion was made by Dr. Pilditch, seconded by Ms. Anderson, and unanimously
passed, to enter in an executive session for the purpose of discussing legal
matters. The executive session
lasted from 3:55 p.m. to 4:04 p.m.
Following
executive session, a motion was made by Ms. Rodriguez, seconded by Mr. O’Brill,
and unanimously passed, to
resume the regular order of business.
CONTINUATION
OF REPORT OF THE COMMITTEE ON CLAIMS AND SERVICE CREDITS
Disability
Pension of Ann Lawrence Approved
The
Trustees reviewed the disability application for Ann Lawrence. Following
discussion, a motion was made by Dr. Pilditch, seconded by Mr. Ward, and
unanimously passed, to grant Ms. Lawrence’s request for a disability pension.
Disability
Pension of Darlene Czaja Approved
The
Trustees reviewed the disability application for Darlene Czaja.
Following discussion, a motion was made by Mr. Ward, seconded by Dr.
Pilditch, and unanimously passed, to grant Ms. Czaja’s request for a
disability pension.
Disability
Pension of Maureen Breen-Putnam Approved
The
Trustees reviewed the disability application for Maureen Breen-Putnam.
Following discussion, a motion was made by Mr. Ward, seconded by Dr.
Pilditch, and unanimously passed, to grant Ms. Breen-Putnam’s request for a
disability pension.
Disability
Pension of Robyn Cavallone Approved
The
Trustees reviewed the disability application for Robyn Cavallone.
Following discussion, a motion was made by Mr. Ward, seconded by Ms.
Anderson, and unanimously passed, to grant Ms. Cavallone’s request for a
disability pension.
Disability
Pension of Octavia Follins Approved
The
Trustees reviewed the disability application for Octavia Follins.
Following discussion, a motion was made by Mr. Ward, seconded by Mr.
O’Brill, and unanimously passed, to grant Ms. Follins’ request for a
disability pension.
Disability
Pension of Dora J. Foster Denied
The
Trustees reviewed the disability application for Dora J. Foster.
Following discussion, a motion was made by Dr. Pilditch, seconded by Mr.
Silver, and unanimously passed, to deny Ms. Foster’s request for a disability
pension.
Disability
Pension of Irma Stevanovic Denied
The
Trustees reviewed the disability application for Irma Stevanovic.
Following discussion, a motion was made by Dr. Pilditch, seconded by Mr.
Silver, and unanimously passed, to deny Ms. Stevanovic’s request for a
disability pension.
REPORT
OF COMMITTEE ON FINANCE
Reimbursement
of the Contingent Account
The
Committee on Finance reported that all bills, cancelled checks, bank statements
and other supporting documents covering net expenditures of $43,824.86 for the
period from November 1, 2000 through January 31, 2001, inclusive were audited.
The
Committee found that expenditures had been made properly and recommended this
account be reimbursed.
Bills
The
following bills were presented with the recommendation that they be approved.
Replacement
Warrants
The
Committee on Finance reported that the following persons requested replacement
warrants in lieu of the following described warrants that were lost or
destroyed. Affidavits certifying
these losses and in each case indemnifying the Fund against any liability,
damage or expense which may result by reason of issuing such replacement
warrants were duly filed. Therefore,
the Committee recommended that warrants issued to the persons named below in the
amounts indicated be duly recorded in the minutes of this meeting.
CONTINUATION
OF REPORT OF COMMITTEE ON CLAIMS AND SERVICE CREDITS
Pensions
The
Committee on Claims and Service Credits reported that applications for pensions
were presented for persons, hereinafter listed, with the recommendation that
they be approved and granted in the amounts and under the conditions set forth
herewith.
In
the case of each applicant for service and disability pensions, the employment
of the teacher has terminated, the legally prescribed minimum years of teaching
service were completed and requirements with respect to age, the Illinois
Retirement Systems Reciprocal Act (if applicable), and the Illinois Pension Code
were fulfilled.
In
accordance with the provisions of the Illinois Pension Code, each applicant for
disability retirement pension was declared by two physicians appointed by the
Board to be suffering from a disability which wholly and presumably permanently
incapacitates him/her for teaching.
Each
applicant for a survivor’s or reversionary pension furnished proper evidence
of his/her right to receive such benefits.
Cancellation
of Pensions
The
Committee on Claims and Service Credits reported that pursuant to the law, the
pensions of the following persons were cancelled upon the date of attainment of
legal age. The Committee
recommended that the cancellations shown below be confirmed and reported in the
proceedings of this meeting.
Revision
in Rate of Pensions
The
Committee on Claims and Service Credits reported that changes in salary credits
after pensions were granted necessitated the following revisions.
The Committee recommended that (1) these revisions be approved, (2) the
records of the Fund be changed accordingly, and (3) adjustments be authorized
for pension payments made prior to this date, as applicable.
Correction
and Reprinting of September, 2000 Meeting
Pensions
Granted Report
The
Committee on Claims and Service Credits reported that the report of the granting
of pensions printed in the September 19, 2000 proceedings booklet contained a
number of irregularities. Therefore,
a revised report is presented in its entirety herewith.
The
Committee recommended that this revised report be approved and printed in the
proceedings of this meeting.
Death
Benefits
The
Committee on Claims and Service Credits reported that documents pertaining to
claims for death benefits were examined and verified, and recommended approval
thereof.
In
support of these claims, the Committee reported that death benefits were for
persons whose dates of death were certified and whose heirs, beneficiaries,
administrators or executors furnished proper evidence to receive such payments.
Refunds
The
Committee on Claims and Service Credits reported that documents pertaining to
claims for refunds, listed herewith, were examined and verified, and recommended
approval thereof.
In
support of these claims, the committee reported that (1) the refunds on
separation from service are for persons no longer employed as members of the
teaching force . . . (2) refunds of contributions for survivors’ pensions are
for members with no eligible survivors at the time of retirement . . . (3)
refunds of excess contributions are for deductions outside of the statutory
requirements and/or overpayments towards the 2.2 upgrade option and . . . (4)
refunds of creditable service withdrawn are for previously validated optional
service.
Outside
Time
The
Committee on Claims and Service Credits reported that affidavits, or other
evidence attesting to or certifying service in the public schools of the several
states or in schools operated by or under the auspices of the United States
outside of the City of Chicago were presented for the persons hereinafter
listed.
The
Committee recommended that the service described be approved for pension credit
provided that the last five years of the member’s service shall have been
rendered in a position covered by this Fund, the State Universities Retirement
System or the Teachers’ Retirement System of the State of Illinois; a maximum
credit of ten years shall be reduced by credit for such service validated by the
State of Illinois and three-fifths of the term of service for which an annuity
is granted shall be in the public schools of the City.
Dr.
Pilditch moved the Report of the Committee on Claims & Service Credits to
the omnibus.
REPORT
OF COMMITTEE ON INVESTMENTS
Purchase
of Securities
The
Committee on Investments reported that securities described herein have been
purchased for investment by the Fund’s investment managers.
The Committee recommended that the listed securities be recorded in the
proceedings for this meeting.
Sale
of Securities
The
Committee on Investments reported that the sale of securities by the Fund’s
investment managers has been completed as listed. The Committee recommended that these be reported in the
proceedings of this meeting.
Ms.
Anderson moved the Report of the Committee on Investments to the omnibus.
REPORT
OF FINANCIAL SECRETARY
Financial
Statement
The
Financial Secretary presented herewith a report on the Fund’s net assets,
changes in net assets, and supporting reports for the six months ending December
31, 2000, with the recommendation that it be approved and printed in the
proceedings of this meeting.
OMNIBUS
VOTE
On
a motion by Mr. Silver, seconded by Mr. O’Brill, and by unanimous vote, the
foregoing committee reports which were moved to the omnibus were approved.
REPORT
OF THE CHIEF FINANCIAL OFFICER
Hardware
Requirements for Document Imaging Approved
Mr.
Kevin Huber presented documents representing due diligence performed by the
Fund’s MIS Department for workstation upgrades and imaging system hardware
requirements. Fund management
recommended the purchase of workstation upgrades and hardware
requirements.
A
motion was made by Mr. Silver, seconded by Ms. Knazze, and unanimously passed,
to approve purchase of workstation replacements for office employees, including
21” monitors, at a total cost not to exceed $85,000. Further to approve purchase of storage device, back-up device
and scanner, at a total cost not to exceed $31,000.
A
motion was then made by Ms. Knazze, seconded by Ms. Anderson, and unanimously
passed, to increase workstation replacement cost not to exceed $100,000.
REPORT
OF THE ATTORNEY
Mr.
Joseph Burns of Jacobs, Burns, Orlove, Stanton and Hernandez reported that other
law firms have expressed an interest in representing the Fund with regard to
securities litigation.
A
motion was made by Mr. Silver, seconded by Ms. Anderson, to authorize the
Executive Director to participate in securities litigation based on proposals
from Bernstein Litowitz Berger & Grossmann LLP; and Hagens Berman LLP for
the purpose of representing the Fund in securities litigation.
The motion passed by the following vote:
Ayes:
Ms. Anderson, Ms. Knazze, Mr. O’Brill, Dr. Pilditch, Ms. Reilly, Ms.
Rodriguez, Mr. Silver--7.
Nays:
Mr. Ward--1.
ADJOURNMENT
On
a motion by Mr. Silver, seconded by Ms. Anderson and by unanimous vote, the
meeting was adjourned at 5:10 p.m.
Respectfully submitted,
SIG
Maria J. Rodriguez
Recording Secretary
February
20
2001
REPORT
OF THE PROCEEDINGS
OF
THE
Board of Trustees
OF
THE
Public School Teachers'
Pension and
Retirement Fund of
Chicago
__________
Executive
Session - Official Report
Tuesday,
February 20, 2001
__________
An
executive session of the Board of Trustees of the Public School Teachers'
Pension and Retirement Fund of Chicago was held Tuesday, February 20, 2001, for
the purpose of discussing legal matters.
The
President, Ms. Mary Sharon Reilly, called the meeting to order at 3:55 p.m. with
the following members present: Ms.
Anderson, Ms. Knazze, Mr. O'Brill, Dr. Pilditch, Ms. Reilly, Ms. Rodriguez, Mr.
Silver, Mr. Ward--8.
Members
absent: Mr. Mayo, Ms. Nolan, Mr.
O’Farrell, Mr. Saffold--4.
Also
in attendance was Mr. Joseph Burns of Jacobs, Burns, Orlove, Stanton &
Hernandez (Legal Counsel).
Legal
matters were discussed. No action
was taken.
The
executive session was adjourned at 4:04 p.m.
Respectfully submitted,
SIG
Maria J. Rodriguez
Recording Secretary