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2004-01-29 - Agendas - Final
Firemen's Pension And Relief Fund • Meeting Agenda January 29,2004 A meeting of the Fayetteville Firemen's Pension and Relief Fund will be held at 11:00 a.m. on January 29, 2004 in Room 326 of the City Administration Building. 1. Approval of the Minutes: • July 9, 2003 Special Meeting Minutes • November 25,2003 Special Meeting Minutes • December 18, 2003 Meeting Minutes 2. Approval of the Pension List: • February 2004 Pension List Approval 3. Longer Investments: • Longer Investments Fourth Quarter Report • Longer Investments News Letter 4. Old Business: • • Ken Kieklak • Letter from Arkansas Fire and Police Pension Review Board • Resolution Number 02-03 -Enacting a 10 Year DROP • Resolution Number 03-03 —Enacting a Temporary 3%COLA Start Date of COLA Does the COLA Apply to DROP participants? • Resolution Number 04-03 —Working after DROP • Ashland Management • Copies of Dennis Ledbetter's Retirement Papers 5. New Business: • Thank you letter to Kathryn Stout • Schedule of Fireman's Pension Meetings for 2004 • Budget Information • Kim Skelton College Registration • Kelly Skelton College Registration • NCPERS 2004 Annual Conference • The Monitor • Parking Permits for 2004 a ca. • 1 11 ........, 1 tttl 1 '. I„ , , ki,\.: 4 I. 1 %-.:zz. ..... ..) . .) Z-7 Z-)3-"P") < t '''. 3,3) ".>,-)-) AC1'1Q ( 0 ry o A. w 'a 15 w El CA V c C r 0 w c`a C C O w E 0 : m ii 0CIu. ° : 3cin I- 3 va° � � co d C C C L C >, t L a) C C O a. C >, 'C al O O O o O C O C 'a �^ O C O O O C G d C 'C .4....7 'a+ V >+ C C . r C C .1., t+ v >1 a. 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Q O C Q Q n _ o Q O e 111VC VU fA I C O +_+ v ° a3 £ U) e0 C C p =' vd ° � ° � �u F- cu_ co ano -, 3 V C •a) _ = L = >, -c m • L = c>, ° 0 0 UC > cNCC.0 0 . . 0C � , C C; o O m (v :Cv U) O aQ 0 0 O QmR co AodQ o u. co 2 2 co 220aaa4m cA 2 2 a7 22: oaacLco Firemen's Pension and Relief Fund Meeting July 9,2003 Page 1 of 5 41kt Firemen's Pension and Relief Fund Special Meeting July 9,2003 A meeting of the Fayetteville Firemen's Pension and Relief Fund was held at 11:00 a.m. on July 9, 2003 in Room 326 of the City Administration Building. Present: Danny Farrar, Pete Reagan, Robert Johnson, Ronnie Wood, Sondra Smith, Secretary, Attorney Darrin Williams, Attorney Mark Martin and Attorney Charles Stutte. Absent: Mayor Coody and Marion Doss The meeting was called to order by Pete Reagan. Report from Attorneys: Mark Martin: I would like to thank you for arranging this special meeting so that we can address the issue of our association with the Law Firm Cauley, Geller, Bowman & Rudman, Darrin Williams is here today to address some of the issues that we discussed at • the last meeting. When we met last we told you that our goal was to expedite this. We have a deadline of presenting to you the losses, as we project them at the meeting on the 31st. To meet that deadline we wanted Darrin to come today to discuss the monitoring agreement which we need to have to accomplish that goal. At this time I would like to introduce Darrin Williams. Darrin Williams: I would like to give you a brief overview of the type of services that we provide to institutional investors such as pension funds and labor funds. Our monitoring services, which is the agreement that we are going to sign today does two things, it is with no consideration, not a single dime passes hands, it does not cost a thing for this. What it does is gives us the authority to receive your investment portfolio on a regular basis, we usually do it on a monthly basis and to monitor that portfolio against the activity that we see in the market. Our firm specializes in securities fraud representation. We have several institutional clients including states, cities and other labor union funds that we monitor their investments. We look at the activity in the market, compare the securities that you own and determine if there are any signs of fraud. If there have been recently filed security litigation cases then we make a report and give that to you, along with the options that • you can take. It is up to you to decide if you want to move forward with litigation, to be Firemen's Pension and Relief Fund Meeting July 9,2003 Page 2 of 5 • part of a class action suit, to bring suit on your own, any number of choices that you might have. With this marketing service we give you the information then you make a decision of what you want to do. Pete has given us some past historical information about your portfolio and we have identified from that information probably 40 securities that you have held since 1999 that have been subject to a securities fraud class action law suit. We have not gone any further, I don't know if your custodial bank or someone has been monitoring this already. I do know there is a particular stock; Campbell Soup Company that was sued two or three years ago and the settlement was reached earlier this year and there is a deadline of tomorrow, the 10th of July for anyone who held stock during the relevant class period and it appears from the information that I was given that you did hold stock during that class period. If you want to be a part of that class action suit to receive funds then you have a deadline of tomorrow to actually file a proof of claim. Often times your custodial bank will file those claims for you, but usually when they do that they will let you know. We don't know if anyone has done that on your behalf, so we are going to try to get that done. I can't promise that we can meet the deadline of the 10th because it is going to rely on being able to contact your custodial bank and get information. That is just one of the types of things that we will be able to provide to you during this monitoring service, not just bring a lawsuit, but when a lawsuit is settled we will be able to assist your custodial bank in making sure that you receive funds. It is your money that • is sitting out there, when it is not claimed it is spread portionally among people who are part of the class action suit, so they get more than necessarily was due them. There are several articles, one I shared with both Pete and Mark that show that pension funds lose out on millions of dollars each year because they simply don't file those claims. In an egregious case where you may have suffered a large loss you may be motivated to actually bring a law suit and if you were motivated to file a class action law suit then you retain our firm to do that. We would negotiate a separate fee agreement with regard to what those fees would cost; in that circumstance we would not receive a penny unless we were successful. We have to have a successful judgment or successful settlement before we are paid. We are suing on a class action basis so all those fees would not be borne by you, they would be borne by the entire class which would be thousands of investors. You only pay your portion of attorney fees and those would only be paid after a successful settlement or judgment and with court approval. Under no circumstances would those fees ever be more than one third of recovery and they could be less than that because the fee would be subject to judicial review and approval. This is the sample monitoring agreement, basically what it does is create an attorney client relationship which allows us to receive your portfolio information and then for us to send you periodic reports. That monitoring agreement sets up an attorney client relationship that requires us to keep the information we have confidential. There is no consideration, it does not cost you anything for us to monitor. If we do find a case that • Firemen's Pension and Relief Fund Meeting July 9,2003 Page 3 of 5 you would like to move forward on then we would have to come back and negotiate a • separate agreement at that time on what the fees would be. Pete Reagan: If we don't file the Campbell Soup case by tomorrow we are going to lose that amount, there is no way that we will recover that is that correct? Darrin Williams: That is correct. Pete Reagan: We don't know how many of those in the past that we should have filed. Darrin Williams: Your custodial bank could very well have been doing this and just not telling you about it, usually it shows up in some type of report that you would get from them, so let's hope that they have done that. We need to check to see if they have done it and if they have not we need to get a proof of claim filed before tomorrow. When a settlement is reached a settlement fund is created and is administrated by a settlement administrator. Anyone who held stock during that relative time period can make a claim and has to prove that they held stock during that time for that fund, once that claim period runs, then the funds are distributed. I do not know what your holding was in Campbell Soup but if it was a dollar it is your dollar so you might as well get it back. We don't get a dime for that we didn't file that suit, we are just making you aware of it and assisting you in getting a proof of claim filed so you can get your money back. Mark Martin: It might be helpful at this time to give the board an opportunity to read • this and then if there are any questions in regards to any of this we will be happy to do our best to answer any questions. Pete Reagan: There is no charge for the monitoring service and when you do find a class action law suit then we retain your firm to assist us in regaining those fees. We are giving you full access to our historical and current investments. Is that correct? Charles Stutte: That is correct. Most significantly with regards to attorneys fees on any type of class action suit, those fees in terms of representation are all going to be approved by a court. I think this is a valuable asset to the board on this fund. In looking through all the records I saw no indication that a representative of Merrill Lynch while managing the fund had appeared to reported to the board that there were pending actions for which your account would have a claim. That would be something which they would have been obligated to do or to send. On most class action suits there is a list of investors and they will send out individual notices and claims to everyone that is a share holder. Those notices, this board should have been receiving, that is why I think that it is likely that Merrill Lynch has dropped the ball. What often happens in these cases is that people keep passing the buck and passing the responsibility. Merrill Lynch is going to say that was not part of their contract, that they were not monitoring class action suits for you and any notice of class actions they will try to wash their hands of it. Longer Investments, I don't believe this is part of their representation, I don't believe they are actively monitoring all of these stocks so it is not necessarily a service that you are having filed right now. It is some what of a time consuming deal because your portfolio is so large • Firemen's Pension and Relief Fund Meeting July 9,2003 Page 4 of 5 • and involves so many diversified stock that if during a period a claim comes back, particularly later, you are going to be in and out of the market during a representative period and no one is keeping up or accounting to this board. That is what this firm is providing, the ability to watch the account if and when claims come up against a particular corporation, whereby they have manipulated stock, fraud or misrepresentation and there is a valid claim they are alerting you and you want to be a part of the law suit or there is a fund that has been established and you need to get a claim in to protect your amount. In that respect I think it is not only a valuable service for the future I think it is also valuable to have their help and assistance in looking at what may have been done in the past, they will recover any losses that may be there. Pete Reagan moved to approve the agreement. Robert Johnson seconded. The motion carried 5-0. Mayor Coody and Marion Doss were absent. Pete Reagan: There is just one line here for the pension board; I think it would be proper for the board clerk to sign. Sondra Smith: Does it need to be signed today? Pete Reagan: If we are going to pursue the Campbell Soup suit it does. The custodial bank now is Northern Trust of Chicago but before it was Merrill Lynch. • Sondra Smith: I do have one question on 3.3 there are some blanks there, is there something that will be filled in those blanks? Charles Suttee: There is nothing that will be filled in there. Mark Martin: Page 4 of 4 in the communications section number 6 we need an individual from the board to be the contact person as the client. Pete Reagan: I will be glad to be the contact person. Pete Reagan moved to list him as the contact person. Ronnie Wood seconded. The motion carried 5-0. Mayor Coody and Marion Doss were absent. Charles Stutte: For an update on the other case that is on going, our intern has completed the work on itemizing out all the trades, accumulating all the losses long term and short term. We are preparing the hard copy to have an expert be able to look at. We hope to have input by July 31 st Pete Reagan: Does it look like we will have a final report on the 31 st? Charles Stutte: I think so and I think Mark has indicated that we have gotten most of our research on the issues that we wanted to look at before we make a determination whether it is arbitration or some other alternative. I think all of that is in and we will • likely be able to make our recommendation and ask for approval also at that same time. Firemen's Pension and Relief Fund Meeting July 9,2003 Page 5 of 5 Sondra Smith: The Firemen's Pension is looking at LOPFI to represent their finances in . the future, should they move to LOPFI how will that affect this contract? Pete Reagan: It is my understanding that this is good for a year and what I perceive happening is that LOPFI will be approached to have this same type of retainer agreement. I am going to encourage that to happen, so this will stay in full effect. Whenever the time comes when the funds are turned over to LOPFI for management then this agreement will be in full force and it will be part of the resolution that will come from this board. Do you have a copy of that sample resolution that Cathryn left and if so can I get a copy. Sondra Smith: Yes. Mark Martin: If that is the original, then Darrin and I will sign it and make copies before we leave. Sondra Smith: I need the original. Mark Martin: A copy will be fine for us, so we will return the original to you. Memo from Marsha Farthing and Steve Davis: Pete Reagan: We have a memo from Steve Davis referencing a $1,500 cost for a • g consolidation process study. It was my understanding at the last meeting that we had with Steve Davis when Cathryn Hinshaw was present, I thought that Steve said the city was paying half and we were paying half. Sondra Smith: This says $1,500 to each pension plan. Danny Farrar moved to approve the payment of $1,500 for the study. Ronnie Woods seconded. The motion carried 5-0. Mayor Coody and Marion Doss were absent. Meeting Adjourned at 11:30 AM • Firemen's Pension and Relief Fund Special Meeting Minutes November 25,2003 Page 1of5 • Firemen's Pension and Relief Fund Special Meeting Minutes November 25,2003 A Special meeting of the Fayetteville Firemen's Pension and Relief Fund was held at 11:00 a.m. on November 25, 2003 in Room 313 of the City Administration Building. Present: Danny Farrar,Pete Reagan, Robert Johnson,Marion Doss,Ronnie Wood,Mayor Coody, Sondra Smith, and Chief Bosch. The meeting was called to order by Mayor Coody. Resolution to extend the DROP period from 5 to 10 years. Resolution to approve working after DROP. Resolution to approve a temporary 3% compound COLA. Mayor Coody: There is only one order of business and that is the discussion of ACT's 1369, 1372 of 2003 for its active members. I just got a copy of this and I am not all that familiar with this particular situation. I know this would change the DROP from five to ten years and people • who have signed up for the DROP would now be able to extend their eligibility for an additional five years with a larger lump sum payment, is this correct. I need to know more about this because this is going to involve big money and I don't know the details and what all is involved. I see that Carreiro says that the cash flow evaluation may be actuarially sound but not with a 3% permanent COLA, that perhaps it can be with a 3% temporary COLA. To be physically responsible I need to know more about what we would be obligating ourselves to in the long term so I would like to ask if we can put this off for a while until we get a chance to look at it. The last thing I want to do is make a snap decision. It may be good for nine people but bad for the other fifty people that are already retired, I don't know if that is the case or not but I have an obligation to all the people that have already retired too. This fund is not as sound as many of us would like for it to be, that is why we are thinking about sending it to Little Rock. We are going to have some big shortfalls to make up when the fund does head south and if it becomes actuarially sound for a short period of time that may not be a good enough reason to jump in there and approve something in something that is not as stable as we would like for it to be. I just need to know more about it. Pete Reagan: The reason I asked for this special meeting, I had one of the guys at the Fire Department that is on the DROP tell me that his end date of DROP was February 1, 2004. Mayor Coody: So that would be the end of his five years? Pete Reagan: Yes. He was asking to either extend employment or enact a ten year DROP and that is the reason that we asked for the costing of this by the actuary. • Firemen's Pension and Relief Fund Special Meeting Minutes November 25,2003 Page 2 of 5 Mayor Coody: When were these Acts of 2003 approved,this was last legislative session so that 41) would have been several months ago and he just came forward in the last few days? Pete Reagan: No. It's been when we were looking at taking this fund to LOPFI for management, that's when we asked Steve Davis if he would find out what the costing of these two benefit increases would be from the actuary. We actually got them back after our meeting started last Thursday. Mayor Coody: I see. Chief Bosch: What is the date do you know? Pete Reagan: Sondra looked up the date and it is May 1, 2004. Sondra Smith: Dennis Ledbetter, according to this, if this is correct, his DROP date is February 1, 2004, so if it is not Dennis the next person on DROP is Eddie Baughman and his is May 1, 2004. Chief Bosch: May 1. Marion Doss: Both of those people asked about this because they were both concerned, they both asked about this and that is what started the project going. The hold up was the actuary. Pete Reagan: The reason that I asked for this special meeting is the Pension Review Board also has to approve this and they are scheduled to meet December 17, 2003 in Little Rock, they will not meet again until March. I was under the impression and I guess Eddie Baughman is too, because he said his time was up in February and he's the one asking for it to be extended. Now that we have looked at this we now have some time if it is true that Dennis is retiring. Chief Bosch: Dennis is looking at retirement; he is looking at leaving next month. I have not seen anything official, but I think that is his intent. He told me verbally, I don't count on anything until I see it in writing. Mayor Coody: So we have a little bit of time. Sondra Smith: My problem is I have not had a chance to look at the information; this is a big decision to make without being able to review the information. I do not want to do anything that is not just and right. I am sure it will probably be okay, the actuary says it is but I would like to look at the information before I vote on anything. I do not have a problem with the temporary 3% COLA, because that is temporary. The thing I am concerned about is the DROP and the effect that might have, I need to get with Steve Davis and get numbers to see what kind of effect that will have on the plan. Marion Doss: It looks to me like it will be better for the plan, one thing the DROP is not 90% if they go ten years, when they start that second five years it drops to 75%is that right? • Firemen's Pension and Relief Fund Special Meeting Minutes November 25,2003 Page 3 of 5 • Pete Reagan: Right. Chief Bosch: So there actual retirement amount drops to 75%. Marion Doss: The amount that goes into the DROP fund. They are still employed and paying into the fund also. I think it is better for the fund than if they leave and they have the total amount coming out. Sondra Smith: 75%more is going to be paid to them in a lump sum, at the end of five years out of the fund that could amount to a large amount if all of them want to extend their DROP. Pete Reagan: They would be drawing it anyway if they retired at the end of their five years, so that is a wash. Marion Doss: They get their DROP, they get the money they put into the DROP plus they draw their retirement. Sondra Smith: They get that DROP as a lump sum and that comes out as a lump sum distribution from this fund. Mayor Coody: And they draw their retirement and they stay on salary and continue to build retirement? • Sondra Smith: They don't draw their retirement, they draw their salary and then their retirement money is set aside and paid out in a lump sum distribution. Robert Johnson: When does the Pension Review Board meet? Pete Reagan: December 17, 2003. Chief Bosch: When do they meet again? Pete Reagan: They meet every quarter; they will meet again in March. Mayor Coody: One thing that concerns me is where it says a 3% permanent COLA cannot be sustained under the current assumptions, it would have to be a 3%temporary COLA and then be reviewed, that's close, to say temporary maybe it will work but permanently no it will not work, that doesn't make it sound like it is good for the fund. I have a lot of homework to do on this because we have a bunch of people involved. I know it would be good for a hand full of folks but I want to make sure that we don't do something that is good for a few that hurts the others. Marion Doss: The 3% COLA would affect everybody but the ten year DROP would affect just nine members that are still working. The working after DROP I don't look for anyone to do that, because if I understand the working after DROP, you quit paying into the DROP,you can't draw your money, you don't draw your retirement, you just work for a regular salary and the money • stays there in the fund. Firemen's Pension and Relief Fund Special Meeting Minutes November 25,2003 Page 4 of 5 Pete Reagan: Yes and the employee does not pay their 6% to the fund and the city does not 4110 match that contribution, actually that is a wash and a 12% savings to the city. Mayor Coody: I am getting conflicting information. Pete Reagan: There are two different ACTS, the ten year DROP is one and the working after DROP is a different one. Mayor Coody: Alright. It's tough for me to walk in and sit down and know what is going on. The last thing I want to do is to make a quick decision that I will regret from now on. Marion Doss: We are the same way. Chief Bosch: Not being a board member, how long does it take to call a special meeting, just public notice, and 24 hours. Ledbetter is looking at leaving in December, I will talk to him some more to see where he is at with that, if he decides to leave then theoretically we do not need to have this to the Pension Review Board in December, we can get it to them in March. That would give us some time to talk about this, look at this and think about it, based on what Ledbetter does, if Ledbetter says I would like to stay we can call a special meeting between now and December 16, 2003. Is that correct? Mayor Coody: If Ledbetter at this late date should say that he wants to stay on and we have to • make a snap decision,the odds are the snap decision would not be positive. Chief Bosch: I would hate for you to make a decision that might be bad for the fund. Marion Doss: That is the way we are, because this affects all of us and we have to answer to all these people that are drawing. Pete Reagan: I understand, but in speaking with Kathryn Hinshaw she said that she has to have a resolution in her hand a day and a week before that meeting so she can get it on the agenda. This is going to hinge on what Ledbetter wants to do. Chief Bosch: I will ask him today and see what his intentions are. Pete Reagan: If he decides that he is retiring then we can handle this at the next meeting. Sondra Smith: If not we can call a special meeting around the first week in December and still get it to them in time. I apologize for not having time to review this but the smoking issue has engulfed my life and I didn't receive this information until Thursday afternoon. Ronnie Wood: I appreciate the fact that you are taking the time to review this. Danny Farrar: The temporary 3% COLA, that is for everyone that is drawing retirement. It amounts to about$54. • Firemen's Pension and Relief Fund Special Meeting Minutes November 25,2003 Page 5 of 5 SPete Reagan: It was my understanding that it was for full paid only, when we had actuaries performed in the past that is the reason that I brought that up. A discussion followed on the actuary report not being completed in a timely manner, the numbers on the report and the fund. There was also a discussion on the DROP plan and how the plan works. Pete Reagan: We can get with Steve and get his opinion. Meeting Adjourned at 11:30 AM • • Firemen's Pension and Relief Fund Meeting Minutes December 18,2003 Page 1 of 8 Firemen's Pension and Relief Fund • Meeting Minutes December 18, 2003 A meeting of the Fayetteville Firemen's Pension and Relief Fund was held at 10:30 a.m. on December 18, 2003 in Room 111 of the City Administration Building. Present: Danny Farrar, Pete Reagan, Robert Johnson, Marion Doss,Ronnie Wood, Mayor Coody, Sondra Smith, Secretary, City Attorney Kit Williams, Marsha Farthing, Steve Davis, and Amber Wood. The meeting was called to order by Mayor Coody. Approval of the Minutes: Pete Regan moved to approve the minutes. Ronnie Wood seconded. The motion to approve the minutes passed unanimously. Approval of the Pension List for January,2003: Earvel Schader passed away,his pension benefits will now go to his widow. Pete Reagan moved to approve the Pension List. Marion Doss seconded. The motion to • approve the Pension List passed unanimously. Old Business: A Resolution to approve a 10 year DROP: Mayor Coody: This is going to extend the DROP program from five years to ten. How many people does this affect? Pete Reagan: It will affect 10 people if they choose to do it. Sondra Smith: In your packet there are three pages that accounting completed that explain how this will affect the plan. Employee A, B and C are employees that draw different salary amounts and their payout on a five year DROP versus their payout on a ten year DROP. When they go to a ten year DROP they only draw 75% of their salary and they only draw 1.5% interest on their funds. Instead of paying the difference from five to ten years on a monthly basis we are paying it out in a lump sum distribution. Mayor Coody: Are these numbers per employee? Sondra Smith: Yes. Mayor Coody: So if I was a fireman on a ten year DROP and I qualified then I would get a lump sum check for$656,000? • Firemen's Pension and Relief Fund Meeting Minutes December 18,2003 Page 2 of 8 • Kit Williams: At the end of the ten year DROP. Sondra Smith: Depending on your salary, these numbers are just estimates at different pay levels. You could only get $393,618 based on your salary. Kit Williams: What were the last couple of DROP check amounts? Sondra Smith: The last one was about $230,000. Marsha Farthing: They run from $150,000 to $260,000. Sondra Smith: The next page shows the difference they would receive by going to a ten year DROP. The difference would be less than they would actually receive if they had drawn their pension during the five years on a monthly basis. Kit Williams: From the plan? Sondra Smith: Yes, from the plan. Kit Williams: But they are getting their salary. Sondra Smith: Yes. • Kit Williams: Are their pension benefits based on the initial retirement age and not on the retirement age after five or after ten years? Pete Reagan: Yes. Marsha Farthing: When they elect DROP. Sondra Smith: So if they receive salary increases during those ten years those increases would not be included, the amount they draw is based on the time they elect the DROP. Marsha Farthing: These are estimated employee wages. Sondra Smith: I think what accounting did was estimate someone at the highest end of the spectrum, the middle and the low end of the spectrum. Marion Doss: What employee was used for Employee A? Marsha Farthing: I would not focus on who it is. This was just a test that was used. Marion Doss: This is a hypothetical employee? • Marsha Farthing: These are somewhat based on someone that could be at that level when they retire. Robert Johnson: This could be based on if they start the DROP now. Firemen's Pension and Relief Fund Meeting Minutes • December 18,2003 Page 3 of 8 Kit Williams: If they start later they are going to start at a higher level because of their income. Do we have anyone that has not entered the DROP that is still eligible to enter the DROP? • Marsha Farthing: There is one person. Sondra Smith: Probably the more realistic numbers are Employee B and C. Marion Doss: Yes, I think so. A discussion followed on going to a ten year DROP. Sondra Smith: The last page shows how this would affect the General Fund. The net amount that could affect the General Fund because of someone staying on DROP, earning a higher salary than a new employee would be at the maximum about $2,700 per year. Ronnie Wood: That is what it would cost the plan? Sondra Smith: That is what it would cost the General Fund of the city. Kit Williams: It is not going to cost the plan it sounds like; it sounds like the plan will be paying out less. Sondra Smith: The plan will be paying out less, and the city will be paying out a little bit more. Pete Reagan: In these calculations did we figure in hiring someone off the street to fill the • position or promoting someone into the position? Marsha Farthing: I am not real sure how that was figured. Kit Williams: I am sure they had to take into account that everyone is going to move but they are not going to have the same step that you are in. Pete Reagan: There is a lot of difference between an entry level position and a current position. Sondra Smith: There are so many variables when you are calculating this. I needed to see how it would affect the plan and the city. It doesn't hurt the plan and it does not affect the city by that much so I really do not have a problem with the ten year DROP. Robert Johnson: The maximum is about$2,700 per person per year. Marion Doss: I don't see how the DROP can hurt the plan at all or I would never have voted for the DROP. A discussion followed on extending the DROP from five to ten years. Kit Williams: Marsha, how does this affect the LOPFI plan, you have someone that will not be contributing to LOPFI because of someone staying on the old plan, so they are not accruing • benefits under LOPFI and they are not paying anything, does that have any affect one way or the other on the LOPFI plan? • • Firemen's Pension and Relief Fund Meeting Minutes December 18,2003 Page 4 of 8 Marsha Farthing: I don't think so. The LOPFI administrators project what they need for the • people to retire. Kit Williams: Delaying new members from LOPFI will not make a difference to the LOPFI plan? Marsha Farthing: No. The only problem is if we felt the old plan was in trouble we might have to bring it into LOPFI and that would affect it. Mayor Coody: How many people have not signed up for DROP yet, one? How many of the rest of you would this affect? Pete Reagan: One has not signed up for DROP yet. It would affect all of us, I only know of one person right now that has requested it. Sondra Smith: Not everyone will do the ten year DROP. Marion Doss: Personally I don't plan on going to a ten year DROP. I am happy with the five year, I guess I could change my mind, but I don't plan on it. I think most people when they sign up for DROP as a rule they are ready for it. A discussion followed on the ten year DROP. • Pete Reagan moved to adopt the resolution approving a ten year DROP. Marion Doss seconded. The resolution passed 6-1. Pete Reagan, Ronnie Wood, Robert Johnson, Marion Doss, Danny Farrar and Sondra Smith voting yes. Mayor Coody voting no. Kit Williams: Everyone that voted in favor of the ten year DROP needs to sign the resolution. Sondra Smith: Yes. A Resolution to approve a 3% temporary compounded COLA for three years for all Paid Pensioners: Kit Williams: This is for three years? Pete Reagan: Three year temporary as per the Osborn and Carreiro report recommendation. Kit Williams: At the end of three years, does it stay at that level from then on. Pete Reagan: Yes, unless it comes back to this board. Kit Williams: So this board could reduce it back or continue it, other than that it would stay, is this compounded? • Pete Reagan: Yes. Steve Davis: I think the actuary ran their assessment based on a compounded COLA. Kit Williams: What affect will this have on the plan Steve? Firemen's Pension and Relief Fund Meeting Minutes December 18,2003 Page 5 of 8 Pete Reagan: The unfunded approved liability goes down, so it is not a large cost to the plan. Is • that right Steve? Steve Davis: With the extended DROP or extended employment the plan is actuarially sound in 2021, with the current plan as it exists; it is actuarially sound in 2020. It never becomes actuarially sound, but based on this report it says "a 3% permanent COLA can NOT be sustained under the current assumptions. As we have discussed, it would need to be a temporary COLA and I would have to see how many years it would be sustainable. A 3% compound COLA for the next three years and then continuing at those benefit levels is projected to have assets sufficient to meet all benefit obligations in the future". Mayor Coody: What assumptions are they using for the rate of return? Steve Davis: They are following the Pension Review Board requirements on rate of return and I believe that is 8%. Mayor Coody: 8%, so if we get an 8%rate of return this may be doable for three years? Steve Davis: That is correct. Mayor Coody: What is the actual rate of return that we have been seeing? Steve Davis: I am not sure. 111 Kit Williams: It has not been 8%. Pete Reagan: We have had years with 27%, 21% and 18%. Kit Williams: But we have had years when it was down. Pete Reagan: We have had two years of negative. That is the rate of return that was set by the Arkansas Pension Review Board for running these numbers. Steve Davis: They do not have an option in selecting any other rate of return. Mayor Coody: So that is the rule and if the 8% is met then the temporary COLA may work, if that 8% isn't met than this temporary COLA even though we are paying it will hurt the plan. Steve Davis: That is correct. Kit Williams: In the statues they talk about a benefit increase over a 30 year period, does he use a 30 year period? Steve Davis: Under the closed plan the statues allow them to amortize debts over a five year period. LOPFI is allowed to amortize debts over 30. This plan is not allowed to amortize over • 30 years by statues only LOPFI, that is my understanding of the difference in the two laws. Kit Williams: I thought this meant that the plan would have to be actuarially sound for 30 years, is that not what they mean? Firemen's Pension and Relief Fund Meeting Minutes December 18,2003 Page 6 of 8 • Steve Davis: No,just able to amortize the debt over that time period. Pete Reagan: When they run these actuary assumptions it is the worst case scenario. Kit Williams: 8% is not the worst case scenario. Mayor Coody: That is pretty best case scenario. Steve Davis: The letter from Osborn and Carreiro, the last projection actually shows both benefit enhancements together. It states these increases together would be considered actuarially sound under the rules of the Arkansas Fire and Police Pension Review Board, even though they are showing in 2027 $2,763,000 in funded accrued actuarially liability under the rules established by the Arkansas Fire and Police Pension Review Board they are still considered actuarially sound. I can only speculate as to why that would be, my guess is that the annual income in each one of those years is sufficient to meet the expenses. Kit Williams: The employer contributions are higher now, then they go down and then they start coming back up again. Is that the millage? Pete Reagan: Isn't that insurance turn back too? Steve Davis: The millage is somewhere between $200,000 and $300,000 so any difference • above $200,000 to $300,000 would have to be insurance turn back. Kit Williams: Does it look like the General Fund will not have to use its money to fund this pension? Steve Davis: They have $3,758,000 in assets in 2027 and an actuarial accrued liability of$6.5 million, so through 2027 based on this report General Fund would not have to give the fund any money. Danny Farrar: I would like the resolution to read all pensioners. I would like to include the volunteers. Kit Williams: We have to do what ever they tell us we can do, were the volunteers included? Marion Doss: They included the entire list. Steve Davis: The entire list may have been sent down but I don't know what was included. Danny Farrar: I spoke to the actuary and they said everyone was included. There was a discussion on including all pensioners in the 3%temporary COLA. • Mayor Coody: What is the dollar amount we are looking at? Everyone gets annual increases don't they? Sondra Smith: No. Firemen's Pension and Relief Fund Meeting Minutes December 18,2003 Page 7 of 8 Mayor Coody: If the 3% COLA is enacted and there is only a 6% rate of return who makes up that difference. • Sondra Smith: The pension fund. Mayor Coody: If the pension fund doesn't then the city has to, right? Steve Davis: There are several options, it could be turned over to the Pension Guarantee Board of the State of Arkansas and benefits could be adjusted to match whatever resources are available, that is the worst case scenario. When we get to that point there are decisions that have to be made before we will find out if the General Fund has to put money toward the plan. Danny Farrar moved to approve the Resolution of a 3% temporary COLA for three years to include all pensioners. Marion Doss seconded. The resolution passed unanimously. A Resolution to approve working after DROP: Mayor Coody: So you would get your lump sum money from DROP and you keep working, do you keep building retirement? Pete Reagan: No sir, you no longer pay into the fund, the city no longer pays into the fund, your DROP is frozen you can not draw it until you leave employment. It is a cost savings to the fund. Marion Doss: You just keep working and drawing your regular salary. • Mayor Coody: What I am afraid of is letting folks work and then you can't get rid of them and they take up space and filling slots that need to be filled by young vigorous strong fire fighters. Is there a chance that that could happen. Marion Doss: I don't think so. Pete Reagan: There is always that chance. Steve Davis: How many people are eligible for this working after DROP? Pete Reagan: Eleven. A discussion followed on working after DROP. Pete Regan moved to adopt the working after DROP resolution. Marion Doss seconded. The resolution passed 6-0. Mayor Coody was absent during the vote. Ashland Management: Postponed until the next meeting. • New Business: • Firemen's Pension and Relief Fund Meeting Minutes December 18,2003 Page 8 of 8 Dennis Ledbetter Retirement: • Pete Reagan moved to approve Dennis Ledbetter's retirement. Ronnie Wood seconded. The motion passed 6-0. Mayor Coody was absent during the vote. The following items were handed out: • A copy of Earvel Schader's death certificate. • A copy of The Monitor. • A copy of the budget reports. • A copy of the Osborn, Carreiro & Associates report. • A copy of the Arkansas Fire and Police Pension Review Board — 2003 Legislative changes. Pete Reagan moved to adjourn. Ronnie Wood seconded. Meeting adjourned at 11:25 AM. • a FIREMEN'S RELIEF AND PENSION February 2004 THE FOLLOWING ARE THE OBLIGATIONS OF THE FIREMEN'S RELIEF FUND FOR THE MONTH OF FEBRUARY. YOU ARE HEREBY INSTRUCTED TO ISSUE CHECKS TO THE • PAYEES, IN THE AMOUNTS SHOWN,AND FOR THE PURPOSE SO STATED. DATE OF REGULAR Year To Date EMP#RETIREMENT NAME MO BENEFIT REG BENEFIT FED.TAX ST.TAX NET 79 11/99 ARMSTRONG(DILL), PAMELA 1,658.91 1,658.91 300.00 100.00 1,258.91 74 3/86 BAIRD,JULIA 1,649.16 1,649.16 350.00 145.00 1,154.16 2 3/75 BLACKARD, PAUL 100.00 100.00 100.00 63 5/72 BOLAIN,ANN 100.00 100.00 100.00 68 7/99 BONADUCE, MICHAEL 2,735.14 2,735.14 475.38 2,259.76 44 9/86 BOUDREY, BETTY MRS. 2,267.18 2,267.18 300.00 50.00 1,917.18 45 9/86 BOUDREY, HOWARD 1,911.99 1,911.99 1,911.99 49 7/88 BOUDREY,JACK 1,507.82 1,507.82 287.68 50.00 1,170.14 4 6/67 CARL, FLOYD JR 100.00 100.00 100.00 5 5/72 CASELMAN,ARTHUR 120.00 120.00 120.00 57 5/90 CATE, ROY 1,637.10 1,637.10 1,637.10 6 4/68 CHRISTIE,ARNOLD 100.00 100.00 100.00 8 10/76 COUNTS,WAYNE 100.00 100.00 100.00 78 11/99 DILL,GARY JOHN 1,658.92 1,658.92 100.00 1,558.92 11 2/76 FARRAR,ALONZO 914.10 914.10 75.00 839.10 38 5/84 FRALEY,JOSEPH G. 1,618.08 1,618.08 200.00 15.00 1,403.08 170 5/03 FREEDLE, LARRY 3,492.86 3,492.86 500.00 100.00 2,892.86 92 03/02 GAGE,TOMMY 2,376.34 2,376.34 226.00 50.00 2,100.34 34 6/79 HARRIS,JAMES E. 100.00 100.00 100.00 70 11/99 HARRIS, MARY RUTH 100.00 100.00 100.00 93 06/02 JENKINS,JOHN 3,273.93 3,273.93 700.00 200.00 2,373.93 86 07/01 JOHNSON,ROBERT 2,812.66 2,812.66 500.00 100.00 2,9 64 4/95 JORDAN,CHARLIE 2,081.90 2,081.90 2, 76 5/88 JUDY,JAN 1,507.82 1,507.82 200.00 50.00 1,257.82 37 3/84 KING,ARNOLD D. 1,393.18 1,393.18 240.00 100.00 1,053.18 54 5/89 KING,ARVIL 1,566.00 1,566.00 130.00 1,436.00 12 3/60 LANE, HOPE MRS 100.00 100.00 100.00 13 10/67 LAYER, MERLIN 417.50 417.50 417.50 173 12/19 LEDBETTER,DENNIS 3,455.40 3,455.40 575.00 173.00 2,707.40 14 7/74 LEE, HAROLD 100.00 100.00 100.00 51 10/88 LEWIS,CHARLES 1,507.82 1,507.82 75.00 25.00 1,407.82 40 9/85 LOGUE, PAUL D. 2,624.88 2,624.88 325.00 75.00 2,224.88 50 9/88 MASON, LARRY 1,492.83 1,492.83 78.16 1,414.67 39 4/85 MC ARTHUR,RONALD A. 1,604.92 1,604.92 150.00 50.00 1,404.92 35 2/82 MC CHRISTIAN, DWAYNE 100.00 100.00 100.00 15 4/77 MC WHORTER, CHARLES 1,221.26 1,221.26 150.00 1,071.26 29 8/81 MILLER, DONALD 1,193.41 1,193.41 125.00 25.00 1,043.41 73 2/00 MILLER,KENNETH 2,910.17 2,910.17 325.00 75.00 2,510.17 42 2/86 MOORE,JAMES H. 100.00 100.00 100.00 16 4/64 MORRIS,WILLIAM H. 115.00 115.00 115.00 62 10/68 MORRISON, ELIENE 125.00 125.00 125.00 48 7/88 MULLENS, DENNIS W. 2,005.35 2,005.35 2,005.35 46 5/88 OSBURN,TROY 1,738.46 1,738.46 200.00 38.00 1,500.46 81 02/01 PHILLIPS,LARRY 2,530.45 2,530.45 2,530.45 53 2/89 POAGE, LARRY 2,147.56 2,147.56 300.00 100.00 1,747.56 22 4/73 REED,JOE 100.00 100.00 100.00 30 3/81 SCHADER, EARVEL(DECEASED) 0.00 172 12/03 SCHADER, MADGE 1,268.40 1,268.40 1,268.40 41 9/85 SCHADER,TROY 1,395.58 1,395.58 57.00 1,338.58 82 03/01 SKELTON,KELLY 1,114.17 1,114.17 125.00 25.00 MK 83 03/01 SKELTON, KIMBERLY 1,114.17 1,114.17 125.00 25.00 66 8/98 SKELTON, PAULINE 390.00 390.00 390.00 36 5/76 SPRINGSTON, CARL 737.78 737.78 70.00 17.00 650.78 90 03/02 STOUT, IMOGENE W. 702.65 702.65 702.65 DATE OF REGULAR Year To Date EMP#RETIREMENT NAME MO BENEFIT REG BENEFIT FED. TAX ST. TAX NET 0 165 12/02 TATE, RALPH 3,356.83 3,356.83 300.00 100.00 2,956.83 26 3/66 TUNE, BILLIE SUE 125.00 125.00 125.00 27 3/71 TUNE, MILDRED MRS. 125.00 125.00 125.00 71 1/00 WARFORD,THOMAS 2,290.35 2,290.35 300.00 1,990.35 28 7/68 WATTS, DONALD 400.00 400.00 400.00 88 01/02 WOOD,RONNIE D 2,816.02 2,816.02 800.00 200.00 1,816.02 52 9/88 WRIGHT, RANDALL 1,547.82 1,547.82 200.00 25.00 1,322.82 79,856.87 79,856.87 8,864.22 1,913.00 69,079.65 DROP DATE DROP EMPLOYEES NEW BENEFITS 05/01/99 BACHMAN, EDDIE 2,396.34 04/01/00 NAPIER,LONNIE 3,219.73 07/01/00 REAGAN,PETE 3,235.68 01/01/01 DOSS,MARION 4,920.63 03/01/03 MAHAN, MARSHALL 3,731.29 03/01/03 PIERCE,JOEY 3,337.69 03/01/03 SHACKLEFORD, GLEN 3,337.69 04/01/03 O'NEAL TEDDY 3,771.29 WE,THE UNDERSIGNED, DO SOLEMNLY SWEAR THAT THE ABOVE OBLIGATIONS ARE JUST AND CORRECT;THAT NO PART THEREOF HAS BEEN PREVIOUSLY PAID;THAT THE PENSION PAYMENTS SO CHARGED ARE IN ACCORDANCE WITH THE ACTIONS OF THE BOARD OF TRUSTEES OF THE FIREMEN'S RELIEF AND PENSION FUND; THAT THE SERVICES OR SUPPLIES FURNISHED,AS THE CASE MAY BE,WERE ACTUALLY RENDERED OR FURNISHED;AND THAT THE CHARGES MADE THEREFORE DO NOT EXCEED THE AMOUNT ALLOWED BY LAW OR THE CUSTOMARY CHARGE FOR SIMILAR SERVICES OR SUPPLIES III SECRETARY CHAIRMAN AND PRESIDENT ACKNOWLEDGEMENT STATE OF ARKANSAS ) COUNTY OF WASHINGTON) SWORN TO AND SUBSCRIBED BEFORE ME THIS DAY OF ,2003. NOTARY PUBLIC MY COMMISSION EXPIRES: • YTD 6810-9810-5335-00 79,856.87 III • City of Fayetteville Fire Pension and Relief Fund U/A Dated 06-18-86 FOURTH QUARTER REPORTS • December 31, 2003 LONGER INVESTMENTS INCORPORATED • A Registered Investment Advisor • Longer Investments Inc. PORTFOLIO APPRAISAL Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 December 3], 2003 (Excluding Reinvested Divs.) Unit Total Market Pct. Unit Annual Cur. Quantity Security Cost Cost Price Value Assets Income Income Yield COMMON STOCK 3,000 Aluminum Co.of 19.89 59,658.00 38.00 114,000.00 1.1 0.600 1,800.00 1.6 America 4,000 American Power 15.84 63,347.35 24.50 98,000.00 0.9 0.320 1,280.00 1.3 Conversion 4,750 Applied Materials 19.56 92,927.80 22.44 106,590.00 1.0 0.000 0.00 0.0 2,000 B.P.Amoco PLC A.D.S. 39.64 79,285.00 49.35 98,700.00 0.9 1.530 3,060.00 3.1 3,250 Biomet,Inc. 28.90 93,922.25 36.22 117,715.00 1.1 0.150 487.50 0.4 3,750 Bristol Myers Squibb 27.17 101,892.50 28.60 107,250.00 1.0 1.120 4,200.00 3.9 3,500 Burlington Northem 28.38 99,347.30 32.35 113,225.00 1.1 0.600 2,100.00 1.9 Santa Fe 3,750 Cabot Corp. 30.46 114,212.15 31.84 119,400.00 1.1 0.600 2,250.00 1.9 2,325 Cardinal Health Inc 57.63 133,988.98 61.16 142,197.00 1.3 0.100 232.50 0.2 1,750 ChevronTexaco Corp. 73.53 128,672.92 86.39 151,182.50 1.4 2.920 5,110.00 3.4 3,000 Citigroup 38.17 114,513.67 48.54 145,620.00 1.4 1.400 4,200.00 2.9 2,650 Coca-Cola 46.62 123,537.19 50.75 134,487.50 1.3 0.880 2,332.00 1.7 3,500 Dell Computer 29.31 102,577.00 33.98 118,930.00 1.1 0.000 0.00 0.0 Corporation 2,000 Devon Energy Corp 50.89 101,785.04 57.26 114,520.00 1.1 0.200 400.00 0.3 2,800 Dover Corp. 38.04 106,503.00 39.75 111,300.00 1.1 0.600 1,680.00 1.5 2,125 Emerson Electric 48.03 102,073.75 64.75 137,593.75 1.3 1.600 3,400.00 2.5 2,185 Estee Lauder 30.38 66,389.79 39.26 85,783.10 0.8 0.300 655.50 0.8 III3,250 ExxonMobil 31.45 102,202.59 41.00 133,250.00 1.3 1.000 3 250.00 2.4 6,675 Flextronics 11.15 74,421.65 14.80 98,790.00 0.9 0.000 0.00 0.0 5,000 General Electric 22.58 112,914.50 30.98 154,900.00 1.5 0.800 4,000.00 2.6 3,900 Genuine Parts 31.89 124,370.31 33.20 129,480.00 1.2 1.180 4,602.00 3.6 4,000 Honeywell(New) 29.72 118,870.30 33.43 133,720.00 1.3 0.750 3,000.00 2.2 1,000 Illinois Tool Works 63.61 63,613.60 83.91 83,910.00 0.8 0.960 960.00 1.1 1,400 Intl Business Machines 81.49 114,090.47 92.68 129,752.00 1.2 0.640 896.00 0.7 3,850 Intel Corp 16.20 62,367.82 32.05 123,392.50 1.2 0.080 308.00 0.2 3,275 Kennametal,Inc. 39.85 130,501.56 39.75 130,181.25 1.2 0.680 2,227.00 1.7 2,500 L-3 Communications 45.58 113,952.17 51.36 128,400.00 1.2 0.000 0.00 0.0 Holdings Inc. 3,100 Lincare 29.61 91,806.28 30.08 93,248.00 0.9 0.000 0.00 0.0 2,150 Medtronic,Inc. 40.25 86,537.65 48.61 104,511.50 1.0 0.290 623.50 0.6 4,500 Microsoft Corp. 27.59 124,176.83 27.37 123,165.00 1.2 0.160 720.00 0.6 1,000 Minnesota Mining& 61.90 61,905.00 85.03 85,030.00 0.8 1.320 1,320.00 1.6 Mfg. 2,520 Northern Trust Corp. 36.52 92,034.00 46.28 116,625.60 1.1 0.760 1,915.20 1.6 6,000 Peoplesoft Inc. 17.64 105,851.64 22.79 136,740.00 1.3 0.000 0.00 0.0 3,600 Pfizer 32.79 118,047.71 35.33 127,188.00 1.2 0.680 2,448.00 1.9 1,500 Qualcomm Incorporated 34.97 52,460.55 53.93 80,895.00 0.8 0.280 420.00 0.5 3,500 SBC Communications 23.44 82,055.00 26.07 91,245.00 0.9 1.250 4,375.00 4.8 2,150 Schlumberger,LTD 45.10 96,955.98 54.72 117,648.00 1.1 0.750 1,612.50 1.4 4,700 Time-Warner,Inc. 17.82 83,761.29 17.99 84,553.00 0.8 0.000 0.00 0.0 3,000 Transocean Inc. 24.56 73,680.00 24.01 72,030.00 0.7 0.120 360.00 0.5 1,575 Union Pacific Corp. 65.93 103,847.00 69.48 109,431.00 1.0 0.920 1,449.00 1.3 3,000 Walgreen Company 33.45 100,337.00 36.38 109,140.00 1.0 0.130 390.00 0.4 1,450 Walmart Stores 52.75 76,491.00 53.05 76,922.50 0.7 0.360 522.00 0.7 2,250 Weight Watchers 36.71 82,605.83 38.37 86,332.50 0.8 0.000 0.00 0.0 3,000 Williams Sonoma 28.85 86,550.90 34.77 104,310.00 1.0 0.000 0.00 0.0 4,221,042.33 4,981,284.70 47.1 68,585.70 1.4 REAL ESTATE INVESTMENT TRUSTS III1,500 Colonial Properties 30.99 46,490.10 39.60 59,400.00 0.6 2.660 3,990.00 6.7 1 hi LONGER INVESTMENTS INCORPORATED I A Registered Investment Advisor • Longer Investments Inc. IIIPORTFOLIO APPRAISAL Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 December 31, 2003 (Excluding Reinvested Divs.) Unit Total Market Pct. Unit Annual Cur. Quantity Security Cost Cost Price Value Assets Income Income Yield 4,000 Equity Office Properties 26.44 105,764.80 28.65 114,600.00 1.1 2.000 8,000.00 7.0 Trust 3,000 Pan Pacific Retail 34.29 102,870.00 47.65 142,950.00 1.4 2.040 6,120.00 4.3 3,500 Sun Communities,Inc. 36.45 127,587.25 38.70 135,450.00 1.3 2.440 8,540.00 6.3 382,712.15 452,400.00 4.3 26,650.00 5.9 PREFERRED STOCK 2,000 NAB Exch'ble PFD TR 25.00 50,000.00 25.09 50,180.00 0.5 2.000 4,000.00 8.0 Al/A(C 9-30-03@25) 50,000.00 50,180.00 0.5 4,000.00 8.0 PREFERRED DEBT SECURITIES 5,000 G.E.Preferred 6.10% 25.00 125,000.00 26.12 130,600.00 1.2 1.525 7,625.00 5.8 AAA/AAA(C 11-15-07) 6,000 G.E.Preferred 6.625% 26.69 160,140.00 26.67 160,020.00 1.5 1.656 9,937.50 6.2 AAA/AAA(C 6-28-07) 3,000 Roch G&E 6.65% 26.30 78,893.10 27.23 81,690.00 0.8 1.662 4,987.50 6.1 AAA/AAA(C 6-20-07) AMBAC 364,033.10 372,310.00 3.5 22,550.00 6.1 MUTUAL FUNDS-EQUITY 6,331.5900 Artisan International 15.79 100,000.00 18.91 119,730.37 1.1 0.175 1,111.19 Go Fund 20,000.0000 Japan Webs 9.46 189,288.50 9.64 192,800.00 1.8 0.002 32.20 0.0 10,000.0000 iShares MSCI Hong 10.12 101,200.00 10.00 100,000.00 0.9 0.151 1,508.66 1.5 Kong Index Fund 390,488.50 412,530.37 3.9 2,652.05 0.6 MUTUAL FUNDS-FIXED 3,000.0000 American Strategic 12.16 36,477.90 13.00 39,000.00 0.4 1.050 3,150.00 8.1 Income Portfolio III 1,500.0000 iShares Lehman 20+ 82.66 123,990.00 85.45 128,175.00 1.2 0.000 0.00 0.0 Year T-Bond Fund 160,467.90 167,175.00 1.6 3,150.00 1.9 CALLS -10 Minnesota Mining& 7.60 -7,603.03 12.40 -12,400.00 -0.1 Mfg.Jan 72 1/2 Calls -7,603.03 -12,400.00 -0.1 CORPORATE BONDS 30,000 Exxon Capital Corp. 99.72 29,917.00 106.30 31,889.52 0.3 6.000 1,800.00 6.0 Notes Aaa/AAA(NC) 6.000%Due 07-01-05 15,000 Gillette Company Notes 99.78 14,967.00 106.29 15,943.09 0.2 5.750 862.50 5.8 Aa3/AA-(NC) 5.750%Due 10-15-05 75,000 Wal-Mart Stores Inc. 98.44 73,831.00 106.94 80,207.70 0.8 5.875 4,406.25 6.0 AA2/AA(NC) 5.875%Due 10-15-05 III 2 LLONGER INVESTMENTS INCORPORATED I A Registered Investment Advisor • Longer Investments Inc. PORTFOLIO APPRAISAL Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 December 31, 2003 (Excluding Reinvested Divs.) Unit Total Market Pct. Unit Annual Cur. Quantity Security Cost Cost Price Value Assets Income Income Yield 25,000 Associates Corp.NA 99.66 24,914.00 108.80 27,200.42 0.3 6.375 1,593.75 6.4 Notes Aal/AA-(NC) 6.375%Due 11-15-05 50,000 Boeing Capital Crp 100.00 50,000.00 105.28 52,638.80 0.5 6.040 3,020.00 6.0 A3/A(NC) 6.040%Due 11-15-05 75,000 Aegon NV Subordinated 99.51 74,629.00 113.45 85,089.52 0.8 8.000 6,000.00 8.0 Note A3/A(NC) 8.000%Due 08-15-06 50,000 NationsBank Corp. 99.79 49,894.00 110.80 55,398.10 0.5 6.375 3,187.50 6.4 Subordinated Notes AA3/A(NC) 6.375%Due 02-15-08 65,000 J.P.Morgan Chase 102.60 66,687.00 111.69 72,598.37 0.7 6.700 4,355.00 6.5 Bank Al/A+(NC) 6.700%Due 08-15-08 50,000 Bankers Trust NY Corp 99.26 49,630.00 109.03 54,516.90 0.5 6.000 3,000.00 6.0 Subordinated Notes A2/A(NC) 6.000%Due 10-15-08 25,000 First Union Corp. 93.78 23,446.00 110.27 27,566.33 0.3 6.000 1,500.00 6.4 Subordinated• Debentures Al/A-(NC) 6.000%Due 10-30-08 25,000 Pepsico Incorporated 97.49 24,373.00 110.09 27,523.20 0.3 5.700 1,425.00 5.8 Medium Term Note Al/A+(NC) 5.700%Due 11-01-08 50,000 Hershey Foods Corp. 97.63 48,816.00 115.31 57,656.80 0.5 6.950 3,475.00 7.1 Notes Al/A+(NC) 6.950%Due 08-15-12 50,000 Paribas New York 96.03 48,014.00 114.37 57,186.60 0.5 6.950 3,475.00 7.2 Branch Subordinated Notes AA3/A+(NC) 6.950%Due 07-22-13 60,000 Aetna Inc.Debentures 87.48 52,487.00 109.64 65,786.58 0.6 6.750 4,050.00 7.7 AA3/A+(NC) 6.750%Due 09-15-13 40,000 Bank of New York 100.00 40,000.00 100.09 40,035.20 0.4 6.500 2,600.00 6.5 Al/A Monthly Pay(C 9-19-04 @ 100) 6.500%Due 09-19-16 50,000 Bank America Corp 100.00 50,000.00 100.89 50,446.60 0.5 6.250 3,125.00 6.2 AA3/A Monthly Pay(C 2-15-05 @100,monthly thereafter) 6.250%Due 02-15-17 75,000 Merrill Lynch&Co. 99.26 74,442.00 111.37 83,527.13 0.8 6.500 4,875.00 6.5 Inc.Global Bonds AA3/A+(NC) 6.500%Due 07-15-18 50,000 National City Corp. 96.65 48,326.00 115.43 57,716.55 0.5 6.875 3,437.50 7.1 Sub.Notes A2/A-(NC) 6.875%Due 05-15-19 • 3 LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor Longer Investments Inc. • PORTFOLIO APPRAISAL Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 December 31, 2003 (Excluding Reinvested Divs.) Unit Total Market Pct. Unit Annual Cur. Quantity Security Cost Cost Price Value Assets Income Income Yield 50,000 IBM Corp.Debentures 100.01 50,004.00 115.01 57,503.35 0.5 7.000 3,500.00 7.0 Al/A+(Subject to make whole call) 7.000%Due 10-30-25 50,000 Dell Computer Corp. 95.46 47,731.00 115.65 57,826.80 0.5 7.100 3,550.00 7.4 Debentures A3/A- (Subject to make whole call) 7.100%Due 04-15-28 Accrued Interest 17,627.60 0.2 942,108.00 1,075,885.18 10.2 63,237.50 6.7 RESTRICTED FIXED INCOME 50,000 Enron Corp Senior 64.32 32,159.49 0.00 0.00 0.0 0.000 0.00 0.0 Notes CA/D 0.000%Due 02-07-21 32,159.49 0.00 0.0 0.00 0.0 GOVERNMENT BONDS 250,000 U.S.Treasury Note 100.28 250,703.13 102.00 255,000.00 2.4 3.250 8,125.00 3.2 3.250%Due 08-15-07 50,000 U.S.Treasury Bond 100.01 50,004.00 104.16 52,078.12 0.5 5.500 2,750.00 5Ala 5.500%Due 08-15-28 50,000 U.S.Treasury Bond 98.95 49,474.00 100.72 50,359.37 0.5 5.250 2,625.00 5. 5.250%Due 11-15-28 200,000 U.S.Treasury Bond 99.91 199,826.92 100.87 201,750.00 1.9 5.250 10,500.00 5.3 5.250%Due 02-15-29 Accrued Interest 8,347.36 0.1 550,008.05 567,534.86 5.4 24,000.00 4.4 GOVERNMENT AGENCY 150,000 Federal Home Loan 100.00 150,000.00 102.24 153,366.60 1.5 4.210 6,315.00 4.2 Mortgage Corp.(C 1X 9-13-04) 4.210%Due 09-13-07 75,000 Federal Home Loan 100.00 75,000.00 100.00 75,000.00 0.7 3.300 2,475.00 3.3 Bank(C 1-17-06 @ 100,1 X) 3.300%Due 01-17-08 150,000 Federal Home Loan 100.00 150,000.00 100.34 150,515.62 1.4 3.600 5,400.00 3.6 Bank(Call 3-11-04 @ 100,continuously thereafter) 3.600%Due 03-11-08 100,000 Federal Home Loan 100.00 100,000.00 100.19 100,187.50 0.9 3.500 3,500.00 3.5 Bank(C 3-11-04 @ 100,continuously thereafter) 3.500%Due 03-11-08 225,000 Federal Home Loan 100.00 225,000.00 98.75 222,187.50 2.1 4.000 9,000.00 4.0 Bank(C 4-1-04 @ 100, continuously thereafter) 4.000%Due 04-01-10 • 4 LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor • Longer Investments Inc. PORTFOLIO APPRAISAL Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 December 31,2003 (Excluding Reinvested Divs.) Unit Total Market Pct. Unit Annual Cur. Quantity Security Cost Cost Price Value Assets Income Income Yield 200,000 Federal Home Loan 100.00 200,000.00 99.31 198,625.00 1.9 4.200 8,400.00 4.2 Bank(C 05-20-04 @100,continuously thereafter) 4.200%Due 05-20-10 50,000 Tennessee Valley 98.95 49,474.00 107.94 53,967.70 0.5 5.625 2,812.50 5.7 Authority(NC) 5.625%Due 01-18-11 50,000 Federal National 100.00 50,000.00 100.53 50,265.62 0.5 5.500 2,750.00 5.5 Mortgage Association Monthly Pay(C 2-23-04 @100) 5.500%Due 02-23-11 200,000 Federal Home Loan 100.00 200,000.00 99.78 199,562.50 1.9 5.080 10,160.00 5.1 Bank(C 01-12-04 @ 100,continuously thereafter) 5.080%Due 10-03-12 150,000 Federal Farm Credit 100.00 150,000.00 100.50 150,750.00 1.4 5.000 7,500.00 5.0 Banks(C 10-15-04 @ 100,continuously thereafter) . 5.000%Due 10-15-12 75,000 Federal Home Loan 100.00 75,000.00 101.84 76,382.81 0.7 5.375 4,031.25 5.4 Bank(C 11-7-05 @100) 5.375%Due 11-07-13 150,000 Federal Home Loan 100.00 150,000.00 100.28 150,421.87 1.4 6.000 9,000.00 6.0 Bank(C 01-26-04 @100,continuously thereafter) 6.000%Due 09-26-17 Accrued Interest 16,201.74 0.2 1,574,474.00 1,597,434.47 15.1 71,343.75 4.5 GNMA 150,000.00 GNMA 5.5%Pool# 100.00 150,000.00 100.62 150,931.50 1.4 5.500 8,250.00 5.5 GNR 2003-20 UK 5.500%Due 03-16-33 100,000.00 GNMA 5.0%Pool# 99.50 99,500.00 99.05 99,054.00 0.9 5.000 5,000.00 5.0 GNR 2003-40 AE 5.000%Due 05-20-33 Accrued Interest 1,104.17 0.0 249,500.00 251,089.67 2.4 13,250.00 5.3 CASH AND EQUIVALENTS Dividends Accrued 8,579.52 8,579.52 0.1 0.000 0.00 0.0 Money Market 493,166.14 493,166.14 4.7 0.400 1,972.66 0.4 501,745.66 501,745.66 4.7 1,972.66 0.4 • 5 LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor Longer Investments Inc. • PORTFOLIO APPRAISAL Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 December 31, 2003 (Excluding Reinvested Divs.) Unit Total Market Pct. Unit Annual Cur. Quantity Security Cost Cost Price Value Assets Income Income Yield CERTIFICATE OF DEPOSIT 50,000 American National 100.00 50,000.00 105.32 52,657.75 0.5 7.050 3,525.00 7.0 Bank&Trust Chicago, IL AA2/NR(NC) FDIC-Insured 7.050%Due 08-02-05 50,000 MBNA America Bank 100.00 50,000.00 105.58 52,788.05 0.5 6.550 3,275.00 6.5 Newark,DE A3/NR (NC)FDIC-Insured 6.550%Due 12-20-05 40,000 Capital One Bank FSB 100.00 40,000.00 104.73 41,890.36 0.4 4.900 1,960.00 4.9 Falls Church,VA BAA1/NR(NC) FDIC-Insured 4.900%Due 02-20-07 Accrued Interest 2,272.25 0.0 140,000.00 149,608.41 1.4 8,760.00 6.3 TOTAL PORTFOLIO 9,551,136.15 10,566,778.32 100.0 310,151.67 3.0 • • 6 hitLONGER INVESTMENTS INCORPORATED A Registered Investment Advisor • Longer Investments Inc. REALIZED GAINS AND LOSSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Gain Or Loss Open Close Cost Date Date Quantity Security Basis Proceeds Short Term Long Term 01-02-03 01-03-03 250 Lowe's 9,765.00 9,077.22 -687.78 12-31-02 01-03-03 1,850 Lowe's 69,838.80 67,171.47 -2,667.33 10-14-02 01-06-03 1,000 Biogen,Inc. 32,888.40 41,113.75 8,225.35 10-17-02 01-06-03 1,000 Home Depot 30,090.00 21,769.34 -8,320.66 08-29-02 01-09-03 1,395 Sungard Data Systems 34,159.09 32,895.89 -1,263.20 08-29-02 01-10-03 105 Sungard Data Systems 2,571.11 2,478.97 -92.14 10-15-02 01-10-03 1,000 Sungard Data Systems 19,400.00 23,609.29 4,209.29 10-17-02 01-13-03 1,100 Home Depot 33,099.00 23,925.92 -9,173.08 10-14-02 01-13-03 1,000 Biogen,Inc. 32,888.40 42,584.71 9,696.31 01-02-03 01-15-03 425 KLA Tencor Corp 15,682.78 16,256.23 573.45 10-24-02 01-15-03 260 KLA Tencor Corp 8,839.53 9,944.99 1,105.46 10-15-02 01-15-03 1,400 KLA Tencor Corp 43,596.28 53,549.92 9,953.64 10-23-02 01-15-03 340 KLA Tencor Corp 10,246.60 13,004.98 2,758.38 04-17-02 01-16-03 1,150 Sun Microsystems 9,581.00 4,197.37 -5,383.63 10-17-02 01-21-03 200,000 U.S.Treasury Bond 199,826.92 204,750.00 4,923.08 5.250%Due 02-15-29 01-18-02 01-23-03 40,000 Federal National Mortgage 40,000.00 40,000.00 0.00 Association(C 1-23-03 @100,CC) 6.000%Due 01-23-15 10-31-02 01-23-03 335 Cemer Corp. 12,393.91 12,234.53 -159.38 10-18-02 01-23-03 500 Cemer Corp. 17,798.35 18,260.50 462.15 • 10-17-02 01-23-03 1,500 Cemer Corp. 52,777.05 54,781.49 2,004.44 08-22-02 01-24-03 2,500 Aluminum Co.of America 68,925.00 52,523.41 -1 ,401.59 10-17-02 01-24-03 50,000 U.S.Treasury Bond 49,956.73 51,890.63 1,933.90 5.250%Due 02-15-29 10-28-99 01-29-03 1,000 Sysco Corporation 18,685.56 27,619.16 8,933.60 08-22-00 01-29-03 325 Johnson&Johnson 15,907.53 16,957.98 1,050.45 11-07-02 01-29-03 900 Kraft Foods Inc. 36,336.42 28,528.41 -7,808.01 12-06-02 01-31-03 3,000 NASDAQ 100 Index 79,830.00 72,792.80 -7,037.20 08-19-02 02-03-03 200 Standard&Poors Depository 19,070.00 17,235.72 -1,834.28 Receipts 08-28-02 02-03-03 1,800 Standard&Poors Depository 166,896.00 155,121.08 -11,774.92 Receipts 11-06-02 02-03-03 1,250 Standard&Poors Depository 114,887.50 107,723.26 -7,164.24 Receipts 11-07-02 02-03-03 650 Standard&Poors Depository 59,689.50 56,016.09 -3,673.41 Receipts 11-15-02 02-03-03 100 Standard&Poors Depository 9,052.80 8,617.86 -434.94 Receipts 05-14-02 02-03-03 225 Procter&Gamble 20,820.00 19,324.67 -1,495.33 07-30-02 02-03-03 150 Procter&Gamble 13,080.82 12,883.11 -197.71 02-06-02 02-03-03 275 Procter&Gamble 22,695.00 23,619.04 924.04 09-10-01 02-03-03 210 Procter&Gamble 15,418.00 18,036.35 2,618.35 09-28-01 02-03-03 225 Procter&Gamble 16,124.00 19,324.67 3,200.67 01-13-99 02-03-03 500 Johnson&Johnson 19,671.00 26,574.19 6,903.19 12-06-02 02-04-03 2,000 NASDAQ 100 Index 53,220.00 47,818.55 -5,401.45 12-09-02 02-04-03 1,000 NASDAQ 100 Index 25,680.00 23,909.28 -1,770.72 11-15-02 02-04-03 1,200 Standard&Poors Depository 108,633.60 101,385.66 -7,247.94 Receipts 12-23-02 02-04-03 50 Standard&Poors Depository 4,505.00 4,224.40 -280.60 Receipts 12-23-02 02-18-03 1,950 Standard&Poors Depository 175,695.00 166,361.00 -9,334.00 • Receipts I LLONGER INVESTMENTS INCORPORATED I A Registered Investment Advisor Longer Investments Inc. • REALIZED GAINS AND LOSSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Gain Or Loss Open Close Cost Date Date Quantity Security Basis Proceeds Short Term Long Term 08-12-02 02-18-03 800 Standard&Poors Depository 71,968.00 68,250.66 -3,717.34 Receipts 01-22-03 02-21-03 -15 General Dynamics February 0.00 1,899.94 1,899.94 70 Calls 01-23-03 02-21-03 -10 Merck February 55 Calls 0.00 1,946.93 1,946.93 02-07-03 02-21-03 -13 Bank of America February 70 1,249.96 1,249.96 0.00 Calls 01-06-03 02-21-03 1,300 BankAmerica Corp. 92,222.00 92,130.22 -91.78 02-10-03 02-21-03 -13 Federal Nat'l Mortgage 6,193.88 4,736.37 -1,457.51 February 60 Calls 01-06-03 02-24-03 50 BankAmerica Corp. 3,547.00 3,457.39 -89.61 10-05-01 02-28-03 50,000 Federal National Mortgage 50,000.00 50,000.00 0.00 Association(continuously callable) 5.500%Due 10-11-12 11-28-97 03-05-03 50,000 U.S.Treasury Bond 49,920.00 58,773.44 8,853.44 6.000%Due 02-15-26 10-27-95 03-05-03 40,000 General Motors Acceptance 40,001.00 41,450.00 1,449.00 Corp.Notes A2/BBB(NC) 6.625%Due 10-15-05 12-23-97 03-05-03 50,000 General Motors Acceptance 50,000.00 51,625.00 1,625.00 Corp.Monthly Pay A2/BBB • (NC) 6.125%Due 01-18-05 02-14-03 03-07-03 -30 Dell March 22 1/2 Calls 11,514.00 9,190.32 -2,323.68 09-12-02 03-10-03 405 Federal National Mortgage 30,057.17 24,149.42 -5,907.75 Assn. 10-23-02 03-10-03 500 Federal National Mortgage 34,595.00 29,814.10 -4,780.90 Assn. 07-22-02 03-10-03 95 Federal National Mortgage 6,432.00 5,664.68 -767.32 Assn. 01-02-03 03-10-03 350 Federal National Mortgage 23,227.00 20,869.87 -2,357.13 Assn. 02-27-03 03-10-03 -12 Wal-Mart March 45 Calls 3,784.76 4,250.30 465.54 02-24-03 03-10-03 -13 Federal Nat'l Mortgage 2,000.00 5,768.02 3,768.02 March 60 Calls 10-17-02 03-11-03 50,000 U.S.Treasury Bond 49,956.73 53,703.13 3,746.40 5.250%Due 02-15-29 02-24-03 03-12-03 -15 Lincoln National Corp. 1,400.00 4,726.45 3,326.45 March 25 Calls 02-27-03 03-13-03 -10 Merck March 50 Calls 1,750.30 3,635.28 1,884.98 08-12-02 03-19-03 1,258 Standard&Poors Depository 113,169.68 110,012.68 -3,157.00 Receipts 10-14-02 03-19-03 1,600 Standard&Poors Depository 134,496.00 139,920.75 5,424.75 Receipts 10-22-02 03-19-03 571 Standard&Poors Depository 50,820.14 49,934.21 -885.93 Receipts 10-25-02 03-19-03 571 Standard&Poors Depository 51,292.93 49,934.22 -1,358.71 Receipts 08-12-02 03-21-03 942 Standard&Poors Depository 84,742.32 83,298.54 -1,443.78 Receipts 10-25-02 03-21-03 58 Standard&Poors Depository 5,210.14 5,128.79 -81.35 Receipts 03-07-03 03-25-03 -30 Dell April 25 Calls 11,212.70 6,214.81 -4,997.89 • 2 hiLONGER INVESTMENTS INCORPORATED A Registered Investment Advisor • Longer Investments Inc. REALIZED GAINS AND LOSSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Open Close Gain Or Loss Cost Date Date Quantity Security Basis Proceeds Short Term Long Term 06-22-98 03-31-03 500 Johnson&Johnson 18,990.00 28,919.26 03-25-03 04-02-03 -30 Dell April 27 1/2 Calls 9,929.26 P 3,512.60 4,409.88 897.28 03-12-03 04-04-03 -15 Lincoln National Corp.April 7,553.56 7,553.56 20 Calls 0.00 01-06-03 04-04-03 1,500 Lincoln National Corporation 51,570.00 37,447.15 -14,122.85 03-13-03 04-17-03 -10 Merck April 50 Calls 2,739.71 2,739.71 0 03-10-03 04-17-03 -4 Wal-Mart April 45Calls 4,073.68 1,377.09 -2,696.595 03-10-03 04-17-03 -8 Wal-Mart April 45 Calls 2,754.18 2,754.18 07-01-02 04-17-03 400 Walmart Stores 0.00 10-12-99 04-17-03 300 Walmart Stores 6,239.00 19,348.24111 -2,582.43 1 10-31-02 04-17-03 100 Walmart Stores ,363.00 14,8 . 6 1,727.81 5,363.00 4,837 .06 -525.94 07-17-02 04-17-03 25 Merck 1,104.50 1,357.43 252.93 02-18-00 04-17-03 200 Merck 12,378.00 10,542.47 10-15-02 04-17-03 525 Merck 1,835.53 26,691.00 27,674.00 983.00 07-17-02 04-17-03 275 Merck 12,149.50 14,495.90 2,346.40 10-08-02 04-25-03 500,000 Student Loan Mortgage 500,000.00 500,000.00 0.00 Associaton(NC) 2.000%Due 04-26-04 LONG TERM PRIOR to 5/6/03 40,999.62 III01-13-03 05-13-03 3,600 MBNA Corp. 72,900.00 70,906.95 1,993.05 01-22-03 05-13-03 200 MBNA Corp. 3,578.00 3,939.27 361.27 01-23-03 05-13-03 400 MBNA Corp. 6,150.00 7,878.55 1,728.55 04-01-03 05-14-03 1,000 S&P Midcap 400 Depository 75,647.40 83,136.10 7,488.70 Receipt 10-25-02 05-14-03 371 Standard&Poors Depository 33,326.93 35,082.30 1,755.37 Receipts 10-22-02 05-14-03 429 Standard&Poors Depository 38,181.86 40,566.87 2,385.01 Receipts 03-27-03 05-14-03 700 Standard&Poors Depository 61,047.00 66,193.03 5,146.03 Receipts 11-07-02 05-15-03 400 Kraft Foods Inc. 16,149.52 12,283.42 -3,866.10 12-04-02 05-15-03 175 Kraft Foods Inc. 6,763.00 5,374.00 -1,389.00 10-10-01 05-15-03 250 Kraft Foods Inc. 8,482.00 7,677.14 06-14-01 05-15-03 175 Kraft Foods Inc. 124.00 03-05-03 05-15-03 750 Kraft Foods Inc. 5,250.00 5,374.0023,031.41 124.00 03-06-03 05-15-03 250 Kraft Foods Inc. 20,986.35 7,677.14 2,045.064 09-26-01 05-15-03 200 General Dynamics 6,777.50 41 899.64 yn 17,034.00 12,922.41 -4,111.59 09-18-02 05-15-03 110 General Dynamics 9,214.33 7,107.33 -2,107.00 03-27-03 05-15-03 300 Standard&Poors Depository 26,163.00 28,461.98 2,298.98 Receipts 04-01-03 05-15-03 950 Standard&Poors Depository 81,383.36 90,129.59 8,746.22 Receipts 04-29-03 05-16-03 500 Biogen,Inc. 19,440.95 19,827.52 04-21-03 05-16-03 500 Biogen,Inc. 386.57 g 18,053.45 19,827.52 1,774.07 04-01-03 05-16-03 500 S&P Midcap 400 Depository 37,823.70 41,448.05 3,624.35 Receipt 04-01-03 05-16-03 50 Standard&Poors Depository 4,283.33 4,723.34 440.00 Receipts 10-14-02 05-16-03 1,200 Standard&Poors Depository 100,872.00 113,360.12 12,488.12 Receipts 04-21-03 05-19-03 1,000 Biogen,Inc. 36,106.90 39,427.95 3,321.05 • 04-21-03 05-23-03 2,000 NASDAQ 100 Index 53,872.00 56,137.36 2,265.36 3 LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor Longer Investments Inc. III REALIZED GAINS AND LOSSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Gain Or Loss Open Close Cost Date Date Quantity Security Basis Proceeds Short Term Long Term 05-22-00 06-02-03 50,000 First USA Bank Wilmington, 50,000.00 50,000.00 0.00 DE AA2/NR(NC) FDIC-Insured 7.350%Due 06-02-03 09-18-02 06-04-03 190 General Dynamics 15,915.67 13,049.14 -2,866.53 07-23-01 06-04-03 200 General Dynamics 16,311.00 13,735.94 -2,575.06 09-10-02 06-04-03 110 General Dynamics 8,911.98 7,554.76 -1,357.22 04-29-03 06-04-03 250 Genentech Inc. 9,548.60 17,011.70 7,463.10 05-19-03 06-04-03 -2 Genentech June 50 Calls 3,950.00 1,009.63 -2,940.37 01-24-03 06-11-03 500 Pan Pacific Retail 17,775.00 20,374.04 2,599.04 09-10-02 06-12-03 250 General Dynamics 20,254.51 18,339.13 -1,915.38 09-10-02 06-16-03 150 General Dynamics 12,152.71 11,013.23 -1,139.48 09-11-02 06-16-03 300 General Dynamics 24,155.00 22,026.47 -2,128.53 01-23-03 06-16-03 300 General Dynamics 19,205.00 22,026.47 2,821.47 10-15-02 06-16-03 440 ChevronTexaco Corp. 32,544.91 32,746.06 201.15 06-10-03 06-16-03 1,500 Standard&Poors Depository 148,215.00 151,252.46 3,037.46 Receipts 06-10-03 06-17-03 2,000 Standard&Poors Depository 197,620.00 203,150.48 5,530.48 Receipts 05-01-03 06-17-03 500 Coca-Cola 20,025.00 23,978.87 3,953.87 05-19-03 06-20-03 -20 Genentech June 50 Calls 10,096.30 10,096.30 0.00 04-15-03 06-20-03 2,000 Genentech Inc. 70,380.00 109,951.62 39,571.62 III 06-11-03 06-24-03 225 Harley Davidson 9,747.50 9,074.57 -672.93 04-14-03 06-24-03 75 Harley Davidson 3,160.64 3,024.86 -135.78 04-14-03 06-25-03 1,500 Harley Davidson 63,212.85 60,015.03 -3,197.82 03-27-03 06-25-03 1,000 S&P Midcap 400 Depository 75,360.00 88,475.85 13,115.85 Receipt 03-31-03 06-25-03 500 S&P Midcap 400 Depository 37,564.50 44,237.93 6,673.43 Receipt 04-23-03 06-25-03 525 Schlumberger,LTD 21,719.25 25,322.06 3,602.81 06-08-99 07-01-03 50,000 Merrill Lynch Bank&Trust 50,000.00 50,000.00 0.00 Plnsboro,NJ NR(C 7-1-03) FDIC-Insured 7.000%Due 07-01-19 05-23-00 07-08-03 280 ExxonMobil 11,462.00 9,971.26 -1,490.74 09-18-02 07-08-03 20 ExxonMobil 667.60 712.23 44.63 07-01-03 07-09-03 2,500 NASDAQ 100 Index 74,500.00 80,392.97 5,892.97 07-01-03 07-11-03 1,000 Standard&Poors Depository 96,880.00 99,942.41 3,062.41 Receipts 07-01-03 07-11-03 2,000 NASDAQ 100 Index 59,600.00 63,157.03 3,557.03 07-01-03 07-16-03 2,000 NASDAQ 100 Index 59,600.00 64,396.97 4,796.97 07-03-02 07-22-03 500 Applied Materials 8,733.12 9,302.26 569.13 07-07-03 07-22-03 840 Applied Materials 14,485.88 15,627.80 1,141.92 07-02-03 07-22-03 435 Applied Materials 7,038.30 8,092.97 1,054.67 01-09-03 07-25-03 550 Oracle Systems 7,060.41 6,400.32 -660.09 01-06-03 07-25-03 1,450 Oracle Systems 17,487.00 16,873.58 -613.42 11-21-02 07-25-03 1,500 Oracle Systems 17,339.40 17,455.43 116.03 07-01-03 07-25-03 1,000 Standard&Poors Depository 96,880.00 99,344.34 2,464.34 Receipts 05-01-03 07-28-03 1,000 Coca-Cola 40,050.00 44,509.11 4,459.11 01-13-99 07-28-03 325 PepsiCo.Inc. 13,040.00 15,105.29 2,065.29 01-13-99 07-28-03 250 PepsiCo.Inc. 10,031.00 11,619.45 1,588.45 05-04-99 07-28-03 400 PepsiCo.Inc. 14,700.00 18,591.13 3,891.13 04-14-03 07-28-03 250 Intel Corp 4,257.37 6,177.20 1,919.82 • 11-21-02 07-28-03 2,500 Oracle Systems 28,899.00 29,555.85 656.85 4 A. LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor • • Longer Investments Inc. REALIZED GAINS AND LOSSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Gain Or Loss Open Close Cost Date Date Quantity Security Basis Proceeds Short Term Long Term 12-26-02 07-28-03 1,000 Oracle Systems 11,260.00 11,822.34 562.34 07-16-03 07-30-03 2,000 Washington Mutual Inc. 83,354.20 81,101.79 -2,252.41 12-02-02 07-31-03 350 Newell Co Inc 11,281.50 8,832.92 -2,448.58 11-20-02 07-31-03 2,400 Newell Co Inc 71,708.88 60,568.59 -11,140.29 01-15-03 07-31-03 250 Newell Co Inc 7,392.50 6,309.23 -1,083.27 06-12-03 07-31-03 325 Newell Co Inc 9,234.76 8,202.00 -1,032.76 01-07-03 07-31-03 430 Werner Enterprises 9,316.50 10,249.56 933.06 08-19-02 07-31-03 2,570 Werner Enterprises 50,913.41 61,258.98 10,345.57 01-28-03 07-31-03 680 Werner Enterprises 12,695.60 16,208.60 3,513.00 07-14-03 07-31-03 225 Flextronics 2,777.24 2,479.22 -298.02 09-25-02 08-08-03 250,000 Federal Home Loan 250,000.00 250,000.00 0.00 Mortgage Corp.(C 1 X 9-26-03 @100) 2.875%Due 09-26-05 06-02-03 08-11-03 • 350 Estee Lauder 11,680.50 13,193.21 1,512.71 04-17-03 08-11-03 250 Estee Lauder 7,626.59 9,423.72 1,797.13 07-02-03 08-13-03 1,050 Applied Materials 16,989.00 19,732.25 2,743.25 11-04-02 08-13-03 2,250 Applied Materials 36,386.78 42,283.38 5,896.60 06-02-03 08-13-03 450 Applied Materials 7,214.00 8,456.68 1,242.68 04-21-03 08-13-03 1,250 Applied Materials 18,823.00 23,490.77 4,667.77 06-18-03 08-14-03 1,575 Johnson&Johnson 86,420.25 80,386.28 -6,033.97 • 08-07-01 08-15-03 50,000 Federal Home Loan 50,000.00 50,000.00 Mortgage Corp(C 8-15-03 0.00 @100,CC) 6.250%Due 08-15-13 08-01-03 08-15-03 1,000.0000 iShares Lehman 20+Year 82,660.00 82,326.14 -333.86 T-Bond Fund 09-26-02 08-28-03 100,000 Federal Home Loan Bank(C 100,000.00 100,000.00 0.00 10-7-03 @ 100,continuously thereafter) 3.000%Due 10-07-05 05-22-03 08-28-03 200,000 Federal Home Loan Bank 200,000.00 194,750.00 -5,250.00 (NC) 2.050%Due 06-16-06 07-14-03 09-03-03 775 Flextronics 9,566.06 10,458.60 892.54 07-07-03 09-03-03 575 Flextronics 6,221.50 7,759.60 1,538.10 10-23-02 09-03-03 500 L-3 Communications 24,340.00 25,249.26 909.26 Holdings Inc. 09-18-02 09-05-03 2,000 Barrick Gold Corp. 34,640.00 41,546.84 6,906.84 08-31-99 09-08-03 40,000 Bank of New York Al/A 38,828.00 40,000.00 Monthly Pay(C 9-8-03 1,172.00 @100,annually thereafter) 7.125%Due 09-08-14 09-13-99 09-23-03 50,000 Federal Home Loan 50,000.00 50,000.00 Mortgage Corp Monthly 0.00 Pay(C 9-23-03 @100,CC) 7.110%Due 09-23-14 06-16-98 09-23-03 2,000 GenAm Inv Tax Cum Pfd 50,000.00 50,000.00 0.00 08-18-03 09-24-03 750 E.I.du Pont Nemours&Co. 33,307.80 30,061.07 -3,246.73 08-01-03 09-25-03 1,250.0000 iShares Lehman 20+Year 103,325.00 108,194.93 4,869.93 T-Bond Fund 09-24-03 09-25-03 3,100 NASDAQ 100 Index 104,656.00 102,109.21 -2,546.79 07-07-03 09-26-03 150000 U.S.Treasury Bond 159,820.31 153,562.50 -6,257.81 III 5.250%Due 02-15-29 5 LONGER INVESTMENTS INCORPORATED I A Registered Investment Advisor Longer Investments Inc. IllREALIZED GAINS AND LOSSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Gain Or Loss Open Close Cost Date Date Quantity Security Basis Proceeds Short Term Long Term 08-01-03 09-29-03 750.0000 iShares Lehman 20+Year 61,995.00 65,134.44 3,139.44 T-Bond Fund 08-01-03 09-30-03 500.0000 iShares Lehman 20+Year 41,330.00 43,831.44 2,501.44 T-Bond Fund 09-22-03 09-30-03 3,000 Diamonds Trust Series I 286,657.20 277,427.00 -9,230.20 08-28-03 09-30-03 3,000 Diamonds Trust Series I 281,160.00 277,427.01 -3,732.99 09-26-02 10-07-03 100,000 Federal Home Loan Bank(C 100,000.00 100,000.00 0.00 10-7-03 @ 100,continuously thereafter) 3.000%Due 10-07-05 09-08-03 10-15-03 300 Minnesota Mining&Mfg. 20,693.00 22,202.23 1,509.23 05-21-03 10-15-03 450 Minnesota Mining&Mfg. 27,857.25 33,303.34 5,446.09 10-17-02 10-16-03 800 Aluminum Co.of America 17,888.00 24,455.73 6,567.73 04-14-03 10-16-03 80 Aluminum Co.of America 1,739.20 2,445.57 706.37 10-13-03 10-17-03 2,000 Standard&Poors Depository 210,440.00 209,210.20 -1,229.80 Receipts 11-27-02 10-27-03 750 Microsoft Corp. 21,817.20 20,256.54 -1,560.66 08-18-03 10-28-03 1,000 E.I.du Pont Nemours&Co. 44,410.40 39,408.15 -5,002.25 08-14-03 10-28-03 350 International Paper Co. 14,137.50 13,470.87 -666.63 08-13-03 10-28-03 500 International Paper Co. 19,909.95 19,244.09 -665.86 07-07-03 10-28-03 1,000 Burlington Northern Santa Fe 29,280.00 28,258.67 -1,021.33 09-12-02 10-28-03 700 Royal Dutch Petroleum 30,415.00 31,086.45 671.45 411 07-25-02 10-28-03 300 Royal Dutch Petroleum 12,727.00 13,322.76 595.76 09-18-02 10-28-03 500 Royal Dutch Petroleum 20,580.00 22,204.61 1,624.61 10-13-03 10-28-03 500 ExxonMobil 19,395.00 18,808.40 -586.60 09-18-02 10-28-03 200 ExxonMobil 6,676.00 7,523.36 847.36 08-27-03 10-30-03 350 Qualcomm Incorporated 14,127.00 16,708.69 2,581.69 07-14-03 10-30-03 250 Qualcomm Incorporated 9,890.00 11,934.78 2,044.78 08-18-03 11-03-03 750 E.I.du Pont Nemours&Co. 33,307.80 30,109.06 -3,198.74 09-11-03 11-03-03 250 E.I.du Pont Nemours&Co. 10,835.00 10,036.35 -798.65 10-24-03 11-03-03 3,000 Standard&Poors Depository 309,450.00 318,975.06 9,525.06 Receipts 05-21-03 11-05-03 250 Minnesota Mining&Mfg. 15,476.25 19,874.06 4,397.81 06-02-03 11-05-03 1,500 American Power Conversion 23,826.15 31,713.31 7,887.16 05-15-03 11-05-03 100,000.00 GNMA 5.0%Pool#GNR 99,500.00 91,062.50 -8,437.50 2003-40 AE 5.000%Due 05-20-33 05-23-00 11-06-03 190 Pfizer 8,295.13 5,961.92 -2,333.21 04-18-01 11-06-03 525 Pfizer 22,215.00 16,473.72 -5,741.28 03-28-02 11-06-03 285 Pfizer 11,328.29 8,942.88 -2,385.41 10-03-03 11-07-03 750 Applied Materials 14,835.00 18,914.11 4,079.11 06-19-03 11-10-03 225 SunTrust Banks Inc. 13,502.80 15,354.71 1,851.91 09-26-03 11-12-03 1,000 Applied Materials 18,968.20 25,293.41 6,325.21 10-13-03 11-18-03 755 Schwab Corporation 10,237.80 8,745.20 -1,492.60 10-09-03 11-18-03 560 Schwab Corporation 7,493.70 6,486.51 -1,007.19 08-13-03 11-19-03 2,000 International Paper Co. 79,639.80 73,860.53 -5,779.27 08-26-03 11-20-03 1,750 Amer International Group 104,584.55 99,604.63 -4,979.92 11-19-03 11-26-03 -14 SunTrust Banks Inc.January 7,049.88 7,049.88 0.00 65 Calls 11-19-03 11-26-03 -1 SunTrust Banks Inc.January 635.00 503.56 -131.44 65 Calls 06-02-03 11-26-03 200 SunTrust Banks Inc. 11,969.56 13,992.52 2,022.96 04-15-03 11-26-03 1,200 SunTrust Banks Inc. 68,401.80 83,955.10 15,553.30 04-15-03 11-26-03 100 SunTrust Banks Inc. 5,700.15 7,023.67 1,323.52 III 10-09-03 12-01-03 4,440 Schwab Corporation 59,414.30 51,634.76 -7,779.54 6 A LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor • Longer Investments Inc. REALIZED GAINS AND LOSSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Gain Or Loss Open Close Cost Date Date Quantity Security Basis Proceeds Short Term Long Term 11-14-03 12-02-03 12,403.0000 Rydex Series Trust URSA 128,122.99 126,014.48 -2,108.51 Fund 08-21-03 12-09-03 500 Williams Sonoma 15,275.00 17,149.95 1,874.95 07-24-03 12-09-03 250 Williams Sonoma 7,258.70 8,574.97 1,316.27 11-14-03 12-10-03 12,403.3900 Rydex Series Trust URSA 128,127.01 126,886.67 -1,240.34 Fund 07-14-03 12-12-03 250 Qualcomm Incorporated 9,890.00 12,476.91 2,586.91 06-18-03 12-12-03 250 Qualcomm Incorporated 8,854.17 12,476.91 3,622.74 10-30-03 12-15-03 1,000 Limited 17,620.00 17,479.17 -140.83 08-20-03 12-18-03 665 Estee Lauder 22,297.45 25,218.81 2,921.36 10-30-03 12-18-03 500 Limited 8,810.00 8,799.58 -10.42 09-25-03 12-18-03 500 Limited 7,635.00 8,799.59 1,164.59 12-10-03 12-18-03 800 Standard&Poors Depository 85,608.00 87,587.89 1,979.89 Receipts 09-25-03 12-19-03 1,350 Limited 20,614.50 23,866.87 3,252.37 12-10-03 12-19-03 2,700 Standard&Poors Depository 288,927.00 294,549.99 5,622.99 Receipts 08-20-03 12-22-03 800 Walmart Stores 47,232.00 42,366.01 -4,865.99 09-25-03 12-23-03 650 Limited 9,925.50 11,582.45 1,656.95 09-25-03 12-26-03 500 Limited 7,635.00 8,946.22 1,311.22 03-12-03 12-29-03 150,000.00 GNMA 5.5%Pool#GNR 150,000.00 146,250.00 -3,750.00 2003-20 UK III 5.500%Due 03-16-33 06-18-03 12-30-03 50 Qualcomm Incorporated 1,770.83 2,711.42 940.59 06-06-03 12-30-03 700 Qualcomm Incorporated 24,481.59 37,959.92 13,478.33 05-28-03 12-30-03 650 Illinois Tool Works 41,348.84 54,131.46 12,782.62 05-04-00 12-30-03 500 Medtronic,Inc. 27,663.00 24,298.86 -3,364.14 09-25-03 12-31-03 1,500 Limited 22,905.00 26,748.84 3,843.84 LONG TERM AFTER 5/6/03 -9,657.11 TOTAL GAINS 432,752.72 57,712.15 TOTAL LOSSES -301,273.48 -26,369.63 10,802,288.71 10,965,110.46 131,479.24 31,342.52 TOTAL REALIZED GAIN/LOSS 162,821.75 NO CAPITAL GAINS DISTRIBUTIONS This realized gain/loss report has been prepared using cost basis and acquisition date information provided by third parties. While every effort has been made to verify the accuracy of this information,it is not possible to unconditionally confirm that it is correct. Longer Investments Inc.can only attest to the accuracy of transactions that were �xecuted under its direction. 7 al. LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor Longer Investments Inc. • INCOME AND EXPENSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Security Ex-Date Pay-Date Amount COMMON STOCK Aluminum Co.of America 02-05-03 02-25-03 300.00 04-30-03 05-25-03 582.00 08-06-03 08-25-03 582.00 11-05-03 11-25-03 450.00 1,914.00 Amer International Group 09-03-03 09-19-03 113.75 American Power Conversion 08-21-03 09-15-03 440.00 11-24-03 12-17-03 320.00 760.00 B.P.Amoco PLC A.D.S. • 02-26-03 03-24-03 625.00 06-09-03 06-09-03 833.33 08-13-03 09-08-03 866.66 11-12-03 12-08-03 866.66 3,191.65 Barrick Gold Corp. 05-28-03 06-16-03 220.00 Biomet,Inc. 07-09-03 07-18-03 487.50 Bristol Myers Squibb 04-02-03 05-01-03 910.00 07-01-03 08-01-03 910.00 10-01-03 11-03-03 1,050.00 12-30-03 02-02-04 1,050.00 3,920.00 Burlington Northern Santa Fe 06-06-03 07-01-03 360.00 09-08-03 10-01-03 600.00 12-10-03 01-02-04 525.00 1,485.00 Cardinal Health Inc • hiLONGER INVESTMENTS INCORPORATED A Registered Investment Advisor • Longer Investments Inc. INCOME AND EXPENSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Security Ex-Date Pay-Date Amount 09-29-03 10-15-03 54.75 12-29-03 01-15-04 69.75 124.50 ChevronTexaco Corp. 02-12-03 03-10-03 1,008.00 05-15-03 06-10-03 1,008.00 08-15-03 09-10-03 730.00 11-14-03 12-10-03 1,277.50 4,023.50 Citigroup 01-30-03 02-28-03 470.00 05-01-03 05-23-03 530.00 07-31-03 08-22-03 1,050.00 10-30-03 11-26-03 1,050.00 3,100.00• Coca-Cola 06-11-03 07-01-03 330.00 11-26-03 12-15-03 583.00 913.00 Devon Energy Corp 09-12-03 09-30-03 100.00 12-12-03 12-31-03 100.00 200.00 Diamonds Trust Series I 09-19-03 10-13-03 588.96 Dover Corp. 08-27-03 09-12-03 420.00 11-25-03 12-12-03 420.00 840.00 Emerson Electric 02-12-03 03-10-03 834.06 05-14-03 06-10-03 834.06 08-13-03 09-10-03 834.06 11-12-03 12-10-03 850.00 3,352.18 • A, LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor • Longer Investments Inc. • INCOME AND EXPENSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Security Ex-Date Pay-Date Amount Estee Lauder 12-12-03 01-06-04 855.00 ExxonMobil 02-06-03 03-10-03 690.00 05-09-03 06-10-03 750.00 08-11-03 09-10-03 675.00 11-07-03 12-10-03 625.00 2,740.00 Federal National Mortgage Assn. 01-29-03 02-25-03 526.50 General Dynamics 01-15-03 02-07-03 453.00 04-09-03 05-09-03 579.20 1,032.20 General Electric • 02-26-03 04-25-03 522.50 06-26-03 07-25-03 712.50 09-25-03 10-27-03 950.00 12-29-03 01-26-04 1,000.00 3,185.00 Genuine Parts 03-05-03 04-01-03 590.00 06-04-03 07-01-03 921.88 09-03-03 10-01-03 921.88 12-03-03 01-02-04 921.88 3,355.64 Harley Davidson 06-06-03 06-20-03 63.00 Honeywell(New) 11-18-03 12-10-03 750.00 Illinois Tool Works 06-26-03 07-21-03 379.50 09-26-03 10-20-03 396.00 12-29-03 01-26-04 396.00 1,171.50 • 3 L' LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor • Longer Investments Inc. INCOME AND EXPENSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Security Ex-Date Pay-Date Amount Int'l Business Machines 05-07-03 06-10-03 128.00 08-06-03 09-10-03 224.00 11-06-03 12-10-03 224.00 576.00 Intel Corp 02-05-03 03-01-03 70.00 05-05-03 06-01-03 82.00 08-05-03 09-01-03 77.00 11-05-03 12-01-03 77.00 306.00 International Paper Co. 08-19-03 09-15-03 712.50 11-19-03 12-15-03 500.00 1,212.50 • Johnson&Johnson 02-13-03 03-11-03 102.50 Kennametal,Inc. 11-06-03 11-25-03 425.00 Kraft Foods Inc. 03-12-03 04-04-03 300.00 Limited 12-03-03 12-16-03 600.00 Lincoln National Corporation 01-08-03 02-01-03 502.50 MBNA Corp. 03-12-03 04-01-03 336.00 Medtronic,Inc. 04-02-03 04-25-03 138.44 07-01-03 07-25-03 160.59 10-01-03 10-24-03 160.59 12-30-03 01-23-04 192.12 651.74 • Merck 4 A. LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor Longer Investments Inc. • INCOME AND EXPENSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Security Ex-Date Pay-Date Amount 03-05-03 04-01-03 369.00 Microsoft Corp. 02-19-03 03-07-03 288.00 10-15-03 11-07-03 720.00 1,008.00 Minnesota Mining&Mfg. 08-20-03 09-12-03 561.00 11-19-03 12-12-03 330.00 891.00 Newell Co Inc 02-18-03 03-10-03 630.00 05-19-03 06-11-03 630.00 1,260.00 Northern Trust Corp. • 06-06-03 07-01-03 340.00 09-08-03 10-01-03 428.40 12-08-03 01-02-04 478.80 1,247.20 PepsiCo.Inc. 03-12-03 03-31-03 146.25 06-11-03 06-30-03 156.00 302.25 Pfizer 01-15-03 02-14-03 300.00 05-14-03 06-05-03 547.50 08-13-03 09-04-03 547.50 11-12-03 12-04-03 397.50 1,792.50 Procter&Gamble 01-22-03 02-14-03 444.85 Qualcomm Incorporated 08-27-03 09-26-03 210.00 11-25-03 12-26-03 192.50 402.50 III 5 ' LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor • Longer Investments Inc. INCOME AND EXPENSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Security Ex-Date Pay-Date Amount Royal Dutch Petroleum 04-24-03 05-12-03 1,652.25 07-25-03 09-17-03 1,271.18 2,923.43 S&P Midcap 400 Depository Receipt 06-20-03 07-31-03 297.69 Schlumberger,LTD 06-02-03 07-03-03 281.25 08-29-03 10-03-03 403.13 12-15-03 01-09-04 403.12 1,087.50 Schwab Corporation 11-05-03 11-21-03 80.57 • Standard&Poors Depository Receipts 03-21-03 04-30-03 1,063.14 SunTrust Banks Inc. 05-28-03 06-13-03 585.00 08-27-03 09-15-03 776.25 11-26-03 12-15-03 45.00 1,406.25 Union Pacific Corp. 12-08-03 01-02-04 472.50 Walgreen Company 11-13-03 12-12-03 107.80 Walmart Stores 03-19-03 04-07-03 135.00 06-18-03 07-07-03 63.00 10-02-03 10-14-03 135.00 12-17-03 01-05-04 202.50 535.50 Washington Mutual Inc. 07-29-03 08-15-03 800.00 Werner Enterprises • 01-09-03 01-28-03 60.00 6 ' LONGER INVESTMENTS INCORPORATED I A Registered Investment Advisor Longer Investments Inc. • INCOME AND EXPENSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Security Ex-Date Pay-Date Amount 04-16-03 05-06-03 73.60 07-02-03 07-22-03 110.40 244.00 COMMON STOCK Total 60,660.80 REAL ESTATE INVESTMENT TRUSTS Colonial Properties 01-29-03 02-07-03 997.50 05-01-03 05-13-03 997.50 07-31-03 08-11-03 997.50 10-30-03 11-10-03 997.50 3,990.00 Equity Office Properties Trust 06-26-03 07-15-03 2,000.00 09-26-03 10-14-03 2,000.00 • 12-11-03 12-31-03 2,000.00 6,000.00 Pan Pacific Retail 01-10-03 02-14-03 1,500.00 05-21-03 06-13-03 1,785.00 08-27-03 09-15-03 1,530.00 11-25-03 12-15-03 1,530.00 6,345.00 Sun Communities,Inc. 01-09-03 01-24-03 2,030.00 04-09-03 04-24-03 2,135.00 07-09-03 07-24-03 2,135.00 10-08-03 10-23-03 2,135.00 8,435.00 REAL ESTATE INVESTMENT Total 24,770.00 PREFERRED STOCK GenAm Inv Tax Cum Pfd AAA(C9-23-03@25) 03-04-03 03-24-03 900.00 06-04-03 06-23-03 900.00 7 LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor • Longer Investments Inc. INCOME AND EXPENSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Security Ex-Date Pay-Date Amount 09-04-03 09-23-03 900.00 2,700.00 NAB Exch'ble PFD TR Al/A(C 9-30-03@25) 03-12-03 03-31-03 1,000.00 06-11-03 06-30-03 1,000.00 09-11-03 09-30-03 1,000.00 12-11-03 12-31-03 1,000.00 4,000.00 PREFERRED STOCK Total 6,700.00 PREFERRED DEBT SECURITIES G.E.Preferred 6.10%AAA/AAA(C 11-15-07) 02-12-03 02-18-03 1,906.25 05-12-03 05-15-03 1,906.25 . 08-12-03 08-15-03 1,906.25 11 12 03 11-17-03 1,906.25 7,625.00 G.E.Preferred 6.625%AAA/AAA(C 6-28-07) 03-25-03 03-28-03 2,484.36 06-25-03 06-30-03 2,484.36 09-24-03 09-29-03 2,484.36 12-23-03 12-29-03 2,484.36 9,937.44 Roch G&E 6.65%AAA/AAA(C 6-20-07)AMBAC 02-26-03 03-17-03 1,246.86 05-28-03 06-16-03 1,246.86 08-27-03 09-15-03 1,246.86 11-25-03 12-15-03 1,246.86 4,987.44 PREFERRED DEBT SECURIT Total 22,549.88 MUTUAL FUNDS-EQUITY Artisan International Fund 11-13-03 11-13-03 1,100.19 . Japan Webs 8 ALONGER INVESTMENTS INCORPORATED A Registered Investment Advisor Longer Investments Inc. • INCOME AND EXPENSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Security Ex-Date Pay-Date Amount 12-22-03 01-02-04 24.15 iShares MSCI Hong Kong Index Fund 12-22-03 01-02-04 1,508.70 MUTUAL FUNDS-EQUITY Total 2,633.04 MUTUAL FUNDS-FIXED American Strategic Income Portfolio III 02-03-03 02-26-03 262.50 03-03-03 03-26-03 262.50 04-01-03 04-23-03 262.50 05-01-03 05-28-03. 262.50 06-02-03 06-25-03 262.50 07-01-03 07-23-03 262.50 • 08-01-03 08-27-03 262.50 09-02-03 09-24-03 262.50 10-01-03 10-29-03 262.50 • 11-03-03 11-19-03 262.50 12-01-03 12-17-03 262.50 12-26-03 01-09-04 480.00 3,367.50 iShares Lehman 20+Year T-Bond Fund 09-02-03 09-11-03 1,487.96 10-01-03 10-10-03 550.32 11-03-03 11-12-03 521.94 12-10-03 12-10-03 626.72 3,186.94 MUTUAL FUNDS-FIXED Total 6,554.44 CORPORATE BONDS Aegon NV Subordinated Note A3/A 8.000%Due 08-15-06 (NC) 02-15-03 02-15-03 3,000.00 08-15-03 08-15-03 3,000.00 6,000.00 Aetna Inc.Debentures AA3/A+(NC) 6.750%Due 09-15-13 03-15-03 03-15-03 2,025.00 • 9 LLONGER INVESTMENTS INCORPORATED I A Registered Investment Advisor • Longer Investments Inc. INCOME AND EXPENSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Security Ex-Date Pay-Date Amount 09-15-03 09-15-03 2,025.00 4,050.00 Associates Corp.NA Notes 6.375%Due 11-15-05 Aal/AA-(NC) 05-15-03 05-15-03 796.88 11-15-03 11-15-03 796.88 1,593.76 Bank America Corp AA3/A Monthly 6.250%Due 02-15-17 Pay(C 2-15-05 @100,monthly thereafter) 01-15-03 01-15-03 260.42 02-15-03 02-15-03 260.42 03-15-03 03-15-03 260.42 04-15-03 04-15-03 260.42 05-15-03 05-15-03 260.42 • 06-15-03 06-15-03 260.42 07-15-03 07-15-03 260.42 08-15-03 08-15-03 260.42 09-15-03 09-15-03 260.42 10-15-03 10-15-03 260.42 11-15-03 11-15-03 260.42 12-15-03 12-15-03 260.42 3,125.04 Bank of New York Al/A Monthly 6.500%Due 09-19-16 Pay(C 9-19-04 @ 100) 01-19-03 01-19-03 216.66 02-19-03 02-19-03 216.67 03-19-03 03-19-03 216.67 04-19-03 04-19-03 216.67 05-19-03 05-19-03 216.67 06-19-03 06-19-03 216.67 07-19-03 07-19-03 216.67 08-19-03 08-19-03 216.67 09-19-03 09-19-03 216.67 10-19-03 10-19-03 216.67 11-19-03 11-19-03 216.67 12-19-03 12-19-03 216.67 2,600.03 • 10 ' LONGER INVESTMENTS INCORPORATED I A Registered Investment Advisor Longer Investments Inc. • INCOME AND EXPENSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Security Ex-Date Pay-Date Amount Bank of New York Al/A Monthly 7.125%Due 09-08-14 Pay(C 9-8-03 @100,annually thereafter) 01-08-03 01-08-03 237.50 02-08-03 02-08-03 237.50 03-08-03 03-08-03 237.50 04-08-03 04-08-03 237.50 05-08-03 05-08-03 237.50 06-08-03 06-08-03 237.50 07-08-03 07-08-03 237.50 08-08-03 08-08-03 237.50 09-08-03 09-08-03 237.50 2,137.50 Bankers Trust NY Corp 6.000%Due 10-15-08 Subordinated Notes A2/A(NC) 04-15-03 04-15-03 1,500.00 10-15-03 10-15-03 1,500.00 • 3,000.00 Boeing Capital Crp A3/A(NC) 6.040%Due 11-15-05 03-15-03 03-15-03 1,510.00 09-15-03 09-15-03 1,510.00 3,020.00 Dell Computer Corp.Debentures 7.100%Due 04-15-28 A3/A-(Subject to make whole call) 04-15-03 04-15-03 1,775.00 10-15-03 10-15-03 1,775.00 3,550.00 Exxon Capital Corp.Notes 6.000%Due 07-01-05 Aaa/AAA(NC) 01-01-03 01-01-03 900.00 07-01-03 07-01-03 900.00 1,800.00 First Union Corp.Subordinated 6.000%Due 10-30-08 Debentures Al/A-(NC) 04-30-03 04-30-03 750.00 10-30-03 10-30-03 750.00 1,500.00 • 11 ALONGER INVESTMENTS INCORPORATED A Registered Investment Advisor • Longer Investments Inc. INCOME AND EXPENSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Security Ex-Date Pay-Date Amount General Motors Acceptance Corp. 6.125%Due 01-18-05 Monthly Pay A2/BBB(NC) 01-18-03 01-18-03 255.21 02-18-03 02-18-03 255.21 03-05-03 03-10-03 212.67 723.09 General Motors Acceptance Corp. 6.625%Due 10-15-05 Notes A2/BBB(NC) 03-05-03 03-10-03 1,067.36 Gillette Company Notes Aa3/AA- 5.750%Due 10-15-05 (NC) 04-15-03 04-15-03 431.25 10-15-03 10-15-03 431.25 862.50 Hershey Foods Corp.Notes Al/A+ 6.950%Due 08-15-12 (NC) 02-15-03 02-15-03 1,737.50 08-15-03 08-15-03 1,737.50 3,475.00 IBM Corp.Debentures Al/A+ 7.000%Due 10-30-25 (Subject to make whole call) 04-30-03 04-30-03 1,750.00 10-30-03 10-30-03 1,750.00 3,500.00 J.P.Morgan Chase Bank Al/A+ 6.700%Due 08-15-08 (NC) 02-15-03 02-15-03 2,177.50 08-15-03 08-15-03 2,177.50 4,355.00 Merrill Lynch&Co.Inc.Global 6.500%Due 07-15-18 Bonds AA3/A+(NC) 01-15-03 01-15-03 2,437.50 07-15-03 07-15-03 2,437.50 4,875.00 National City Corp.Sub.Notes 6.875%Due 05-15-19 A2/A-(NC) 12 LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor Longer Investments Inc. INCOME AND EXPENSES • Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Security Ex-Date Pay-Date Amount 05-15-03 05-15-03 1,718.75 11-15-03 11-15-03 1,718.75 3,437.50 NationsBank Corp. Subordinated 6.375%Due 02-15-08 Notes AA3/A(NC) 02-15-03 02-15-03 1,593.75 08-15-03 08-15-03 1,593.75 3,187.50 Paribas New York Branch 6.950%Due 07-22-13 Subordinated Notes AA3/A+(NC) 01-22-03 01-22-03 1,737.50 07-22-03 07-22-03 1,737.50 3,475.00 Pepsico Incorporated Medium Term 5.700%Due 11-01-08 Note A 1/A+(NC) • 05-01-03 05-01-03 712.50 11-01-03 11-01-03 712.50 1,425.00 Wal-Mart Stores Inc.AA2/AA(NC) 5.875%Due 10-15-05 04-15-03 04-15-03 2,203.13 10-15-03 10-15-03 2,203.13 4,406.26 CORPORATE BONDS Total 67,165.54 GOVERNMENT BONDS U.S.Treasury Bond 6.000%Due 02-15-26 02-15-03 02-15-03 1,500.00 03-05-03 03-06-03 157.46 1,657.46 U.S.Treasury Bond 5.500%Due 08-15-28 02-15-03 02-15-03 1,375.00 08-15-03 08-15-03 1,375.00 2,750.00 U.S.Treasury Bond 5.250%Due 11-15-28 05-15-03 05-15-03 1,312.50 S 13 ALONGER INVESTMENTS INCORPORATED A Registered Investment Advisor • • Longer Investments Inc. INCOME AND EXPENSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Security Ex-Date Pay-Date Amount 11-15-03 11-15-03 1,312.50 2,625.00 U.S.Treasury Bond 5.250%Due 02-15-29 01-21-03 01-22-03 4,565.22 01-24-03 01-27-03 1,176.97 02-15-03 02-15-03 6,562.50 03-11-03 03-12-03 181.28 07-07-03 07-09-03 -3,132.60 08-15-03 08-15-03 9,187.50 09-26-03 09-29-03 962.98 19,503.85 U.S.Treasury Note 3.250%Due 08-15-07 02-15-03 02-15-03 4,062.50 08-15-03 08-15-03 4,062.50 8,125.00 4111 GOVERNMENT BONDS Total 34,661.31 GOVERNMENT AGENCY Federal Farm Credit Banks(C 5.000%Due 10-15-12 10-15-04 @ 100,continuously thereafter) 04-15-03 04-15-03 3,750.00 10-15-03 10-15-03 3,750.00 7,500.00 Federal Home Loan Bank(C 5.080%Due 10-03-12 01-12-04 @ 100,continuously thereafter) 04-03-03 04-03-03 5,080.00 10-03-03 10-03-03 5,080.00 10,160.00 Federal Home Loan Bank(C 6.000%Due 09-26-17 01-26-04 @100,continuously thereafter) 03-26-03 03-26-03 4,500.00 09-26-03 09-26-03 4,500.00 9,000.00 • 14 IL' LONGER INVESTMENTS INCORPORATED I A Registered Investment Advisor Longer Investments Inc. INCOME AND EXPENSES • Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Security Ex-Date Pay-Date Amount Federal Home Loan Bank(C 4.200%Due 05-20-10 05-20-04 @100,continuously thereafter) 11-20-03 11-20-03 4,200.00 Federal Home Loan Bank(C 3.000%Due 10-07-05 10-7-03 @ 100,continuously thereafter) 04-07-03 04-07-03 3,000.00 08-28-03 08-29-03 1,183.33 10-07-03 10-07-03 1,500.00 5,683.33 Federal Home Loan Bank(C 3.500%Due 03-11-08 3-11-04 @ 100,continuously thereafter) 09-11-03 09-11-03 1,750.00 Federal Home Loan Bank(C 4-1-04 4.000%Due 04-01-10 • @ 100,continuously thereafter) 10-01-03 10-01-03 4,500.00 Federal Home Loan Bank(Call 3.600%Due 03-11-08 3-11-04 @ 100,continuously thereafter) 09-11-03 09-11-03 2,700.00 Federal Home Loan Bank(NC) 2.050%Due 06-16-06 08-28-03 08-29-03 831.39 Federal Home Loan Mortgage Corp 6.250%Due 08-15-13 (C 8-15-03 @100,CC) 02-15-03 02-15-03 1,562.50 08-15-03 08-15-03 1,562.50 3,125.00 Federal Home Loan Mortgage Corp 7.110%Due 09-23-14 Monthly Pay(C 9-23-03 @100,CC) 01-23-03 01-23-03 296.25 02-23-03 02-23-03 296.25 03-23-03 03-23-03 296.25 04-23-03 04-23-03 296.25 05-23-03 05-23-03 296.25 06-23-03 06-23-03 296.25 • 15 ALONGER INVESTMENTS INCORPORATED A Registered Investment Advisor • Longer Investments Inc. INCOME AND EXPENSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Security Ex-Date Pay-Date Amount 07-23-03 07-23-03 296.25 08-23-03 08-23-03 296.25 09-23-03 09-23-03 296.25 2,666.25 Federal Home Loan Mortgage Corp. 4.210%Due 09-13-07 (C 1X 9-13-04) 03-13-03 03-13-03 3,157.50 09-13-03 09-13-03 3,157.50 6,315.00 Federal Home Loan Mortgage Corp. 2.875%Due 09-26-05 (C 1X 9-26-03 @100) 03-26-03 03-26-03 3,593.75 08-08-03 08-11-03 2,695.31 6,289.06 • Federal National Mortgage 6.000%Due 01-23-15 Association(C 1-23-03 @100,CC) 01-23-03 01-23-03 1,200.00 Federal National Mortgage 5.500%Due 10-11-12 Association(continuously callable) 02-28-03 02-28-03 1,046.53 Federal National Mortgage 5.500%Due 02-23-11 Association Monthly Pay(C 2-23-04 @100) 01-23-03 01-23-03 229.17 02-23-03 02-23-03 229.17 03-23-03 03-23-03 229.17 04-23-03 04-23-03 229.17 05-23-03 05-23-03. 229.17 06-23-03 06-23-03 229.17 07-23-03 07-23-03 229.17 08-23-03 08-23-03 229.17 09-23-03 09-23-03 229.17 10-23-03 10-23-03 229.17 11-23-03 11-23-03 229.17 12-23-03 12-23-03 229.17 2,750.04 Student Loan Mortgage Associaton 2.000%Due 04-26-04 (NC) 16 LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor • Longer Investments Inc. INCOME AND EXPENSES • Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Security Ex-Date Pay-Date Amount 04-25-03 04-25-03 5,000.00 Tennessee Valley Authority(NC) 5.625%Due 01-18-11 01-18-03 01-18-03 1,406.25 07-18-03 07-18-03 1,406.25 2,812.50 GOVERNMENT AGENCY Total 77,529.10 GNMA GNMA 5.0%Pool#GNR 2003-40 5.000%Due 05-20-33 AE 05-15-03 05-30-03 -805.56 06-20-03 06-20-03 833.33 07-21-03 07-21-03 833.33 08-20-03 08-20-03 833.33 09-22-03 09-22-03 833.33 10-16-03 10-16-03 833.33 • 11-05-03 11-10-03 125.00 11-20-03 11-20-03 833.33 12-22-03 12-22-03 416.67 4,736.09 GNMA 5.5%Pool#GNR 2003-20 5.500%Due 03-16-33 UK 03-12-03 03-28-03 -1,237.50 04-16-03 04-16-03 1,374.99 05-16-03 05-16-03 1,374.99 06-16-03 06-16-03 1,375.00 07-16-03 07-16-03 1,375.00 08-18-03 08-18-03 1,375.00 09-16-03 09-16-03 1,375.00 10-16-03 10-16-03 1,375.00 11-17-03 11-17-03 1,375.00 12-16-03 12-16-03 1,375.00 12-29-03 12-31-03 687.50 11,824.98 GNMA Total 16,561.07 CASH AND EQUIVALENTS Money Market 17 hatLONGER INVESTMENTS INCORPORATED A Registered Investment Advisor • Longer Investments Inc. INCOME AND EXPENSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Security Ex-Date Pay-Date Amount 02-03-03 02-03-03 387.08 03-03-03 03-03-03 587.10 03-03-03 03-03-03 294.28 03-31-03 03-31-03 1,334.56 05-01-03 05-01-03 826.27 06-02-03 06-02-03 793.24 06-30-03 06-30-03 385.37 08-01-03 08-01-03 148.70 09-02-03 09-02-03 136.00 09-30-03 09-30-03 136.44 11-03-03 11-03-03 290.85 12-01-03 12-01-03 256.71 12-31-03 12-31-03 195.90 5,772.50 CERTIFICATE OF DEPOSIT • American National Bank&Trust 7.050%Due 08-02-05 Chicago,IL AA2/NR(NC) FDIC-Insured 02-02-03 02-02-03 1,776.99 08-02-03 08-02-03 1,748.01 3,525.00 Capital One Bank FSB Falls Church, 4.900%Due 02-20-07 VA BAA1/NR(NC)FDIC-Insured 02-20-03 02-20-03 988.05 08-20-03 08-20-03 971.94 1,959.99 First USA Bank Wilmington,DE 7.350%Due 06-02-03 AA2/NR(NC)FDIC-Insured 06-02-03 06-02-03 1,852.60 MBNA America Bank Newark,DE 6.550%Due 12-20-05 A3/NR(NC)FDIC-Insured 06-20-03 06-20-03 1,633.01 12-20-03 12-20-03 1,641.99 3,275.00 CERTIFICATE OF DEPOSIT Total 10,612.59 i 18 LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor Longer Investments Inc. INCOME AND EXPENSES • Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Security Ex-Date Pay-Date Amount CERTIFICATE OF DEPOSIT(MONTHLY PYMT.) Merrill Lynch Bank&Trust 7.000%Due 07-01-19 Plnsboro,NJ NR(C 7-1-03) FDIC-Insured 01-01-03 01-01-03 297.26 02-01-03 02-01-03 297.26 03-01-03 03-01-03 268.49 04-01-03 04-01-03 297.26 05-01-03 05-01-03 287.67 06-01-03 06-01-03 297.26 07-01-03 07-01-03 287.67 2,032.87 EXPENSE ACCOUNTS Automated Cash Mgmt. 02-03-03 02-03-03 64.13411 03-03-03 03-03-03 104.35 03-31-03 03-31-03 248.73 05-01-03 05-01-03 146.01 06-02-03 06-02-03 142.09 06-30-03 06-30-03 73.97 08-01-03 08-01-03 33.59 09-02-03 09-02-03 32.10 09-30-03 09-30-03 32.84 11-03-03 11-03-03 70.80 12-01-03 12-01-03 67.76 12-31-03 12-31-03 50.90 1,067.27 Foreign Tax on Dividends 02-26-03 03-24-03 62.50 05-12-03 05-12-03 247.84 06-09-03 06-09-03 83.33 06-16-03 06-16-03 33.00 09-08-03 09-08-03 86.67 09-17-03 09-17-03 190.68 12-08-03 12-08-03 86.67 790.69 Northern Trust Fee 03-31-03 03-31-03 3,181.20 411 19 AALONGER INVESTMENTS INCORPORATED A Registered Investment Advisor Longer Investments Inc. • INCOME AND EXPENSES Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 From 01-01-03 Through 12-31-03 Security Ex-Date Pay-Date Amount 06-30-03 06-30-03 2,979.52 07-23-03 07-23-03 -1,384.80 07-23-03 07-23-03 534.34 07-23-03 07-23-03 -2,699.73 07-23-03 07-23-03 2,250.56 07-23-03 07-23-03 -3,181.20 07-23-03 07-23-03 2,057.80 07-23-03 07-23-03 -2,979.52 07-23-03 07-23-03 1,774.88 09-30-03 09-30-03 1,680.91 12-31-03 12-31-03 2,713.22 6,927.18 EXPENSE ACCOUNTS Total 8,785.14 AFTER FEE PERFORMANCE EXPENSE ACCOUNTS Management Fee • 01-14-03 01-14-03 19,094.91 04-07-03 04-07-03 18,565.33 07-07-03 07-07-03 18,959.57 10-06-03 10-06-03 19,586.04 76,205.85 NET INCOME 253,212.15 20 A. LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor December 31, 2003 Fayetteville Fire Pension and Relief Fund U/A DTD 6-18-86 113 West Mountain Fayetteville,Arkansas 72701 Longer Investments Inc. STATEMENT OF MANAGEMENT FEES For The Period Ending December 31,2003 Portfolio Valuation as of 12-31-03 $ 10,521,225.20 3,000,000 @ 1.000%per annum 7,500.00 3,000,000 @ 0.750%per annum 5,625.00 4,000,000 @ 0.650%per annum 6,500.00 521,225 @ 0.500%per annum 651.53 Quarterly Management Fee $ 20,276.53 • TOTAL DUE AND PAYABLE $ 20 276.53 Pursuant to Section 204-3 of the Investment Advisors Act of 1940,Part II of Form ADV is available to all clients of Longer Investments Inc. This statement may be obtained by submitting a written request to the company. As instructed,the management fee has been billed to the account. It is the responsibility of the client to verify the accuracy of the fee calculation. The custodian will not determine if the fee is properly calculated. • LONGER INVESTMENTS INCORPORATED A Registered Investment Advisor View • TheL COMMENTS AND OUTLOOKS FROM LONGER INVESTMENTS INCORPORATED January 12, 2004 Well,that was fun! After three years in the trenches, The economic recovery has gained traction. It is playing defense and trying to protect capital for clients,it beginning to affect corporate investment spending. Busi- was fun this year to play offense again and generate returns ness investment in the third quarter increased 14%,double on capital. In many respects,the 2003 markets were a the second-quarter rate,and spending on equipment and mirror image of the 2002 markets. In 2002,the Standard& software rose 18.4%. Incoming data and forward-looking Poor's(S&P)500 was down 22.2%;in 2003,it was up indicators suggest that businesses are continuing to invest at 28.6%. The ten-year U.S.Treasury yield fell 128 basis double-digit growth rates.More important,businesses are points(1.28%)in 2002,but it rose 47 basis points in 2003. no longer just replacing existing capabilities,but making Every major S&P sector was down in 2002;every major discretionary investments for future growth. Risk-taking is sector was higher in 2003,except telecommunications returning,with corporate merger and acquisition activity services. Technology was the worst performer in 2002 with improving. Financial markets are again rewarding expansion a 38%drop,but it led the advance in 2003 with a 44% strategies. return. We began 2003 predicting that stocks would outperform bonds. They did(see table below). We greet Profitability and cash flow continue to be stronger than 2004 with the same prediction. We expect that stocks will expected. Third-quarter profits were up 30%from the third outperform bonds,albeit at a less exuberant pace. quarter of 2002,and up almost 12%sequentially. Busi- nesses have achieved these results,to a significant degree, Table 1 through expense reductions and productivity gains. U.S. worker productivity grew in the third quarter at a 9.4% 2003 Stock Market Returns annual rate,the fastest rate in two decades. • S&P 500(cash basis) 26.4% Faster productivity growth does have a downside in S&P 500(with dividends) 28.6% the short run: Businesses are able to meet demand without NASDAQ index of over-the-counter stocks 50.0% hiring workers. This is a key reason that employment DJIA(cash basis) 25.3% growth has not been as robust as economic growth in this Lipper Growth Fund Index 28.1% cycle. However,with continued strength in final demand DJ Utility Index 28.9% and the revival of business confidence,the economy is now DJ World Stock Index 33.0% creating jobs faster than at any time since the end of the recession in November 2001. Although it is not yet robust, 2003 Bond Market Returns the trend in payroll increases is encouraging. Moreover, labor market indicators,from weekly jobless claims to Salomon Brothers Treasury Index 2.3% small-business hiring plans,point to payroll gains later in Lehman Brothers Interm.-Term Treas.Index 2.0% 2004. Table 2 Consumer spending was surprisingly strong in 2003, even while unemployment remained stubbornly high. Spending was supported by the boom in home refinancing. U.S.Treasury Yield Curve Households reduced their mortgage interest rates and thereby increased their monthly cash flow,or tapped into 12/31/02 12/31/03 their home equity for other purchases and home improve- Fed Funds 1.25% 1.00% ments. Also,the Bush-enacted tax cut put more money into Two-Year 1.57% 1.82% the hands of taxpayers in the third quarter,contributing to Five-Year 2.69% 3.25% the strong 8.2%real GDP growth rate. Keep in mind that 10-Year 3.78% 4.25% consumer spending makes up 73%of GDP growth. In 30-Year 4.74% 5.07% 2004,consumer spending may take a breather as these contributing factors—home refinancing and tax cuts- Economy exhaust their potential to affect consumer behavior dramatically for short-term marginal benefits. The economy grew by 8.2%in the third quarter of • 2003.Although final 2003 results are not yet in,fourth- Increased business investment and improvement in labor quarter projections called for a 5%to 6%growth rate. The markets should help sustain the economic recovery. growth in real GDP(gross domestic product)for 2004,as a The economy is now positioned to grow at a 5.0%to 5.5% whole,is projected to be approximately 5.0%. annual rate in 2004. LONGER INVESTMENTS INCORPORATED Because of productivity gains,labor slack,and excess During June 2003,the Fed cut rates by 25 basis points. capacity,inflation should remain low(less than 2.5%), However,long-term rates climbed significantly in July. Yields even as the economic recovery proceeds. As consumer on the 10-year Treasury note rose from a low of 3.07%on II spending slows,we anticipate that increased business June 16 to 4.68%on Aug. 14. The rise in rates brought about spending and capital investment will become the engine for a steep decline in bond prices in July. In fact,the 30-year economic growth in 2004. Treasury bond fell 12%during that one month. Since July's dramatic spike, 10-year rates have returned to about 4.00% Bond Market Outlook to 4.25%. We stated in our third-quarter newsletter: Lt.i The productivity improvements and the excess We consider 3.1%to 4.6%the likely trading capacity of both labor and capital suggest that this range for the next few quarters. Bonds are economic recovery may proceed longer at a stronger rate of attractive for purchase as yields approach the growth,without igniting inflationary pressures,than upper limits of the range,and profits can be taken recoveries usually do. For this reason,although the Federal if yields drop down below 3.5%. We expect Reserve(the Fed)has not cut interest rates since June,the economic growth to remain strong in the second policy statement released at the end of the Fed meetings half of 2003,fiscal stimulus(i.e.,federal deficit last year communicated the message that the Fed will spending)to continue,monetary stimulus to maintain low interest rates for a"considerable period of remain accommodative,and dollar weakness time." abroad to persist Therefore,at some point we expect retest of the 4.6%high achieved in August An accommodative monetary policy will continue to stabilize the short end of the yield curve(which includes Our position has become even more cautious. We now U.S.Treasury bill rates,one-year and two-year Treasury expect a retest of those highs,and we accept the possibility note rates,and certificate of deposit rates)at least through that yields on the 10-year could approach 5%this year. spring. However,market forces(such as inflation expectations,fiscal policy,and currency valuation)will At this point I can hear my dear deceased Dad saying, affect the yield in longer-dated bonds—five-year to 30- "Geez,Elaine,get to the point!" The point is this: The price year maturities. For instance,in the year just past,short sensitivity of bonds and the variability of that risk according rates actually continued to decline,while the yield on the to length of maturity are crucial elements of our bond market 10-year and 30-year Treasury bonds increased by 47 basis strategy as we enter 2004. After being aggressively long in • points and 33 basis points,respectively. This is due to the the bond market since 2000,we have become more conserva- market participants'expectations of an economic recovery, tive with our average maturity structure in bond portfolios the possibility of rising consumer prices and strong oil during 2003. We anticipate that the Fed will have to raise prices,a large fiscal deficit,and currency risk(the dollar rates this year,and long-term interest rates will rise. For this index declined 14.7%in 2003). Because of these"risk reason,we have ample cash reserves and short-maturity factors,"investors demand a higher return to entice them to bonds in our fixed-income portfolios. We await the opportu- lock up their money for five years to 30 years. nity we expect this year to buy higher yields. We are defensively postured,willing to sacrifice some yield near- It is important to realize that bonds do carry some term to protect the flexibility that will let us take advantage price risk. Even if you're invested only in U.S.Treasury of what we expect will be a good buying opportunity in the bonds,the market price of those bonds can fluctuate with first half of the year. changes in market interest rates. In the 2000-2002 period of declining interest rates,bond returns were greater than Stock Market Outlook the stated coupon interest rates,because the prices of those bonds appreciated when rates declined. Conversely, The stock market rebounded in 2003 after three years in 2003,the total return(change in market value plus of decline. As measured by the S&P 500(cash basis),the interest income earned)was lower than the stated income NASDAQ,and the DJIA(cash basis),the markets returned return on bonds. This was because interest rates rose in 26.4%,50.0%,and 25.3%,respectively. Although the returns the five-to 30-year maturity spectrum(see Table 2), last year were indeed impressive and a welcome respite from producing a modest decline in prices of bonds that offset the worst bear market since 1939-1942,the losses of the last some,but not all,of the income return. three years were not fully recovered. The impressive 50% return on the NASDAQ last year moved the index to In some years of rising interest rates,bond price 2003.37. At that level,it remains 60%below the high declines offset income return completely,thereby produc- achieved in 2000. The S&P 500 and the DJIA remain 27% ing a negative total return. This was the case in 1994. In and 11%below their respective 2000 highs. that year,the Fed raised rates six times. The decline in bond prices was significant enough to offset the income The returns this year were propelled by an accommoda- return on bonds entirely. The total return on the five-year tive monetary policy that held short-term interest rates at 40- • Treasury note was approximately-5%,and longer- year lows,and an aggressive fiscal policy that pumped maturity bonds exhibited even greater losses. The longer a billions of dollars into the economy through tax cuts and bond's maturity,the greater the price risk. increased government spending. The resultant economic LONGER INVESTMENTS INCORPORATED recovery brought with it an increase in profitability and We expect stock market returns in 2004 to track • earnings. Lower taxes on dividend income and capital gains earnings growth(estimated at 13%to 17%)closely. It is increased expected aftertax returns on stock investments, possible that stock returns could be less than earnings making stocks very attractive vis-a-vis other investments. growth if interest rates rise enough to put pressure on valuation or on the P/E multiple applied to earnings. If we Valuation add that possibility to the equation,stock market returns in the new year could be within a more modest 5%to 8% Operating earnings,as measured by the S&P 500,were range. We still anticipate that stock returns will outperform expected to close the 2003 year at$54.50. Estimates for bond returns for the year,which could fall to sub-coupon 2004 range from$62 to$64. These estimates for growth of levels in a rising interest-rate year. L 13%to 17%this year appear reasonable in light of contin- ued strong economic growth(estimated at 5.0%),operating We expect business spending and capital investment to leverage,and the weak dollar(which helps U.S.multina- strengthen even as consumer spending slows from the brisk tional firms'earnings as they are translated into dollars). 2003 pace supported by refinancing activity and tax cuts. Therefore,we are overweight in cyclical sectors—capital At a closing price of 1,111.92,the S&P 500 trades at a goods,defense,chemicals,metals and mining,energy, price/earnings(P/E)valuation of 20.4 times 2003 earnings transportation,and technology—and underweight in and 17.6 times 2004 earnings. This valuation,although high consumer and financial sectors. We believe that dividends by historical standards,is not out of line with a 10-year will matter this year. In a year of lower returns,the income Treasury note yield of 4.25%. In fact,according to the component(dividend income)will play a more important Fed's valuation model,the S&P 500 is undervalued by 15% role in total return(dividend income plus price apprecia- based on 2003 earnings and 31%based on 2004 earnings, tion). given a 10-year Treasury yield of 4.25%.Here's an illustration of the stock market's sensitivity to rising interest Risks rates: If yields climb to 5.00%on the 10-year Treasury,the market at year-end prices is overvalued by 2%based on Although we have many reasons to be optimistic about 2003 earnings and only undervalued by 13%based on 2004,as outlined above,we would be remiss in our duties if earnings estimates for 2004. Rising rates in 2004 could we did not also share the concerns we have regarding a few offset positive earnings growth next year by negatively clouds on the rosy horizon. Our concerns are discussed • affecting the valuation(P/E multiple)applied to earnings. below. The tailwind of declining interest rates could change to a headwind of rising rates in 2004 as the economy continues • Fiscal Health—Although the economic recovery to improve and the Fed begins to tighten monetary policy. has helped state and local governments,most are still in fragile financial positions,dependent upon continued Outlook and Strategy economic progress to get their budgets funded. The federal government budget deficits of$374 billion in The economy and the markets continue to display 2003 and an estimated$500 billion in 2004 are still many positive factors. Earnings are expected to grow by very worrisome. The first batch of baby boomers will 13%to 17%in 2004,with GDP growth of 5.0%. Short- reach retirement age in five years. Spending on term interest rates will remain low;and most likely they will entitlements is expected to balloon in the years after not begin to increase until mid-year. Monetary policy and that—and surpluses in Social Security and Medicare fiscal policy are accommodative,and inflationary pressures will change into large and growing deficits. The remain subdued. Productivity improvements are expected Medicare prescription drug benefit will add at least to continue. Employment growth should be manifest before $400 billion to spending over the next 10 years,and Election Day. Valuation is high,but not overly so,if more than$1 trillion during its second decade,but the improvements in earnings are forthcoming in line with law provides no additional funding source. estimates and if the 10-year Treasury yield does not exceed 5%. The median stock market gain for an election • Dollar Weakness—The U.S.dollar continued year is 8%,and the gain is 13.3%when an incumbent wins, to decline relative to the euro and yen last year. The according to Ned Davis Research. dollar index declined 14.7%in 2003. This presents a risk to the United States,which is dependent upon the The past year was characterized by strength in growth flow of foreign capital($2 billion per day)to finance stocks and low-dividend-paying higher-risk stocks as our debt and to sustain our spending habits. When the • compared to large-capitalization dividend-paying stocks dollar declines,foreigners who have purchased U.S. (witness NASDAQ's 50%return versus 25%for the Dow Treasury debt lose money. They could demand a Jones Industrial Average). The consumer was the driving higher price to finance our debt(that is,higher interest force behind economic growth,but business sector spending rates). Our economic growth could be negatively • also showed improvement in the second half of 2003. affected if the Fed feels compelled to raise rates to defend the currency. LONGER INVESTMENTS INCORPORATED • Pension Deficits—Unfunded pension liabilities transition to a stable Iraqi democracy? Will the Middle • continued to grow in 2003 even while stock market East be more stable or less stable following the Iraq gains added more than$100 billion to depleted pension War? Is the United States more secure or less secure, funds. For America's 500 largest companies,the given the rising Islamic fundamentalist fervor in the cumulative unfunded liability in pension funds grew to world? Will the United States be hit by another $259 billion from$212 billion one year ago(an increase terrorist attack? This is still a wild card in the deck— of 22%in a year in which the stock market returned the imponderable and unpredictable nature of the world 26%). With an aging work force,pension liabilities are we live in post-9/I 1. All discussions of interest rate increasing at a more rapid rate than pension assets, outlook,earnings growth,relative valuations,and which widens the unfunded gap. This represents a consumer and corporate confidence could become moot "call"on future earnings of corporations. They will if we are hit again in a major,traumatic terrorist attack. Afs, have to increase the funding of their pension plans to meet this demographic challenge. Conclusion • Rising Energy Prices—The Organization of With all of these factors described in this newsletter, Petroleum Exporting Countries(OPEC)has indicated both pros and cons,we proceed into 2004 as we entered that it would support a higher range,or band,of energy 2003—cautiously optimistic. We remain vigilant about prices because of the decline in the value of the dollar the risks,yet encouraged by the improvements we've seen (oil is priced in dollars in world markets). China is now this past year and expect to see in 2004. a net importer of energy;it is expected to demand more from international oil supplies as its economy picks up A Personal Note steam. As long as oil remains in the$28 to$32 per barrel range,it will not threaten our economic outlook. I thank all of you for your friendship and support and However,energy prices above$32 to$35 per barrel for the very rewarding and fulfilling business relationship could negatively affect world economic growth. we have enjoyed through the years. In 2003,I celebrated • Protectionism and Free Trade—In an election my 20th anniversary as a money manager. It has been an exciting career—financially rewarding,but much more year,we can expect to hear more political rhetoric about rewarding in relationships and friendships. protectionism,and we'll probably see increased • pressure to enact tariffs and quotas on imported goods. In 2003,we managed 31%more money than we did China is a favorite target. As the Chinese economy in 2002. This would not have been possible without the continues to expand and attract manufacturers eager to generous referrals you make on our behalf. Thank you for tap into its low-wage and loose regulatory environment, taking the time to tell others about the services we provide. protectionist fervor may increase and retaliatory measures could threaten world trade. I speak for all us at Longer Investments when I say that we appreciate the opportunity to perform the services • The War on Terrorism—Within this category,we we do each day for you,our clients. We are honored by the include the Iraq War. The capture of Saddam was a depth of trust you display in allowing us to be involved in psychological boost,but it did little to answer the your financial future and to be a trusted advisor. We wish questions surrounding the future of Iraq. How long will you a new year full of all the special blessings of health, the U.S.military have to play a major role in policing happiness,and success. and rebuilding Iraq? Will the international community commit resources and personnel to ensure a peaceful The information provided herein is illustrative only. It should not be construed as a formal recommendation by Longer Investments Inc. LONGER INVESTMENTS INCORPORATED Services Provided by Longer Investments Inc.:Personal Investment Planning•Risk Tolerance Assessment•Developmmt of an Investment Policy•Retirement Planning•IRA,Pension and Profit Sharing Management•Survivorship and Estate Transfer Planni Charitable Trust Management•Nonprofit Foundation and Endowment Management•Tax and Accounting Facilitation•Reputable Fee-Based Asset Management P.O.Box 1269 Fayetteville,Arkansas 72702 • Telephone:479-443-5851 •Toll free:800-827-7710• Fax:479-443-7129•E-mail:info@longerinvcom Web site:wwwlongerinv.com • pRB ARKANSAS FIRE & POLICE PENSION REVIEW BOARD P.O. DRAWER 34164 LITTLE ROCK, ARKANSAS 72203 TELEPHONE: (501) 682- 1745 FAX: (501) 682- 1751 January 21, 2004 email:info@lopfi-prb.com RECEIVED website:www.lopfl-prb.com Board of Trustees „BAN 2 3 2004 Fayetteville Fire Pension Fund 113 West Mountain ACCTG. DEPT Fayetteville, AR 72701 Dear Board of Trustees: This letter is in response to your letter of January 14th regarding resolutions for three benefit increase proposals. The resolutions include the provisions under Act 1369 of 2003,which extends the DROP to 10-years; implementing a temporary 3% COLA for all pensioners; and Act 1372 of 2003,which allows Fund members to remain employed after the DROP period ends. Based on the letter from the actuary dated November 20, 2003 and a follow-up email dated January 21, 2004 your Fund is able to implement these proposals and still • remain actuarially sound. Therefore, your benefit increase proposals are approved. To properly implement the provisions under Act 1369 of 2003 and Act 1372 of 2003,it is necessary to seek approval from your governing body i.e. City of Fayetteville via an ordinance. Once this action is approved please forward a copy of the City's approval to the PRB. My decisions are subject to review by the PRB. The next meeting is scheduled for March 10, 2004 in Little Rock. However,this letter serves as authorization that, based on the results from the actuary,the temporary 3% COLA may be implemented effective January 1, 2004 and Acts 1369 and 1372 of 2003 may be implemented after approval of your local governing body. Please contact me at 682-1745 with any questions you may have. Respectfully, /do David B. Clark Executive Director • Cc: PRB Chairman Bill Lundy • FAYETTEVILLE • THE CITY OF FAYETTEVILLE,ARKANSAS January 14, 2004 Arkansas Fire & Police Pension Review Board (PRB) PO Box 34164 Little Rock,AR 72203 RE: Fayetteville Fireman's Pension Board Resolution No. 02-03 Enacting a 10 Year DROP Resolution No. 03-03 Enacting a Temporary 3% COLA Resolution No. 04-03 Enacting Working after DROP Dear Sirs: • The Fayetteville Fireman's Pension Board passed the enclosed resolutions at a regular meeting of the board on December 18, 2003. I have also enclosed a copy of the minutes from the December 18, 2003 meeting and a copy of the actuarial report. It is my understanding that the resolutions must be approved by the Arkansas Fire & Police Pension Review Board before they can become effective. If you have any questions or need any further information from the board please contact me at 479-575-8323. I look forward to your reply. Sincerely, Sondra Smith CZty Clerk Firer�ien's Pension Board Secretary 113 WEST MOUNTAIN 72701 479-521-7700 FAX 479-575-8257 • Fayetteville Firemen's Pension and Relief Fund City of Fayetteville Arkansas Resolution Number 02,03 A Resolution to allow the Fayetteville Firemen's Pension and Relief Fund to enact the Act 1369 of 2003 instituting a 10 year DROP. Whereas; The Fayetteville Firemen's Pension and Relief Fund met on December 18t,2003 and passed a resolution to enact Act 1369 of 2003,for it's members.And, Whereas; The Actuarial Firm of Osborn, Carreiro and Associates,have reported that these increases in benefits,would be considered actuarially sound under the rules of the Arkansas Fire and Police Pension Review Board.And, (See page 2, 1M paragraph of actuarial report dated November 20th) • Whereas; Act 1369 of 2003 requires the Pension Board to pass a resolution, as well as City Council. Therefore be it resolved; That the Fayetteville Firemen's Pension and Relief Fund, City of Fayetteville Arkansas,pass this resolution,increasing the five year DROP plan to a ten year DROP plan. A copy of this resolution has been forwarded to the City Clerk,Fayetteville Arkansas,and The Arkansas Fire and Police Pension Review Board office in Little Rock Arkansas. PASSED and APPROVED this 18th day of December,2003. Approved • 1. 2. 3. 5. 6. • 7. Fayetteville Firemen's Pension and Relief Fund City of Fayetteville Arkansas Resolution Number 03-03 To allow the Fayetteville Firemen's Pension and Relief Fund to institute a temporary 3% COLA for all pensioners. Whereas; The Fayetteville Firemen's Pension and Relief Fund met on December 18t,2003 and unanimously passed a resolution to institute a temporary 3% COLA for all pensioners.And, Whereas; The Actuarial Finn of Osborn, Carreiro and Associates,have reported that this increases in benefits,would be considered actuarially sound under the rules of the Arkansas Fire and Police Pension Review Board. (See page 2,2nd paragraph of actuarial report dated November 20th) Therefore be it resolved; That the Fayetteville Firemen's Pension and Relief Fund Board of Trustees, City of Fayetteville Arkansas,pass this resolution,enacting a temporary 3%COLA for three (3)years for all pensioners,and a copy of this resolution has been forwarded to the City Clerk, Fayetteville Arkansas,and The Arkansas Fire and Police Pension Review Board office in Little Rock Arkansas. PASSED and APPROVED this 18th day of December,2003. Approved by: 3. 4. '``.� (jG 1AAn,*' 5. 6. 7. 1111 • • Fayetteville Firemen's Pension and Relief Fund City of Fayetteville Arkansas Resolution Number 04-03 A Resolution to allow the Fayetteville Firemen's Pension and Relief Fund to enact the Act 1372 of 2003 working after DROP. Whereas; The Fayetteville Firemen's Pension and Relief Fund met on December 18th,2003 and passed a resolution to enact Act 1372 of 2003,for it's members. And, Whereas; The Actuarial Firm of Osborn,Carreiro and Associates,have reported that these increases in benefits,would be considered actuarially sound under the rules of the Arkansas Fire and Police Pension Review Board. And, (See page 2, lst paragraph of actuarial report dated November 20th) • Whereas; Act 1372 of 2003 requires the Pension Board to pass a resolution, as well as City Council. Therefore be it resolved; That the Fayetteville Firemen's Pension and Relief Fund, City of Fayetteville Arkansas,pass this resolution,working after DROP. A copy of this resolution has been forwarded to the City Clerk,Fayetteville Arkansas, and The Arkansas Fire and Police Pension Review Board office in Little Rock Arkansas. PASSED and APPROVED this 18th day of December,2003. Approv:: , ,: I - 2. ikr: — 3. - % % 5. ,1 lebei1.b . q �'L 6. fic1nd t,,v) cti • 7' KIT WILLIAMS FAYETTEVILLE CITY ATTORNEY •DAVID J. WHITAKER Assistant City Attorney Judy Housley Office Manager THE CITY OF FAYETTEVILLE,ARKANSAS Phone (479)575-8313 113 W.Mountain,Suite 302 FAX (479)575-8315 Fayetteville,AR 72701-6083 December 19, 2003 Ashland Management, Inc. ATTN: Ms. Kirsten Kavanaugh 475 Park Avenue South, 32nd Floor New York, NY 10016 Dear Ms. Kavanaugh: Thank you for your letter of December 8, 2003 with the copy of the Investment Advisory Agreement apparently signed by the Fayetteville Fire Fighters Pension and Relief Board. Thank you also for your "Final Billing" • explaining why you believe you are owed $2,462.62 from the Fire Pension Board. In reading what appears to be your standard Investment Advisory Agreement, I have noted that your basis for the fee claim are paragraphs 4. and 12. In paragraph 4, the contract states: "In the event of termination, the advisory fee will be pro-rated based on the numbers of days this Agreement is in effect during the quarter." Paragraph 12 states: "The term of this agreement ... shall continue until terminated at any time by either party upon not less than thirty (30) days prior written notice to the other party." However, you are also bound by the other language in paragraph 4 that states your fee is based on "an annual rate of the greater of eight-tenths of one (1) percent of the average quarterly net assets in the portfolio, or $10,000.00 ...." (emphasis added.) Since the average quarterly net assets have been determined by your company by adding the portfolio amounts on the last date of the month for each quarter and dividing by three (see bill for quarter ending 6/30/02, your bill should be figured as shown below: • DATE VALUE • 07/31/02 $1,607,591.09 08/31/02 -0- 09/30/02 -0- Value Sum $ 1,607,591.09 Sum/3=Average $ 535,863.66 .8% of Asset Value $ 428.91 Total Billing For Quarter $ 428.91 Thus even though you can claim a thirty day notice requirement beginning on August 7, 2002, as personally confirmed by our new investment advisor, there were no funds in the account immediately thereafter on which to base your percentage of the average quarterly net assets. By my count the thirty day notice would have run no later than September 6, 2002. That would mean that in 2002 your firm would be entitled to the greater of .8% of the average quarterly net assets (earning you $3,897.34 in the first quarter; $3,689.10 in the second quarter and $428.91 in the third quarter or the portion of the $10,000.00 annual fee during which the agreement was in effect (January 1, 2002 until September 6, 2002) 248 days ± 365 = 67.9452%. 67.9452% x $10,000.00 (annual fee) = $6,794.52. Since the Firefighters Pension • Fund had already paid you more than $7,000.00, the greater fee will be the average quarterly net assets determination for the third quarter which is $428.91. Please confirm this is the proper amount due by your invoice so that the Firefighter Pension Fund Board may pay this amount. • With kindest regards, KIT WILLIAMS Fayetteville City Attorney KW/jh cc: Fire Pension Board Marsha Farthing, Accounting Manager • QE~ • z w w �44 z _., .< ri • 01 co t A 1 cv rn cn co k in CII co oN Co Ln co n o W I r 1 lD 0 Ln r-1 l r( .41 • Fla 1 Ul o 01 En to ill ol a I co Ol co 'o in \CD CO w ') CO illQ•' � � O (NIOl r) H CO (I I O h W co W o r °1 co r to co CD 14 In I-4 \ 1 ,-1 r 1 r-1 1 o W (- rl U r) r Cl) x • Z Ln 0 o fs r R' l0 a r I , r co piC*a E-+ W W H W r O to U a CO w Z r Z a X w I DI z H ' CO o ► + U) - 14 1• H EH-1 EW-1 r a w "' a I w a c� a HfcC I z H U 2 0I f O H `I > d a r CI N CV 6 > o H o H U I o 0 0 U) 4 0 H w 1 n co ;� a H DIr o r-L o W in • U DI 41 in in in1-1H >4 A r — „ a Kc O C(, I ,t+ In CD ,cc H 1 0 0 0 > U >4 Ia w 1 a a �1 i I i 1. It 1 • `1 f1 [! fi FIREMEN'S PENSION & RELIEF FUND AFFIDAVIT State of Arkansas ) ID)ss: County of Washington ` ) I, v, h". 'S - -C�64. 12, ,do solemnly swear that: 1. I am a former firefighter for the City of Fayetteville,Arkansas,Fire Department. I am the spouse/former spouse/widow of a former firefighter for the City of Fayetteville,Arkansas, Fire Department, and that I have not remarried since becoming eligible for benefits. I am an eligible dependent of a former firefighter for the City of Fayetteville, Arkansas, Fire Department and submit the attached school affidavit as verification of my school attendance. 2. I presently receive benefits from the Fayetteville Firemen's Pension and Relief Fund and I am eligible to continue receiving the pension fund benefits as governed under state law. 3. My personal information is as follows: p Address: /o o `ell L.' tilt Lill /f 0/4-c FRem 14?77/n IQr K— 13 1,S l5 -7l 730 Telephone: _(q 7 q ) A G. �/ 7-$o 5 Social Security No.: 443d - q,0 - ..2.0 Birth date: 74 6"-'5 f PLEASE LIST ALL BENEFICIARIES BELOW: (complete only if you are the retiree) • NAME SOCIAL SECURITY NO. BIRTH DATE RELATIONSHIP EL;z4btr4 Lec q30~37-.2665 3-!!-6z W/ CL1n ato b 4u`ha t, 243I-SY-6776 /b-AO-Y 3 .Sun- v 471 1'j4% ! day of , ,2GY� 416 it._ 2 OVIen of Or. 4?.//eK (es AFFIANT(signature) Ar,11.LCS�V C3 . r om 77 ..'�? Parent/Guardian Signature 44.46OV4R/Ce . l dayof 'As. .I_ ^CRIBED AND SWORN TO before me, a Notary Public, this 14 cz It Oa !°� " e�•n , '3 . o . ,:IC • I /.. rigli. Notary Public •440 ."4..,p issionExpires: /%Z t/ O/ �v/e • (This affidavit is required annually by ththe Firemen's Pension and Relief Fund Board of Trustees and must be properly executed and returned to the Fayetteville City Clerk,113 West Mountain,Fayetteville,Arkansas,72701 by January 31'of each year.) (Revised 11/03) • Fayetteville Firemen's Pension and Relief Fund Deferred Retirement Option Plan(DROP)Distribution Election Form To be completed by Employee with regard to the distribution of his DROP account balance. Dennis W. Ledbetter DecemhPr 19, 2001 Member Name(please print) Retirement Date Please select option A, B,or C: A. The Fayetteville Firemen's Pension and Relief Fund is directed to make full payment to me,the member, less 20%federal withholding tax. I understand that the entire amount of distribution from my DROP account will be reported to the Internal Revenue Service. Sigri re of Member Date B. The Fayetteville Firemen's__ Pension and Relief Fund is directed to mail my full distribution to: Dennis W.Ledhetter TRA Rn1 1 over (Name of Annuity Provider) for deposit. I understand that the entire amount of distribution from my DROP account will be reported to the Int al Revenue Servi /i/a 6/c3 Signature of Member Date C. The Fayetteville Firemen's Pension and Relief Fund is directed to mail$ (fill in the amount)of my distribution to (Name of Annuity Provider)for deposit. The remainder will be paid directly to me,the member,less 20% Federal withholding tax. I understand that the entire amount of distribution from my DROP account will be reported to the Internal Revenue Service. • Signature of Member Date (To be completed by the Annuity Provider if option B or C is selected) In accordance with the above authorization of the depositor,we agree to deposit the forthcoming distribution amount from the Fayetteville Firemen's Pension and Relief Fund in the following account: ACG.1}- —I1 3L`— a- Type of Account: (fill in the blank) Dennis W. Ledbetter IRA Rollover Char1 es Schwab & Co Inc. Cust I(we)certify that the account is a qualified account,as defined by the Internal Revenue Service,to receive distributions,from the Fayetteville Firemen's Pension and Relief Fund,on which the income tax may be deferred. Longer Investments Annuity Provider Autho ignatu P.O. Box 1269 /i -Q3 Mailing Address Date Fayetteville, AR 72702 479-443-5851 City State Zip Telephone Number Return to: Firemen's Pension and Relief Fund • City of Fayetteville 113 West Mountain Fayetteville,AR 72701 Page 1 of 2 The following is an excerpt from the original DROP Member Election Form: IMPORTANT NOTICE • Attorneys for the Fayetteville Firemen's Pension and Relief Fund Board of Trustees has advised that there may be serious potential tax consequences as a result of participating in the Deferred Retirement Option Plan(DROP,A.C.A. &24-11-830)as follows: An application for a letter of determination as to the tax deferral status of the Firemen's Pension and Relief Fund Plan and Trust has never been filed with the IRS. Also, no determination request has been made for the Deferred Retirement Option Plan(DROP), an amendment to the pension and relief fund plan and trust. Kefance on another State's qualification is not permitted. An adverse ruling on the tax deferred status of the plan could have serious detrimental tax consequences to each participant. DROP distributions will be treated as ordinary income in the year constructive receipt occurs and rollover into an otherwise qualified plan, IRA, or other investment may not be possible. By not acting to formally tax qualify the plan, an array of possible options for the DROP participants may not be available. We strongly urge you to seek advice from a competent tax accountant and/or an attorney before participating in the DROP program. You assume the risk of such adverse tax consequences if you elect to participate. I understand that the Fayetteville Firemen's Pension and Relief Fund has no liability for any adverse tax • consequences which may accrue to me as a participant in the DROP plan. Zaees <<A� 03 Member Signature ate • Page 2 of 2 • General Fire Pension • Date: 12/03/98 Name: Dennis Ledbetter Emp No. 42 - DOH: 01/21/74 • Yrs Service: 25 - Hourly Rate: 21.509 Hours Base: 2080 - � r(/1,,,, EMT Pay $20.00 0 0.0000 ---�- Annual Salary 44,738.7200 65.000%Annual Salary 29,080.1680 4C,:(L Li 1/12 Monthly Benefit 2,423.3473 3 !4 Rounded to nearest cent 2,423.35 • Additional Yrs Beyond: 5 5 Max at: $20.00 100.00 f ` DROP Amount 2,523.35 I �� Pre red by (Accounting and Audit Division) e� ed by (Fire Department) • Approved by (Drop Applicant) • FAYE1'1'tVILLE FIREMEN'S PENSION AND RELIEF FUND DEFERRED RETIREMENT OPTION PLAN (DROP) • MEMBER ELECTION FORM I hereby elect the DROP as my retirement benefit option from the pension plan in place of normal retirement benefit. I understand that in electing DROP, I have agreed to the following statements: * 1. The amount of the DROP payments will be $ SA3.35per month. This amount includes all service and age 60 bonuses that I have earned to this date. This amount is the same as if I retired today. * 2. I understand that the monthly benefit that I will receive at the end of the DROP period is the exact same amount stated in Item 1, regardless of any pay raises I receive or extra years of service I may work. 3. I understand that at the end of the DROP period I will have the option to receive the DROP account as a lump sum or convert the DROP account to a monthly annuity account or any other method of payment as provided for in the current Rules and Regulations of DROP. 4. I understand that the DROP account will remain in the pension fund until withdrawn in accordance with the Rules and Regulations of the DROP plan. I do • not have the ability to withdraw from the DROP account until the time of my departure. 5. I have elected to begin the DROP on . DROP will end at the earlier of when I resign or f - .2w6 c f , (5 years from the above date, unless authorizations to participate in DROP shall be specifically extended by the Arkansas Statutes). 6. I understand that neither the pension fund nor the Department has given any tax advice concerning the way the DROP account is taxed. I have, or will consult, my own tax advisor for this information. 7. I have read the Rules and Regulations pertaining to DROP. *Two exceptions to these rules: Age 60 bonuses(for members with over 25 years of service when they go on to DROP) begin e 60 whether o RO o not; raises given to retirees are also given to DROP participants. a- 3-9‘..fP Member Signature Date E11-446(911) htif 1/d /�- /A / Spou Signature Date Plan Representative Date FAYEI hVILLE FIREMEN'S PENSION AND RELTF.F FUND • DEFERRED RETIREMENT OPTION PLAN (DROP) MEMBER ELECTION FORM (Beneficiary Designation) Xf_at'a,=, Q3O-fr-.)002C Member SSN DOB oZ gW L&d lac ZtIr � n� adeert oa, 7-170/ Address Cite State Zip al K4) 8i-Q3& 05 I /l / -- S use SSN DOB A5 i - a1-7q Years of Service Date of Employment Witnes Date DESIGNATION OF BENEFICIARY I hereby designate the following beneficiary to receive any benefits from the DROP plan if I die prior to my termination of employment: E.;r./3hQii, A- �v. iE� • Name Relationship /0.4"...., ,ey.hgerz -3-?/ Signature of ember Date Please select one of the following (if spouse is not selected as beneficiary): I certify that to the best of my knowledge, the above-named member is single or that his spouse cannot be located. Signature of Plan Representative/Notary Date I certify that I have agreed with my spouse on the selection of the above-named beneficiary or beneficiaries. I understand that if I am not named beneficiary, I will not be entitled to benefits under the Plan. Signature of Spouse Date I certify that I have witnessed the above spouse's signature. • Signature of Plan Representative/Notary Date • • December 18, 2003 Kathryn B. Stout 1510 E. Overcrest Street Fayetteville,AR 72703-3023 Dear Ms. Stout, The Fireman's Pension and Relief Fund Board of Trustees would like to thank you for your check in the amount of$300 to the Fireman's Pension Fund. Your generosity is appreciated. Have a wonderful Holiday! • Sincerely, Sondra Smith Fireman's Pension Board Secretary Fayetteville City Clerk • Sondra Smith-Firemen's Pension and Relief Fund Page 1 From: Amber Wood • To: Smith, Sondra Date: 1/12/04 1:55PM Subject: Firemen's Pension and Relief Fund I have the following dates scheduled for the Firemen's Pension and Relief Fund Board of Trustees. Please confirm the following information and any changes that need to be made via email. I appreciate your help! Firemen's Pension and Relief Fund Board of Trustees Last Thursday of each month Weekly Meetings List 11:00 a.m. City Administration Room 326 January 29 February 26 March 25 April 29 May 27 June 24 July 29 August 26 September 30 October 28 November 18 December 30 • Thanks, Amber Wood City of Fayetteville City Clerk Division 575-8323 awood@ci.fayetteville.ar.us • New World S,ut s:s 5.1 hLPJE4 FINANCIAL MANAGEMENT PAGE 29 DATE 12123;63 GL2110 TIME 11:41:20 BUDGET PERFORMANCE REFORT DGRI77.1F Month End Date: 11/30/20)3 -iir ADOPTED altar 'MED 1 1N11 Y-T-I � Y tag Y t-•D } ACCOUNT NUMBER BUDGET AMENDMENTS BUDGET TRALiS'ACTIOtt REVENUES YTS REVENUES IISED REVENUE Fund 5810 - Fire Pelsinn Division 0981 - Fire Pexlsiun Revenue ACCOUNT CLASSIFICATION RP.10 -- Taxes 1100.00 Prcls Taxes ).C) .00 30930).00 97908.35 243827.19 61172.81 80X 224705.97 4100.01 E lingProl: 12910.0) .00 12910.01) 7C)7.38 17165.09 4255.09- 133X 21993.58 Taxes TOTALS . : -317310;1301 .00 3t'1910.(o 98616: 260994.28 56917.72 -B2Z 446699.; 4t1 74s Ifccoum CLA IFICATI Rey- Intet�err 2tal °i 4301.00 StInsFurnb 6500).00 .0) 69300.00 .0) 412688.18 347688.18- 635% 87878.13 4301.06 R Wre9t ; .00 .00 .00 .00 11487.84 11487.84- 02 .00 1rlter v°1: T(IT11L : 8`i0 _____.03 - 6 + A 01F .00 -"4211176s02 - ° I/ - 653Z 871PIL 13, a. ACCOUNT C1.ASSTFICATIt l R1;70 - 'Interest 4703.00 Int-Trust 1000.00 .00 15000.00 M0.05 4804.05 10195.95 32X 17968.93 4704.00 Int-9ndInv 1400000.00 .00 14(000.00 5197.59 60946.92 79C53.08 44X 127403.25 4704.02 Int-'CD 15000.0.) .00 13000.00 720.00 11322.11 3677.89 76Z 19833.89 4704.04 Int0o tSec 40000.00 .00 40>00.00 9424.61 111720.93 71720.93- 279% 4 , 0 0 .,.`.V; 4705.00 Int-Cking 873.00 .00 875.00 9.90 .',45 786.55 10X 1; 0:�p34' i 4708.00 Int TI est .00 .0) .00 .00 .00 .00 #+ - -r 0 4710.00 DivOn5tock Al0C0.O0 .00 75)00.(}�) 8533 % 106968.78 30968.7a 141X 106' 52" 04:7t).01 (M..osslnv .00 .0Ci .00 21357.21 66197.60 66197.60- t++ 1324385.47- @. 47A).99 1lnreal "AIL .00 .00 .00 .03 .00 .00 +++ .00 4780.00 InvestFees 65000.00- .00 65000.00- .00 80419.81- 15419.81 124X 42935.48- I1'tfieCest TOTALS . --ra7573 " -- -- --- ;00" `-ZiCen T :.4549Z.Zi. _ .28CRITYT �:UF IZ7Z 1057,11.01F wt ACCOUNT CLASSIFICATION R.EBO - Contributions 4809.00 Donations .00 .00 .00 .00 300.00 300.00- +++ .00 4810.00 OffcrCcxitr 3.3995.00 .00 33995.00 2396.98 29734.43 4260.57 :•:X 30375.64 4912.00 GenFndCo-tt 67990.00 .00 67990.00 4793.09 59468.57 8521.43 :•:X 60751.52 Contrib TOTALS :' """"IOC .00 101993.00. 3.T#" Imo.UD 'WA '.4 milt eussu sate RE90 1 i scel luaus -t1= :% ;p 4999.00 Mix Rev .00 .00 .00 .t.10 .00 .00 H.+ .00 4999.99 UseFundBal 604874.00 110978.00 715852.00 .00 .00 715052.00 0X .00 tax T(7 $ . . : 6€4874.Uf) 1109/8.t1U 71 .00 .110: .1 151 2.0O•` {; ':,.=�0, .• Division TOTALS . . . -nrsvor- 110979.00 1421622.00 151'99.41 1=0.331 366321 67 -74Z -61 .64= Fund TOTALS . . . . . ~1 :00- --TT09797om' TT2I622.0o --TST299:11- -1 .33 - 321.67 -747 • New World S-stems 5.1 *L1UEy FINANCIAL MANAGEMENT PAGE 167 DATE 12/23/03 GL2110 TIME 11:41:15 BUDGET PERt:'ORMANCE RETORT DGRI77J,v tl nth End Date: 11/30/2003 LWOW MENDED . LAST liourr WINER 4DCMTED EIII)GEI MUD tl) 1 YT-D Y T D BUDGET LESS. X :" Y-'C D MEND WS BUDGET TRANSNCTIONS EEUSRANCFS EXPENDITURES YTD EXPELS USED, ?'+•1 PITURES Fund 6810 - Fire Persia) Division 9810 - Fire Pension Expense ACCOUNT CLASSIFICATION MO - tlaterials"arid Supplies 52000.00 Oft'Stpt)rnt .00 .00 .00 .00 .00 .00 .00 ++4 410.15 MFat/9upp TOTALS : ..----_---- --------:OD- ._._._--700_ -.. --xi . - -- .00 --- .00 +F+ -i.i5- ACCOUNT Ci..115SiFICA;T,Ci EX30 - Services and Cl ges 5303.00 Pubs/Dues' .00 .C10 .00 .00 .00 100.00 100.00- +++ .t�0 5304.00 7Y'ave1/Trn .00 .00 .00 .00 .00 .00 .0) 444 .00 S304.99 TAT Advnce .00 .00 .00 .00 .00 .00 .00 +++ .00 5307.00 Audit Esp 38E0.00 .00 3860.00 .00 .00 2600.00 1260.00 67Z 3500.00 5311.09 Settlement .00 .00 .00 .00 .00�y .0) .00 +++ 18717.78 5314.00 Prof Se u .00 .C0 .00 .00 .00 1960.00 1960.00- 4 44 .00 ;' ,.. :531y4.0g1 LB1Sety .00 .4O .00 .00 .00 .000� p� y0y0 +44 ./CO° n��w3}�2j0�..00�1y .c.. .ry i 50.�00 .00' 50.00 .00 .00 - .00y 50.00 OZ �i `,. 53 4.00 �.�ti 4t d .00 .00 .00 .00 .00 .00 ♦00 +++ .0 5335.00 Pensionko 9006734.00 .0) 906734.00 76401.47 .00 846010.87 60723.13 93Z 806436.64 5135.01 DROP Exp 40000100 110978.00 510978.00 33691.33 .00 395572.07 11E405.93 77Z 330734.39 5335.06 FtISu nBene .00 .00 .00 .0) .00 10788.96 107::.96- OZ .00 Serv/CNS TOTALS . 1310644.00 1IO78 0l 1421 .Q0 11009"aT .00 1257031.90 164550.10 '-gaZ 1159428.81,..,' vision IDTALS . . : 7310644707 m "T42'1644.ixl. 1100132.M .0t1 1 Ax41.9t3 164;i90.10-'' ',""1'1' :.:` Rind TOTALS . . . . : f3155 --II - -1721M 110092.1 T - .00 1257031.90 164590.10 -Ea 1159838.96. .41E ra .. "', O ( l2 Systems 5.1 *LIVE* FINANCIAL MANAGEMENTPAGE 1E DATE 12/23103 ACCUMULATED TRANSACTION IN GL1320 MUZZLETIME 11:38:12 TRAH JRN PROJECT,# G/L DATE JOURNAL TYPE TYPE SOURCE DESCRIPTION DEBIT AI'1)UNT CREDIT AMOUNT A SALABCF 1 -- , 2 G/L t'lt)H1t1 WIRER: 6810,9810.52t10.00 Office arlieslprirttirtg ' I AL YEAR TO DATE - 41, Daae/Detail TOTAL • OffroupPrnt �.. 3 -4, 4 G/L ACCOUNT NUMBER: 6810.9810.5303.00 Publications & dues FISCAL YEAR TO DATE: 100.0( 5 Base/Detail TOTAL • Pubs/Dues .00 ,QU 6 G/L ACCOUNT NUMBER: 6810.9810.5304.00 Travel & training FISCAL YEAR TO DATE: .0( 7 Ham/Detail TOTAL • Travel/Am .00 •Q0` '' 8 G'/1.ACCo1RT NumBER: 6810.9810.53O4.99 Travel/tta1n1rig advances FISCAL YEAR 10 DATE: ; s Basa/Detail TOTAL • TAT Advnce 10 YEAR TO DATE: 2+600.0( G/L ACCOUNT NUMBER: E810.9810.530 .00 Audit expense FISCAL .00 u,600.0( 11 Base/Detail TOTAL . . . . : Audit Exp .00 12 13 G/L ACC.(U1Rt DER: 6810.9810.5311.09 Settlaments FISCAL YEAR TO DATE: - Base/Detail TOTAL . . . . : Settler It .00 •00., . 4 15 G/L ACCOUNT NUMBER: 6810,9810.5314.00 Professional services FISCAL YEAR TO DATE: 1, ( 16 Base/etail `TOTAL • Prof Serv .CEO .00 1,960.0( 17 G/L ACCOUNT NUMBER: 6810.9610.5314.01 Legal services FISCAL YEAR TO DATE: .0( .18 Base/Detail TOTAL • Legal Sery .00 .00 .0( 19 20 RACCOUNT # : t381O.9810.532Ci•O1 Bank service shharges _ FISCAL YEAR TO DATE:> < �tx * 21 MONTH TOTAL: NOVEMBER .00 .00. '.0( 22 Base/Detail TOTAL • BankServCh .00 .00 .a 23 24 G/L ACCOUNT NUMBER: 6810.9810.5324.00 Perisicn withdrawal FISCAL YEAR TO DATE: .Ot 25 Base/Detail TOTAL • PEt ithr .00 .OG`' 26 G/L ACCt1ii1 111i1'18 : 61.0«5$10. 5,00 Pension ettge • FISCAL YEAR TO DATE:°.- 769,•!. .i 27 11/1S/2003 305575 HR J£ Hs, Rst'c Payroll Checka-11/30/2('103 1,668.91 ° 28 305575 HR JE Human Rsrc Payroll Checks-11/30/2(03 1,649.16 i l?.4: 29 75 HR JE Ht .Rsrc Payroll thecks-11/30/2003 100.00 773117.4: :305575 HR JE Human Rsrc Payroll Checks-11/30/2003 100.00 30 305575 HR JE Human Rsrc Payroll Checks-11/30/2CX03 2,735.14 7754352.6: 31 3(415575 BR E HMI Ram Payroll t ecks--11/30/23 , 2,267.18 778, : ,ea HR JE Htaan Rare Payroll-thecka-11/30/2003 1,911.99 ., 78{'1 :K 32 305575 BR Z Mari Rem Payroll thecks-11/30✓2003 1,507.82 ; 781,.W , 33 3 75 HR JE lattai Rem Payroll Mat 11/30/2403 100.00. . 781Y •;` 34 305575 HR JE Human Rsrc Payroll Checks-11/30/2003 12).0 781, -L, 305575 HR JE Human Rsrc Payroll Checks-11/30/2003 1,637.10 783,396:7( 35 3(6575 HR JE Hunan Rsrc Payroll Checks-11/30/2003 100.00 783,496.7( 36 305575 HR JE Human Rs'c Payroll (becks-11/30/2003 100.00 793,596.7( X5575 HR Ht ax_Payroll ( lts-11/30/2003 1,658..92 _ 914.-4O ,,. •,,, 38• _ 4� BR ,�.�" a�'�' cell �:ks-1��� .., "' � 305575 'RR JE Htat i Rm-e P Col l (� •11/3O/2M3 1,615.08" 4:.,-.:-': 39 " 3 ia75 RR ' Jt .1�Rsr'C Payroll ( ecka-11/; 3,492:96 ' . . e 79tf 40 302 57 HR JE HCmian Rsrc Payroll Checks-11/ /200 2,376.34 79;r=. 3(6575 HR JE Human Rscc Payroll Checks-11/30/2003 100.00 793,7EUX 41 3(13675 HR JE Human Rsrc Payroll Checks-11/30/2003 100.00 793,857-0( 42 33=75 HR JE Huatan Rrc Payroll Checks-11/30/2003 3,273.93 797,130.9: 43*>_ :3 HR' "R.re Payro heck•-11/<OC219'• 2,812;66, . ,:, e 3005 HR; E 'Ism Pa ol th &s-11 : , ,. 44 ." 3t� . - JET,:r twe Won"ticks-1.1 ' 1,507.92 -.„- 1(is ,. 45; . 305575 12 ,16- RtrCDoll CZecka-11i3� 1,39118. . 46 305575 HR JE Human Rsrc Payroll Checks-11/30/2CO3 1,56(.00 809, `%3( BR JE Htmat Rsrc Payroll (becks-11/30/2003 100.00 806,592:4. 47 /b HR J6 Human Rsrc Payroll Checks-11/30/2CO3 417.50 48 3065 JE Hu HR man Rsrc Payroll Checks-11/30/2003 100.00 807,109.91 30M5. Hit JE Rim Rare Payroll C11eeks41!30/240:3 1,507.82 ,6 I: 30� BR JE.Httlahi Ra`c Payroll C aas:'-11/30/2(2 2,624.8• 811i2'P(` 50 /a HR ,Ti MO Rare"Payroll Checks-11130/200.3. 1:492r .812, << 51 305575 HR X Ph an Rart Payroll fttecks-i'1 03 1,604.92 .•8146 '. 52 3(6575 HR JE Human Rsrc Payroll ('hecks-11/30/2003 100.00 814,E 1.• 3(6575 HR JE Human Rsrc Payroll Checks-11/30f2003 1,221.26 8 1:77 53 305575 HR JE Hunan Rsrc Payroll Checks-11/30/2003 1,193.41 .1: 54 306575 HR JE Human Rsrc Payroll Checks-I1/30/2003 2,910.17 8 , .21 3055 5 HR JE Roman Rare Payroll Checks-11/3O/2003 100.00 '819t .; 55 �, �7 - New kkrldSystenfs `.l *LIVE4- FINANCIAL MANAGEMENT PAGE 200 DATE 12/23it3 ACCUIIJLATED TRANSACTION LISTING GL132) ' TIME 11:38:12 DGRI771 F IRAN JRN _PROJECT # G/L DATE JOURNAL TYPE TYPE SOURCE DESCRIPTION DEBIT AMOUNT CREDITAMOUNT ACTUAL BALANCE 0 ACCOUNT NW R: 6810.9810.5335.00 Pansicri"e lse ' FISCAL YEAR TO DATE:" ' 769,609.40 , : 305515 HR JE arc Myron l Chef 11/30/2033 115.00 819;980.28" 3=75 HR JE Hunan Rsrc Payroll (becks-11/30/2003 125.00 820,105.28 ::.. 105575 HR JE Human Rsrc Payroll Checks-11/30/2CO3 2,OC6.35 822,110.63 305575 HR JE Human Rsrc Payroll Checks-11/30/2003 1,738.46 823►849.09 305575 HR JE Human Rsrc Payroll Checks--11/30/2003 2,530.45 826,379.54 305575 HR JE Human Rstc Payroll Checks-11/30/2CO3 2,147.56 828,527.10 HR JE NMI Rsrc Payroll becks-11t.3)/2003 1C)0.00 828►627 10: .: ::' 305575 HR JE Hunan Rsrc Payroll (heck$11/30/2003 1,268.40. 8,8" 50- "'' 305515 HR JE Homan Rsrc Payroll Qre 11/30/2003 1,395.50 ,2991; 3', = d bbil5 11R JE Hunan Rsrc Payroll Checks-11/30/2003 1,114417 832,4C 3.25 '",: 305575 BR JE Human Rsrc Payroll Checks-11/330/2003 1,114.17 833,519.42 305575 HR JE Human Rsrc Payroll Checks-11/30/2003 390.00 833,909.42 3tE575 HR JE Hunan Rsrc Payroll Checks-11/30/2CO3 737.78 834,647.20 3C5T5 HR JE Human Rsrc Payroll Checks-11/30/2003 702.65 835,349.85 305575 HR JE HumaaRarc Payroll Checks-11/30/2003 3,356.83 838,706.68 " . 305575 HR JE HtLan Rsrc Payroll ('hecks-11/30/2003 125.00 838,831.68 3(6575 HR JE Ikon RaT Payroll t heckss-1 l/30/2C*)3 125.00 838,966.68' '- 305675 HR JE Wren Ram Payroll Checks-1113012003 2,290.35 841s247:O3 ro' " 3(6575 HR JE Human Rsrc Payroll Checks-11/30./2003 400.00 841,647.03 , 3(6575 HR JE Human Rsrc Payroll Checks-11/30/2003 2,816.02 844►463.05 306575 HR JE Human R.Tc Payroll Checks-11/30/2003 1,547.82 846,010.87 M ITI TOTAL: WAIFIIBER 76,401.47 .00 ' 840,010.87 Base/Detail TOTAL • Pensicrilp 76,401.47 .00 846410.87' G/L ACTOUNT NUMBER: 6B10.981O.5335.01 DROP expense FISCAL YEAR ID DATE: 361,880.74 62042 1 11/M/20):3 :305980 JE JE 11033 SO Record DROOexpense Nov43 3,455.40 365,336.14 62042 2 :3+75980 JE .1E 11033 SO Record DROP expense Nov03 292.81 365,628.9S C 2014 1 3066980 JE JE 11033 SO Record DROP expense Nov03 2,396.34 368,025.29 62074 2 3C6980 JE JE 11033 SO Record DROP empenSe Nov03 222.51 I247: 0 . . " 62069 1 3t6980 JE JE 11033 SO Record DROP,:�(, == Nov03 3,219.73 ' 37:, 453 ." 2 3(6980 JR JE 11033 SO Record DROP : : Nov03 241.13 '. 37 f7%68 ' •• 1 3OS980 JE JE 1.1033 SO Record Dom:exPensellov03 3,205.68 i9444 ' ' >.. 2 305980 JE JE 11033 SO Record DROP expense Nov03 251.14 375;195.50 ,41: 1 306980 JE JE 11033 SO Record DROP expense Nov03 4,920.63 380,116.13 62080 2 305980 JE JE 11033 SO Record DROP expense Nov03 340.66 360,456.79 62081 1 305980 JE JR 11033 SO Record DROP expense Nov03 3,731.29 n 384,1N.08 62081 2 :1 1 d,E+ JR 110�.n so Record IMP 1P expense 140/y3 ryry 2+�yry�,.4. I f�w= �3y�,g14 82082 moo JE JR 1103]SO Re + Y;i. • it:: •` VO3 3411 "., -' • r<".x;s'%i. 82082 2 3(6980 JE JR 11033 SO Record ►'e• :++.:"- 222.5. ` ' ,3 . 6�3 1 3C76980 JR JE 11033 So Record DROP .:' .:-' 3,337.69,". , 'A s • ' 391292 2..' .;Y,V 62083 2 3C6'10 JE JE 11033 5O► Record DROP expense NoVO3 2 .51 ' 391;554.63 62084 1 3(6960 JE JE 11033 SO Record DROP expense Nov03 3,771.29 395,325.92 62064 2 3C6960 JE JE 1i0"33 SO Record DROP expense Nov03 246.15 395,572.07 MATH TOTAL: RODEI 't :33,691 33 - ' .: 3gl* 07:`,-: ; .; , eelDetail TOTAL • DROP Exp 33,891L33' ) 5"1 .07'''``'` G/L ACCOUNTEVER: 6810.9810.5335.06 FL e'Sopplementa] Sane ' FISCAL YEAR TO DATE: 10,788:96 Base/Detail TOTAL • FL erie .00 .00 10,7::.96 Division TOTAL • FirePenExp 110,092.80 .00 1,257,031.90 "FEW�y�,,,,�.�y�p� ri �y�,,,, *gyp./g�. may,. : �e�, ��..r,/�+�1 ,# •,.:.. 1!YtAIt" ,"a • r_ :s''r - Fi .7"�iia Li9,id Gi►8O • y,OO":�v ►_ ,.....,a�7V," , II O A 1-A u FAYETTEVILLE THE CITY OF FAYETTEVILLE,ARKANSAS IP January 12, 2004 Ms. Kim Skelton 5505 Bryant Place Springdale,AR 72764 Dear Kim, State law allows children of deceased pensioners to continue to receive pension benefits until they reach the age of nineteen or graduate from high school, which ever comes first. The law also allows them to continue to receive benefits if they are a full time student enrolled in an institution of higher learning after completing high school. The benefits will continue as long as they are enrolled as a full time student until they reach the age of twenty-three or get married. II You must provide Proof of Enrollment each semester. Please provide Proof of Enrollment from an institution of higher learning by the beginning each semester which clearly states the following information: 1. Number of hours you are enrolled. 2. Number of hours the institution considers full-time. 3. The length of the term. I have not received your Proof of Enrollment for the current semester. Please keep in mind that you will be required to submit verification each semester. If we do not receive the necessary enrollment information by the beginning of each semester of school,your pension benefits could cease.Please forward the documents to the City Clerk's Office, 113 W.Mountain,Fayetteville,AR. 72701 before February 1,2004. If you have any questions,please feel free to call the City Clerk's Office at 575- 8323. Sincerely, 4'444,, 60.-Aksio Sondra Smith City Clerk • 113 WEST MOUNTAIN 72701 479-521-7700 FAX 479-575-8257 r�. mom Office of the Registrar 146 Silas H.Hunt Hall School Code:001108 Fayetteville,AR 72701 (479)575-5451 Kimberly L. Skelton 5505 Bryant PI Springdale,AR 72764 Enrollment Verification RECE,��C JAN264 CITY OF This is to verify that Kimberly L. Skelton CITYCLeFtir E L(E OFFICE is currently enrolled at the University of Arkansas, Fayetteville. ❑ was enrolled at the University of Arkansas, Fayetteville. ❑ has pre-registered at the University of Arkansas, Fayetteville. ❑ has no record of enrollment at the University of Arkansas, Fayetteville. ❑❑ Officially Withdrew enrollment at the University of Arkansas, Fayetteville other: for the Spring 2004 term, extending from 01-12-04 to 05-07-04, for 12 semester hours credit. This is full-time. Date: Tuesday, January 13, 2004 Office of the istrar REGISTRAR ASSISTANT, Seal This certification is valid only when signed by an authorized official of the Office of the Registrar and the certificate is embossed with the seal of the Registrar. • FAYETTEVILLE THE CITY OF FAYETTEVILLE,ARKANSAS • January 12,2004 Northwest Arkansas Community College Office of the Registrar One College Drive Bentonville, AR 72712 Dear Sirs, Kelly D. Skelton, Social Security Number 429-59-9896 is drawing Firemen's Pension Benefits from the Fayetteville Firemen's Pension Fund. State law allows children of deceased pensioners to continue to receive pension benefits until they reach the age of nineteen or graduate from high school,which ever comes first. The law also allows them to continue to receive benefits if they are a full time student enrolled in an institution of higher learning after completing high school. The benefits will continue as long as they are enrolled as a full time student until they reach the age of twenty-three or get married. • Ms. Skelton informs me that she is currently enrolled at Northwest Arkansas Community College. She must provide Proof of Enrollment stating the following for her to continue to receive Pension Funds: 1. Number of hours enrolled 2. Number of hours the institution considers full-time 3. The length of the term of enrollment If we do not receive the necessary enrollment information by the beginning of each semester of school,her pension benefits could cease. Please forward the documents to the City Clerk's Office, 113 W. Mountain, Fayetteville, AR. 72701 before February 1, 2004. If you have any questions, please feel free to call the City Clerk's Office at 575-8323. Sincerely, 56ak C *3 Sondra Smith City Clerk • 113 WEST MOUNTAIN 72701 479-521-7700 FAX 479-575-8257 FAYETTEVILLE IIITHE CITY OF FAYETTEVILLE,ARKANSAS January 12, 2004 Ms. Kelly Skelton 3112 West Jewell Road# 10 Fayetteville, AR 72701 Dear Kelly, State law allows children of deceased pensioners to continue to receive pension benefits until they reach the age of nineteen or graduate from high school,which ever comes first. The law also allows them to continue to receive benefits if they are a full time student enrolled in an institution of higher learning after completing high school. The benefits will continue as long as they are enrolled as a full time student until they reach the age of twenty-three or get married. You must provide Proof of Enrollment each semester. 0 Please provide Proof of Enrollment from an institution of higher learning by the beginning each semester which clearly states the following information: 1. Number of hours you are enrolled. 2. Number of hours the institution considers full-time. 3. The length of the term. I have not received your Proof of Enrollment for the current semester. Please keep in mind that you will be required to submit verification each semester. If we do not receive the necessary enrollment information by the beginning of each semester of school,your pension benefits could cease.Please forward the documents to the City Clerk's Office, 113 W.Mountain,Fayetteville,AR. 72701 before February 1,2004. If you have any questions,please feel free to call the City Clerk's Office at 575- 8323. Sincerely, boiict.t, Ail-att--, Sondra Smith City Clerk 113 WEST MOUNTAIN 72701 479-521-7700 FAX 479-575-8257 • VERIFICATION OF ENROLLMENT NorthWest Arkansas Community College One College Drive Bentonville,AR 72712 (SO )636-9222 Office of the Registrar To Whom It May Concern: r' >>This is to verify that �. 1U/LLt(( 5/L L- �� <1 Name Social Security Number ❑ is enrolled at NorthWest Arkansas Community College,Bentonville U was enrolled at NorthWest Arkansas Community College,Bentonville has early-registered at NorthWest Arkansas Community College,Bentonville has to record of went at NorthWest Arkansas mmunity College,Benton�,il , for the - ( l l. C term,extending from (i y i. Z to t� for semester hours credit. 3 • This is full-time half-time et/e) ot� t Da SEAL { Alice Stephens, fembos+edwitthe°MchIsealoftheRegstrar Registrar V- • ANCPERS 2004 Annual Conference and Exhibition The Voice for Public Pensions Anaheim Hilton,Anaheim,California r, Pre-Conference April 30-May 1,2004*Main Conference May 2-6,2004 • Certification of Delegates Form Your organization is entitled to send an unlimited City Clerk number of attendees to the Conference: Fayetteville Fire Fighters Pension & Relief 2 can be voting delegates and 2 can be alternates 113 West Mountain Street Fayetteville, AR 72701 Membership ID: ORG11313 Date: 01/07/04 NCPERS Official Voting Rules Official delegates to the Annual Meeting are Iequired to file their credentials with the Secretary of the Conference no later than 15 days prior to the Annual Meeting. This document shall serve as proper notice in accordance with the bylaws Article 3, Section 2. 1. Only delegates or their assigned alternates are eligible to vote on matters before the Conference. Alternate delegates are authorized to vote only if the registered delegate is unable to attend the Conference. No person shall be a delegate for more than one member group or organization. 2. All registration fees and membership dues must be paid in full prior to the conference. Delegates may not participate in the National Committee Election on Monday, May 3, 2004, if fees are not paid in full. 3. Once the list of delegates has been filed with the Secretary, any changes must be received in writing no later than . April 15, 2004. 4. The authorized names submitted will be selected in numerical order from the official delegate list until your voting entitlement is exhausted. Other persons listed WILL NOT have a vote unless the persons listed previously are not registered at the Annual Meeting. 5. This form must be received no later than April 15, 2004, to qualify your organization for all voting procedures at the conference. KEEP A COPY FOR YOUR FILES. Official Delegates Alternate Delegates 1. 1. 2. 2. Authorized Signature Title (Signature and title of person with authority to certify delegates and alternates delegated for the above organization) FOR CREDENTIALSCOMMITTEEUSEONLY—DO NOT WRITEIN THISSPACE Above affiliated organization is entitled to delegates and a like number of alternates. RECEIVED Date JAN 1 2 2064 Pat McElligott, NCPERS Secretary CITY OF FAYETTEVILLE Mail Form To: NCPERS,444 N.Capitol St., NW,Suite 221,Washington, DC 20001 CITY CLERK'S OFFICE 1 �.. . . C 4 0 , r ,. R , A. 11* i ', il 1 MIN ,' I, , :. , • ,, „ ..„.• ., . . . . .,„... ..L:,: „,„„ 2004 Legislative Conference Feb. 9- 11 The dates for the NCPERS' Annual (P.I... 107-173). This highly controversial Legislative Conference are set for and divisive law establishes a new February 9-11, 2004 at the Holiday Inn Medicare prescription drug benefit that Medicare Rx Drug Program on the Hill in Washington, DC. has been criticized for providing marginal could cost$2.4 trillion over the assistance, assaulting employer-based next 20 years. This conference is an enjoyable and health insurance, and fundamentally rewarding event for all participants. It altering one of the most popular and will begin with a keynote address by Jack successful federal programs. The Congressional Budget Office Gennond, a syndicated columnist and (CBO) has scored the new law at $400 regular panelist on Sunday morning news Prescription Drug Program billion over the first 10 years. However, programs. lie will provide an Beginning in 2006, Medicare CBO's director has publicly speculated entertaining and informative outlook on beneficiaries can elect to enroll in the that during the second 10 years-when the Washington political climate. Policy new drug program, called Medicare Part many of the baby boomers will retire-the experts from the Hill,the Administration, D. Seniors who enroll in the program price tag could balloon to$2 trillion. and elsewhere will follow Jack and brief have to pay a monthly premium of$35 you on the critical issues. ($420 per year)plus an annual deductible Partially causing the escalating price tag • of$250. For this upfront cost of$670, is the lack of price controls and The Legislative Conference is for both the Medicare drug program covers 75 prohibition on Medicare to negotiate experienced politicos and political percent of drug costs up to $2,250. The directly with drug companies. Congress novices who have a desire to affect beneficiaries would pay the remaining 25 barred Medicare from negotiating lower change for the betterment of their funds. percent. For drug costs between $2,250 drug prices for seniors. This is left up to Our conference will enable you to stay on and $5,100, Medicare covers nothing. individual insurance companies. This top of the critical issues that will impact And for drugs above $5,100, Medicare arrangement will continue to foster a your fund and provide the tools for covers 95 percent of the costs. system that forces Americans to pay the dealing with them effectively. Some of world's highest drug prices. the issues that will be on the agenda are: While the provision covering 95 percent Mandatory Social Security Coverage, of costs above $5,100 sounds generous, Beyond the financial costs, in exchange Private Retirement Accounts; for the vast majority of seniors it is an for the$1,080 prescription drug benefit, Administration's Retirement Savings unnecessary assistance that is long on the new law upends Medicare as we Proposals; Effects of the Medicare appearances, but short on real benefits. know it. A central provision in the law Prescription Drug Law,and Public Sector Fortunately, most seniors do not incur pits traditional fee-for-service Medicare Pension Legislation. You will become an catastrophic drug costs. The annual (in which more than 90% of expert on these issues and the prescription drug costs of average seniors beneficiaries are enrolled) against congressional process. Armed with the "coincidently"runs below$5,100. private health plans. This provision, essential knowledge needed to present known as "premium support," is slated your case, you will then have the However, the program's gap in coverage to begin as a demonstration project in opportunity to lobby your legislators is where beneficiaries do incur drug six metropolitan areas in 2010. Up to face-to-face. Register online at costs. For a beneficiary who has drug six million seniors could be affected by www.NCPERS.org. costs of $5,100, Medicare would cover the experiment. Those who choose to only$1,080 and the beneficiary would be stay in Medicare could face increases of Public Sector Hurt by responsible for the remaining$4,020. In 5 percent. Premium support could be Medicare Prescription Law other words,Medicare would cover about the first step in privatizing Medicare and On December 8, President Bush signed 21 percent of the costs, while the transforming it from an entitlement into law the Medicare Prescription Drug beneficiary would bare 79 percent of the program to a defined contribution health • Improvement and Modernization Act costs of$5,100. plan. (continued on p. 2) NATIONAL CONFERENCE ON PUBLIC EMPLOYEE RETIREMENT SYSTEMS • . 1, 1 '• . .. . „,,,,, , _4 .:,.. .,. ,,,,t ,,,ew ,.:,,...;,:., .. • ' n ---- ' Threat to Retiree Health Care • Importation of Drugs: The law allows Originally enacted in 1976, the PSOB There are two provisions in the law that the importation of drugs from Canada was largely limited to deaths and undermine employer-based retiree only if the Secretary of Health & Human catastrophic injuries resulting from health insurance. First,the law endorses Services certifies the safety of the drug. physical trauma.Under the provisions of the Erie County court case, which However, this is unlikely because the S.459,if a public safety officers dies as a resulted in the reduction of health Bush Administration has been adamantly "direct and proximate" result of a heart coverage to pre-age 65 retirees. In the against this policy. Moreover, it is HHS attack or stroke within twenty-four hours Erie County case, it was ruled that regulations that make importing drugs of responding to an incident or training providing higher health benefits to pre- illegal• exercise involving strenuous physical Medicare eligible retirees than • Health Savings Accounts: The law activity, the death will be "presumed" in Medicare-eligible retirees violated the establishes Health Savings Accounts the line of duty and the family will Age Discrimination in Employment Act allowing all taxpayers with a high- eligible for PSOB benefits.The President (ADEA). However, some employers deductible health insurance to save and signed the bill on December 16. The provide "better" health benefits to pre- withdraw money tax-free to pay for effective date is the date of enactment. 65 retirees because otherwise these medical expenses. retirees would have no access to • Drug Discount Cards: Beginning in Amended Social Security Bill affordable health insurance. Once April, Medicare will provide discount Passes Senate retirees enroll in Medicare, it's cards that are estimated to provide On December 9, the Senate passed an reasonable for the employer-based savings of 15 to 25 percent. however,the amended version of H.R. 743, a Social insurance to become the secondary discounts are not mandated in law. This Security bill, which only adds Kentucky insurer. The net effect of this law is that program is intended to be a temporary and Louisiana to the list of 21 states that firefighters and police officers (who program until the permanent drug plan are allowed to have a "divided retire earlier than 65, some with comes online in 2006. retirement" system. The issue of divided mandatory retirement ages)and teachers retirement systems, where individual • could lose their employer-provided NCPERS Opposed Bill, Working to employees choose whether to be in Social health benefits until they reach age 65 Correct Problems Security or not, provided that all new and become Medicare-eligible. NCPERS opposed enacting this bill hires are covered by Social Security-was because it prohibits public employers a chief concern for NCPERS (also see The law also allows employers to dump from offering higher health benefits to October and November 2003 issues of their retirees from their more generous pre-Medicare eligible retirees,minimally The Monitor). health plans into Medicare. CBO has benefits seniors, radically changes the estimated that approximately a third of Medicare program, undermines Both Kentucky and Louisiana petitioned retirees would lose their employer-based employer-based retiree health plans, and for the ability to institute a divided health insurance. While $86 billion in does not reduce spiraling drug costs. We system to address legitimate issues that subsidies and tax breaks are set aside to are currently in discussion with allies on arise when jurisdictions with non- entice employers to keep their retirees the Hill and elsewhere to correct the covered employees merge or annex on the employer-based health plan, this major problems of the legislation. jurisdictions with covered employees. translates into a subsidy of only $0.28 Earlier in the year, the House of for every dollar a public sector employer Public Safety Officer Benefit Expanded Representatives only allowed Kentucky would spend on drug costs between to institute a divided system in its version $250 and $5,000. Private sector Before leaving town for their winter of H.R. 743. In the Senate, the Finance employers get tax deductions and recess, Congress passed the Hometown Committee approved a version of H.R. subsidies totaling S0.63 per every dollar Heroes Survivors Benefit Act, S.459, 743 that allowed all states to have a spent on health care. which expands the Public Safety Officers divided system. Benefit (PSOB) to include heart attacks Other Provisions and strokes. The Senate divided system provision was • Means Testing: Beginning in 2007, beneficiaries enrolled in Medicare's medical insurance(Part B)with incomes of $80,000 or more will have to pay •January.9 is the.cut-off dete to;giiarentee.your tliscounted,i' 1,0 ,,, higher premiums. Instead of paying the feservatIOris et the newly,t`e b" s�tttl I o day In i or the Hitt„°,: ,.,A,!,,:::::' current 25% of Part B premium, , . convenientlyloceted one bleat,frq tft.:`0api oF:and;Uiiian40- :� ~:y, • wealthier seniors will pay up to 80%of Register f©Y'itle confer6tlG r1t.t+�s'reserve-your your raorrt otllin � �' .,, the premium. www.NCPERS.ot't> gconf. .a`:` NCPERS, The Voice for Public Pensions December 2003/January 2004 • a major concern because it was a H.R. 743 closed a loophole that allowed expires on June 30, 2009. backdoor method of implementing certain State and local government The last provision that affects public mandatory Social Security coverage. employees to escape the Government pensions is the establishment ofs anew NCPERS sent strong letters to the Hill Pension Offset (GPO). The loophole federal mandate. It requires a staten or rebuking the Senate provision.Our active allowed employees in non-covered local government entity, hiring an and decisive lobbying paid off. positions to be exempt from GPO if just individual in a non Social Security prior to retirement they move to a Social covered position, to provide employees Additionally,NCPERS was successful in Security-covered position. H.R. 743 with ae written notice that explains the removing a proposal to require retirement requires that government workers be effects of the government pension systems to report on the 1099-R whether covered by Social Security the last 60- (GPO and �VEP [windfall a pension is from non-Social Security- months prior to retirement inf order to be elimination provision]) on their Social covered work, which would have exempt from GPO. mThe effective date Security benefits for which they may be proliferated paperwork and caused all will be fir those who retire after June 30, eligible. The employer must then sorts of administrative difficulties for 2004. The Senate bill also allows a submit the notice to the relevant pension funds. This reporting language transition for employees who worked for retirement system. was intended to assist the Social Security five years that paid into both Social Administration in better estimating Security and the state retirement fund No additional action will take place potential offsets to Social Security before H.R. 743 is enacted(most likely in until late January when Congress comes benefits of non-covered government late January). These employees may back from its winter recess. The House employees. NCPERS pointed out that count this service toward the five years. must pass the bill with the Senate pension funds really don't have the They must, however, work at least the amendments. For the latest news on records to make such determinations. final month before retirement in a Social H.R. 743 wwand other legislative activities, Security position. The transition period visit .NCPERS.org ra..a.':;�C,y.'E.�=aDfg.txtMi s'^iI.)......'1r3�'at t''z(c�ca.l r`".�..•::",�:2>e-yz t,,sF,'.., Yx' sihy�,(.t<..�`:'3€.r"g.ut�zz"f'3�;`'-y�3,I.j..�{:.t�'1"cna.'7 a-3.:y...:::`i:..�'€E t �..♦3:`.,:r ss "nI :c#, �.c� {i.t..'•.,..: a S �,.L E .. € � ''.... .... ( �#s' .;: • • • • • • • • • • .� x a 0 1 r . f F�t ,, 1 �: t a3 27 �,!- r : - t d � %�0� i ,' x ` t b r r . '$�. L 4 w • $ .: � '"'tvL '. tt!''�� 1 at , z st t �"', h 4 4 �� t c:iI ic C :{ 3f� au t ttZ. rs;3� 'A � . t ' . °� '; f ^tP' C . t aw � � %� r ,at a 'r t ` ' :' � e.,. art ���� �r �:"' . +ucifaS A i ' 6 Y z', �i t3 � % +ysfi't., „ 1. S ' R +: iYa t--' t ? 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' ^ ' �z t :It'' 3 x ' t . ltt S �. ` S " ¢ c a'� q in' t' r � Mis& . £, ?t {� i 1•✓:ef3lCo-, I€" t ,' r ' .':;`t. , �, } +�: o t t �t€t ' F �i fi t+ e' i . tl,.,€t, Cs y r + P ➢t � s tt ' 4 - . z, .r tdt t are tcl a , • . • .=t -` ;' F tl e - t 1 " i K :' i)'';,F. dd:f41.2 . *`' ‘' 'y ,t , $c 3� r ; t , h 1` t Y � ,,� '.{.. Ft ,, , :la j r %r, I 32(1 i,,i # 71• ' '" » i -.,'4 x,EF ", w ca { i;,i° s "D 'K8 ;ir,A„0- , tl i -4;,...'',i '1 ; 7 ' t t `�! tf t '� .•,f r i s,:'� z';';' , ` ' iF�3 at 4. 4 ! �' iS ! �.. ..,,,y , r . o,.`a f ,.. .�'r � `J i- "tva ' ° .q: C d(, 4��3 ic i1•=` ( tAt.t' 4'✓ i ' :.. t4•ei Utti i 1 �`. •47 a s Y.4. t t� .a„ £ � i , "�t�'. t e .r^1�„ .fr::: a �: , .. : .��.a s i,?;� ' . �? • � • s'_ .Y A � -r� aG r� .�. r_�. ... . • • • • • • • • • • • • NATIONAL CONFERENCE ON PUBLIC EMPLOYEE RETIREMENT SYSTEMS Dec'03/Jan'04 • Jk 5 � x k' `Syron L.1�t '�,Y Struggle � � with the calendar. With record-low States gg The latest version of the reform bill keeps interest rates,counties,cities,villages and A survey by the National Governors the oversight provisions that were in both school districts by the score are in a rush Association and the National Association bills. It would require regular to refinance huge debts owed to the of State Budget Officers showed that performance audits at the retirement Wisconsin Retirement System by January systems, and board members would have 1,2004. By refinancing loans with lower while there were signs of slight improvement, states continue to face to adopt travel and ethics policies and file interests, the localities will retire their pressure to balance budgets with rising public debt sooner. health care costs and flat revenue growth. 62% of Americans support a The survey found that states pared back universal health insurance California spending significantly in fiscal 2003 to program that's run by the Business groups,fighting a California law balance budgets. It found revenue government and financed by requiring companies to buy employee collections at the beginning of fiscal 2004 taxpayers versus 32% who health insurance, saw their odds for a were sluggish, although they have begun prefer the current health care plummetFriday March ballot referendum to improve in some states. State system. when a Sacramento judge invalidated Medicaid spending continued to outpace their petition drive. Opponents of a new revenue growth. Thirty-two states California law (SB 2) that requires predict they will have shortfalls in their ABC News/Washington Post Poll employers to provide health insurance to fiscal 2004 Medicaid budgets. employees claim they have enough signatures to qualify an initiative to repeal 'julO financial disclosure statements. the law in the March primary ballot. Californians Against Government Run State of Ohio legislative negotiators are Healthcare said it gathered 620,000 • apparently close to agreeing on a tea.ssacu setts. PP' Y agreeing signatures, well over the 373,816 compromise pension reform bill that Beginning next July, Boston plans to signatures needed to qualify the initiative. strips out two controversial provisions import prescription drugs from Canada However, the judge ruled that the from a version passed by the House in for thousands of city workers and petitions misled voters and violated state November. retirees. The pilot program could shave election law. Former Governor Gray about$1 million a year off the city's $61 Davis(D)signed SB 2 into law two days According to news reports, House and million prescription drug bill, according before he lost the recall election. The new Senate negotiators tentatively agreed to to city estimates. The City asserts law takes effect January 1, 2004, with remove requirements that Ohio's five importing medications is safe, although public-employee pension funds use Ohio- the federal Food and Drug based brokers and money managers for a Administration has repeatedly cautioned of majority of their equity trades.They also that it cannot ensure the safety of drugs • : "`.' `e Axr o • r •f tentative] agreed to kill aprovision that ;;,`;$ ;.r;t,_4•, ,Vll4� :,:°' :;> Y 'g brought in from Canada and importation _ a would have given state Treasurer Joe @r;_;&: g remains illegal. �•� a� Deters the authorityto appoint the al1t?1t f1 ssoctati{in • tCt B' _» executive directors of the five pension The agency,however,has not tried to stop ' .1 , SQ! net BCftt4 4 boards. • . Springfield,the first and onl} US city to turn to Canadian pharmacies to fill the Instead of the provision requiring a drug orders of its employees. Springfield compliance deadlines phased in majority of equity trades be carried out by figures the five-month-old policy has beginning in 2006. Ohio-based brokers and money already cut by $750,000 the $18 million managers,the measure would require the the city spends on prescription drugs for New York pension funds to give preference to Ohio its workers, retirees, and their "''w --- investment fines when trading equities dependents. New York City's mayor is pressing city and choosing money managers.The Ohio unions to agree to hundreds of millions of firms would have to meet certain criteria, Wisconsin dollars in savings in health care costs to such as managing a minimum amount of help hold down the city's health insurance assets. Local government officials are in a race premiums and to help finance possible • SAFE continued >) NCPERS, The Voice for Public Pensions December 2003/January 2004 • • i continued from STATE raises for city workers. Administration look for savings to help the city hold said it remains a useful management tool officials said they hoped to use the labor down its annual payments fir health but should be used only when it yield negotiations on health coverage to insurance. savings. advance Mayor Bloomberg's policy of FiOriCia granting wage increases to city workers The program. which is available only to Miami-Dade County's internal watchdog high-level officials at the county only if the unions agree to money-saving measures to finance the raises. is urging County Manager George manager's discretion, offers $600 Burgess to scrap an early retirement monthly cash payments or free health But labor leaders view the talks program for senior administrators that insurance for officials and their families differently, insisting that the main could cost taxpayers millions of dollars, until the officials become eligible for if widely applied. The inspector purpose of the negotiations is to find Medicare-in some cases longer. At health care savings to salvage a nearly general's office, in a report issued this present, 27 former county officials are month, labeled the Departure Incentive insolvent drug fund for 300,000 participating in the program-called DIP- Program a "de facto entitlement" for municipal workers. Union leaders said at a cost to taxpayers of more than they hoped to find more than $100 departing officials. It was created in $200,000 a year. That cost will rise 1995 at a time when the county was along with health-insurance rates. million in savings per year to save that facing layoffs and cutbacks. Burgess plan, which provides free drugs for Another 72 officials are eligible, cancer, asthma and psychological said he intends to keep the program but "potentially costing the county millions," problems. As a secondary goal, union wants to make sure it operates under leaders said they would be willing to stricter guidelines to prevent abuse. He • '.-..":.:a14 /7,, ,,, ,,,P 4.,.. ..:;:':''''' — V lrjl .3 Frederick H: a 1-: IN „� Eixec{, rQp � ;3 (.....„ EL s to 4 �.t _ ;;icy oro ive ci „ �.,, AARP, Sells Out, - Public Employees .: on .Medicare ,Ein l aen.t Act AREA .if they2 provi le;benefi 4 t � Prescription Drag Rill retirees.wliu,are not'ell ble Pr:Coves e d l' +t�� .t when they.provide lesser benefitsta'retixybo: .t4.', Z 3 :* Thts`beadline says it all. age of 65 and are eligibl For ca e,"rage Linde edi v om, ' At tP`sol+d out.iubiic employees byinsisting..that.employers This ra iee;is,not"a a tnati'' i`Xt f+ ,_€ W�, fJ'r i health, f toMedicare eli `ble_' °-co `e -e"pn r cannot ©, e h gher-Beal bene-ts pre- St...-. Megthar tr some �!pn„, ayeir o Itr � , retirees than Medicare-eligible retirees. And in the process;'" employer pri ded+l` :bem ''se ,` # 4 t 'they;supporte d language that-will:provide .there. trtillioua.;of'. "'.sense i,),"eco,nio,.„ d ' IT, t ° ,? =�d. ars irt.s bsidies for their'AARP=run drug''°rt gram,.; ,Thei x t, 93, :.�",; *' e .i'`" : t. i;' , r„ � ;wonder'wh the su ted�this'bill` The also.aa`.�=: ADEA.1-i ` fitted?" e :.. r �`` : ' } h , .4 : , .: , . , €✓iE:2,n - -ii—=.3...e_:,. ..ate.."- ' '^ `°n;i' �* `i . supporting .. rivate retirementaecounts ithin icial S� staid` tt ;pii:l4ediF* - Str i ,v, tr � wt rKing:'.in conjunction:'with the Na*tone ;ASsoclatmoiI` }e efYts`:'w,itl Med do .:6 ; >" is ai e �s.. . gam .:i,91; :� .t-`- :.: a✓ :: `. . �. x. - s ea .•t'S�,': M ? actures and the Republican Partyk_'-F: 3 21. 4'-, ,have,-pre'ventetl;:' 3 € } ` 3 >;g - 3$ ;�:}jtl ";`'.^ _ _ .! -°g'`°',y`�`. '4-iti-.'.:x,�'$d: ,;.Ey. r.:zez , Gt 'L 'F - r,.0•.:,•. �- ', ,r'etti`� .may a ), + e. '� a e �F€ =a i;l4:as7�..:: �a t r s t �Rl�:rlainis:'that',-;�ifferin .,hi >aer�Yi,ral�ti 'l3ert�fSi'�°:icy;' F�: ofbealit3a "t►� E �.- ,� Medicareeligible:i ti es•is tag discs urination and`st�ece s l '°:"t."'.tlieEri oui t t l#t' a J£Ei, j E ` removed: 4Senate provision ill me final conference agreeirfe f<; ieeal- he era -flit sir i . t n.:,tl e. Medicare ding_-bill that:,would .have'iermiit.df thi-1::`:in,thi set"t"o comb, € l' ° a` , o ' 1. b ' practice =::Tfie`bottottt-.line is that firefighters andl. lion c _=:=: °;< 4,,, .'_:_ _� A ::: n ',- �b r } :,4 { lilt r S%t"earlier::than'l S;some with,urzmdittary t a, • ,e. e`..Vl ,,- h 4 �,x ' �.- . ages) and teachers will lose, their employerprovided=he`' ,,represei tpublic j . M..• s -..:A;..,-o� t .e i '} s q `..i' .g . - C..,, ,. .-:- -,. iii Y to d ' 4 - '}. '.benefits until-they reach age 65 and become Medicare-eligible v. repr`;esczi retirees-�whi, . , .'wilt .eri �g ,:i ,.°% 4',.-° ... � - - .., 5 `-;fi.. .a 2,Nis d. :'- £L.3> �i they:WOO'get arts'un .the new laws: E £ ta„e ,t. •'; i 'Under` the original bill 'approved by the'.Senate employers. r .; s ; t` .. . would not: lie in violation of'the Age Discrimination Sti whgi .do 30tx ht2 N, Jn ,�.. ,< _ NCPERS, The Voice for Public Pensions December 2003/January 2004