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HomeMy WebLinkAbout1991-08-29 Minutes• • • MINUTES OF A MEETING OF THE FIRE PENSION BOARD A meeting of the Fayetteville Fire Pension and Relief Fund Board of Trustees was held on Thursday, August 29, 1991, at 11:00 a.m. in Room 362 of City Hall. PRESENT: Firemen Marion Doss and Richard Baird and Darrell Linebaugh, and City Clerk Danny Farrar, Retirees Judy, City Manager Scott Sherry Thomas. ABSENT: Fireman Pete Reagan. CALL TO ORDER The meeting was called to order by City Manager Scott Linebaugh. MINUTES Linebaugh stated that a correction was needed in the July 25, 1991, minutes reflecting the amount under Investments, second column, second paragraph, at $200,000.00. In addition, Pete Reagan was not present at the meeting. Motion was made and seconded to approve the July 25, 1991 minutes as amended. The motion passed unanimously. PENSION LIST City Manager Linebaugh reported that there were no changes on the Pension List. Motion was made and seconded to approve the Pension list as it stands from the last meeting. The motion was approved by a unanimous vote. NEW BUSINESS INVESTMENTS Richard Yada addressed the Board regarding the stock performance recap from January 1, 1991 through July 31, 1991. New Mexico Capital portfolio started the year at $2,107,956.00 and at the end of July reflected $2,311,881.00, or plus 9.67%. Roxbury started the year at $566,115.00 and reflected $670,204.00 at the end of July, for a performance of plus 18.39%. Yada stated that the market is up, and as of August 27, 1991, Roxbury showed $690,000.00. The income account started the year at $2,565,153.00 and at the end of July was at $2,588,350.00, for an increase of $23,000.00. He stated that $114,000.00 was withdrawn from the income account to pay benefits. Roxbury is in line with the indices and is 97% invested. Baird asked where the money brought in through firemen and City contributions, insurance, property tax, millage, etc. was placed. • • August 29, 1991 Mayes stated that it went into the checking account at Northwest National Bank. He further explained that money brought in does not always make the payments, as funds come in at various times of the year. Excess funds are invested and withdrawn as needed. Baird stated that he would like to see a statement reflecting the money taken in. Mayes stated that the City was not affected by the Northwest National Bank takeover as the accounts are less than $100,000.00. New Mexico Capital Management portfolio at the end of July was at 7% in cash or $150,000.00; $878,000.00 in government securities; and $1.2 million in stocks. Year-to-date income summary shows interest dividends at $66,389.00. Yada stated that since Iraq invaded Kuwait, the European stocks have not performed well, but are making a comeback. Baird expressed his concern that their money is going overseas and has been showing a loss for six months. Yada responded that those stocks are traded on the New York Stock Exchange, and not all of them are down. He stated that the Roxbury Account is fully invested, showing an asset allocation of 3% cash and 97% stock. Yada reported that the asset allocation shows stocks at 35.23%; bonds at 54.12%; cash at 8.11%; and the other category is at 2%. Dividends and interest paid totalled $10,645.92. He reported that in the last two weeks, interest rates have dropped significantly, and fixed income securities have increased in value. Zero Coupon bonds currently have a profit of 20% Ben Mayes prepared a report requested by City Manager Linebaugh at the July meeting comparing the portfolio performances between the Police Pension and Relief Fund and the Fire Pension and Relief Fund Mayes reported that actuary reports are done every other year and explained the various sections of the report. He explained that to be considered actuarilly sound, 100% of the liabilities must be covered for both active member contributions and future benefits to present retirees. Beginning in 1982 when the Plan was enacted, each year 5% of active members not retired must be completely funded, so by year 2003, the fund must be completely 100% funded. In summary, until they become actuarilly sound, benefits cannot be increased. City contributions to the fund are set aside by state statute and include the state insurance turn back, property tax millage, and matching contributions to pensions (60% for Fire and 90% for Police). August 29, 1991 Mayes stated the potential reasons for the fund now being actuarilly unsound are: 1) Ten firemen retired during the 10 year period, adding approximately $2 million to accrued liability; 2) The percentage of active participant liability required to be funded increased from 25% in 1987 to 35% in 1989 and the 1991 report will reflect 45%; 3) The average salary per fireman has increased approximately 7% per year; 4) The policy of the state actuaries to compare the cost value of assets rather than market value. Further, the actuary firm was asked to quantify these reasons and they refused to do so without additional compensation. Mayes reported that for the Police Pension Plan, it was projected that they would need to maintain earnings of 6% to be actuarilly sound by the year 2003. In comparison, the Fire Plan return for 1988 was 6.71% and for 1989 was 7.94%, but the board voted not to have a similar study done. The City's matching funds were increased. Judy inquired as to whether the salary increases could be paid in lump sums so as not to affect the Plan; and Linebaugh responded that he didn't believe they could do this until they were actuarilly sound. This method was compared to giving bonuses based on profit rather than raises. ADJOURNMENT The meeting was adjourned at 11:58 a.m.