HomeMy WebLinkAbout1991-08-29 Minutes•
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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 He stated that $114,000.00 was withdrawn from the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.
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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 Excess funds are invested and withdrawn as needed.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.