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HomeMy WebLinkAbout1992-04-30 Minutes• • • MINUTES OF A NESTING OF THE FIRE PENSION BOARD A meeting of the Fayetteville Fire Pension and Relief Fund Board of Trustees was held on Thursday, April 30, 1992, at 11:00 a.m. in Room 362 of City Hall. PRESENT: Fireman Pete Reagan, Retirees Richard Baird and Darrell Judy, City Manager Scott Linebaugh, City Attorney Jerry Rose, Administrative Services Director Ben Mayes, and City Clerk Sherry Thomas. ABSENT: CALL TO ORDER The meeting was called MINUTES Firemen Marion Doss and Danny Farrar. to order by City Manager Scott Linebaugh. Reagan, seconded by Judy, made a motion to approve the minutes of the March 26, 1992 meeting. The motion was approved by a unanimous vote. PENSION LIST Thomas reported there were no changes on the Pension List March. Reagan, seconded by Judy, made a motion to approve Pension List as it stands from the last meeting. The motion approved by a unanimous vote. OLD BUSINESS ROY SKELTON for the was City Attorney Jerry Rose reported receiving a letter from Lamar Pettus, Attorney for Roy Skelton. Rose reiterated his previous explanation to the Board at their last meeting, regarding "normal retirement age" and his disagreement with Mr. Pettus' interpretation. If Mr. Skelton chooses to contest the Fire Pension and Relief Fund Board's requirement for a physical examination for any disability retiree who has not attained the normal retirement age, Mr. Rose stated that he would be pleased to defend the Board's position. Attorney Rose further reported that Mr. Skelton raises the issue that the Board waived the requirements because of the lapse of time and failure of the Board to make an annual request. Rose further disagreed with this position since a year has not passed since the Court determined that Skelton was eligible. In addition, Mr. Skelton questioned the Board's recommendation that he be evaluated by Dr. Tuft, requesting that they come to an agreement on a qualified doctor. Rose stated that he would be happy to inform Mr. Skelton that Dr. Tuft is a qualified • • 1 April 30, 1992 psychiatrist. Mr. Skelton's only proof of mental disability at his trial was from a general practitioner who had known him since childhood. City Attorney Rose explained that the Fire Pension Board has by vote, decided to require Roy Skelton to take the test; it would take an affirmative action on their part to change that decision. If the Board chooses to stand by their previous decision, Rose suggested that he respond to Mr. Pettus that he has also examined the law and disagrees with Mr. Skelton's position. Dr. Tuft is a board certified psychiatrist and supply Pettus with those qualifications. If Mr. Skelton wishes to litigate this decision, that they will see him in court. Otherwise, Mr. Skelton would need to report to Dr. Tuft for his examination. Reagan concurred with City Attorney Rose. He questioned Mr. Pettus' request for a certified transcript of the entire pension meeting. City Attorney Rose responded that they can give Mr. Pettus' what they have, that being minutes of the meeting. In addition, Rose stated that he didn't believe they were required by law to have a transcript of the meetings. Rose further stated that as a public meeting, Mr. Pettus and/or Mr. Skelton were also welcome to attend the Fire Pension and Relief Fund Board meetings. Linebaugh stated that last time the Board voted on a course of action to take with regard to Mr. Skelton, they asked City Attorney Rose to give his opinion from which they voted. He therefore asked City Attorney Rose to verify his opinion whether the Board requiring Skelton undergo an examination is a contestable or feasible action that the Board is taking. City Attorney Rose stated that in terms of "waste of time" or "feasibility", those are questions within the Board's purview; however, he believes that the actions of the Board have been legally correct. There were no motions to change the vote taken by the Fire Pension and Relief Fund Board to require Roy Skelton to undergo an examination by Dr. Tuft. City Manager Linebaugh stated that the previous action of the Board will stand and requested that the City Attorney counter to Lamar Pettus and further request that Skelton contact Dr. Tuft in Rogers. He suggested that Dr. Tuft's address and phone number be included in his letter to Mr. Pettus. City Manager Linebaugh asked if they had contacted Dr. Tuft advising him that Roy Skelton would be contacting him for an appointment. • • • April 30, 1992 City Clerk Sherry Thomas responded that they did not because City Attorney Rose advised that Dr. Tuft would request whatever information he saw fit. City Manager Linebaugh suggested that they write Dr. Tuft, giving him the reason for Mr. Skelton's examination, in accordance with the statute, and offer to provide any and all information that he may need. Baird stated that he believed Dr. Tuft should have some knowledge of the ongoing circumstances and problems provided by the Board because he would not get the same story or opinion from Mr. Skelton or Mr. Pettus. City Attorney Rose explained that the issue of "causation" has already been determined by the court. The only determination for Dr. Tuft to make is whether or not Roy Skelton's condition is continuing and whether or not he is able to return to work. Providing Dr. Tuft with a complete history of this case could cause the Board to be charged with "poisoning the well" against Skelton. Instead, Attorney Rose suggested that he advise Dr. Tuft of Skelton's physician, and then Dr. Tuft could request his records, if he saw fit. NEW LEGISLATIVE BILL Baird asked if a copy of the newly passed bill had been received. City Attorney Rose responded that he contacted the Legislative Council, but he has not yet heard back from them. PENSION AFFIDAVITS Reagan asked City Clerk Sherry Thomas if she has heard back from Dwayne McChristian and return of his affidavit. She responded that she had not. She has sent notification to Mr. McChristian that his May pension check would be held until he furnished her with the affidavit. NEW BUSINESS INVESTMENT REPORTS Richard Yada from Merrill Lynch addressed the Board with the current stock portfolio recap for the first quarter of 1992. The New Mexico Capital Management portfolio began the year with $2,523,000, showing $2,506,000 at the end of March. Roxbury portfolio began the year with $796,707, showing $771,407 at the end of March. The income account portfolio began the year at $2,821,624, with withdrawals of $64,000 sent back to the checking account to pay benefits leaving a balance at the end of March of $2,770,300. • • April 30, 1992 Currently, out of the $2,506,000, New Mexico Capital Management has 55% in stocks, 41% in bonds, and 4% in cash and cash equivalents. Mr. Yada explained that this was a very conservative portfolio, down .67% of 1% for the year. Yada further stated that there has not been many changes or activity in this account. Three long term treasury bonds, with a maturity date in November, 2016, were sold in March for a profit of $6,934 and $5,154. In addition, a profit of $5,600 was realized on a $100,000 U.S. Treasury bond with a maturity date of November, 1994. Yada reported that capital gains and losses show profits of $5,713 in short term and long term at $44,095, or a total profit of approximately $50,000. In addition, $15,000 in interest has been generated in the account. Long term treasury bonds are down 3.69%, and corporate bonds are down 1% for the year. Yada explained that the mixture of stocks and bonds are keeping up with the market. New Mexico Capital Management reports that they are being purchased by John Hancock Insurance Company, effective at the end of June 1992. The same staff and account managers will be handling their account. Yada stated that Merrill Lynch is comfortable with the situation, having confirmed with New Mexico Capital Management that • they are not in trouble and expect more capital behind the company. Both New Mexico Capital Management and Merrill Lynch will be submitting letters to formally advise the Board of this sale. John Hancock Insurance Company will be requiring an agreement with the Fire Pension and Relief Fund Board confirming that New Mexico Capital Management is authorized to continue to manage their portfolio. Baird asked what would happen in the event that the Board did not sign the forthcoming agreement. Mr. Yada responded that they would get their investment back, and then seek out another money manager for the portfolio. Reagan asked how New Mexico Capital Management compares to other balanced accounts. Mr. Yada responded that for the year 1991, they were average, with a risk adjusted return, and a beta at approximately 27%. Richard Yada stated that he sees no problems with this sale of New Mexico Capital Management to John Hancock Insurance Company. However, he advised that they should keep an eye on the situation and look for implementation of a new system or any big changes. The Roxbury portfolio, after being up over 40% in 1991, shows little activity at 3.18% for 1992. Standard and Poor's was down • 2.5% and Dow is up 2.84%. The Mercantile was at 1.47% at year end, and currently closed between 1.48% and 1.49%. With the introduction of a new drug, Proscar, Mercantile expects a large • April 30, 1992 profit with a substantial increase with a 3 for 1 stock split set for May 1992. Roxbury recap reflected the sale of 100 shares of Federal Home Loan Mortgage stock for a profit of $4,400, and 500 shares of Syntex stock, with an $8,800 profit. For 1992, Roxbury is realizing profits of $38,000 which will help the actuary, in addition to $3,500 in interest and dividend income. Roxbury is 97% invested with 3% in cash. The income portfolio, which started the year at $2,821,624, shows withdrawals of $27,000 in January, $17,000 in February, $20,000 in March, for a total of $64,000; April is expected at $14,000 to $17,000. Yada reported that these withdrawals are in line with those of 1991, with an average withdrawal of $20,000 for the first four months. On a time -weighted basis, money is coming out at periodic intervals, and this portfolio was up 1.10%. Yada stated that Merrill Lynch feels positive about the income portfolio which is generating a lot of income and high rates of return. He further reported that historically, the savings ratio prior to age 40 is 7%, and beyond age 40 is 23%. Yada reported Roxbury sold $100,000 of zero coupon bonds at $7,000 • and $2,500 profits. In 1991, $1,250,000 zero coupon bonds matured at which time an intermediate term maturity was selected (7 to 10 years). With fluctuating interest rates, this has proven to be a good move by locking in good rates of return on high quality bonds at 9.5% to 10%. Currently, only an 8% return could be expected. Merrill Lynch's interest rate scenario is expected to remain steady or decline for the long term. Reagan inquired about the continued loss in Occidental. Yada responded this stock fluctuates from 18 to 25. He explained that Oxy is in the midst of restructuring after having spun off IBP. In addition, gas and oil prices have contributed to the loss. Oil prices have nearly bottomed out, and it is expected that if they increase at all, this should cause the stock to go back up to a respectable level. Yada reported that Merrill Lynch didn't want to take the loss in the last half of 1991 in order to maintain the actuary report. • City Manager Linebaugh inquired about the future of the European fund and ML Lee. Mr. Yada responded that the German market has a lot of effect on the European fund, due to recession and refinancing of the East German sector. This was purchased at 15, with a current rate of 11.5, and a dividend payment of approximately 7%. The European fund is heavily weighted in Germany, causing the low rate. • • • • April 30, 1992 Yada further reported that ML Lee is likewise affected by the economy. Since this is not a publicly traded stock, there is no market. The future of ML Lee will depend upon an upswing in the economy. ML Lee has sold some securities from various department stores. Hill Department Store declared bankruptcy in 1991, has restructured their debts, and will be discharged from them in the next month or two. The rate of return is currently at 5.5%, and the long term projection is good. One-year CD rates are currently at 4%, and two-year CD rates are at 4.4% to 5.4%. Yada reported commission charges for 1991 - Roxbury with a portfolio of approximately $750,000, showed commission charges of $6,674, plus management fees of $4,719.89, for a total charge of $11,393.89 or 1.5%. New Mexico Capital Management, with a portfolio average of $2.5 million, had commission charges for 1991 of $8,243, plus a management fee of $12,474.30, for a total fee of $20,717.30, or .08 of 1%. The Income Account portfolio of $2,800,000 shows commissions charged in 1992 of $3,495.25, with an account fee of $150, for a total fee of $3,645.25. Yada reported that total commission and management fee charges for the plan are at $35,756.44. The portfolio value was at $6.1 million at the end of 1991, on a total of $6 million, the commission averages out to be .60% of 1%. ADJOURNMENT The meeting was adjourned at 11:49 a.m.