HomeMy WebLinkAbout1992-04-30 Minutes•
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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
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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.
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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.
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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
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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.
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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.
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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.