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HomeMy WebLinkAbout1993-06-29 Minutes• • • MINUTES OF A MEETING OF THE FIRE PENSION BOARD A meeting of the Fayetteville Firemen's Pension and Relief Board was held on Tuesday, June 29, 1993, at 10:00 a.m. in Room 326 of the City Administration Building, 113 W. Mountain, Fayetteville, Arkansas. PRESENT: Marion Doss, Pete Reagan, Ron Wood, Retiree Darrell Judy, Mayor Fred Hanna, City Clerk Sherry Thomas, City Treasurer Glyndon Bunton, LaGayle McCarty, Assistant City Attorney, and Martha Lindsey, Finance Department. ABSENT: Retiree Richard Baird CALL TO ORDER Mayor Hanna called the meeting MINUTES Reagan, seconded the June 3, 1993 PENSION LIST to order. by Judy, made a motion to approve the minutes of meeting. The motion was approved unanimously. Reagan, seconded by Doss, made a motion to approve the pension list for July. There were no changes in the pension list. The motion was approved unanimously. OLD BUSINESS NEW LEGISLATION REPORT Reagan asked to comply with Act 1197 of 1993 does the fund have to be actuarially sound to increase the minimum benefit. McCarty stated that it does not have to be. The act merely increases the minimum amount for both volunteer and full time retirees with all other regulations staying the same. Reagan asked regarding the Drop Plan, if a firefighter has in 20 years of service and opts for this plan, 1/2 of his salary goes into the trust fund, does the city's share continue to be paid? McCarty stated that it would continue to be paid. Reagan asked Mayor Hanna if the City would continue to pay 12% or would they pay only 6%. Mayor Hanna stated he did not know, but suggested Reagan get with Ben Mayes and/or Personnel Director Don Bailey to determine this answer. Reagan stated the Fire Pension Board needs to meet on this Drop Plan and decide if Fayetteville will participate in this plan and if so, guidelines for participation need to be established. He suggested a workshop be set up to discuss this plan. • • • Doss stated the should also be person chooses goes to a trust level and not McCarty stated passed. June 29, 1993 long range effects on the pension fund of this plan considered. He asked if after working 20 years, a to participate in this plan and 50% of his salary fund, will his retirement benefit be frozen at that take into consideration future pay increases. that issue was not addressed in the act that was Mayor Hanna stated he would ask Ben Mayes to research this it can be discussed further at the next pension meeting. RICHARD BAIRD act so Darrell Judy stated he had contacted Richard Baird, and Baird wants to continue to be a member of the Board. He would like for Howard Boudrey to fill in for him until he is able to attend the meetings himself. GARY SPRINGSTON TERMINATION Reagan asked if Gary Springston withdrew his pension contributions from the fund. Thomas stated Springston did withdraw. She prepared a check request withdrawing the pension in the amount of $14,980.60 which is the total of his contributions during the time he was a firefighter. NEW BUSINESS ROXBURY INVESTMENT REPORT Richard Yada and Curtis Williams of Merrill Lynch were both present, and they introduced Katie Hayden who is with Roxbury Investments and was present to give a report on the Roxbury portfolio. Ms. Hayden gave the pension board a brief history of the company which was founded in 1986 but was founded by Tony Browne and Harry Wilson, both of whom have many years' experience in the investment business. The company manages $1.2 billion, has 7 institutional clients and 119 individual clients. There are 22 employees and 5 owners. Ms. Hayden stated Roxbury buys stocks that are selling below the worth of the company. Roxbury combines both growth and value in the same portfolio. They look to invest in companies that maintain a constant earning stability and return money in the form of dividends. Roxbury invests in basically 50 stocks, and they do research and personally visit each of the 50 companies in which they invest. She stated the portfolio consists of between 30-60% blue chip stocks, 20-40% small to medium stocks, and about 20% in specialized stocks. • • • June 29, 1993 Ms. Hayden stated Roxbury does have a sell discipline that when prices decline 15% from their high or cost, they look to see if the stock should be sold. In the last 10 years, compared with 31 other managers, Roxbury has been in the top 10% of the managers. They have outperformed their peers since 1983 by 5.7%. Roxbury has reworked the client portfolios to try and do the best in today's economy. Roxbury is seeking to invest in the types of securities that are not sensitive to interest rate changes. They do feel interest rates will remain low for some time to come. Reagan stated for the past 1 and 1/2 years, the pension fund portfolio has been down compared to the rest of the market. He asked for an explanation of this from Ms. Hayden. Ms. Hayden stated when Roxbury started with the account in 1990, the market was down. In 1991, the market was up, and they earned about 42% interest. Roxbury realized the portfolio needed to be changed to deal with the recession because the companies that had been performing well would not continue to do so. Since Roxbury has had the account, the pension fund has had about an 11.7% return. She stated January and February were terrible, but they have had a good month and expect to have good quarter. The market is up about 3.5% year to date, and the portfolio is up about 1%. Reagan stated he was concerned about the length of time it was taking to reposition the portfolio. Ms. Hayden stated Roxbury buys stocks in blocks, and if they sold huge blocks of stock at one time, it could drive down the value of the stock. So, they slowly reposition the stocks to keep from losing value. Reagan asked what percentage of growth they are aiming at for 1993. Ms. Hayden stated she does not know because of all of the uncertainty in the market and economy. They hope to have a growth rate between 15 and 18%. Richard Yada stated Wal Mart was down 20% since January, which indicates growth is down in the majority of areas of the stock market. Ms. Hayden stated retailers are hurting right now. She feels the pension fund portfolio is about 92% restructured. Yada stated as of yesterday, the fund was actually up for the year. Curtis Williams asked if Roxbury does economic forecasting. Ms. Hayden said they did do some forecasting. Roxbury studies a certain stock selection which leads them into industry study of • June 29, 1993 that particular sector. She stated Roxbury's long term record has been better than the market. Since inception of the account with Roxbury, which was March 31, 1990, the pension fund has had an 11.3% annualized average rate of return. Williams explained that an ADR, or an American Depository Receipt, was a foreign based company that is listed on the American stock exchange. An example of this is Nestle's, which is a Swiss company. At Merrill Lynch, they are trying to get the portfolio at 20% in foreign stocks. The United States now only consists of about 35% of the world economy as opposed to the 65% that we used to represent. Glyndon Bunton asked with the small to medium sized stock companies, when does Roxbury expect to see gains. Ms. Hayden stated the fear of inflation has caused these stocks to decline. One of these companies, Alza Corporation, as of yesterday, only had a relatively small loss. They are a drug delivery system company, and they should be able to do ok in the market. ADJOURNMENT • The meeting adjourned at 11:10 a.m. •