Loading...
HomeMy WebLinkAbout1993-07-29 Minutes• MINUTES OF A MEETING OF THE FIRE PENSION BOARD A meeting of the Fayetteville Firemen's Pension and Relief Board was held on Thursday, July 29, 1993, at 11:00 a.m. in Room 326 of the City Administration Building, 113 W. Mountain, Fayetteville, Arkansas. PRESENT: Pete Reagan, Ron Wood, Retiree Darrell Judy, Mayor Fred Hanna, City Clerk Sherry Thomas, City Treasurer Glyndon Bunton, and Administrative Services Director Ben Mayes. ABSENT: Marion Doss and Retiree Richard Baird CALL TO ORDER Mayor Hanna called the meeting to order. MINUTES Reagan, seconded by Judy, made a motion to approve the minutes of the June 29, 1993 meeting. The motion was approved unanimously. PENSION LIST Reagan, seconded by Doss, made a motion to approve the pension list for August. There were no changes in the pension list. The motion was approved unanimously. OLD BUSINESS RICHARD BAIRD Reagan stated he had asked City Attorney Jerry Rose for an opinion regarding attendance at the pension meetings. Rose has sent the Pension Board a memo which states the pension board can set rules for attendance to the meetings. Reagan stated Richard Baird has asked Howard Boudrey to fill in for him at the meetings until he can return. However, Boudrey was upset when he was told he had no voting power on the board. Reagan stated the only way a replacement for Richard Baird would have theright tovote is, if the person were elected or appointed to fill a.vacancy created by Baird's resignation from the Board. 141 Judy stated when he talked with Richard Baird, Baird felt the board members were trying to railroad him and get him off the Board. Reagan stated that is not his intention. The retirees elected Baird as their representative just like they elected Darrell Judy. Mayor Hanna stated all of this puts the Board in an awkward position. If Baird is comfortable with getting Boudrey to fill in for him on this Board, that is okay, but Mayor Hanna agrees that Boudrey will have no voting authority. Mayor Hanna stated he feels it would be up to the retiree members of the pension fund to make July 29, 1993 a decision regarding Baird's status on the Board. Mayor Hanna asked Darrell Judy to call a meeting of the retirees and discuss this issue. Wood stated he feels Baird has every intention of coming back to this Board. Judy stated he will try and get a meeting with the retirees and get an answer for the next pension board meeting. FINANCIAL STATEMENT Mayes stated the financial statements for the year ending December 31, 1992, were completed by the auditors, Coopers & Lybrand. The City is required to furnish financial information every year to LOPFI. These financial statements use the cost basis of the investments rather than the market value like Merrill Lynch uses when they provide the Board with the portfolio valuation. Reagan asked what the administrative fee of $2,246 listed on page 3 consisted of. Mayes stated it was not city related expenses. It is the actuary and audit expenses. INVESTMENT REPORT Richard Yada, of Merrill Lynch, addressed the Board and stated on August 11 there will be another pension meeting in Little Rock to discuss the recent legislation, especially the DROP Plan. There has been a lot of confusion about how to implement this plan. Bunton asked how many active firefighters are there approaching retirement that might be interested in the DROP Plan. Reagan stated there are 2 who have expressed some interest in this plan. Reagan stated this is permissive legislation and this Board can either adopt or not adopt to offer the plan. He stated the Board needed to have all of the ground rules together and all questions answered before they vote to offer the plan. Yada stated there will be no effect from this plan on the actuarially soundness of the fund. The initial retirement amount under the DROP Plan will not be changed by any future salary increases. Judy stated he did not see the advantage of using this plan. Reagan stated he felt the Pension Board should wait until after the next public hearing before they make any decisions regarding the DROP Plan. July 29, 1993 INVESTMENT RECAP Yada stated the New Mexico Capital balance is $2.979 million. New Mexico is up 7.87% this year. Roxbury is up .82% for the year. The income account is up 4.29% for the year. Reagan asked what Yada thought about the way Roxbury was performing. Yada stated they had a great year in 1991, but not in 1992 or 93. They have had the fire pension money for about 3 years. They only have about $800,000 of the pension fund which is now valued in excess of $7 million. He recommends terminating Roxbury and allowing New Mexico Capital to handle that portion of the fund. Reagan asked if that would be an equity or balanced account. Yada stated about 1/2 would be in stocks and the other half would be fixed income. He stated by transferring the Roxbury funds to New Mexico, the pension fund would save about $1,200 in management fees per year. Restructuring the portfolio by New Mexico would cost about $1,500 to $2,000. So, there would probably be a net cost of about $1,000 to transfer between the managers. Bunton asked if the investment was in the name of Roxbury or in the City's name. Yada stated the funds were in the name of the pension fund. Yada stated there are about $20,000 in realized gains to be taken from the account. Actuarially, it would help the fund to take these gains and move the investments from Roxbury. He stated 80% of the unrealized gains can be used by the actuary. Reagan asked Ben Mayes for his comments. Mayes stated he felt the funds should be removed from Roxbury and given to New Mexico. The fund's investment policy stated they will give a money manager 3 to 5 years with the investment before making a change. Roxbury has had the money a little over three years and has not performed very well. Reagan, seconded by Bunton, made a motion to terminate Roxbury because of their performance, and reinvest the money with New Mexico Capital. The motion passed by a unanimous vote. M.L. FUTURES FUND Yada stated the "Other Investments" allocation according to the investment policy should be not more than 10%, and it is now at 2%. Yada stated Merrill Lynch has a new strategy fund called M.L. Futures. Merrill Lynch guarantees the worst that a person can do with their money is break even. He stated this is a speculative • • • July 29, 1993 type investment, but the principle is guaranteed. This can be sold every month with a 10 day notice . The most Yada stated he would recommend investing in this fund would be $100,000. He stated this investment has a negative correlation to the stock market. Reagan stated this doesn't sound too bad since the principal is guaranteed to be returned in five years. Bunton stated as diversified as the investments within this fund are, it should be okay. Reagan, seconded by Judy, made a motion to M.L. Futures fund. The motion was adopted BOARD VACANCIES invest $100,000 in the unanimously. Reagan stated he would like the Pension Board to address the problem of vacancies. He would like to get with City Attorney Jerry Rose and draft a policy that could be reviewed at the next meeting. Mayor Hanna stated he felt that would be a good idea. DROP PLAN Richard Yada stated he would try and attend the next public hearing on the DROP Plan and report on that hearing at the next Pension Board meeting. ADJOURNMENT The meeting adjourned at noon.