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.
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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
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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.