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HomeMy WebLinkAbout1995-07-27 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 27, 1995, at 11:00 a.m. in room 326 of the City Administration Building, 113 W. Mountain, Fayetteville, Arkansas. PRESENT: Marion Doss, Pete Reagan, Ron Wood (arrived late), Darrell Judy, Mayor Fred Hanna, and City Clerk/Treasurer Traci Paul. ABSENT: Howard Boudrey CALL TO ORDER Mayor Hanna called the meeting to order and explained that he would need to leave the meeting at 11:30 a.m. in order to attend another meeting. MINUTES Reagan, the May seconded by Judy, made a motion to approve the minutes of 25, regular meeting. The motion passed unanimously. PENSION LIST In answer to a question from Mayor no changes in the pension list. In answer to a question from Doss raises, Paul stated there were no she was not sure of the status of In answer to a question from Doss, went into effect today. Hanna, Paul stated there were regarding the volunteer's changes in the pension list and the raises. Reagan stated the State Law Mayor Hanna stated the changes should show up on for September. the pension list Doss stated that seven people would be effected by the increase. Total increases would amount to $55.00. In answer to a question from Mayor Hanna, Reagan stated the State Law did not affect any of the full paid retirees. They are all already receiving more than the minimum. Doss listed the following retired volunteers and widows that are eligible for an increase to $50.00 per month: Elizabeth Barnes, Floyd Carl Jr., Arnold Christie, Hope Lane, Wilkie Morris, Grace Polly. Each person is currently receiving $45.00 per month. Reagan asked that a letter of explanation be sent to each person. • • • July 27, 1995 Judy, seconded by Reagan, made a motion to approve the pension list with the noted changes. The motion passed unanimously. OLD BUSINESS PENSION BOARD MEMBER ELECTION Reagan stated the Board needs to vote on Ron Wood's position. Doss stated letters were mailed out requesting nominations. Ron Wood's name was submitted. Doss, seconded by Reagan, made a motion to accept the nomination of Ron Wood to serve on the Board for another two year term. The motion passed unanimously. NEW BUSINESS INVESTMENT REPORT Curtis Williams, Merrill Lynch, distributed a packet of information to each Board member. In reviewing the portfolio performance from December 31, 1994 to June 30, 1995, Richard Yada stated on December 31, 1994, New Mexico Capital was at $4.2 million and the Income Account was at $3.2 million. At the end of June, the New Mexico Account was at $4,708,090 and the Income Account was at $3,590,612. There were some withdrawals in March and April to cover some benefits. The stock market is up 20%. The Long Term Treasury Bond is up 18% and the High Grade Corporate is up 14%. The New Mexico Capital Account is up 11.30%. The Income Account is up 11.42%. Yada stated the year, so far, has been good. In reviewing the asset allocation as of June 30, 1995, Yada stated the fixed income is right about where it needs to be. Cash is a little high because of the drop in interest rates during the first part of June. The opportunity was there so profits were captured on some bonds. In answer to a question from a Board member regarding the Other section of the asset allocation chart, Yada stated Other is the MLE and the Sector Strategy Fund. Williams explained that the MLE fund is winding down. They are in the liquidation phase of that partnership. In answer to a question from Reagan, Williams stated we know what we have made up to this point. We've gotten all of our money back plus some. • • • July 27, 1995 Yada stated the asset allocation makes up about 93% of the return on the portfolio. Yada explained that it is a good time to take money out of New Mexico and put it with another growth manager. Williams stated, referring to asset allocation, we are trying to keep all of the money diversified in a way that all of the assets will not be moving in the same way at the same time. The market cannot be controlled so there should be varied asset classes that will perform differently in a given market cycle. Mayor Hanna left the meeting. Portfolio managers want to see 100% negative correlation, two investments going in the opposite direction at the same time so the target level is always being reached. Growth and value, two different investment stocks, do tend to have a negative correlation. When we came out of Roxbury, it was believed that growth was going to underperform. Now, it is time to get growth back in the portfolio. Asset allocation will remain the same. Rom Wood arrived. Yada recommended that the Board take the money given to NM Capital in 1993 and shift it back to a growth manager. Williams stated that there have been indications that growth is going to come back and be the dominant investment theme. Yada introduced Keystone as the recommended growth manager. Yada explained that Keystone has a great record. In the last 20 years, they have outperformed inflation by an average of 9%. Last year, a good year for value managers, was their only down year. Williams stated in the future, we may want to cut back down to value again. In answer to a question from Reagan, Williams stated Merrill Lynch has given their stamp of approval to Keystone. In answer to a question from Reagan, Yada stated he recommends that $1 million out of the $4.7 million in the NM Capital account should be moved to the equity manager. In answer to a question from Reagan, Yada stated we are going 80% into equities. Williams stated the bonds that Keystone will hold will do the same things that the bonds that NW Capital will hold. Williams stated when New Mexico raises the million, they will raise some of that from bonds. Our bonds position will be cut slightly and our equity position will be increased. • • July 27, 1995 We are slightly out of allocation. This will get us back in line and achieve some diversification. Yada and Williams discussed possible market projections. Yada stated the Pension Review Board changed rule #4. Yada reviewed the actuary report for 1993. Yada explained that an additional five years are allotted to pay off any unfunded liability. Starting in the year 1998, we can have 5% of our unfunded liability still uncovered and still be considered actuarily sound. Yada stated that switching some money from NM Capital to Keystone will help profits. The profits will reduce the unfunded liability. Yada discussed projected benefit payments and stated that being a little ahead in projections would benefit the actuary. In answer to a question from Reagan regarding the actuary, Yada stated there are some drafts being taken out of the checking account. The City Accounting Division said they were some kind of City investment. Paul stated she was unsure of the reason for the drafts. Yada suggested the members of the Board discuss the drafts with Emma Badgley in the City Accounting Division. In answer to a question from Reagan, Paul stated the pension payments are processed through the Accounting Division after the pension list is signed and forwarded to them. Reagan, seconded by Wood, made a motion to move $1 million over to Keystone. The motion passed unanimously. OTHER BUSINESS DROP PLAN REPORT In answer to a question from Doss regarding the work being done by the attorney hired by the Board, Reagan stated Greg Jones has been in contact with a Little Rock law firm. The request could have gone to the Oklahoma City Office of the IRS. ADJOURNMENT The meeting adjourned at 11:55 a.m.