HomeMy WebLinkAbout1995-07-27 Minutes•
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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.
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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.
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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.
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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.