The URL can be used to link to this page

Home My WebLink About1996-12-04 - Agendas - Final• FAYETTEVI LLE OrHE CITY OF FAYETTEVILLE, ARKANSAS TRACI PAUL, CITY CLERK ..J TO: FROM: DATE: SUBJECT: Firemen's Pension Board Members Traci Paul, City Clerk/Treasurer December 4, 1996 Firemen's Pension Board Meeting The next Firemen's Pension Board meeting is Thursday, December 12, 1996, at 11:00 a.m., in room 326 of City Hall. Attached, please find a copy of the agenda for the upcoming meeting, the minutes from the October 31 meeting, and the pension list for December, 1996 -and January, 1997. - Attachments 113 WEST MOUNTAIN 72701 501 575-8323 AGENDA FIREMEN'S PENSION AND RELIEF BOARD 1. Approval 2. Approval approval December 12, 1996 11:00 a.m. City Hall Room 326 of the minutes of October 31, 1996. of Pension List of Pension List for December 1996 AND for January 1997. 3. Investment Report, Merrill Lynch 4 Old Business 5 New Business APFIhAVITS / 14 our reEPOrer ON Cr. IOL.LY 6 Adjournment • MINUTES OF A MEETING,OF THE FIRE PENSION BOARD A meeting of the Fayetteville Firemen's Pension and Relief Board was held on Thursday, October 31, 1996, at 11:00 a.m., in room 326, of the City Administration Building, 113 W. Mountain, Fayetteville, Arkansas. PRESENT: Mayor Hanna, Pete Reagan, Darrell Judy, Marion Doss, Ron Wood, and City Clerk/Treasurer Traci Paul ABESENT: Howard Boudrey CALL TO ORDER Mayor Hanna called the meeting to order. MINUTES Reagan moved to approve the minutes of the September 26, 1996, meeting. Wood seconded. The motion passed unanimously. PENSION LIST Paul reported no changes. Reagan moved to approve. Doss seconded. The motion passed unanimously. OLD BUSINESS BENEFIT INCREASE REQUEST Doss referred to a letter about the request for the increase. The gist of the letter was that the method they used had failed. He stated they did not use the cash-flow method, as had been requested, and had billed for the normal method. He had called them about it, and they will do it for an additional $850. He had not been aware it would cost more. There was discussion as to whose mistake this was. Reagan moved to spend the additional $850 for this. Doss seconded. The motion passed unanimously. Reagan offered to write the actuary a letter to find out what instructions they had received. • • t October 31, 1996 INSURANCE TURNBACK CHECK - LOSS OF INTEREST Reagan referred to a letter he'd written to Arnold Feller, Chairman, Pension Review Board, regarding the loss of interest due to delays in notification. He stated he would like to ask Mr. Feller to proceed in trying to recoup some of the interest lost. Reagan moved to do this. Doss seconded. Doss stated the reason they didn't do it, was our board's noncompliance. Reagan stated he'd attended the July 11 meeting and had received a variance. He read page 11 of the PRB minutes which showed that Fayetteville Fire was not to be penalized and would receive the money, as they were making an effort to come into compliance. He also had a copy of a memo sent from Kathryn Hinshaw requesting the release of the funds two months after the July 11 meeting. The vote on the motion was unanimous. Later in the meeting, Ben Mayes stated the interest lost would depend on the rate used. If it'd been in the investment manager's hands, he'd have earned 100. The board should look at having Merrill Lynch give an estimate of what they lost based on the other earnings. He would ask the City Attorney if there is a rate commonly used in Arkansas to award penalties; but the board could begin by asking for what they truly feel was lost, then negotiate down if necessary. Mayes reported, after conferring with City Attorney Rose, that the Arkansas judgement interest rate is 10%. NEW BUSINESS INSURANCE TURNBACK CHECK - INVESTMENT Reagan referred to a memo from Ben Mayes dated October 11, which referred to the State insurance turnback. He understood that Mayes was recommending transferring $140,000 of the $146,000. Reagan also questioned the numbers for the November and December employee and employer contributions, which were lower than October. Mayes stated there may have been three payrolls in October. Mayes confirmed he was recommending the $140,000 transfer. We try to keep three months, at the most, of benefit payments easily available. The motion to do this is recorded below. • October 31, 1996 INVESTMENT REPORT • Curtis Williams, Merrill Lynch, gave the report. Each account has grown this year. Both equity accounts are under -performing the equity indexes. The cautious view of the market is costing performance. The income account has a positive rate of return thus far this year. We are outperforming the indexes on the fixed income account. Reagan asked for the global investments to be shown on the report as part of the income account. Williams replied this is difficult to do initially. We are up $5,643 on the initial global transaction. We are down $1,887 on the second commitment and are up $4,443 on the third commitment. We are in the process of making the fourth one. They will be tracked separately. He would talk to Richard Yada about getting these on the report. Reagan asked if the recommendation was to put $140,000 of the insurance turnback into fixed income. Williams responded it was. It would be consistent with the asset allocation. Reagan moved to move the $140,000 of the $146,000 to Merrill Lynch for the income account. Wood seconded. The motion passed unanimously. ADJOURNMENT The meeting adjourned at 11:40 a.m. FIREMEN'S RELIEF AND PENSION FUND DECEMBER 1996 TRACI PAUL, TREASURER •THE FOLLOWING ARE THE OBLIGATIONS OF THE FIREMEN'S RELIEF FUND FOR THE MONTH OF DECEMBER 1996. YOU ARE HEREBY INSTRUCTED TO ISSUE CHECKS TO THE _../ PAYEES, IN THE AMOUNTS SHOWN, AND FOR THE PURPOSE SO STATED. EMP# NAME 43 BAIRD, RICHARD H. 2 BLACKARD, PAUL 63 BOLAIN, ANN 44 BOUDREY, BETTY MRS. 45 BOUDREY, HOWARD 49 BOUDREY, JACK 4 CARL, FLOYD JR 5 CASELMAN, ARTHUR 57 CATE, ROY 6 CHRISTIE, ARNOLD 8 COUNTS, WAYNE 61 DAVIS, BEULAH F. 10 DEARING, EMMA MRS. 11 FARRAR, ALONZO 38 FRALEY, JOSEPH G. 33 HARRIS, BILL C. 34 HARRIS, JAMES E. 64 JORDAN, CHARLIE 47 JUDY, DARRELL 37 KING, ARNOLD D. 54 KING, ARVIL 12 LANE, HOPE MRS 13 LAYER, MERLIN 14 LEE, HAROLD 51 LEWIS, CHARLES 60 LEWIS, MARVIE 55 LEWIS, ROGER 40 LOGUE, PAUL D. 50 MASON, LARRY 39 MC ARTHUR, RONALD A. 35 MC CHRISTIAN, DWAYNE 15 MC WHORTER, CHARLES 29 MILLER, DONALD 42 MOORE, JAMES H. 17 MORRIS, WILKIE MRS. 16 MORRIS, WILLIAM H. 62 MORRISON, ELIENE 48 MULLENS, DENNIS W. 58 OSBURN, EDWARD 46 OSBURN, TROY 53 POAGE, LARRY 20 POLLY, GRACE A. MRS. 22 REED, JOE 30 SCHADER, EARVEL 41 SCHADER, TROY 23 SKELTON, BURL L. 24 SKELTON, LEE 56 SKELTON, ROY 36 SPRINGSTON, CARL 25 STOUT, ORVILLE 27 TUNE, MILDRED MRS. 26 TUNE. BILLIE SUE GROSS FED. TAX ST. TAX NET 916.20 100.00 55.00 55.00 1,266 21 180.00 1,066.66 837.68 287 68 50.00 75,00 909.50 50.00 55,00 377.50 50.00 707.84 953.38 100.00 55.00 55.00 1,192.17 837.68 828.42 100.00 1,131.00 130.00 50.00 417.50 55.00 837.68 439.16 439.17 1,469.38 175.00 829 35 29.35 891 62 100 00 55.00 30.00 885.14 50.00 863.01 125.00 55.00 50.00 65.00 70.00 1,114.11 1,284.63 160.00 965.81 65.81 1,201.98 - 200.00 50.00 55.00 915.78 783.74 20.00 692.50 42.50 390.00 1,626.02 126.02 609.88 590.36 50.00 70.00 70.00 81620 55.00 55.00 1,086.21 1,066.66 50,00 500.00 50.00 75.00 909.50 50.00 55.00 377.50 50.00 707.84 10.00 843.38 55.00 55.00 1,192.17 837 68 10.00 718.42 1,001.00 50.00 41750 55.00 837.68 439.16 439.17 20.00 1,274.38 800.00 791.62 25.00 835.14 738.01 55.00 50.00 65.00 70.00 1,114.11 1,124.63 900.00 30.00 971.98 50.00 55.00 915.78 763.74 650.00 390.00 50.00 1,450.00 609.88 540 36 70.00 70.00 • • 28 WATTS, DONALD 59 WATTS, WAYNE 52 WRIGHT, RANDALL 400.00 921.17 877.68 96.17 150.00 400.00 825.00 727.68 31,614.91 2,317.53 170.00 29,127.38 WE, THE UNDERSIGNED, DO SOLEMNLY SWEAR THAT THE ABOVE OBLIGATIONS ARE JUST AND CORRECT; THAT NO PART THEREOF HAS BEEN PREVIOUSLY PAID; THAT THE PENSION PAYMENTS SO CHARGED ARE IN ACCORDANCE WITH THE ACTIONS OF THE BOARD OF TRUSTEES OF THE FIREMEN'S RELIEF AND PENSION FUND; THAT THE SERVICES OR SUPPLIES FURNISHED, AS THE CASE MAY BE, WERE ACTUALLY RENDERED OR FURNISHED; AND THAT THE CHARGES MADE THEREFORE DO NOT EXCEED THE AMOUNT ALLOWED BY LAW OR THE CUSTOMARY CHARGE FOR SIMILAR SERV! • ES OR SUPPLIES SECRETARY CHAIRMAN ND PRESIDENT ACKNOWLEDGEMENT STATE OF ARKANSAS ) COUNTY OF WASHINGTON) )SS SWORN TO AND SUBSCRIBED BEFORE ME THIS w DAY OF DeceFIAer, 1996. PUBLICW Ai / N Y MY COMMISSION EXPIRES: 3-/ • d .. FIREMEN'S RELIEF AND PENSION FUND JANUARY 1997 TRACI PAUL TREASURER •THE FOLLOWING ARE THE OBLIGATIONS OF THE FIREMEN'S RELIEF FUND FOR THE MONTH OF JANUARY 1997. YOU ARE HEREBY INSTRUCTED TO ISSUE CHECKS TO THE `-- PAYEES, IN THE AMOUNTS SHOWN, AND FOR THE PURPOSE SO STATED. • EMP# NAME 43 BAIRD, RICHARD H. 2 BLACKARD, PAUL 63 BOLAIN, ANN 44 BOUDREY, BETTY MRS. 45 BOUDREY, HOWARD 49 BOUDREY, JACK 4 CARL, FLOYD JR 5 CASELMAN, ARTHUR 57 CATE, ROY 6 CHRISTIE ARNOLD 8 COUNTS, WAYNE 61 DAVIS, BEULAH F. 10 DEARING, EMMA MRS. 11 FARRAR, ALONZO 38 FRALEY JOSEPH G. 33 HARRIS, BILL C. 34 HARRIS, JAMES E. 64 JORDAN, CHARLIE 47 JUDY, DARRELL 37 KING, ARNOLD D. 54 KING, ARVIL 12 LANE, HOPE MRS 13 LAYER, MERLIN 14 LEE, HAROLD 51 LEWIS, CHARLES 60 LEWIS, MARVIE 55 LEWIS, ROGER 40 LOGUE, PAUL D. 50 MASON, LARRY 39 MC ARTHUR, RONALD A. 35 MC CHRISTIAN, DWAYNE 15 MC WHORTER, CHARLES 29 MILLER, DONALD 42 MOORE JAMES H. 17 MORRIS, WILKIE MRS. 16 MORRIS, WILLIAM H. 62 MORRISON, ELIENE 48 MULLENS, DENNIS W. 58 OSBURN, EDWARD 46 OSBURN, TROY 53 POAGE, LARRY 20 POLLY, GRACE A. MRS. 22 REED, JOE 30 SCHADER, EARVEL 41 SCHADER, TROY 23 SKELTON, BURL L. 24 SKELTON, LEE 56 SKELTON, ROY 36 SPRINGSTON, CARL 25 STOUT, ORVILLE 27 TUNE, MILDRED MRS. 26 TUNE, BILLIE SUE GROSS FED. TAX 916.20 55 00 55.00 1,266.21 1,066.66 837.68 50.00 75.00 909.50 50.00 55.00 377.50 50.00 707.84 953.38 55.00 55.00 1,192.17 837 68 828.42 1,131.00 • 50.00 417.50 55.00 837.68 439.16 439.17 1,469.38 829.35 891.62 55.00 885.14 863.01 55.00 50.00 65.00 70.00 1,114.11 1,284.63 965.81 1,201.98 50.00 55.00 915.78 783.74 692.50 390.00 1,626.02 609.88 590.36 70.00 70.00 ST. TAX NET 100.00 816.20 55.00 55.00 180.00 1,086.21 1,066.66 287 68 50.00 500.00 50.00 75.00 909 50 50.00 55.00 377.50 50.00 707.84 100.00 10.00 843.38 55.00 55.00 1,192.17 837 68 100.00 10.00 718.42 130.00 1,001.00 50.00 41750 55.00 837.68 439.16 439.17 175.00 20.00 1,274.38 29.35 800 AO 100 00 791.62 30.00 25.00 50.00 835.14 125.00 738.01 55.00 50.00 65.00 70.00 1,114.11 160.00 1,124.63 65.81 900.00 200.00 30.00 971.98 50.00 55.00 915.78 20.00 763.74 42.50 650 00 390 00 126.02 50.00 1,450.00 609.88 50.00 540.36 70.00 70.00 • • 28 WATTS, DONALD 59 WATTS, WAYNE 52 WRIGHT, RANDALL 400.00 921.17 877.68 96.17 150.00 400.00 825.00 727.68 31,614.91 2,317.53 170.00 29,127 38 WE, THE UNDERSIGNED, DO SOLEMNLY SWEAR THAT THE ABOVE OBLIGATIONS ARE JUST AND CORRECT; THAT NO PART THEREOF HAS BEEN PREVIOUSLY PAID; THAT THE PENSION PAYMENTS SO CHARGED ARE IN ACCORDANCE WITH THE ACTIONS OF THE BOARD OF TRUSTEES OF THE FIREMEN'S RELIEF AND PENSION FUND; THAT THE SERVICES OR SUPPLIES FURNISHED, AS THE CASE MAY BE, WERE ACTUALLY RENDERED OR FURNISHED; AND THAT THE CHARGES MADE THEREFORE DO NOT EXCEED THE AMOUNT ALLOWED BY LAW OR THE CUSTOMARY CHARGE FOR SIMILAR SERVICES OR SUPPLIES. kin 1 SECRETARY CHAIRMAN AN RESIDENT ACKNOWLEDGEMENT STATE OF ARKANSAS ) COUNTY OF WASHINGTON) )SS /99J6 SWORN TO AND SUBSCRIBED BEFORE ME THIS ,j 4( DAY OF Levn,jir ,49977 NOTUBGe MY COMMISSION EXPIRES' 3 -/-.00.5" 100-14 Manual Check ■ 0 z c N' to m H '1 J Send copy to: ■ 1 4 • • \, U Y0 0 Amount of Check Fund Name -W 4-) ri•• 0 0+ U4) id Z $4v 14 4_,°a 0040 O'nro' i 0 ..,04 0ZU•H 0a 0 ssl a CC ❑ a 04 ❑ ❑ a 0' c .r4 N S1 G) U v v • S+ CP A C E ✓ z o ar U a 4 U U a 0 Prepared by Approved by Account Number Sub Project Project rI mti V m 0 C L A) N A m t./� c IS Sub Dept a A" C , Q 7 9 C a v Amount Ir t Account Name iT IL L 4 II U: 4 2L Gr li IJ. 1 v. f 0' c .r4 N S1 G) U v v • S+ CP A C E ✓ z o ar U a 4 U U a 0 Prepared by Approved by 7 - OCT -09-96 WED 14:16 P / P.01 • ARKANSAS LOCAL POLICE & FIRE RETIREMENT SYSTEM ARKANSAS FIRE & POLICE PENSION REVIEW BOARD From: Date: Time: FAX TRANSMITTAL 11-76/4 ei /tat -, ori" -est ,...9� Ace ( G' jO. flA Union National Ptaza l24 W. Capitol, Suite 940 Link ROCK. Arkansas 72201 P.O. BOX 34.164 Utile Rock. Arkansas 72203 Telephone (50 11682.1745 FaX: (501) 682.1751 Please Deliver the Following Pages To: Name: Oka/ Metkie4 g Company: f ettAc 4iuC ilLC _ LJ64L 501 --51)5--0y51 FAX#: Message: 4444,,dzazt flaw. rairlecksza) R•50_ `mak F A.J-4t. QtQ 'fl .B 114-4 l upi tit an Shim .s_0 CLQ a itle- If transmission is incomplete, please call (501) 682-1745. FAX number is (501) 682-1751. 04- 4,4‘4.1 ( PA2,1it ILC -A40 / 4 t fa & Our OCT• 3 1 1996 ` CLEF., 1 • wi-UU-8b WED 1U:2b • •Osborn, Carreiro & Associates, Inc. ACTUARIES • CONSULTANTS • ANALYSTS October 9, 1996 Mrs. Cathym Hinshaw, Executive Director Arkansas Fire and Police Pension Review Board One Union National Plaza, Suite 940 124 West Capitol Avemre Little Rock, Alt 72201 RE: Fayetteville Firefighters Benefit Increase Proposal Dear Cathym: Attached please find two benefit increase proposal letters for the Fayetteville Firefighters Pension Fund. These are the standard format for benefit increase proposal letters The request from the pension fund asked for a cash flow valuation to show the soundness of the proposals, but they were initially billed for two "standard format" proposals (.e. $600 for thel,first, $300 for a second and $75 prornshw). Since this is what we received we decided to first try the benefit increases using the regular tests for actuarial soundness. As you can see, the 65% proposal did not pass the fimded percentage test. The 60% proposal came close but did not quite tneet the funded percentage test. This leads me to thank that the 60% proposal would past on a cash flow valuation and the 65% proposal might pass. P.02 One Union National flaza,5une 1690 174 West Capital Avenue Lmie Rock. A 722D1 (501)376.8043 Our normal fee for a cash flow valuation is $1,750 as you know. Since we have already completed this work and have been paid $900, I think it would be fair to charge $1,000 extra to complete a cash flow valuation. Please let me know how we should proceed. i If you have any questions or comments, please let me know. Sincerely, 411 Iody Carreiro, A.S.A , MAAA Associate Actuary • WI -08-86 WEI) IU:'db • P. 03 Osborn, Carreiro & Associates, inc. ACTUARIES • CONSULTANTS • ANALYSTS City of Fayetteville Firemen's Relief and Pension Fund PROPOSAL TO INCREASE RETIREMENT BENEFITS The cost of this proposal is calculated using the same methods, assumptions, tnd data as were used in the December 31, 1995 actuarial valuation. "Previous befit provisions" [afar to the provisions in effect on December 31, 1995. Proposal 1: Increase the basic formula for fiuI-paid firefighters from 50% of Final Salary to 65% ofFinal Salary (the additional amount for service over 20 years is unchanged), and change the basic formula for volunteer firefighters to a $55/mo. base. Increase due Previous After Proposal 1 to Proposal Paid Volunteer Paid Volunteer aid Volunteer Normal Cost $ 201,692 S 0 $ 259,344 $ � 0 $ 57,652 $ 0 Unfunded Accrued Liab_ Active Lives 12,320 0 107,461 i 0 95,141 0 Retired Lives 0 0 230,560 2463 230,560 2,263 Total . $ 214,012 $ 0 $ 597,365 $ 2463 $ 383,353 5 2,263 Less Member Contrib. - 40,611 0 - 40,611 0 0 0 Net Employer Contrib. $ 173,401 $ 0 $ 556,754 $ 2,263 $ 383,353 $ 2,263 I Employer Rate 25.6% 82.3% 56.7% Short Condition Test Computed Actuarial Liabilities (1) Active Member Contrib. Previous 418,412 Proposed 418,412 Sincerely, Steve Osborn, F.S.A. • Actuary (2) Retirees and Inactives 5,101,995 6,595,951 (3) Actives -Employer Financed 3,525,576 4,671 523 October 3, 1996 Valuation Assets Portion of Liabilities Covered by Assets (1) (2) (3) Funded Percent 8,897,591 100% 100% 96% 98.4% 8,897,591 100% 100% 40% 76.1% • 017=U9-96 WEU 10:25 P.04 Osborn, Carreiro & Associates, Inc. ACTUARIES • CONSULTANTS • ANALYSTS City of Fayetteville Firemen's Relief and Pension Fund PROPOSAL TO INCREASE RETIREMENT BENEFITS The cost of this proposal is calculated using the same methods, assumptions, �nd data as were used in the December 31, 1995 actuarial valuation. "previous benefit provisions" refer to the provisions in effect on December 31, 1995. proposal 2 • Increase the basic formula for full -paid firefighters from 50% of Final Salary to 60% of Finial Salary (the additional amount for service over 20 years is unchanged), and change the basic formula for volunteer firefighters to a $55/mo. base. Normal Cost Unfunded Accrued Liab. Active Lives Retired Lives Total • Less Member Contrib. Net Employer Contrib. Employer Rate Previous After Proposal j Paid Volunteer Paid Volunteer $ 201,692 $ 0 $ 239,394 $ i 0 $ 37,702 $ 0 12,320 0 77,626 1 0 65,306 0 0 0 153,706 2,263 153,706 2,263 $ 214,012 $ 0 $ 470,726 $ 2,263 $ 256,714 $ 2,263 Increase due to Proposal Paid Volunteer - 40,611 0 - 40,611 $173,401 $ 0 $ 430,11$ 25.6% 63.5% Short Condition Test Computed Actuarial Liabilities (1) Active Member Contrib. Previous 418,412 Proposed 418,412 Sincerely, Steve Osborn, F.S.A. • Actuary (2) (3) Retirees Actives and Employer Inactives Financed 5,101,995 3,525,576 6,102,299 4,312,175 October 3, 1996 0 0 $ 2,263 $ 256,714 37.9% Portion of Liabilities Covered by Assets Valuation (1) Assets 8,897,591 $ 2,263 (2) (3) Funded Percent 100%. IO0% 96% 98.4% 8,897,591 100%. 100% 55% 82.1% NOV-22-96 FRI 16:29 0 • • Ylito•PAir a- g'. If -l- SA- 5'75-8as7 Date: PtOve44 %ef t)a/ I55� STATEMENT For Actuarial Services city: Faye;(1 P.01 TYPE OF FUND Police Paid Fire Paid/Volunteer Fire Volunteer Fire ' ()Standard ()Non -Standard ()Standard ()Non -Standard ()Standard (�QNon-Standard I ()Standard ()Non -Standard Actuarial Fee: "processing Fee: Total Fee: $ 85D (zdit Swft( tea P4 $ $ gsQ • PLEASE MARE CHECKS PAYABLE TO: ARKANSAS LOCAL POLICE & FIRE RETIREMENT SYSTEM SEND ALL INFORMATION AND CHECK TO: ARKANSAS FIRE & POLICE PENSION REVIEW BOARD P.O. DRAWER 34164 LITTLE ROCK, ARKANSAS 72203 a • MINUTES OF A MEETING OF THE FIRE PENSION BOARD A meeting of the Fayetteville Firemen's Pension and Relief Board was held on Thursday, October 31, 1996, at 11:00 a.m., in room 326, of the City Administration Building, 113 W. Mountain, Fayetteville, Arkansas. PRESENT: Mayor Hanna, Pete Reagan, Darrell Judy, Marion Doss, Ron Wood, and City Clerk/Treasurer Traci Paul ABESENT: Howard Boudrey CALL TO ORDER Mayor Hanna called the meeting to order. MINUTES Reagan moved to approve the minutes of the September 26, 1996, meeting. Wood seconded. The motion passed unanimously. PENSION LIST Paul reported no changes. Reagan moved to approve. Doss seconded. The motion passed unanimously. OLD BUSINESS BENEFIT INCREASE REOUEST Doss referred to a letter about the request for the increase. The gist of the letter was that the method they used had failed. He stated they did not use the cash-flow method, as had been requested, and had billed for the normal method. He had called them about it, and they will do it for an additional $850. He had not been aware it would cost more. There was discussion as to whose mistake this was. Reagan moved to spend the additional $850 for this. Doss seconded. The motion passed unanimously. Reagan offered to write the actuary a letter to find out what instructions they had received. November 19, 1996 City Clerk of Fayetteville 113 West Mountain Street Fayetteville, AK 72701 Dear Sir or Madam: KEYSTONE INVESTMENTS CEIVED NOV a 6 1996 CITY CLERK'S OPFICE In anticipation of the upcoming merger between First Union and Keystone, we are legally obligated by the Securities and Exchange Commission (SEC) to mail out the enclosed notification to you with respect to your investment management agreement with us. It is important for you to note for you to note that no action is required on your part in order to maintain your existing investment contract with Keystone. Should you have any qustions, please let us know. Sincerel Andrew Baldassarre Vice President & Portfolio Manager cc: Mr. Curtis Williams Mr. Richard Yada 8 s _ 200. Berkeley Street, Boston, Massachusetts 02116-5034 Phone: (617) 210-3200 November 19, 1996 Dear Client: KEYSTONE INVESTMENTS Albert H. Elfner, III CFA Chairman Chief Executive Officer and President Keystone Investments, Inc. I am writing to remind you of an important announcement regarding Keystone Investments, Inc. Keystone Investments, Inc. has reached an agreement with First Union Corporation ("First Union") pursuant to which Keystone Investments, Inc. will be acquired by First Union National Bank of North Carolina ("FUNB-NC") through the merger of Keystone Investments, Inc. with and into a subsidiary of FUNB-NC, subject to the satisfaction of certain conditions. Keystone Investments, Inc. is the parent corporation of Keystone Investment Management Company, which serves as the investment manager or is an affiliate of the invest- ment manager for your account. It is currently expected that the acquisition will close on December 11, 1996. We believe First Union's added support will enhance Keystone's ability to pursue its goals of excellence in investment management. First Union is the sixth largest bank holding company in the nation with assets of approximately $140 billion. The Capital Management Group of First Union manages or otherwise oversees the investment of over $34 billion in assets of institutional clients, including pension funds and endowments, and individuals. Further information regarding First Union is available upon request. We believe the combi- nation with First Union will be highly beneficial to all of our clients. After completion of the acquisition, your account will be managed by Keystone Investment Management Company, and there will be no change in the investment disciplines used by Keystone Investment Management Company in its management of your account. In addition, the investment philosophy, client services and the supervision of your account are expected to remain the same. The acquisition by First Union, if consummated, may be deemed an "assignment" of your investment adviso- ry agreement within the meaning of the Investment Advisers Act of 1940, and therefore your consent to the agreement is required in order for Keystone Investment Management Company to manage your account. If we do not hear to the contrary from you prior to December 11, 1996, Keystone Investment Management Company will provide investment management services for your account, and exercise the same authority heretofore granted to the investment manager of your account, subject to your right to terminate your invest- ment advisory agreement at any time within 45 days after the consummation of the acquisition, without cost to you, by notifying us in writing before the end of that 45 day period of your desire to terminate the invest- ment advisory agreement. If Keystone Investment Management Company has not received such notice from you during that period, you will be deemed to have consented to the assignment of the investment advisory agreement and the continuation of its services thereunder. We highly value our relationship with you and believe the acquisition to be a positive event in helping to meet your investment needs. Please feel free to telephone us regarding this change in ownership or about your portfolio. We look forward to continuing to serve you, and we thank you for your continued confi- dence. Sincerely, t. " Albert H. Elfner, III 200 Berkeley Street, Boston, Massachusetts 02116-5034 Phone: (617) 338-3404, Fax: (617) 338-3468 DEC -10-96 TUE 14:37 • pl P, 01 ARKANSAS FIRE & POLICE PENSION REVIEW BOARD • December 10, 1996 Board of Trustees Firemen's Pension and Relief Fund C/0 The Honorable Fred Hanna City of Fayetteville 113 W. Mountain Fayetteville, AR 72701 Fax: 501-575-8257 '501-575-0471 (Chief Marion Dear Board of Trustees: We are in receipt of your benefit increase 1996,' in which you ask that the Arkansas Fire an Board consider a request to increase base benefi to 65t of final salary, and increase benefits td and the widows of volunteer fire fighters to a _. pursuant to Board Rule #4 and a cash flow study. P.O. DRAWER 34T64 Lrrri Root. ARKansas 72203 TELEPHONE(50T)682-1745 Fax (501) 682-1751 oss) equest of July 25, Police Pension Review s to paid fire fighters volunteer fire fighters nimum of ,$55/month, Enclosed please find the cash flow study, prepared by Osborn, Carreiro, and Associates. On pages 1 and 2 of the report, you will find the opinion of Mr. Jody Carreiro, an actuary to the Pension Review Board, In his opinion, Mr. Carreiro finds that Lhhe cash flow projections show that the fnnA would be actuarially sound based on Arkansas Fire and Police Pension Review Board Rule #4 if minimum benefits were increased as described above. Therefore, I certify that this benefit increase may be granted, and that the Fayetteville Fire Pension Fund is now iii compliance with laws governing benefit increases in local pension fundis. Under, law, my decisions regarding benefit increase requests must be reviewed by the Pension Review Board. The next meeting of the Review Board is scheduled for February 13, 1997. However, this letter serves as authority for the Board of Trustees to pay thi's higher benefit now. Respectfully, • Cathyrn E. Hinshaw Executive Director encic: December 9, 1996 Cash Flow Study DEC -10-96 TUE 14:37 `1sr .. • Osborn, Carreiro & Associates, Inc. ACTUARIES - CONSULTANTS - ANALYSTS December 9, 1996 Board of Trustees Fayetteville Firefighters Pension and Relief Fund 113 West Mountain Fayetteville, AR 72701 Gentlemen: P.02 One Union National Plazas„ lte 1690 124 West Capitol Avenue Little kock, Arkansas 72201 (S01)3768043 This report presents the results of our actuarial study of the the assets and liabilities of the Fayetteville Firefighters Pension and Rglief Fund, as of January 1, 1996. The report analyzes the effect of certain benefit increases. The purpose of this report is to evaluate the current and 1projected status of the plan if certain benefit increases are implemented. • CESS We prepared a cash flow analysis. This was done by first projecting out the benefit payments from -the fund for the next 50 years. Nexti, the contribution income to the fund was projected. This contribution income! includes the 6% member contribution, the 6% city match, local mil/age contributions, and insurance premium taxes. Exhibit 1 details the assumptions we made regarding these contributions Once the benefit payout and contribution income projectionsrwere prepared, 6% investment return was added. The benefit payout stream wasalso projected based on different benefit levels as requested by the plan.' Exhibit 1 shows the results. CURRENT STATUS OF PLAN Exhibit 1 shows the projected benefits, income, and assets based on current contribution levels. We project that the pension fund will continue to grow each year. DEC -10-96 TUE 14:38 ,.r rt • P•03 Osborn, Carreiro & Associates, I'Itc, ACTUARIES • CONSULTANTS • ANALYSTS Board of Trustees Fayetteville Firefighters Pension and Relief Fund - p 2 December 9, /996 B * F.FTT INS We reviewed the various benefit rates as requested In pa reviewed the effect of raising the base benefit of the vol $5S per month, and the base benefit of paid members to 65%; included increasing all of the volunteer widows to a mini rticular, we teer members to f salary. This of S55 per month. In our opinion, the cash flow projections show that the.fu d would be actu- arially sound based on the Arkansas Fire and Police Pensit4 Review Board Rule #4 if benefits were increased to a 65% base for paid membe s and $55 base for volunteer members. These results depend, of course, upon the actuarial assump Note.also that actual results will vary on a year -by -year: projections. This report is based on the participant and'; supplied to the Arkansas Fire and Police Pension Review Bb audit this data, although we did review it for reasonablen The purpose of this report was described earlier. This re for any other purpose or for use by peibous who are not f matters. If you have any questions or comments, please let me know. Sincerely, Carreiro, A.S.A., M.A.A.A. ssociate Actuary • ions being met. asis from the inancial data you rd. We did not Ss and consistency. -rt is not intended • iliac with such '. • r7 • FAYETTEVILLE FIRE DEPT PENSION AND RELIEF FUND PORTFOLIO PERFORMANCE 12/31/95 TO 11/30/96 12/31/95 NM CAPITAL MANAGEMENT $3,891,670 - 40,000 - 300,000 INCOME ACCOUNT 3,848,643 + 40,000 +300,000 KEYSTONE ASSET MGT 1,018,776 3 - MONTHS TREASURY BILLS DJIA W/DIV REINVESTED S R P 500 W/DIV REINVEST LONG TERM TREASURY BONDS H IGH GRADE CORP BONDS CPI (NOV) NM CAPITAL (time wtd) INCOME ACCOUNT KEYSTONE ASSET MGMT WITHDRAWALS: 03/13/96 04/12/96 08/13/96 09/11/96 ZO'd ZOO'oN 9£:TT $16,000 10,000 10,000 20,000 96,ZT 39G 12/31/95 • + 5.46 +35.53 +34.94 +27.63 +23.51 + 2.67 +15.68 +15.61 11/30/96 $3, 897;665 4,5581130 1,226,678 11/30/36 + 4.84 +25.47 +30.14 + 1.28 + 3.68 + 3.13 + 8.86 + 5.27 +20. 35 y 2— Se/. - O Syr • TSG£-S2_2-TOS:131 /0 • 1 1 1 1 1 1 119 1 CAPABILITIES PRESENTATION AND DISCUSSION -'- DEMOS ARGYROS Vice President Private and Corporate Accounts Phone: (314) 746-2531 TIM O'LEARY Vice President Phone: (314) 746-2539 440 Oppenhe'mer & Co , Inc. 7701 Forsyth Boulevard St. Louis Mo. 63124 Phone: 1 800-782-6217 Fax: (314) 863-1809 1 lo 1 1 1 1 1 1 1S 1 1 1 1. 1 1• 1 INTRO INVESTMENT PHILOSOPHY EQUITIES INVESTMENT STRATEGY OPCO RESEARCH CAPABILITIES INVESTMENT MANAGERS FIXED INCOME PHILOSOPHY PUBLIC FINANCE 1 1 1 1 1 1 1 1 1 1 1 1 MEM 141 Oppenheimer & Co Business. Securities .Brokerage, InveSt'tnentBanking and Asset Management Headquarters kOppenheimer Tower, World Financial'Center, New York, NY 10281 • (2i) 667 7000 Branch Offices + !,_ Atlanta • Boston • Chicago ••.. Fort Lauderdale • Houston u Los A w 4Cork ._St L`ll is • San Francisco nv 1. Vi Angeles': • Miami t Ne ul :111,t,„, jf1 +!1 �F f,jtq 1 l E k �+ u r I III Overseas' Affiliates '1i�{+ i�. fl 'g 11• b1111111f IfIiJ Oppeuhe imer'Ilhternational Ltd IE.'Shalev, Ltd - T�eI•Aviv I � tie: d i/if a1.117Cfrat.:,Y London - 0. r' i •i ee lif 11 F Representative Offices V 4 t uenos Aires Lima • 4Mdan;r� Satttia g. o • 1 Seo Paulo gi{ Founded 1950-'�'``� ' ia Employees 3;012,ncluding 659, tcip Ji +�Captal };$ 3JIllliiotnaltr t • Seattle -- f3 6 retadbrokers • it ,SE e IIV NCHPAL VICES OPPENHEIMER & C O. , A NC. Oppenheimer r& CO., Inc. 'pis to 0primately. [owned securities brokerage, investment Nanking and [asset ,managememfirm offering Abroad range rof inaneial services lo corporations; [institutions rand surbSrantial rrprisate rawestots w'OrldwUde: {Its refill -ate, Oppenheimer Capital ds one of the largest independent money management if rms'in the [United States: imanagmg in [excess r$40f0 billion tor pension funds and other institutions, ors well ras high net ,orth individuals. Oppenheimer [Group, Int., •ownediby [the senior fl anagenmentiand [senior executives (ofthe (firm, is the parent company rot ihdth[Oppenheimer & Co., and rt),pperd eimer Capital, IInstitutional The (firm Ihas [been [art industry [leader in prov+id'ing re -search and [trading upport to the institutional community. In [research, Oppenheimer is (recognized for its rv;alue orientedtapproach t0 securities [analy;sis. Its Special Research Series [Recommended IList, established in 1075., has (one ofitlte best longterm performance records (of any [brokerage fires: The [firm also has (a highly regarded 6nationai research capability' O,ppenhe mer'us la meniberrof.ithe major stock (exchanges and fa market=Tnaker fn equities [asras [many [types of fixed income securities. The firm maintains institutional sales ,andlortrading [operations in New York; Manta: [Boston, • Chicago, :Houston, Los Angeles, S:t.. Louis. Seattle rand `tn :London through its [affiliate., ;Oppenheimer International Ltd, rP,tiiva`te Investments Oppenheimer offers ,a full range [of investment strategies particularly suited (to the sophisticated [high Mgt [writ -di individual, as well las [these rserVides+furnished by most securities ,brokerage ff rms: Teams (of [spec alists[offer rtorporaterexecutliace services: retirement Eservaces, financial ,planning, reor0porate cash management, ,mutual fund [consulting rand insurance=related (products. (Asset IMaoagement Oppenheimer r& Co:, Inc. provides ;assetmanagement .[sen ices to individuals rand institutions: Over$/bil Ih'il]'ian lis currently managed for clients ;in [services [such ras`. pee`iail inves[ment [partnerships Which seek (oUtinnov.ative stentures for the h'i[ghlnet rwolfth investor, [Oppenheimer Investment Advlsets which offers individually [managed portfolios, the O,pOapital Account which brings Oppenheimer (Capital management Ito retail [clients and fth'e(OIYPEGA program, an innovative [extension of the [conventional [broker -client [money [management ;relationship. The (firm [also provides ra consulting service, Strategic Asset Reutew ((:START, which permits its [clients fto effectrve]y select ran+appropnate routsid'evolley manager, Oppenheimer Capital is portfolio managers have [compiled all exceptional long `term performance record randcurrently [manage fin excess [of `$4'0100 Milton. Ther ll w.aloe o ceded investment rstralegy seeks flo (preserve capital in falling markets K _. ,and aht cev�e better Than [aveiiage rams in �is.mg ones: (.1 1 1 1 1 COMPANY HISTORY e PPMANAGEMENT 1 OPPENHEIMER1 & C 0., I N C. C Investment Banking• Oppenheimer has successfully completed diverse assignments for clients ranging from Fortune 500 companies to start-ups. Its willingness to explore unorthodox solutions to client problems has earned it a special niche among investment bankers serving middle -market companies. The department has a number of industry specializations including health care, environmental, specialty retailing/ consumer products, insurance, gaming and leisure, entertainment, electronic technology, media and communications, real estate, energy and financial institutions. It offers a complete range of services including public and private financing, as well as merger and acquisition and•bankruptcy advice. The International Investment Banking Group has been active in addressing the financing needs of many private and public entities in emerging market countries. Oppenheimer & Co., Inc. has its origin in 1950 when a partnership was created to act as a broker-dealer and to manage certain related financial services. In 1982, the company was purchased by Mercantile House Holdings.PLC, a British merchant banking firm. In 1986, the firm's.senior management, led by Stephen Robert and Nathan Gantcher, formed Oppenheimer Group to.take the company • private. The acquisition did not include the mutual funds division now known as OppenheinerFunds, Inc. Stephen Robert, Chairman and Co -Chief Executive Officer, 56, joined Oppenheimer in 1968 as a portfolio manager of the Oppenheimer Fund. Mr. Robert became a partner in 1970 and a member of the Executive Committee and Director of Research in 1977. In 1979, he became President of the firm and in 1983 assumed his present titles. Mr. Robert is a Fellow of Brown University, where he is chairman of the Endowment Investment Committee. He is on the Boards of Thirteen/WNET, The Manhattan Institute, The Polish American Enterprise Fund and the New York City Economic Development Corporation. Mr. Robert is a member of the Council on Foreign Relations and is also a member .. of both the Business and Investment Committees for the Museum of Modern Art. I Nathan Gantcher, President and Co -Chief Executive Officer, 56, joined Oppenheinier in 1968 as a broker. He became the Director of Retail Sales in 1976. Narned an Executive Vice Presidentin 1980, he assumed his current title in 1983.. He is a Director of Datron, Inc. and Koret of California, and a former Governor of the American Stock Exchange. Mr. Gantcher is Chairman of the Board of Trustees of Tufts University, and Chairman of the Nominating Committee. He is a member of the Board of Overseers at Columbia University School of Business. - For Further Information John Ryan Managing Director Corporate Communications Oppenheimer Tower, World Financial Center New York}New York 10281 (212) 667-5059 October 1996 1 1 1 1 1 1 N 1 1 1 1 1 1 1• 1 1 Our goal is to make money for clients by providing sophisticated investment ideas and opportunities supported by a high level of personal attention. Our clients are thorough, demanding investors who understand the concept of nsk versus reward and seek superior returns on their assets. They share Oppenheimer's belief in the benefit of a disciplined, value - oriented investment strategy. Over the years. the consistent application of this investment approach has earned Oppenheimer a distinguished reputation for outstanding stock selection. Our services for the private investor are particularly suited to high net worth individuals and include innovative money management strategies, unique Investment opportunities as well as retirement and estate planning. The institutional community utilizes our value -oriented research, excellent trading and market- making capabilities. Corporations benefit from our full range of investment banking expertise and creative ideas on specific issues such as employee retirement benefits and corporate management. We provide clients with a full range of traditional investments, and we actively seek to develop new ideas and services to meet the changing needs of individuals and Institutions. When we see trends emerging in the financial markets, we create investment strategies to capitalize upon these opportunities. tHEVE$ POR tHE 21ST CENTURY TELECOMMUNICATIONS EFFICIENCY ENHANCMENT NATURAL RESOURCES CORPORATE RESTRUCTURING CAPITAL MARKETS DEVELOPMENT HEALTHCARE INFRASTRUCTURE EMERGING CONSUMER MARKETS GLOBAL INTEGRATION 1 1 1 1 1 1 1 1 • 1 1 1 1 1 1 1 1 INVESTMENT PHILOSOPHY The primary mission has always emphasized the importance of compounding long-term capital growth while at the same time protecting our clients' assets against volatility and risk during adverse markets. In our opinion, supenor long-term investment results can best be achieved through obtaining consistent performance. We strongly believe that our client's interest is best served when they are directly involved in portfolio structuring and retain final control over all investment decisions. We work in sales team partnerships and utilize all of our firm's resources when helping clients manage their assets. Because of Oppenheimer's vast expertise, we do not limit ourselves to being simply equity specialists or fixed income specialists. We believe this protects our clients from the whims of any particular market cycle. Our procedure is to have at least one "fact finding" meeting with a client to determine his overall position and objectives. We then prepare a formal presentation outlining alternative strategies and specific recommendations. We typically work closely with our clients' accountants and attorneys to address the tax and legal questions which may arise. •