HomeMy WebLinkAbout1996-05-30 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, May 30, 1996, at 11:00 a.m., in room 326 of
the City Administration Building, 113 W. Mountain, Fayetteville,
Arkansas.
PRESENT: Pete Reagan, Darrell Judy, Ron
Clerk/Treasurer Traci Paul
ABSENT: Mayor Fred Hanna, Marion Doss,
CALL TO ORDER
Pete Reagan called the meeting to order.
NEW BUSINESS
Investment Report
Wood, and City
Howard Boudrey
Curtis Williams reported for Merrill Lynch, asking the Board to
review the numbers in the report they had before them regarding
what the accounts are doing and their performance in various
indexes. The first international investment is in place. U.S.
is up nicely; United Kingdom down a little bit; Japan is up
nicely. We just established the second portfolio last week. It
has not had a chance to do anything yet. A running tally will be
kept on those, as requested.
Williams responded to a question from Reagan regarding the cost
of buying into these. There is a three-quarter percent sales
charge front load on those; then they take another one-quarter
percent over the year. That is why there is a down in United
Kingdom. We did get the Hong Kong established as well this time,
so we now have all four. The Hong Kong was closed the first time,
around. We'll catch that back up the next time around. Then we
will have the four programs going and dollar -cost averaging into
those and begin to level those on the anniversary next year. The
idea is to take away from the strongest markets and give to the
weakest markets in anticipation of catching the next big movement
in a down market.
Williams responded to a question from Reagan regarding the income
account. These numbers are as of 4/30. By 5/24, they were up a
little. It is coming back a little bit. Rates have moved down a
little in the last week.
Merrill Lynch's strategic analyst has his lowest allocation in
stocks right now in the history of the firm. A corrective
process will probably start soon. This is background behind our
international diversification, get a little money out of our
markets and get it where it will be sheltered from a down draft.
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May 30, 1996
Chuck Dumler reviewed the New Mexico Capital portion of the
account, which he is responsible for. All the numbers presented
are as of the end of April. We show a value of little over
$4,162,000 at that point. Sixty-seven and a half percent of. the
,account is in the stock market; almost twenty-eight percent is in
U.S. treasury bonds; cash and equivalents is 3.8 percent, a money
market fund; and accrued income, interest and dividends that have
accrued but have not hit the account yet is added in.
The total account performance as of the end of April is up 5.8.
As of the 20th of May, it has jumped up to 9.2. At the end of
April stocks were up 8.4 and is now almost 12%. The bonds are
exactly dead even.
It has been a tough year in the bond market. We are happy to say
we haven't lost any yet. The only reason this is the case is
that we've got U.S. treasuries of short maturity, a very low-risk
approach. We'll give up a little in a good bond market, but we
won't lose in a difficult bond market.
Our account is now up 105%
doubled in about six years
The stocks have been where
per year over this period.
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since we started in January of 1990,
. That annualizes at 12.1% per year.
most of the gain has come from, 14.3%
Thus far this year, we are running a little ahead of the market.
Last year we lagged behind the market. We will lag behind in a
bull market.We are stock -pickers that emphasize out -of -favor,
cheap stocks. We are true believers in the need to find cheap
stocks. To measure if a stock is cheap or not, we prefer a
ratio of the price of the stock to its book value per share. The
stock market today is selling at over four times the book value.
Your portfolio today is one and a half times the book value. We
are less than half as expensive as the stock market. The whole
reason for this is it keeps us out of trouble.
At this stage we have not changed our allocation much. We are
maintaining our bond position. The maturities run from 1997 to
1999. Some stocks are up nicely, and there are a few
disappointments. He ran through the list. We have a cheap
portfolio. One that will protect you in the down side. The
value of what NM Capital brings to the table in a program like
this is protection in a bad market. So far, we've had nothing
but good markets; but a strategy like this will look good in a
bad market. If we wake up tomorrow and the market is down 10%,
this portfolio will not be down 10%. We may not make money, but
we would not lose money.
Dumler stated he would be happy to meet with the board as often
as they would like.
May 30, 1996
Curtis Williams stated a letter to New Mexico was needed
authorizing them to make some funds available. The first two
were done out of the income account, but the next one will have
to come from them, so they need authorization. It is not
critical but it would give them a quarter to do it. We don't
want to wait until the day. It needs to be something like, "This
is your authorization to make up to $575,000 available over the
next six months for international investment."
Traci Paul agreed to send this to New Mexico with a copy to Chuck
Dumler.
MINUTES
Reagan asked if there were any additions, deletions,
corrections to the minutes of the April 25 meeting.
none, he asked for a motion to approve the minutes.
seconded by Judy, moved to approve the minutes. The
passed unanimously.
PENSION LIST
Paul reported no changes in the pension list.
or
There being
Wood,
motion
• Judy, seconded by Wood, moved to approve the June pension list.
The motion passed unanimously.
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OLD BUSINESS
Proposed Resolution
Increase Base Benefit to 65%
Reagan stated each member should have a copy of a proposed
resolution to increase benefits. City Attorney Jerry Rose has
reviewed the resolution. Since all Board members are not
present, we may want to discuss this resolution at the next
meeting. This does not have the three or four volunteers that
we were going to increase. He suggested tabling it until the
next meeting so that the volunteers could be included.
Wood, seconded by Judy, moved to table this until the June
meeting. The motion passed unanimously.
Nominations
Paul reported she sent out memos requesting nominations to fill
the retired position. We now have three nominees: Bill Morris,
Carl Springston, and Darrell Judy. Paul stated she would send
out a ballot with the checks on the 15th.
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May 30, 1996
Reagan stated he had sent a memo to all the active people on the
plan and advised them of the active member opening and gave a
deadline of Friday the 24th to submit names for the position. He
stated no one had placed their name in nomination other than his,
and so he was duly elected.
Reagan stated there would be an election for the retiree
position, as there are three nominees.
Drop Rules & Regulations
Paul reported that at the last meeting a.change had been made in
the DROP rules and regulations which the Mayor asked to be sent
to City Attorney Jerry Rose for review. Rose reviewed it and
okayed it. It changed deferred "compensation" plan to deferred
"pension" plan.
NEW BUSINESS
Insurance Premium Funds
Paul reported that $7,984.30 in Act 833 money was received.
Mickey Jackson instructed her to give this check to Marilyn
Cramer in the accounting department. He would sign and return
the form.
Reagan noted this was not pension money. It was sent to Paul as
City Clerk. Act 833 money is to help pay for training,
improvements, and equipment.
DROP Application
Paul reported she had received a DROP application, which she
would send to accounting. It was from Robert Johnson. This will
be voted on at the next meeting.
Reagan requested that Johnson be asked to return and fill out
another application with the dates in pen rather than pencil.
Johnson would also need to look over the numbers given by
accounting, to avoid mistakes.
Pension Spreadsheet
In reviewing the spreadsheet, Reagan stated there are 14 people
who have received raises. Arnold King and Joe Fraley are the
only two that got the last raise and the other twelve got the
full $200. We had to change some monthly salaries at retirement
because some of the salaries at retirement did not show their
longevity check. We went ahead and brought theirs up and then we
did the disability. What we are proposing on this is that you
can see the difference in salaries. The ones with zeros will not
get pay raises and those are the guys that received the $200.
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May 30, 1996
Also, we need to put in the record the three pay raises given.
The first one was September 1, 1983, $100 across the board for
full paid and $10 for volunteers. April 1, 1984, we had a $50
increase for full paid. October 1, 1986, we had $50 across the
board. Some of these guys have been drawing the increase for ten
years. The twelve that got the original increase have been
drawing the increase for almost fourteen years. The second page
of the spreadsheet shows what the increases will cost the fund
annually.
Reagan stated the next meeting date would be June 28 at 11:00.
There being no further business, the meeting adjourned at 11:50.