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HomeMy WebLinkAbout1986-10-30 MinutesMINUTES OF A MEETING OF THE POLICE PENSION BOARD A meeting of the Fayetteville Policemen's Pension and Relief Fund Board was held on Thursday, October 30, 1986 at 4:00 p.m. in Room 326 of City Hall. PRESENT- Chairman Don Grimes, Treasurer Scott Linebaugh, Dr. James Mashburn, Rick Hoyt, Hollis Spencer, Eldon Roberts, and Mike Mitchell ABSENT: City Clerk Suzanne Kennedy The meeting was called to order by Chairman Don Grimes. MINUTES The minutes of the July 17 quarterly meeting were approved as distributed. The minutes of the August 5 special meeting were approved with the following correction: The meeting started at 4:00 p.m. rather than at 4:45 p.m. INVESTMENT REPORTS Merrill-Lynch/RNC Speaking for Merrill -Lynch, Richard Yada presented a report from the money manager, RNC, on the portfolio as of September 30. He noted the investments were started in the beginning of June. Of the $500,000 'invested in June, Yada reported $8,000 in fees were paid to RNC; that investments are now down by $22,000, leaving the portfolio value at $470,197.52. In answer to a question from Hoyt, Curtis Williams said Merrill -Lynch 'had provided a list of Arkansas stocks for RNC to consider, and RNC watched Dillards stocks for several months before placing them on the "buy" list. In answer to a question from Linebaugh, Yada confirmed the fact that, although the portfolio is down $22,000 now, as of September 30 it was down by a greater amount. • Police Pension Board Minutes October 30, 1986 Page 2 A. G. Edwards Bill Conrad presented a report on the Equity portfolio being handled by A. G. Edwards and Sons. Conrad noted the account started out with $500,000, the value of the portfolio at the end of June was $510,289, and its value as of September 30 was $451,254. Conrad said the portfolio was down 9.54% since its inception. Conrad reported total fees so far amount to $4,086. Conrad said he was not able to tell the Board at this time what the value of the portfolio is worth today. DISCUSSION Following the reports, Linebaugh told the Board that, as of September 30, he calculated that Merrill -Lynch lost $45,989, and charged $8,250 in fees; and that A. G. Edwards lost $44,660, and charged $4,000 in fees. Dr. Mashburn asked the other members of the Board for their feelings regarding investments in local stocks. Linebaugh said the Board must use a money manager to make investments in stocks. ACTUARIAL STUDY Linebaugh said he was asked to check out the Werntz Company and hire them to conduct an actuarial study for the Board. He said Hall Consulting recommended the firm, that Kathyrn Hinshaw of the State Auditor's Office had never heard of them but said there was no problem in using the firm as long as they follow certain State regulations. Linebaugh said he contacted the firm regarding conducting the study but they later called him and said they could not do the study for the price they quoted. Linebaugh said they are now quoting a fee of $2,800-$3,200 to perform the study according to State statutes. Linebaugh said he thought this problem would come up with other firms which quoted a fee, as none of them have actually done an actuarial study according to State law. Linebaugh estimated a fee of approximately $3,000 will be necessary for the actuarial study, and he asked the Board if they still wished to have a private actuarial study done for that cost. Mike Mitchell suggested not having a private actuarial study done now, until the Board knows more about how its investments are doing. Linebaugh told the Board one of the reasons a private actuarial study was requested was because of some mistakes having been made in the past. Hollis Spencer said other retirees are aware that some mistakes have been made in the past. Spencer agreed however that the timing would be bad right now for a study to be done. Linebaugh pointed out • Police Pension Board Minutes October 30, 1986 Page 3 • that a State audit will be done at the end of this year, which will generate some results by mid -1987. Hollis Spencer suggested tabling this item for the time being. Hoyt, seconded by Roberts, made a motion to table. The motion passed unanimously. HOLIDAY PAY LAWSUIT Linebaugh reported he had been contacted by several retirees who are very interested in how the holiday pay lawsuit will affect them. Linebaugh explained fire and police officers sued the City on the issue of holiday pay, which was settled out of court. Linebaugh said beneficiaries have requested holiday pay be added to the base pay upon which their retirement was calculated. Linebaugh said the first thing to consider is whether the City will contribute 6% of the settlement to the pension fund; secondly - whether the beneficiary would contribute 6% of his amount to the pension fund; and thirdly - whether the pension board wants to pay extra benefits monthly to the beneficiaries. Linebaugh distributed a letter he received from City Attorney Jim McCord, which states that the holiday pay settlement was considered a lump sum settlement and, therefore, in his opinion, does not meet the salary guidelines which would be considered in making contributions to the pension fund, or that the pension board would have to increase monthly benefits to the beneficiaries. Linebaugh said he called State Auditor Kathryn Hinshaw and asked her for her opinion. He said Hinshaw felt the decision as to whether or not the settlement could be considered as salary was up to the pension board to decide. Linebaugh distributed some additional information showing how the pension fund could be affected. City Manager Grimes stated he was of the opinion that, in light of the fact that a settlement has been reached on the lawsuit, the issue should be left alone. Hollis Spencer said he visited with the City Attorney who seemed to feel strongly against the idea of the pension board paying any additional benefits. Or. Mashburn quoted from the last paragraph of McCord's letter where he states: "In my opinion the term 'salary' ... does not include the lump sum payments made under the judgment entered in the above referenced lawsuit because the statutes ... expressly provide that holiday pay shall be in addition to the regular pay schedule." Police Pension Board Minutes October 30, 1986 Page 4 City Manager Grimes asked that it be acknowledged in the minutes that this opinion has been received and no action would be taken today. Mike Mitchell agreed, stating he would like time to think about it. Linebaugh said the Board will need to meet again to vote on this question. City Manager Grimes suggested waiting a week. Eldon Roberts stated he would feel comfortable going along with the City Attorney's recommendation. Dr: Mashburn, seconded by Grimes, made a motion that, based on the City Attorney's opinion, that this Board should not pay additional benefits. The motion passed unanimously. ADJOURNMENT With no further business, the meeting was adjourned.