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HomeMy WebLinkAbout1987-10-15 Minutes1 MINUTES OF A POLICE PENSION BOARD MEETING A meeting of the Fayetteville Police Pension & Relief Fund Board of Trustees was held on Thursday, October 15, 1987 at 4:00 p.m. in Room 326 of City Hall. r MEMBERS PRESENT: Chairman Pennington, Treasurer Linebaugh, Richard L. Hoyt, Jr., Dr. James Mashburn, Michael Mitchell, Eldon Roberts and Hollis Spencer. Also present was City Clerk Suzanne McWethy. The meeting was called to order by Linebaugh, who noted this was City Manager Pennington's first Police Pension Board meeting. All members were present. Minutes It was moved by Hoyt, seconded by Mashburn and unanimous, to approve the minutes of the last meeting. Act 405/Election of Members Eldon Roberts gave the Board copies of Act 405, recent legislation concerning the composition of Police Pension Boards. He explained the Act calls for there to be seven members, composed of the Chief Executive Officer of the City (who shall be Chairman), the City Treasurer (who shall be Treasurer), one member who is retired from the Pension Fund, and three active members of the Pension Fund (elected by the active membership of the Pension Fund). The Act calls for the active Pension Fund members to elect the active members by secret written ballot in May of each year, with two of the members to be chosen in odd numbered years, and the other member in the even numbered year. The Act calls for the retired member to be chosen in fay cf each even numbered year by a method to be determined by the ?card. A_t stipulates that all members shall serve two-year terms. Roberts reported an election was held at the Police Department anout a month ago, and only Hoyt, Mitchell and Roberts were even nominated, arid were therefore re-elcted. 'roberts said they recommend that a decision be made today as to which member •.:i 11 serve in the position which expires in the even numbered year. On the retired position, which should have been addressed back in May cf 1987, Robert: suggested Spencer continue to serve until May of 1988. Roberts said the six Board members must select a Secretary and formalize the selection of • Police Pension Board Minutes October 15, 1987 Page 2 a doctor. Roberts noted that Dr. Mashburn was the only person who applied for the position. Spencer said the last time he was elected, a meeting was called of the retired members, a selection was made and a letter may have been written. He asked if this is the method which should be used next time. The Board agreed it was the Board's option to decide how this should be done. Roberts agreed, commenting that he thought the retired members should have a say in electing their representative. Roberts, seconded by Hoyt, made a motion that the same method be used to elect the retired representative. The motion passed unanimously. The three active members tossed a coin to determine which one of them would serve in the position to expire in May of 1988. It was determined that Mike Mitchell's term would be up in May of 1988. Roberts, seconded by Spencer, moved that Dr. Mashburn be re -appointed to the Pension Board of Trustees to serve in the doctor's position. The motion passed unanimously. Hoyt, seconded by Mitchell, made a motion to select Eldon Roberts as Secretary of the Pension Board. The motion passed unanimously. • Old Business Separation of Funds Roberts noted that the last time the Board met, there was some mention of separating Police Pension Funds from City Funds, not immediately, but as investments mature. Linebaugh said this is being done gradually, but suggested the Board take formal action on the matter. Mitchell, seconded by Roberts, moved that this policy be put into effect. Linebaugh explained that this will mean, instead of investing Police Pension funds with other City funds (in the past this was done for the purpose of having a larger C.D.), the Police Pension funds will be accumulated until there is enough to invest in a security. Roberts said the reason for making this change is that there is interest in the idea of investing more of the Fund with the money managers in the future. Linebaugh said, in the meantime, the funds would seside in a money market account, instead of being in a Treasury investment. He added that although interest would still be earned, it would be at a lower rate, until enough funds collect to make an investment. The motion passed unanimously. •` • • Police Pension Board Minutes October 15, 1987 Page 3 New Business Cash Flow Linebaugh referred to a cash flow projection he distributed to the Board. He said this shows how much money will be available to invest in the next couple of months. Linebaugh said at the end of October $550,000 can be invested, and in November $349,000 can be invested. Bid sheets were distributed which showed Treasury Bills purchased for the last Police Pension investments. Roberts said members of the Police Pension Fund have informally discussed the possibility of investing more funds with the money manager, and discussed the actuarial soundness of the Fund. Linebaugh said he was in favor of the idea. Roberts said at one time he and the ouher two active members of the Board discussed the idea of investing $1 million, but now feel more comfortable with the idea of investing $500,000. He said assets now total about $3.3 to $3.5 million, with $1 million presently invested with the money managers. Merrill -Lynch Report Richard Yada presented a report on the investment with Merrill -Lynch as of September 30 from RNC. He said portfolio value on that date was $581,392, and was $556,000 as of yesterday. Curtis Williams spoke about analysts' predictions on the condition of the market. A. G. Edwards Report Bill Conrad presented a report on the investment with A. G. Edwares. He reported the portfolio value for the end of September to be $546,911, wiuh cash value at $194,000. He said the portfolio value as of yesterday's close was $532,815. He said $223,444 of it was in cash (42% of the total). Discussion of Additional Investments Hollis Spencer told the Board that the retired members don't meet very often, but that some of them are receptive and others are not, to the idea of investing additional funds. Dr. Mashburn this point. he would be a said he was not too anxious to invest a whole lot of money at He said, until the market establishes a more definite trend, litule reluctant to make additional investments. • Police Pension Board Minutes October 15, 1987 Page 4 Roberts asked how much of the Fire Pension Fund is invested. Linebaugh said they have over 50% invested. Linebaugh pointed out that going with a money manager does not necessarily mean all the money will be invested, but a money manager ought to be able to invest the money so that it will earn more than Treasury rates. Bill Conrad said he would be glad to find out how their money manager would invest any money that the Board might wish to invest right now. Mitchell asked why A. G. Edwards kept some of the portfolio in cash instead of investing it. Conrad explained the purpose was for the preservation of capital in case the market goes down. Richard Yada said that RNC's position is to keep from 0-10% of the portfolio in cash. Curtis Williams told the Board "I can say emphatically that we think the money should be invested." Mike Mitchell said he agreed that the Fund needs to be actuarily sound, but asked if now was the time to invest another $500,000. Hoyt said he thought the question was not whether to invest money in the stock market but whether we want to use the services of a money manager; that another question was whether to invest with Merrill -Lynch where 0-10% is kept in cash, or with A. G. Edwards, where 40% is kept in cash. Hoyt said he thought the Board should give $250-300,000 to the money managers to invest, but not $500,000. Mike Mitchell said he was in favor of that idea. Dr. Mashburn asked what percentage of the Fund would be invested if $200,000 were placed with each money manager. Linebaugh said that would be barely over 40% of the Fund. Mashburn said he would be reluctant to invest any more than 40% of the Fund. He said he thought 60% should remain in Treasuries or other stable investments. Roberts suggested that between now and the next meeting, the Board members can think about this, watch the market and, if necessary, a special meeting can be called. Dr. Mashburn made a motion that, since $850,000 will become available between now and the end of the year, Linebaugh be authorized to give $200,000 to Merrill -Lynch and $200,000 to A. G. Edwards when the funds become available. The motion was seconded by Mitchell and passed unanimously. It was clarified that it would be up to Scott to transfer the funds "when the time looks right." ., Police Pension Board Minutes October 15, 1987 Page 5 Cash Management Account Richard Yada asked the Board to consider switching their account to a "cash management account". He said this was an automated, rather than a manual, account where any dividends go right into a money market fund. He said there would be a cost of $125 but he said Merrill -Lynch would discount that amount from any trades called in to them by RNC, to cover the cost. He said in January this would be switched to a "key client account" which will permit month-end statement to get out faster. He said this account has insurance up to $10 million. It was moved by Hoyt, seconded by Mitchell, and unanimous to approve the change. Adjournment The meeting was adjourned at about 5:15 p.m.