HomeMy WebLinkAbout1988-11-07 MinutesMINUTES OF A POLICE PENSION BOARD MEETING
A meeting of the Fayetteville Police Pension and Relief Fund Board of Trustees
was held on Monday, November 7, 1988 at 1:45 p.m. in Room 326 of the City
Administration Building at 113 West Mountain Street.
PRESENT: Members James Pennington, Scott Linebaugh, Eldon Roberts, Rick
Hoyt, Jr., and Jerry Friend. Also present were City Clerk Suzanne
McWethy and Accounting Supervisor Zelda Parson.
ABSENT: Hollis Spencer and James Mashburn
Chairman
of three
Company,
Pennington introduced consideration of placing the investments with any
firms presently under consideration by the Board - Dean Witter and
Longer Investments, Inc. and Shearson -Lehman -Hutton.
Linebaugh said he thought the presentations heard by the Board were good, but
thought the real question came down to whether the Board wants a monitor or not,
and does the Board want to put their money with one or more money managers. He
said Shearson Lehman included in their cost the ability to add another money
manager at no cost. He said the Board could ask them to use Elaine Longer as one
of the money managers.
Linebaugh said what bothered him about Dean Witter was their presentation wasn't
real understandable, and their "scattergrams" were based off other companies in
the scattergram, instead of the Standard and Poors, and the two money managers
they selected had poorer performance that the two selected by Shearson.
Linebaugh said, in his opinion, the Board needs money management and asset
monitoring, so we don't get caught up in what we had in the past. He said he was
afraid that if we go with just one money manager we've got a problem, and the
monitoring will show us trends, statistics and comparisons with other companies.
Linebaugh said he was shocked to discover how low Shearson's fees were. He said
their fees were .913% of the assets, which he said was about a 1.5% drop from
what we were paying to both Merrill Lynch and A. G. Edwards
Hoyt asked if Shearson, for the amount they would charge us, would still be able
to hire Longer as a money manager. Linebaugh said Longer's fees were 1% compared
to 1/2% proposed by Shearson.
Linebaugh suggested another alternative would be to give $3 million to one firm
and $500,000 to Longer, but commented that the Board would be unable to have
Longer monitored. Linebaugh said although Longer was asked for a "scattergram"
she didn't provide one, stating it would cost her an additional $24,000 a year to
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Police Pension Minutes
November 7, 1988
Page 2
compile the information. Hoyt asked if another firm could monitor Longer.
Linebaugh said only if she would allow them to do so.
Hoyt said he was not opposed to having a monitor but was just not sure he wanted
the monitor to pick the money manager.
Linebaugh said there was no question Longer was good but pointed out that her
clients were individuals, and she has only one other employee, who is an office
manager. He questioned what the Board would do if something ever happened to
Longer.
Hoyt said he would
some of the money.
than just $500,00
Oppenheimer.
Roberts said that,
$930,000.
prefer giving Oppenheimer some of the money, and giving Longer
He said he would like to see Longer getting $1 million rather
0. He suggested perhaps $2 million could be placed with
as of November 3, the market value of the investments was at
After further discussion, Hoyt commented that it had never been decided
money the Board would be investing. He asked how much money was needed
flow every month. Zelda Parson said cash flow varies from positive to
every month, with the maximum negative cash flow being $10,000 per month
maximum positive cash flow being about $27,000 per month. She said
about $23,000 a month now to pay retirement benefits. She said,
everyone eligible will retire, that amount would go up to $26,000.
how much
for cash
negative
and the
it takes
assuming
It was decided that Linebaugh should contact Shearson Lehman and Elaine Longer
regarding the feasibility of their working together. Returning to the meeting,
Linebaugh reported both parties said they could work with each other, but their
fees will go up quite a bit. He said the trouble was money managers like
Oppenheimer will charge 1/2%. while Longer charges 1% and has mentioned raising
her fees already. He said the money manager fee would be 1% instead of 1/2% and
instead of having a brokerage and asset handling fee of 1/2% that will be greater
by perhaps another 3/4%. He said having them work together will be workable but
difficult.
Jerry Friend said he was sold on Elaine Longer but said it didn't make sense to
pay her twice what we would pay someone else. He said if the Board decided to
choose Shearson Lehman, they would have to decide how many money managers to use.
Linebaugh said that could be decided at a later date.
Hoyt asked if it would be feasible to give some of the money to Shearson Lehman
and the money managers, but still give some of the money to Longer. Linebaugh
reminded the Board that, although that could be done, they would be paying fees
to Shearson, plus 1% to Longer, plus brokerage fees, plus paying a bank to hold
the money that Longer would invest. He said there would be a $21 per stock and
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Police Pension Minutes
November 7, 1988
Page 3
$28 per transaction charge, plus a set up charge. On the other hand, Linebaugh
said, Shearson Lehman provides custodial services, money management and asset
monitoring, all for 1%.
After further discussion, Hoyt moved the Board hire Shearson Lehman as an asset
monitor and work with them on determining how much of the entire Fund will go to
money manager(s) and who the money manager(s) will be. The motion was seconded
by Eldon Roberts. The motion passed unanimously, with Mashburn absent and
Linebaugh voting as proxy for Hollis Spencer.
After further discussion, it was moved by Hoyt that the Board "go with Option C"
(see attached) at $31,955 per year. The motion passed unanimously, with Mashburn
absent and Linebaugh voting as proxy for Hollis Spencer.
There being no further business, the meeting adjourned at 2:46 p.m