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 • • 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 • • • 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