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Home My WebLink About1990-04-18 Minutes• MINUTES OF A POLICE PENSION BOARD MEETING A meeting of the Police Pension Fund was held on Wednesday, April 18, 1990, at 2:00 p.m. in Room 326 of City Hall, 113 West Mountain Street, Fayetteville, Arkansas. PRESENT: Rick Hoyt, Jr., Jerry Friend, Hollis Spencer, Dr. James Mashburn, Accounting Supervisor Ben Mayes, Scott Linebaugh, and Sherry Thomas. ABSENT: Eldon Roberts OTHERS PRESENT: Mike Kirkland of Dean Witter MINUTES Hoyt, seconded by Linebaugh, made a motion to approve the minutes. The motion was passed unanimously. 4 INVESTMENTS Linebaugh stated the purpose of this meeting is to discuss the investments. The Board had asked Kirkland for some additional information: the effects on the Oppenheimer account if cashed in and a new manager was hired, and what the fees would be and/or how they would change if a new manager was hired. Kirkland stated that he had not been able to study the managers and was not prepared to make a recommendation for a new manager to the Board at this time. He discussed the fee issue with the New York office, and they informed him that they would agree to the same fee arrangement the Board had with Shearson. He had also talked with Madison today, and it does not make them any difference which firm they are dealing with. However, Madison could not offer the 'wrap fee' as the pension fund currently utilizes. Madison feels the pension fund would be better off at this point not utilizing the wrap fee because Madison is now to the point of managing the money without a lot of trading bonds, etc. where the wrap fee saves the pension fund money. The fee would consist of the management fee and then a slight mark-up or mark-down on what was sold. Oppenheimer works primarily with Shearson, so Dean Witter does not work with Oppenheimer. If the Oppenheimer arrangement was terminated, the mechanics would be for a termination letter to be written to select managers in New York, and transfer the assets to a Dean Witter account. Dean Witter can be instructed to do nothing with the account --leave it intact as it was with Oppenheimer until a new manager can be selected. Kirkland stated he would like to do a search to come up with two or three managers and split the equity side of the fund between these two or three managers. He recommended picking out one or two fixed income managers. This April 18, 1990 would create our own balanced account. There would be no additional costs involved in utilizing several managers. Dr. Mashburn asked if the fund would lose any money by trading managers. Kirkland stated that the unearned management fee would be returned to the fund from Oppenheimer. So, no funds would be lost on the change in regard to fees. Based on up to date figures, there is about $310,000 in cash in the Oppenheimer account, and if everything was liquidated today, the fund would be up about $91,000. Linebaugh asked if Kirkland was saying there would be a gain of $91,000 on the account, and there would be no fee to cash or transfer the account to a new manager. Kirkland stated this was true. Linebaugh asked if there was a trading fee per stock change. Kirkland stated the fund would go under a wrap fee basis with the new manager which would eliminate any trading charges or fees. Mashburn asked if Kirkland had any managers in mind. Kirkland stated he had not completed his search of managers to be able to make a recommendation at this time. Kirkland stated he could be ready to make a presentation next Thursday [April 26). Linebaugh stated the pension board had asked several questions: (1) What would the fees be - and Kirkland had said the fees would remain the same; (2) How much would it cost to get out of Oppenheimer - and Kirkland stated the fund would have a $91,000 gain; and (3) Would there be any cost to transfer - and Kirkland stated there would be no cost because of the wrap fee. Linebaugh further stated Kirkland recommended diversifying the fund between several managers. Linebaugh asked the Board how they wanted to proceed. Kirkland pointed out that Dean Witter's asset allocation on the average balanced account side is 55% equity, 35% bonds, and 10% cash. Their balanced accounts are 85% equity and 15% bonds. Spencer stated he would like to give Kirkland a chance to make a presentation. Friend agreed, but stated he would like to let Elaine Longer give a presentation as well. Mashburn stated he would be willing to listen to anyone with a local Fayetteville office. Hoyt stated it might not even take a presentation from Longer to determine if her company would be suitable for the pension fund. Linebaugh stated he had talked with her, and she can now go to a firm like Dean Witter, etc., as a money manager and have them do the trading for her. Linebaugh stated at the end of February, the Madison account had lost $400, but Kirkland pointed out that the fee had been taken out of the account. At this point, Kirkland left the meeting. • • April 18, 1990 Linebaugh stated the Board needed to decide how to proceed from here. He asked if the Pension Board wanted to listen to all of the firms in Fayetteville or limit the presentations to several. Hoyt, seconded by Friend, made a motion to get Kirkland to make a presentation, and then get Elaine Longer to make a presentation. Hoyt stated he was not interested in listening to all of the firms again as the Pension Board has already been through all of that. Mashburn stated he had no problem with splitting the account and diversifying between several managers. Friend suggested that the money could be moved to Dean Witter and demand that they use Longer as a money manager. Upon roll call, the motion to invite Kirkland and Elaine Longer to make presentations to the Board, passed unanimously. The next meeting was set for Thursday, April 26 at 10:00 a.m. contingent upon the availability of Kirkland and Longer. DISABILITY RETIREMENT Mashburn stated he had reviewed the statements from the physicians which indicated no changes in the disability retirees. He had not examined any of the people, but had no reason to doubt the reports. He suggested accepting the recommendations of the physicians. ADJOURNMENT The meeting adjourned at 2:58 p.m. • • • tf/t frtts-% April 10, 1990 Dr. James Mashburn 236 Oakwood Avenue Fayetteville, AR 72703 Dear Dr. Mashburn: Per the request of the Police Pension Board, I am sending you copies of the physicians' statements on the disability retired officers for your reviewal. Also, enclosed is a memo telling you of the next meeting which will be April 18. Thank you for your attention to this matter. Sincerely, Sherry Thomas City Clerk Attachments