HomeMy WebLinkAbout1990-08-23 Minutes•
MINUTES OF A MEETING OF THE POLICE PENSION BOARD
A meeting of the Fayetteville Police Pension Board was held on
Thursday, August 23, 1990, at 2:00 p.m. in Room 326 of City Hall.
PRESENT: Eldon Roberts, Rick Hoyt, Jerry Friend, Hollis
Spencer, City Manager Scott Linebaugh, Finance
Director Ben Mayes, and City Clerk Sherry Thomas.
CALL TO ORDER
The meeting was called to order by City Manager Scott Linebaugh.
MINUTES
Hoyt, seconded by
the last meeting.
INVESTMENTS
Friend, made a motion to approve the minutes of
The motion passed unanimously.
Linebaugh gave a brief recap of events leading up to this meeting
regarding the placement of investment funds with Longer Investments
and ACORN Management Firm.
Dean Witter Presentation
Mike Kirkland, with Dean Witter, addressed the Board with a brief
presentation regarding the ACORN firm. He stated that when the
members decided to liquidate from Oppenheimer, the market was
somewhat higher, allowing for a greater part of the monies to be
paid in cash. The amount at Dean Witter at present is
$1,314,568.00.
Michelle Hennessy addressed the Board on the history of ACORN, its
owners and investment strategy. She stated that the company was
set up as a private firm in 1962 with Donald Getty as founder and
presently chairman of ACORN. The number one goal is preservation
of capital with second being income. The third goal of the company
is growth. She explained that the current yield (approximately 6%)
would still be put into the portfolio, giving a hedge or a comfort
level to the portfolio.
Hennessy explained that ACORN is considered to be a value manager
with a growth approach. This means finding securities with a good
buy level with the possibility of increasing price and providing
a good profit. She stated that in the 1990's, the company's belief
will be changing regarding the type of stocks to buy. The reason
is that the growth companies will be the ones that have cash on
hand and the capabilities to go international, have a large market
share and have a stable product with price flexibility; i.e., Dow
Chemical Company, Ford Motor Company, and IBM. She explained that
is the reason ACORN is described as a value and growth manager.
She distributed brochures with bar charts showing the company's
August 23, 1990
performance, even in a declining market, and she stated that,
although it is important that the manager have a good track record,
other factors should be considered. She stated it was important
that the investors feel comfortable with the investment philosophy.
Hennessy stated that she felt one of the strongest advantages of
ACORN is the committee participation and group decisions. There
is an Investment Policy Committee made up of eight members whose
function is to view the economy, and to discuss, analyze and decide
on allocations of funds accordingly. She stated that ACORN sends
out a quarterly newsletter which includes surplus cashflows and
news articles. She stated that representatives of ACORN usually
meet with clients in person twice a year and that it would be up
to the Board how often they wanted to meet.
Hennessy also stated that the firm would keep investors abreast of
any major international situations like the Iraq/Kuwait instance.
She said that any time there is a crisis or situation it is felt
the clients should know about, ACORN feels it is important to get
the information in print to the investors as soon as possible.
She stated there would be an update on the Mid East situation
shortly and a copy would be sent to the Board.
Mike Kirkland explained that there were several different ways the
Board could approach a decision about ACORN. He stated that
ACORN's management fee was 1% and since the assets were somewhat
smaller, the fees would not be very large. He stated that a wrap
fee could be done through Dean Witter and it could be "discounted
down" to a 1% fee to Dean Witter for a total RAP fee of 2%.
Another suggestion was to generate a commission with a 40-50%
discount every time there was a trade.
Michelle Hennessy stated that since the account was all cash, it
would be a trade-off for the first year with the second year
probably better off going with commissions, as there would not be
a large amount of trading. She stated that most of the
municipalities ACORN dealt with were on a commission basis but that
it was entirely up to the Board.
Kirkland stated that the bottom line was for the assets to grow,
but he had no control over when and how many trades ACORN made.
He assured the Board that there was and would not be any
manipulation involved regarding commissions. He stated that the
1% for Dean Witter (wrap fee) was below their discount but he
wanted to be competitive with the other management firm. He told
the Board that the final decision was up to them.
Hennessy stated the 1% wrap fee was very reasonable as most firms
charged a total of 3%.
• August 23, 1990
•
Linebaugh asked if the Board would like to make a decision at this
meeting or schedule another meeting after they had a chance to
discuss and think about everything that had been presented.
Friend, seconded by Roberts, made a motion to engage the ACORN
management firm. The motion was adopted unanimously. Motion was
made and seconded to stay with the 2% fee for services on the
account. The motion was adopted unanimously. Friend, seconded by
Roberts, made a motion to authorize Scott Linebaugh to sign all
documents and papers concerning the ACORN decision. The motion
was unanimously adopted.
It was discussed that a cash management account should be set up
with at Dean Witter so one check per month could be taken out to
cover the pension checks. Motion was made and seconded to give
Scott Linebaugh the authority to transfer the necessary cash
accounts with Dean Witter to transact business.
Longer Investments Presentation
Elaine Longer of Longer Investments began her presentation by.
giving an explanation of a study they had asked for. Steve
Osborne, associated with the actuary firm, completed the study to
determine what type of investment returns would be required to
fully fund the pension plan, given the current contribution rate
from the City. Longer stated the study assumed the same
contribution income of 6% from members, 12% from the City, 10% of
fines, local millage contribution and insurance premium taxes.
The conclusion was, given all contributions, if a 6% annual rate
of return was achieved the plan would be fully funded.
Longer explained the status of the transfer at present. She stated
that $1 million in cash was transferred. She stated she would have
kept all of the stocks if the international situation in the Mid
East had not changed so drastically. Longer stated that when Iraq
invaded Kuwait, Longer Investments received a special arrangement
with A.G. Edwards to allow them to sell stocks, pending delivery
of the assets to the trust. She stated that they did sell Nestle's
at approximately 58 and it did continue to drop to 50. Primerica
was also sold, along with a small portion of Phillip Morris and a
portion of American Home Products to reduce holdings down to 1,000
shares of each.
Longer stated that when the money came in, she proceeded to assume
conservative positions in the drug, technology, and food companies.
She stated that with the oil stocks currently held, the Pacificorp
utility stocks and cash holdings, the portfolio is at approximately
25% cash ratio on the equity side. Only one bond has been
purchased, so the bond side stands at approximately 20%.
Ar
August 23, 1990
Longer stated that before her firm took over management of the
portfolio, the policy prevented the Plan from participating in 70%
or more of the index. She went on to explain the differences
between investment grade stocks and investment grade bonds. She
suggested that a change be made in the investment policy to read
"Equities purchased for the account will carry a minimum S&P
rating of B- with a weighted average of the equity portfolio being
equal to a Standard & Poor's rating of B+ or better." Longer
stated that would keep the total portfolio over investment grade
and give them the flexibility to keep moderation within the
portfolio.
Friend, seconded by Roberts, made a motion to change the investment
policy statement from "investment grade" to "B+ or better". The
motion was unanimously adopted.
Longer distributed a sheet to the Board to show them what common
stocks were owned at present, including the sale of Nestle's. She
stated that the weighted average debt -to -total capital on the
current portfolio is 23.8%, which is noted as very conservative.
The five year average annual growth rate in earnings on the
companies owned is 26.7% with the portfolio rated at 2.2 or "A".
Longer stated that international affairs might be "rocky" for some
time but the plan has a very high quality group of stocks, and they
could be content to just sit and wait until everything returns to
some sort of normal.
Longer suggested that the Board discuss the risk parameters and
return objectives and decide on an investment objective that could
be used in the investment policy.
Linebaugh suggested that Ben Mayes could draft possibilities for
the policy and the Board could then meet, discuss, and possibly
sign the necessary papers.
Ben Mayes gave a brief explanation on the Pension Turn -back,
outlining what was in the fund at present and how the payments are
made to retirees, etc. He also pointed out that the actuary study
did not show any future increase in benefits. Linebaugh stated
that the Board should really look the study over carefully.
Spencer asked about the possibility of the Fund paying insurance
through the City's policy (Blue Cross/Blue Shield) instead of
giving cash increases. Linebaugh stated that it would have to be
researched since he did not know what restrictions or rules BC/BS
would have concerning that.
ADJOURNMENT
The meeting adjourned at 3:30 p.m.
•
•
•
•
MICROFILMED
Sherry:
Attached are copies of the computations for the Police Pension and Fire Pension
turnback checks received on July 27, 1990.
Ben has requested that at the next Fire Pension Meeting and Police Pension Meeting
their respective turnbacks be approved and the calculations approved.
Thanks!
Rainy
•
/Police Turnback
•
Police Officer's Pension & Relief Fund
Annual State Turnback
Warrant Received July 27, 1990
State Warrant #90E-1610896 192,641.56
As of 06/30/90
Active
Retired
LOPFI
Totals
Allocation per total count
•tive/Retired
LOPFI
•
25.00
38.00
30.00
93.00
63.00 680-980-4-301.00
30.00 101-901-4-301.02
Total Allocation
2071.4146
130,499.12
62,142.44
192,641.56
•
ARKANSAS
INSURANCE
DEPARTMENT
SLP fid.
aoo Univarsiy Tows' Budding • Little Rock, Arkansas 72204
Ron Taylor Ph. 501-371-1325
Insurance Commissioner
July 23, 1990
To: City Treasurer
From: Ron Taylor
Re: Police Officer's Pension & Relief Fund
Enclosed is your state warrant to be credited to the Police Officer's
Relief and Pension Fund. The warrant was issued under authority of
Appropriation Act 137 of 1989.
Contact Pam Davis regarding any questions on the turnback at 371-1412.
•
FUND
MO.
PAY
YR.
SLP
6
27
90
01008
4251045104
ACCOUNT NUMBER
THIS WARRANT VOID AFTER JUNE 30,1991
uMitor oftate of Put lumens
To THE STATE TREASURER, LITTLE ROCK, ARK.
PAY TO THE ORDER OF:
90E-1610896
FAYETTEVILLE ?*192641
DOLLARS
CENTS
( DO NOT BEND, FOLD OR MUTILATE
19&216" nos 20076MI:
CITY OF FAYETTEVILLE
Ec KPT rNS-ARRKANSAS
DATE 07/27/ 19 90
RECD. FROM State of Arkansas
$ 62,142.44
ADDRESS
RECD BY Rainy
IN PAYMENT Or ITEMS LISTED BELOW
TOR CRT OF rA
ACCOUNT FILE
56
201610896"
CITY OF FAYETTEVILLE ARKANSAS
RECEIPT NO. L- 76514
DATE 07/27/ 19 90
RECD. FROM State of Arkansas $ 130,499.12
ADDRESS
Rainy
RECD BY
IN PAYMENT Or REDO LISTED BELOW
Police State SSMYMMYMX
DOG LICENSE No
BREED _ _
Turnback
MASE P®EALE AGE
COLOR
NAMB
RABIES CEBTIF NO DATE
LICENSE FOR CALENDAR YR
CCOUNTNG DEFORMATION
A General 12010
AC NUMBER 101-901-4-301 02
02010
ACCOUNT FILE
56
201610896"
CITY OF FAYETTEVILLE ARKANSAS
RECEIPT NO. L- 76514
DATE 07/27/ 19 90
RECD. FROM State of Arkansas $ 130,499.12
ADDRESS
Rainy
RECD BY
IN PAYMENT Or REDO LISTED BELOW
ACCOUNT FILE
Police State Turnback
Doc LICENSE NO
BREED
MALE FEMALE AGE
COLOR
NAME
RABIES CERTIF NO. DATE
LICENSE FOB CALENDAR TR
ACCOUNTING DEFORMATION
Police Pension 12800
FUND
AC NUMBER 680-9R0-4-3111 00
12800
ACCOUNT FILE
•
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•
•
•
Stocks
Stocks
Stocks
Stocks
Stocks
Stocks
Stocks
STANDARD AND POOR'S INVESTMENT GRADING
rated
rated
rated
rated
rated
rated
rated
Recommendation:
BREAKDOWN OF S & P 500
A+
A or better
A- or better
B+ or better
B or better
B- or better
C or Not Rated
12.8% of
29.1% of
45.1% of
65.1% of
81.0% of
90.4% of
9.6% of
index
index
index
index
index
index
index
Equities purchased for the account will carry a minimum
S & P rating of B- with a weighted average of the equity
portfolio Standard and Poor's rating equal to B+ or better.
Stocks not rated by Standard & Poor's should have the credit
quality characteristics detailed below:
1. Total debt to total capital less than 35%;
2. Minimum current ratio of 1.8 to 1;
3. Cash flow from operations sufficient to cover
dividends, capital expenditures and debt reduction;
4 A minimum of ten years of uninterrupted operating
earnings;
5. Return on shareholder equity of 13% or better.
•
Date
Quantity
Longer Investments, Incorporated
PURCHASE AND SALE REPORT
City of Fayetteville Police Pension Fund
From 07-25-90 To 08-23-90
Security
Unit
Price
Amount
PURCHASES
07-26-90
08-22-90
07-26-90
08-10-90
07-26-90
08-22-90
08-06-90
08-22-90
07-26-90
07-30-90
07-30-90
08-03-90
07-26-90
07-26-90
07-30-90
08-06-90
07-27-90
07-30-90
08-13-90
08-06-90
07-30-90
O 0-90
0 0-90
08-03-90
08-22-90
07-30-90
08-08-90
•
1,000
500
1,000
700
1,500
400
600
300
1,200
1,000
300
1,800
500
1,000
1,000
1,000
500
500
1,600
1,200
700
800
800
1,500
500
1,000
100,000
AMP
Abbott Labs
Amoco
Amoco
Archer Daniels Midland
Archer Daniels Midland
Bristol Myers Squibb
Bristol Myers Squibb
Emerson Electric
Fluor Corp.
Fluor Corp.
Greiner Engineering
Int'l Business Machines
Laidlaw Inc. Class B
Lowe's
Luby's Cafeterias
Mobil Corp.
Mobil Corp.
Pacificorp
Reebok Int'l.
Tiffany & Co.
Toys -R -Us
Toys -R -Us
Tyson Foods
Tyson Foods
Walmart Stores
Federal Home Loan Mortgage
9.150% Due 08-08-00
1
44.94 44,945.00
37.32 18,660.00
53.57 53,570.00
55.82 39,074.00
25.07 37,605.00
21.75 8,700.00
57.94 34,767.00
57.87 17,361.00
40.07 48,084.00
44.44 44,445.00
44.50 13,350.00
13.07 23,526.00
113.07 56,535.00
22.44 22,445.00
34.82 34,820.00
19.07 19,070.00
64.94 32,472.50
64.75 32,375.00
19.57 31,312.00
13.19 15,834.00
45.50 31,850.00
28.69 22,956.00
29.00 23,200.00
26.94 40,417.50
25.25 12,625.00
30.69 30,695.00
Corp. 100.00 100,000.00
890,694.00
•
Date
Quantity
Longer Investments, Incorporated
PURCHASE AND SALE REPORT
City of Fayetteville Police Pension Fund
From 07-25-90 To 08-23-90
Security
Unit
Price
Amount
SALES
08-21-90
08-15-90
08-03-90
08-03-90
08-03-90
08-21-90
08-16-90
08-15-90
08-15-90
08-16-90
08-13-90
08-13-90
07-31-90
•
•
1,000
250
1,000
500
1,000
1,000
1,075
350
900
1,000
1,200
200
500
AMP
American Home Products
Amoco
Archer Daniels Midland
Lowe's
Luby's Cafeterias
Nestle
Philip Morris
Primerica Corp.
Primerica Corp.
Reebok Int'l.
Tiffany & Co.
Toys -R -Us
2
39.93
48.86
59.43
24.43
27.05
19.13
58.75
47.05
29.93
29.43
13.05
38.35
30.76
39,928.66
12,214.59
59,428.01
12,214.59
27,054.09
19,129.36
63,156.25
16,468.70
26,936.10
29,429.01
15,665.47
7,669.74
15,379.48
344,674.05
•
41/olice Turnback
Police Officer's Pension & Relief Fund
Annual State Turnback
Warrant Received July 27, 1990
State Warrant #90E-1610896 192,641.56
As of 06/30/90
Active
Retired
LOPFI
Totals
Allocation per total count
C
Active/Retired
LOPFI
•
25.00
38.00
30.00
93.00
63.00 680-980-4-301.00
30.00 101-901-4-301.02
Total Allocation
2071.4146
130,499.12
62,142.44
192,641.56
Reliefand—Pension Fund. The warrant was issued under authority 6Y
Appropriation Act 137 of 1989.
•
Contact Pam Davis regarding any questions on the turnback at 371-1412.
•
Nig
DAY
ECO
6
27
90
01008
4231043 04
ACCOUNT NUMBER
THIS WARRANT VOID AFTER JUNE N0,1 991
Ikubitor of $tate of TPtrkallsas
To THE STATE TREASURER, LITTLE Rte. ARK.
PAY TO THE ORDER OF
90101610896
FAYETTEVILLE lo192641
DOLLARS
CENTS
( DO NOT BEND, FOLD OR MUTLATE
19 1 21.60 1:08 200 767131:
QTY OF FAYETTEVILLE ARKANSAS
RECEIPT NO. L-
K NAA- 76 515
DATE 07/27/ 19 90
RECD FROM State of Arkansas
s 62,142.44
ADDRESS
RECD BY Rainy
DI PAYMENT OP ITEMS LISTED BELOW
DOG LICENSE NO
Police State SXNYREXIX
MEDTurnback
MALI FEMALE AGE
COLOR
NAME
NAME
R 140
R aIF DATE
BABIES CERTIF NO. DATE
fl,
CALENDAR YR
LE
LICENSE FOR CALENDAR TR
ACCOUNTING INFORMATION
FUND Gene -ml 42010
ACCOUNTING INFORMATION
Police Pension 42800
FUND
AC NuleMa 101-901-4-301 02
AC NUMBIB 680-980-4-'U11 00
#2010
42800
ACCOUNT FILE
•
56
2016108960'
QTY OF FAYETTEVILLE ARKANSAS
RECEIPT NO.L- 76514
DATE 07/27/ 19 90
RECD. FROM State of Arkansas s 130,499.12
ADDRESS
Rainy
REC'D BY
171 PATICENT or ITEMS LITTER BELOW
DOG LICENSE NO
Police State Turnback
BREED
MALE FEMALE AGE
COLOR
NAME
BABIES CERTIF NO. DATE
LICENSE FOR CALENDAR TR
ACCOUNTING INFORMATION
Police Pension 42800
FUND
AC NUMBIB 680-980-4-'U11 00
42800
ACCOUNT FILE
+: Washington Update
on Public Pensions and Benefits m
1
Contact: Cathie Eitelberg August 1990
Betsy Dotson 202/429-2750
Donna Saffle - 202/429-2755 (FAX)
CONGRESSIONAL TAX PROPOSALS
AFFECTING PENSIONS
***TAXATION OF SECURITIES TRANSACTIONS"•RELIEF FROM MAXIMUM BENEFIT AND
CONTRIBUTION RULES (Section 415)"'
Tax Bill Debate Includes Pension Provision%
Washington budget negotiators are looking for revenues to make a dent in the nation's deficit. Over
the last few months a budget "summit" has been taking place as the deficit continues to worsen.
To avoid sequestration, the automatic across-the-board budget cuts that are mandated by the
federal deficit -cutting law, (Gramm-Rudman), high-level congressional and administration officials
are looking for additional federal revenues and spending cuts. Within the framework of the fiscal
year 1991 budget bill two issues of concern to public employee retirement systems (PERS) are likely
to be decided. They are the imposition of a securities transfer excise tax (STET) and granting
relief from the maximum annual benefit and contribution limits found in Internal Revenue Code
(IRC) Section 415.
Action Needed—Send Letters—Make Phone Calls—Make Visits
Oppose --the securities transfer excise tax. Support ---the Section 415 relief bills. Public pension
officials are encouraged to send letters to their congressional delegations, especially if their
representatives sit on the House Ways and Means Committee or Senate Finance Committee. Letters
should also be sent to the President and Treasury Secretary Brady on the STET issue. Included in
this update to assist you in these efforts are sample letters, a list of the members of the tax -
writing committees, and general addresses.
It is important that you follow-up your congressional correspondence with a phone call. All
members of Congress can be reached through the Capitol Switchboard at 202/224-3121 (Senate)
202/225-3121 (House). Congress will be in recess from mid-August to Labor Day. This break
provides an opportunity to meet with members while they are in their home districts. District
office numbers are listed in your local phone directory.
Issue One: Securities Transfer Excise Tax (STET1
Although no one single STET proposal has yet to be introduced the most commonly discussed plan
would levy an 'excise tax of one-half of one percent (0.5 percent or 50 basis points) on the value
of stocks, bonds, options, futures, and limited partnership interests. Sellers would pay the tax at
the time of a secondary market sale. The only securities that would be exempt would be U.S.
Treasury debt. The Congressional Budget Office estimates that a STET would raise approximately
$10 billion annually.
Government Finance Officers Association
1750 K Street. Suite 200
Washington. DC 20006
202/429-2750
FAX: 202/429-2755
1,
I
Impact on State and Local Government Pension Plans
The STET tax would reduce investment returns to public employee retirement systems (PERS) by
the amount of the transaction taxes paid to the federal government as well as any future earnings
that these payment may have earned. Investment earnings that are used to pay transfer taxes and
not returned to the pension trust for the payment of benefits or to make additional investments
will result in a shortfall. As most governments maintain defined benefit plans, public employers
will be obligated to make up this difference. Moreover, the value of retirement benefits would be
reduced over time as governments find it harder to find the funds to make cost -of -living
adjustments.
Public plan investment officials are encouraged to estimate what the cost to their systems will be
and to communicate this information to their congressional delegations, President Bush and Treasury
Secretary Brady.
Issue Two: Section 415 Relief Leaislation Introduced
Legislation introduced in both the House and the Senate will amend Section 415 of the Internal
Revenue Code (IRC) so as to provide relief for state and local governments from the maximum
annual tax code limits on pension distributions and contributions. S. 2901, the Employee Benefits
Simplification Act, sponsored by Senator David Pryor (D -AR) is a larger bill containing a range of
pension amendments one of which is the state and local government Section 415 remedy. H.R.
5504, introduced by Congressman Robert Matsui (D -CA) is a bill containing only governmental plan
Section 415 relief provisions. Amendments in both bills:
1. )establish a uniform defmttion of comoensatiott--this change will establish parity between state
and local government compensation definitions and the federal compensation definition used to
determine retirement benefits by allowing deferrals to be included in compensation for Section
415 testing purposes.
2. Exempt governmental olans from the 100 oercent of compensation test --this exception will
assist lower -paid, long-term employees that exceed 100 percent of final pay at retirement due
to step -rate formulas or after retirement due to cost -of -living increases.
3. Exempt survivor and disability benefits --this exclusion is necessary because these benefits are
often provided to younger workers or their survivors. Under Section 415, benefits must be
actuarially reduced from age 62 to the present age of the beneficiary at the time of injury
or death. The result can be a Section 415 benefit limit well below the amount authorized
under the public plan.
4. Authorize excess olana--this provision allows state and local governments to establish excess
plans for individuals • that exceed the Section 415 dollar maximums. These plans, which are
used in the private sector, are designed to pay amounts in "excess" of the federal limits.
Pension plans are required to comply with the Section 415 limits to receive or maintain tax -
qualified status. If a plan is found to be in violation of these limits it can be disqualified by the
IRS. Such action would result in both current and future employees being taxed annually on the
value of benefits earned each year and the earnings of the trust would be subject to federal
taxation. These changes to the existing Section 415 requirements will simplify compliance for state
and local government pension plans and enable them to pay the level of benefits promised without
jeopardizing the tax -status of the trust.
2
f
•Smote letter: STET
•
•
Dear Congressman or Senator.
It is recognized that a variety of tax proposals are being considered to address the deficit as it
relates to the current budget debate. To that end I am writing to express my concern about a
recent proposal to levy a 0.5 percent securities transfer excise tax (STET) on the sale of securities.
Such a proposal would reduce public pension plan investment earnings. These losses would have to
be made up by .higher state and local taxes since we are legally bound to provide a certain level of
benefits. The end result is higher costs for state and local governments and limited resources to
protect the value of retirement benefits against inflation for our active and retired
participants.
Based on our pension fund's current market activities, this tax would cost our system S
annually. These would be dollars that are not returned to our fund to pay for benefits. Our plan
is a defined benefit plan. This means we have promised to pay a specified benefit to individuals
vested in our system. If investment earnings are used to pay transfer taxes and not returned to
the pension trust for the payment of benefits or to earn additional investment income, the shortfall
will have to be paid by the sponsoring government. In reality, it will be the taxpayers of our
jurisdiction who will pay.
The value of retirement benefits over time will also be affected. Most state and local pension
systems grant cost -of -living increases on an ad hoc basis. These increases serve to maintain the
purchasing power of retirement benefits. Employers will find it increasingly difficult to make these
adjustments because of the reduction in investment earnings to pay for them.
Some attempt to justify the STET on the basis of reducing excessive speculation and churning.
Public pension plans are long-term investors and therefore this tax is not needed as a inducement
to change investment behavior. Given your strong support to public pension systems over the
years, we urge you to reject this proposal. It will raise the cost of funding public pension plans
and result in higher state and local government taxes and lower pension benefits.
Sincerely,
Sample Letter: Section 415
Dear Senator.
I am writing in support of the Section 415 remedy for state and government pension plans
contained in the Employee. Benefits Simplification Act, S. 2901, sponsored by David Pryor (D -Ark).
Dear Congressman:
I am writing in support of H.R. 5504 sponsored by Congressman Robert Matsui (D -Ca).
(Continue either letter as follows:)
This bill contains provisions that will simplify state and local government pension plan compliance
with the maximum annual contribution and distribution rules under Section 415 of the Internal
Revenue Code.
3
I
Provisions in the bill amend the existing law that have frustrated the attempts of governmental
pension plans to meet the requirement of Section 415. A comprehensive remedy which would
establish a uniform definition of compensation and restructure the testing requirement would allow
state and local governments to pay the benefits promised to employees without jeopardizing the
tax-exempt status of the plan.
This bill is supported by a coalition of state and local government and public union
organizations. We urge you to cosponsor this legislation.
Sincerely,
Malllna Information
Honorable
U.S. House of Representative
Washington, D.C. 20515
Honorable
U.S. Senate
Washington, D.C. 20510
Letters concerning the STET should also be sent to:
President George Bush
The White House
1600 Pennsylvania Avenue
Washington, D.C. 20500
Honorable Nicholas F. Brady
U.S. Department of the Treasury
1500 Pennsylvania Ave., NW
Washington, D.C. 20220
Sonata F3atmce Commttta/s
Phmra:
Dramas (11)
Llora Emma TR 0
Sparc Mameaga mil
Dania Merman. NY
Mac Bona MT
Davi Boren OK
Bill Bremer NI
Germ Mermen. ME
Dawn ?not .AR
Canard Rama MI
far Ram WV
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Mal. CLW of Stan:
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John Damen MO
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John Hems PA
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•
House Ways and Means Committ
Wane (202) 229
Dress 1331
Dan Ram IL Chew'
Sam GLhma. a
JL Adds TX
Chariot Ramfd NY
RATS Stare. CA
Aadaw lama IN
Havid Fora TN
Fd lemma. GA
REINS Gephardt MO
Thames Dterar. NY
Fnmt Gan NJ
Marty Rum IL
Dmid Peen OH
Rohit Mama. CA
Bent Attar AR
Rams FBPpn AL
Byron Damn ND
Baur Kamen CT
Brion Dance ir: MA
W89sm Cana PA
Michael Aadaeua TX
Sander Levet MI
IIm Mar WI
Mat. CLW Counsels
R.hert Leaman
227.3625. 1102 LHOB
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Guy Manor WM. Ml
PIMP Cahn IL
Bib Freak MN
Richard SdarLa PA
Wills Gm®mt OH
Witham Thoma CA
Raymmrd Mder@t NY
Hank Brawn. CO
Rod Clanela WA
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'Ex alarm manna a an
This Update was prepared by Cathie Eitelberg, Director, GFOA's Pension & Benefits Program.
Please send copies of correspondence to the GFOA, Federal Liaison Center, 1750 K Street, N.W.,
Washington D.C. 20006. For more information please call one of the contacts listed on the front
page.
4
FAYETTEVI LLE
THE CITY OF FAYETTEVILLE, ARKANSAS
•
DEPARTMENTAL CORRESPONDENCE
•
•
TO: Police Pension Board
FROM: Sherry L. Thomas, City Clerk
DATE: August 13, 1990
SUBJECT: Next Meeting
As you have been informed, the next meeting of the Police Pension Board is
scheduled for August 23, at 2:00 p.m. in room 326.
Attached is a copy of the minutes from the July 3, 1990 meeting and a copy of
a letter from Elaine Longer with a month-end portfolio appraisal.
In addition, a representative from Madison Investments will be at the August 23
meeting.
Attachments (2)
List:
Roberts
Hoyt
Friend
Spencer
Mashburn
Linebaugh
Mayes
•
ELAINE M. LONGER. C.F.A.
•
•
LONGER INVESTMENTS, INC.
REGISTERED INVESTMENT ADVISOR
P 0. Box 490
18 E. CENTER STREET SUITE 201
FAYETTEVILLE. ARKANSAS 72701
TELEPHONE 501/443-5851
August 3, 1990
City of Fayetteville
Police Pension Fund Committee
Attn: Mr. Scott Linebaugh
113 W. Mountain
Fayetteville, AR 72701
Dear Scott:
Please find enclosed a month-end portfolio appraisal for the
Police Pension Fund. We received the initial cash deposit of
$1,000,000 this week and have been able to begin investing for
you. We will use a beginning S & P 500 value of 355.91, the date
of our first transaction, and beginning account value of
$1,442,978 for tracking purposes.
We are still awaiting the delivery of the stocks that are to be
transferred to the account, plus an additional $60,000 to make up
for 900 shares of Air Products that were sold before the
transfer.
I have also included the statement for your account origination
fee. As instructed, your Northern Trust account has been billed
for the fee. Please feel free to call me if you have any
questions or comments.
Sincerely,
a ine M. E///on(:2F r
President
•
•
•
Quantity
COMMON STOCK
Security
1,000 AMP
1,250 American Home
Products
1,000 Amoco
1,500 Archer Daniels
Midland
800 Dun and Bradstreet
1,200 Emerson Electric
1,300 Fluor Corp.
1,125 General Electric
500 Intl Business
Machines
1,000 Laidlaw Inc. Class B
1,000 Lowe's
800 Minnesota Mining 8
Mfg.
1,000 Mobil Corp.
1,075 Nestle
1,350 Philip Morris
1,900 Primerica Corp
700 Tiffany 8 Co.
1,100 Toys -R -Us
1,000 Ualmart Stores
CASH AND EQUIVALENTS
Money Market
TOTAL PORTFOLIO
Longer Investments, Incorporated
PORTFOLIO APPRAISAL
City of Fayetteville Police Pension Fund
July 31, 1990
Unit Total
Cost Cost
Market Market
Price Value
Pct.
Assets
Unit Annual Cur.
Income Income Yield
44.94 44,945.00 45.12 45,125.00 3.1 1.360 1,360.00 3.0
44.84 56,047.00 50.75 63,437.50 4.4 2.150 2,687 50 4.2
53.57 53,570.00 55.62 55,625.00 3.9 2.040 2,040.00 3.7
25.07 37,605.00 25.12 37,687.50 2.6 0.100 150.00 0.4
44.43 35,547.00
40.07 48,084.00
44.46 57,795.00
48.06 54,062.00
113.07 56,535.00
22.44
34.82
70.72
64.85
58.22
32.36
22.02
45.50
28.92
30.69
22,445.00
34,820.00
56,575.00
64,847.50
62,588.00
43,691.00
41,844.18
31,850.00
31,808.50
30,695.00
865,354.18
486,031.98
486,031.98
1,351,386.16
44.62 35,700.00
40.75 48,900.00
45.25 58,825.00
71.75 80,718.75
111.87 55,937.50
21.87
29.87
90.37
65.25
60.25
47.75
32.25
45.50
30.50
31.37
21,875.00
29,875.00
72,300.00
65,250.00
64,768.75
64,462.50
61,275.00
31,850.00
33,550.00
31,375.00
2.5 2.120 1,696.00 4.8
3.4 1.260 1,512.00 3.1
4.1 0.240 312.00 0.5
5.6 1.880 2,115.00 2.6
3.9 4.840 2,420.00 4.3
1.5 0.280 280.00 1.3
2.1 1.000 1,000.00 3.3
5.0 2.920 2,336.00 3.2
4.5 2.900 2,900.00 4.4
4.5 1.450 1,558.75 2.4
4.5 1.370 1,849.50 2.9
4.2 0.400 760.00 1.2
2.2 0.280 196.00 0.6
2.3 0.000 0.00 0.0
2.2 0.280 280.00 0.9
958,537.50 66.4
25,452.75 2.7
486,031.98 33.6 8.550 41,555.73 8.5
486,031.98 33.6
41,555.73 8.5
1,444,569.48 100.0 67,008.48 4.6
•
•
41/August 3, 1990
City of Fayetteville - Police Pension Fund
Attn: Scott Linebaugh, City Manager
113 W. Mountain
Fayetteville, AR 72701
•
Longer Investments, Inc.
STATEMENT OF MANAGEMENT FEES
Portfolio Valuation as of 07-26-90
$1,500,000.00 @ 0.25%
Account Origination Fee
TOTAL DUE AND PAYABLE
$1,500,000.00
$3,750.00
$3,750.00
$3,750.00
