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HomeMy WebLinkAbout1994-04-21 Minutes• MINUTES OF A POLICE PENSION BOARD MEETING A meeting of the Police Pension Board was held on April 21, 1994, at 2:30 p.m. in Room 326 of the City Administration Building, 113 W. Mountain, Fayetteville, Arkansas. PRESENT: ABSENT: Eldon Roberts, Hollis Spencer, Mayor Fred Hanna, City Clerk Sherry Thomas, and City Treasurer Glyndon Bunton Dr. James Mashburn, Clint Hutchens, and Jerry Friend CALL TO ORDER The meeting was called to order by Eldon Roberts. MINUTES Spencer, seconded by Bunton, made a motion to approve the January 20 and February 15, 1994 minutes. The motion passed unanimously. OLD BUSINESS MEDICAL RETIREES Roberts stated he felt it was fine to notify the medical retirees about an update from their doctors regarding their medical disabilities. However, it is the retiree's responsibility to notify this Board on an annual basis. Thomas distributed copies of a letter from Don Kilgore's physician regarding his medical disability. Bunton asked if there were any different requirements for a medical retiree and a line of duty disability retiree. Roberts stated he did not believe there were any differences. NEW BUSINESS MADISON INVESTMENT REPORT Kay Frank, Madison Investments, Madison, Wisconsin, attended the meeting and reported on the 1993 year end and the first quarter investments. She stated last April the economy was not very good. There were tax hikes, consumer confidence was down, and there was a general negative feeling in the country. But, both the stock market and the bond market were doing okay. The economy was still pretty strong in the fourth quarter of 1993, but Madison was anticipating a change in the markets. So, they started to lighten maturities and to take more risk off the table. The portfolio is down .6 of 1% as of March 31, 1994. Interest rates have risen, so the markets have gone down. The average annual rate of return on the fund for the past 4 to 4 1/2 years has been about 9%. • • April 21, 1994 Frank stated today the yield on treasury bills is a little over 7%. The stock market has moved very far, very fast, so they are expecting a retracement of some of the loss in the market. They expect a small rally in the not too distant future. The federal bank has just begun to raise short term interest rates. The bond market may have an impact on the economy as a result of these increasing interest rates. However, Madison does predict there will be some volatility over the next year or two in the markets. They do expect to have a good year in 1994. Bunton asked in order to take advantage of the anticipated rally, what securities would Madison be investing in. Frank stated they will be looking into selling some of the 3 year maturity treasuries and buying 30 year bonds when their returns increase. DEAN WITTER INVESTMENT REPORT Mike Kirkland stated there is $84,293 in cash, and the TCW balance as of March 31, 1994 was $1,504,001. The S&P was down 8.1%, the Dow was down 9.4%, and TCW was down 7.25%, which is a little better than average. Most of the drop happened in one month. The portfolio is split 65% in stocks, 35% in bonds, and 5% in cash. Kirkland stated the stock market has recovered a little, and they expect it to increase a bit more. They also expect to see long term bonds earn around 7.5%. He stated TCW's return over a 5 year period was about 14%. TCW has had this account since August 19, 1993. Kirkland stated housing starts were up again in March, but they were flat in February. They do not think the higher interest rates will effect the jumbo mortgages that much, so they expect the housing starts to continue to grow, which is good for the economy and the investment markets. LONGER INVESTMENT REPORT Elaine Longer stated the bond market has gone down, and long term interest rates have moved up. The markets are currently in a transition stage. She stated the portfolio has 44% in equities and 13% in cash. She has been working on gaining buying power to be able to take advantage of increasing treasury bill rates. She has been buying some of the 6% treasuries due in November, 1997. The bond portfolio has 30% in corporate bonds and 53% in government bonds. The stock portfolio is split about 50% in mid -cap stocks and about 50% in the larger companies. Longer stated the portfolio is down 4.11% for the first quarter of • 1994. The total account return since inception is 8.33%. She stated there have been $96,708 in realized gains year-to-date. She 1 • • • April 21, 1994 stated it has been some time since the portfolio has had a down quarter such as this one. The earnings of the companies in the stock portfolio continue to look good, so they are anticipating a growth in the returns for the balance of 1994. Longer stated there may be another increase in the prime interest rate. She wants to be in a position to take advantage of the decline and have cash ready to make investments. OTHER BUSINESS Roberts stated elections will need to be held the first part of May because two of the positions come up for appointment. He stated he will call a meeting of the active members. Spencer stated he would contact the retirees regarding the retiree position. ADJOURNMENT The meeting adjourned at 3:35 p.m.