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HomeMy WebLinkAbout1996-01-18 MinutesMINUTES OF A POLICE PENSION BOARD MEETING A meeting of the Police Pension Board was held on January 18, 1996, at 2:30 p.m. in room 111 of the City Administration Building, 113 West Mountain, Fayetteville, Arkansas. PRESENT: Mayor Fred Hanna, Randy Bradley, Jerry Friend, Dr. James Mashburn, Eldon Roberts, and City Clerk/Treasurer Traci Paul. ABSENT: Hollis Spencer CALL TO ORDER The meeting was called to order by Mayor Hanna. MINUTES Roberts stated the Board voted at the October 19 meeting to transfer state insurance turnback funds of $150,000 to Longer Investments. The turnback check was for $163,000. Roberts asked what happened to the remaining $13,000. Administrative Services Director Ben Mayes explained that a cash flow is done to determine what the Board can afford to invest long term. Mayes explained projected pension payments are deducted from the state turnback money, property taxes and employee contributions. Mayes stated the additional money available to invest is not always equal to the amount of the state turnback check. This time, the projection was $150,000. Mashburn, seconded by Roberts, made a motion to approve the minutes of the August 9 regular meeting and the October 19 regular meeting. The motion passed unanimously. NEW BUSINESS INVESTMENT REPORT Dean Witter Investment Report Mike Kirkland, Dean Witter, stated last year was a good year for stock and bond markets. In reviewing the Cash Account, Kirkland stated there is over $77,000 in the money fund. All the CD's are maturing this year. In May, $90,000 will be maturing and $114,000 in June. Roberts asked what the Board would get if those are reinvested right now. Kirkland stated 5%-6%. • • January 18, 1996 Kirkland reviewed a list of the current holdings in the Madison Account, the fixed income account. Kirkland pointed out that since inception, Madison has kept volatility down. He stated they are right in line with what other managers have done. Kirkland reviewed a list of holdings in the balanced Account with TCW. He explained that in the future the Board might consider moving some of the fixed income money over to a fixed income manager and having the stock side with a stock manager. It would give a clear picture of what the fixed income side did and what the stock side did. In answer to a question from Mayes, Kirkland explained he would have to look at the numbers before he could decide whether to use TCW or another manager. Kirkland stated he wanted to talk about a different strategy at the next meeting. In answer to a question from Mayes regarding 1996, Kirkland stated we are still looking for things to be up. We are looking for rates to be down. Corporate earnings may be affected some by the slow down of the economy. MAYES - COST BASIS SUMMARY Mayes distributed a cost basis summary and explained that the numbers are just about where the investment policy says they need to be. In answer to a question from Roberts, Mayes stated City held investments is $28,000. Mike and his cash fund has $77,000. That is right at $106,000. Our goal is to keep three months of pension benefits. JERRY FRIEND RETIREMENT Friend presented a request for pension to the Board. Roberts stated Friend's retirement is to be effective February 3, 1996. On Saturday, February 3, Friend would go off City pay and go on police pension pay. Roberts, seconded by Bradley, made a motion to accept the retirement request by Sergeant Jerry Friend effective February 3, 1996. The motion passed unanimously. 1 January 18, 1996 DISCUSSION REGARDING COMPOSITION OF THE BOARD Roberts stated the retirement of Jerry Friend will change the percentages of the active members and the retired members in the fund. There is a law that states as the percentages change, the composition of the Board must change. Roberts stated there will be 14 active members and 45 retired members when Jerry retires. Paul stated she would check the pension laws. INVESTMENT REPORT Longer Investments Elaine Longer, Longer Investments, distributed the portfolio appraisal and other reports. Addressing the Combined Account, Longer stated the equity part of the portfolio at year end was 46.5%. Corporate bonds were 9.6% and Government bonds were 37.3%. The total market value on the portfolio at year end was just $26,000 shy of $4 million. The income yield on the portfolio is $165,000. Equity as a percentage of the Stock Account is 73.6%. Longer explained that the reserves are good. Longer reviewed a list of the largest holdings, the top five stocks in the equity portfolio. She stated as a percent of the portfolio, based on historical cost, we drop to 1.8% of total after the top five. There is no stock as a percent of total portfolio that makes up more than 2.4%. Longer stated the portfolio is welldiversified with good, high quality companies. Longer reviewed to portfolio parameters. Longer stated the performance history report goes back to account inception. For 1995 stocks were up 28% and the fixed income part of the portfolio was up 15%. The total account was up 19.5%. Longer explained that the account reconciliation shows beginning portfolio value, net deposits, and withdrawals. Ending value at year end was 3.9 million. Total investment return for 1995 was about $628,000. From account inception to date, total investment return has been $1,254,489. Longer reviewed the portfolio income and yield report. Longer stated the weighted average maturity on the entire bond portfolio is right at about 5 years with 28% maturing in 3 years. In reviewing the 1995 expense summary, Longer stated management fees plus custody fees are .97% of the portfolio. Total expenses ratio is 1.42%. • • • January 18, 1996 Looking on to 1996, Longer stated before the collapse of the budget talks we were looking at another growth type year in the economy. Longer explained the effects that the government has had on the market. Longer explained that not having a budget deal in place hangs a grey cloud of uncertainty over many of the issues. Longer stated she is being careful. The main thing is to preserve the gains from the last year. Mayor Hanna left the meeting at 3:23 p.m. The Board briefly discussed the status of Walmart stock. The meeting adjourned at 3:30 p.m.