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%.
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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.
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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%.
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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.