HomeMy WebLinkAbout1996-10-24 MinutesA special
24, 1996
Building,
PRESENT:
t
MINUTES OF A POLICE PENSION BOARD MEETING
meeting of the Police Pension Board was held on October
at 10:00 a.m. in room 326 of the City Administration
113 West Mountain, Fayetteville, Arkansas.
Mayor Fred Hanna, Eldon Roberts, Jerry Friend, Hollis
Spencer, Dr. James Mashburn, Randy Bradley, and City
Clerk/Treasurer Traci Paul
CALL TO ORDER
Mayor Hanna called the meeting to order and explained . that the
meeting was a continuation of the October 17 meeting.
CHANGES IN ALLOCATION OF FUNDS
Mashburn made a motion to leave the Madison Account with Dean
Witter, move the TCW Account to Morgan Keegan for Mike Kirkland's
proposal to have two managers as presented at the October 17
meeting, invest the available turnback funds of $155,000 and the
$279,814 that is in the Dean Witter Cash Account with Elaine
Longer.
In answer to a question from Friend regarding the need for a cash
account, Administrative Services Director Ben Mayes stated we do
not need that much in the cash account. Over time it has built up
to $279,814. We try to maintain a minimum of three months of
pension payments which would be approximately $100,000.
Mashburn stated he would change his motion. He proposed to move
$150,000 of the cash account plus the turnback funds of $155,000 to
Elaine Longer.
Roberts asked who oversees the fact that we keep a little cash on
hand.
Mayes explained that the Accounting Department monitors that.
Mayes stated we keep the money at Dean Witter because they can earn
a better interest rate on their cash account than we can. We just
draw money as we need it.
Roberts asked how Dean Witter comes up with cash if they start
running short.
Mayes stated their are several things that bring money into the
Fund throughout the year.
Mashburn asked if the Board wanted to leave $100,000 with Dean
Witter in a cash account or transfer the cash account over to
Longer Investments.
October 24, 1996
Mayor Hanna asked if the funds for pension payments comes from Dean
Witter or from City held investments.
Mayes stated both. The City held investments is usually only
around $2,000.
Bradley suggested the Board should extend its risk in equities by
changing the equity percentage from 20% - 40% to 25% - 45%.
Roberts 'suggested inviting Elaine Longer to the next meeting to
work with the Board on what we can do to increase our exposure to
the equity market.
Paul asked if Elaine Longer would be reviewing the investment
policy. The Board said yes.
Friend stated we should send Elaine Longer an invitation to attend
the meeting to review the policy and copy of the investment policy.
Roberts suggested sending a copy of the actuary and a list of total
investments might be helpful.
Mashburn suggested sending a letter soon asking Elaine Longer to
make a presentation at the January meeting and asking her to
request any documents that she may need to help make a
presentation.
Mayor Hanna asked how changing the investment policy would reflect
how the other managers operate.
Mayes stated when all of the managers were hired they were given a
copy of the policy. You hired Madison to be nothing but a fixed
account. You hired TCW to be a balanced account. Mike was the
Board hired counselor to keep TCW within parameters that balanced
between stock and balanced between equity. Elaine Longer was hired
as a balanced manager. The Board did everything the way it should
have been done with one exception. The policy states that the
Board should review its investment methodology, including its
investment policy, semi-annually. Mayes suggested leaving the
basic guidelines the same with the exception of increasing the
equity. Mayes stated the Board could set separate policies for
each individual manager on the maximum equity percentage. The
Board can discuss the structuring with Elaine Longer at the January
meeting.
Roberts commented that the Board has preached conservatism but now
we have enough safe investments that we can afford to take a little
risk.
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October 24, 1996
Mayes stated the Board asked him to research about the South
African. It is no longer a State Statute. It was repealed so it
can be deleted from the policy in January.
Mayes stated it was estimated that $155,000 was available for
investment from the turnback funds but we are down to $152,000 so
the motion needs to be changed to $150,000 on the turnback.
Mashburn agreed to change the amount of turnback funds invested to
$150,000.
Roberts stated $150,000 from the Dean Witter cash account plus the
$150,000 in turnback funds will be transferred to Elaine Longer.
Mayor Hanna stated Dr. Mashburn's motion is to leave the Madison
Account with Dean Witter, transfer the TCW account to Mike Kirkland
at Morgan Keegan, take $150,000 out of the Dean Witter cash account
plus $150,000 in turnback funds and give to Elaine Longer. Roberts
seconded the motion. The motion passed unanimously.
Roberts stated we need to send a letter to Mike Kirkland and ask to
manage the account like he mentioned at the October 17 meeting.
Mayor Hanna asked if the Board wanted Mike Kirkland and Jim Wood to
attend the meeting in January or just send a written report.
Roberts stated lets dust let them send a written report because
that meeting will be time consuming.
Mayes reported that the City has the turnback money invested until
next Thursday. Mayes stated it will be wired on Thursday or Friday
of next week. We will get with Dean Witter next week also.
Roberts commented that historically, for the long term, the stock
market is where the money is.
Mayor Hanna stated the Board's main charge is to preserve the money
while making as good a return as possible. There is a risk to
everything.
Mashburn stated prior to the July thing, Elaine anticipated what
was going to happen and was prepared. She is a very sharp money
manager.
Mayes stated for your information on a cost basis you have $7.6
million. On a market basis you have $8,136,000. On a cost basis
your equity percentage is 30 and on a market basis it is 35.1.
There is a big difference in cost and market calculations.
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October 24, 1996
Mayes stated we will pull the Actuary Study and see where they
projected you to be by the end on 1996.
In answer to a question from Bradley, Mayes stated he would write
a letter to TCW notifying them to halt trading.
The meeting adjourned at 10:28 a.m.
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