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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. 2 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. 3 • 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. • 4 •