HomeMy WebLinkAbout2000-12-21 - Agendas - Final POLICE PENSION AND RELIEF FUND BOARD
AGENDA
DECEMBER 21, 2000
A meeting of the Fayetteville Police Pension and Relief Fund Board will be held at 1 :30 p.m. in
Room 326 of the City Administration Building.
1 . Approval of the minutes
2. Approval of the pension list
3 . Investment report
4. Other business
•
MINUTES OF A MEETING
OF THE
FAYETTEVILLE POLICE PENSION AND RELIEF FUND BOARD
SEPTEMBER 21 , 2000
A meeting of the Fayetteville Police Pension and Relief Fund Board was held on September 21 ,
2000 at 1 :30 p.m. in Room 326 of the City Administration Building located at 113 West
Mountain, Fayetteville, Arkansas.
PRESENT: Mayor Hanna, Hollis Spencer, Jerry Friend, Randy Bradley, Eldon Roberts, and City
Clerk Heather Woodruff.
MINUTES
Mr. Spencer moved to approve the minutes. Mr. Friend seconded the motion. Upon roll call the
motion carried unanimously.
PENSION LIST
Mr. Roberts stated Mr. Schuster had been added to the pension list. The gross pay under his
name was not what he will be drawing per month, but this had a fraction of a month added onto
it. He had retired in the middle of a month.
• Mr. Roberts moved to approve the pension list. Mr. Bradley seconded the motion. Upon roll
call the motion carried unanimously.
INVESTMENT REPORT
Ms. Elaine Longer, Longer Investment, stated they had cut off at the quarter for their report.
They had also included an update up to August 31 .
As of June 30, their equity weighting was 42-43% mutual funds and common stock. Total
market value was 11 .28 million dollars. The August 31 , 2000, report for the same portfolio
increased the equity exposure to 49%. The Market value on August 31 was approximately 11 .62
million dollars. The realized gains year to day were approximately $ 145,000. Net income was
approximately $ 156,000. Summary of expenses, the total expense ration in 1997 was 1 .49%, in
1998 was 1 .32%. Since the consolidation of the account the total expense ratio has dropped to
about a 1 . 1 %. That included all of their expenses. As the assets went up in size the fee schedule
goes down. The Bond Fund, during March, April, and May they were rolling all of their
maturities forward that they could roll forward so they could capture those higher interest rates.
Now that those rates were going down they did not really have any maturity risk in the portfolio.
They did not have anything maturing until the first quarter of next year. Those maturities only
amounts to about 4% of the total portfolio. They were well structured as far as their corperate
bonds went. Government bonds, most of those maturities went past 2002. Government agencies
were the same way. The first maturity came up in May of next year. Income Yield on book
value of bonds was approximately 6.5%. The income yield on the total portfolio was 4.5%,
including stock. Their target there was to try and keep it at a 4% income yield on book value.
• The weighted average maturity on their bonds was only four years. They had approximately
Police Pension Minutes
September 21 , 2000
Page 2
6.5% yield in the four-year maturity. That compared to the ten-year yield which was at 5 .9%.
The thirty-year yield was approximately 5 .85%. They had a good strong yield, without a lot of
risk of a lengthy maturity structure. The bonds were 55% of portfolio.
Mr. Roberts stated a complete study had been authorized to the distribution of the Insurance
Turnback. It was going to be later in the year before they received their check. They did not
know what to expect yet.
Ms. Longer stated the next report was the summary of preformance. The average annual return
thru August 31 , 2000 was approximately 13 .3% on Stock, 6.8% on Bonds and 9% overall. That
is net of all expenses. Thru August 31 , Bonds were 4.6%. This year there was a declining
interest rates they had the income on bonds, plus a little bit of capital appreciation. It was the
opposite of last year. Last year the total return on bonds for the year was only 2.8%. This year
we were starting to see a decline in interest rates. They had the reverse of that happening. They
were earning income plus a little bit of capital appreciation. Their account was up approximately
2%. The market was relatively flat to down thru August 31 . The S&P was up approximately
2%. The NASDQ and the Dow were down approximately 34%. Total investment return, was
3 .81 %. The portfolio was well balanced. Earning should be up 13-18% for the year. Their
• technology weighting was approximately 39%. Their financial stock had done well.
OTHER BUSINESS
Mr. Roberts stated the people who were retired received a State supplement. The last legislative
session passed a law to provide that for two-years. They had sent the money for one-year. We
had not received the money for the second year. We did not receive the money in time for one of
the pension checks. The supplement money has now come in and has been put on the next check
for both this month and last month. That was only a two-year supplement. The legislature would
have to rededicate the month in order for them to continue to receive the money. It was only
good for another year. That money came from the State and not our Pension Fund.
Meeting adjourned at 2:05 .
•
POLICE PENSION FUND
JANUARY, 2001
EMP# NAME GROSS FED. TAX ST. TAX NET
154 ALLEN, CHARLES 2,244.53 220.00 66.89 1 ,957.64
152 ARNOLD, WILLADEAN 853.00 853.00
130 BAYLES, DON 1 ,384.31 11384.31
107 BLACK, JOE P 985.99 100.00 20.00 865.99
120 BOWEN , J R 613.19 10.00 603. 19
147 BRADLEY, GERALD 4, 172.85 840.53 117.32 3,215.00
139 BRADLEY, RANDALL 21482.20 21482.20
101 BROOKS, BILL 1 ,325.79 1 ,325.79
157 CARROLL,RONALD L 39132.22 435.00 180.00 21517.22
151 COLE, RUSTON 29659.53 600.00 200.00 1 ,859.53
109 COOPER, ADRIAN 565.71 565.71
111 DAY, LUCILLE 400.00 400.00
108 DENNIS, WARREN 1 ,202.71 1920271
125 FLOWERS, HAROLD 759. 10 759.10
140 FOSTER, BILLIE D. 2,781 .68 300.00 120.00 21361 .68
148 FRIEND, JERRY 2,734.53 350.00 150.00 20234.53
145 HANNA, MARK 21376. 11 225.00 75.00 2,076. 11
124 HASKINS, RONALD 689.73 689.73
146 HUTCHENS, BERNICE 889.85 130.00 759.85
143 JOHNSON, CHARLES 2, 133. 14 42.67 2,090.47.
103 JOHNSON, WENDELL 690.55 690.55
118 JONES, BOB 2,862.00 2,862.00
• 144 KILGORE, DONALD 1780.31 19.72 1 ,760.59
129 LAWSON, FORREST 1 ,367.48 200.00 1 ,167.48
150 LITTLE, PATSY R 400.00 400.00
153 LORCH, DONNA G 400.00 400.00
156 MARTIN, KENNETH 3200.49 1000.00 140.00 2,060.49
128 MCCAWLEY, LARRY 1 ,476.94 180.00 20.00 1 ,276.94
116 MCCHRISTIAN, MARIE 400.00 400.00
126 MCWHORTER, KAREN 500.02 500.02
136 MITCHELL, MICHAEL 2,003.56 150.00 1 ,853.56
141 MUELLER, ROSEMARY 1 ,795.38 19795.38
158 MUNSON,ANGELA 3,621 .36 500.00 183.00 2,938.36
112 MURPHY, JAKE 400.00 400.00
137 PERDUE, LARRY 2,018.55 200.00 25.00 1 ,793.55
132 PHILLIPS, HOMER GENE 19528.40 300.00 1 ,228.40
105 PRESTON, GEORGE DAVII 19396.37 67.43 196.37 19132.57
135 RICKMAN, LOREN 1 ,939.54 230.00 65.00 11644.54
104 RIGGINS, RAYMOND C 1 ,455.01 125.00 25.00 11305.01
159 SCHUSTER,JOHN H. 2,689.07 340.00 110.00 2,239.07
122 SKELTON, FRANK 728.67 728.67
123 SPENCER, HOLLIS 11201 .65 150.00 36.65 19015.00
155 STOUT, BETTY 430.25 430.25
133 SURLES, JERRY 2,362.50 412.50 50.00 1 ,900.00
142 TAYLOR, DENNIS 1 ,795.38 65.00 65.00 1 ,665.38
106 UPTON, FRANKLIN 926.84 10.00 916.84
110 WATTS, BEULAH 400.00 400.00
149 WILLIAMS, JOYCE 1 ,232.07 217.07 1 ,015.00
• 134 WITT, DON _--1 ,539.09 - ---6400 -� 115.00 1360.09
127 WOOOOD, PAUL J 1 ,378.72 1 ,378.72
$78,306.37 $7,421 .53 $29022.62 $68,862.22
LONGER INVESTMENTS INCORPORATED
M --_- A Rryislrrrd limrs6nnif Advisor
December 21 , 2000
Mr. John Maguire .
City of Fayetteville Police Pension Fund
113 West Mountain
Fayetteville, Arkansas 72701
Dear John:
Yesterday we sold the Tyson Corp. 7.00% due 05-01 - 18-bond issue in the City of
Fayetteville Police Pension Fund account. Following the announcement that Tyson is
offering to acquire all of the outstanding stock of IBP Inc. through a part-cash, part-stock
transaction, a major bond rating agency placed Tyson Foods Inc. on CreditWatch with
negative implications (see enclosure).
Even though the proposed transaction would make Tyson Foe + the world's leading
marketer of beef, pork, and chicken, debt would increase sign' fi;:antly. The total debt to
capitalization is expected to increase to about 56%, because of the debt incurred by Tyson to
• fund the acquisition. The company may face challenges in combining these two
organizations that could also impact their ability to pay interest and principal on outstanding
bonds.
If the bonds were downgraded in the future, they would be bi4c-w investment grade. The
policy of the Fayetteville Policemen Pension Fund stipulates a minimum credit rating of "A"
or better by Moody' s or "A" by Standard & Poor's. We are concerned the debt downgrade
would negatively affect the price of the bonds, so we have so'd in anticipation of the possible
rating change. We will reinvest the bond proceeds in a similar maturity, high credit quality
bond. We wanted to inform you of this decision, since we rarely sell bonds we have
purchased for accounts, unless there is a compelling reason to do so. Please feel free to call
if you have any questions or if we can be of further service.
Sincerely,
Elaine M. Longer, CFA
President
EML/tl
Enclosure
• P.O. 13nr 1269
FnlT1hig1 r, Alknnsns 72;02
7f�f1111011f: 50 '4 ki'J Y-i � .
7011 frfr: 300827-7710
hu 501-447-7129
Page 1 of 2
Publication date: 05-Dec-2000
Reprinted from RatingsDirect -
News
Tyson's Long-Term Ratings Placed on CreditWatch Negative, CP Affirmed
Following Announcement
Analyst: Pamela L Atkins, New York (1) 212-438-7823
NEW YORK (Standard & Poors CreditWfre) Dec. 5, 2000 — Standard & Poor's
today placed its ratings of Tyson Foods Inc. on CreditWatch with negative
implications (see list below). Tyson's 'A-2' commercial paper rating is affirmed
and is not on CreditWatch. These actions follow the announcement that Tyson
is offering to acquire all of the outstanding stock of IBP Inc. through a part-cash,
part-stock transaction.
IBP's ratings (see list below) remain on CreditWatch with negative implications,
where they were placed Oct. 2, 2000.
Under Tyson's proposal, IBP shareholders will receive $26 per share of IBP
stock, 50% in cash and 50% in Tyson class A stock. The transaction will have a
total value of $4.2 billion, including the assumption of $1 .4 billion of IBP debt.
The terms of this proposal are subject to the negotiation of a definitive merger
agreement. Standard & Poor's expects that the cash portion would be debt-
financed, if the transaction is finalized.
• The proposed transaction would make Tyson the world's leading marketer of
beef, pork, and chicken. While the equity portion of the proposed transaction is
significant, debt on a pro forma basis would increase significantly and credit
protection measures are expected to weaken materially. Standard & Poor's
expects total debt to capitalization to increase to about 56% , and earnings
before interest and taxes (EBIT) to total interest to drop below 3.0 times.
Standard & Poor's will monitor this situation, and assuming the transaction
moves forward, meet with management at Tyson to discuss the operating
strategies and financial policies of the combined entity. — CreditWire
RATINGS PLACED ON CREDITWATCH WITH NEGATIVE IMPLICATIONS
'Fyson Foods Inc . Rating
Long- term corporate credit rating A-
Senior unsecured debt A- -
RATING AFFIRMED; NOT ON CREDITWATCH
Tyson Foods Inc . Bating
Short-term corporate credit rating A_ Z
RATINGS REMAINING ON CREDITWATCH WITH NEGATIVE IMPLICATIONS
• IBP Inc .
Corporate credit rating A- /A-2
Senior unsecured debt A-
http://www. standardandpoors.cotr./ratings/corporates/DCWS/tyson.htm 12/20/2000
Page 2 of 2
CP A- 2
Shelf reg for senior unsecured debt ( prelim) A-
IBP Finance Co . of Canada
i Senior unsecured debt ( Gtd : IBP Inc . ) A-
This report was reproduced from Standard & Poor's RatingsDirect, the
premier source of real-time, Web-based credit ratings and research from an
organization that has been a leader in objective credit analysis for more than
140 years. To preview this dynamic on-line product, visit our RatingDirect
Web site at www-standardandpoors.corn/ratingsdirect. Standard & Poor's.
Setting The Standard.
Stfll2&M & P9wr'S . .
A DMOUa rATFe.�lywod!!$Caa@ury
Published by Standard 8 Poor's. a Division of The McGraw-Hill Companies, Inc. Executive offices: 1221
Avenue of the Americas, New York, NY 10020. Editorial offices: 55 Water Street, New York, NY 10041 .
• Subscriber services: (1) 212-438-7280. Copyright 2000 by The McGraw-Hill Companies, Inc.
Reproduction in whole or in part prohibited except by permission. Ali rights reserved. Information has
been obtained by Standard 8 Poor's from sources believed to be reliable. However, because of the
possibility of human or mechanical error by our sources, Standard 8 Poor's or others. Standard 8 Poor's '
does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible
for any errors or omissions or the result obtained from the use of such information. Ratings are statements
. of opinion, not statements of fact or recommendations to buy, hold, or sell any securities.
http://www.standardandpoors.com/ratings/corporates/news/tyson.htrri 12/20/2000
LONGER INVESTMENTS INCORPORATED
,I Rali::Irnst Inrlslmml A111knr
October 26, 2000
Mr. John Maguire
City of Fayetteville Police Pension Fund
113 W. Mountain
Fayetteville, Arkansas 72701
Dcar .lohn :
Yesterday we sold the AT&T Corp 5 .625111 due 03- 15-04-bond issue in your account.
AT&T announced a restructuring plan that will essentially break the company into four
parts. AT&T has debt outstanding of approximately $60 billion , and the restructuring
plan did not contain specific information on how this debt will be apportioned between
the surviving pieces of the parent company. Our concern is that the debt may face a
credit downgrade because some of the companies spun-off may not have the strong
financials, and strong earnings that AT&T exhibited . It is quite different to own AT&T
bonds than it is to be i creditor of the subsidiary that owns the cable properties and
generates no earnings. In order to protect capital, we sold the bonds rather than to wait
and see the way the debt will be distributed . We will reinvest the bond proceeds in a
similar maturity, high credit quality bond .
We wanted to let you know of this decision, since we rarely sell bonds we have
purchased for accounts, unless there is a compelling reason to do so. Please feel free to
call if you have any questions or if we can be of further service.
Sincerely,
Elaine M . Longer, I FA 1/
President
EM L/tl
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7VItEARKANSAS FIRE & POLICE PENSION REVIEW BOARD
P.O. DRAWER 34164
LITTLE ROCK, ARKANSAS 72203
RECiEIV1- t- TELEPHONE: (501 ) 682 - 1745
FAX: (501 ) 682 - 1751
email: info@lopfi-prb.com
OCT 05 2000 website: wwwlopfi-prb.com
October 3, 2000 ACCTG. DEP T
Dear Sir or Madam:
The 82nd General Assembly of the state of Arkansas passed Acts 1570 and 1288 in
1999. These Acts provide for a new method of distributing the insurance
premium tax turnback funds for the police and fire districts who provide pension
coverage through LOPFI and/ or a closed local plan. Distribution of the pension
funds will now be based on a formula, which will use land area in square miles
and total population. A component of this legislation designates the University
of Arkansas at Little Rock (UALR) Geographic Information Systems (GIS)
Laboratory to map the boundaries of the state's 253 fire and 141 police districts
that provide pension coverage and to provide the land area and population totals
for each district.
Sarah Breshears, Phyllis Smith, and their staff from UALR will be contacting all
participating districts to obtain the legal descriptions of the boundaries. The
process *
include a personal visit and a visual inventory or measurement of
the boundaries. The law requires that a local official (mayor, police chief, fire
chief, or county fire coordinator) certify the boundaries. Upon completion of this
certification, you will receive maps depicting your district s boundaries. Please
note that the law provided the funding to pay for this process, so there is no
direct cost for this mapping to your department.
This legislation was written to correct inequities in the distribution of funds. We
believe it is a worthwhile endeavor and the end result will be a more accurate
allocation of insurance premium tax turnback funds. We encourage you to
cooperate fully with the UALR researchers.
Sincerely,
Cathyrn Hinshaw, Executive Director Richard Drilling,
Arkansas Fire and Police Pension Arkansas Department
Pension Review Board of Finance & Administration
•