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HomeMy WebLinkAbout2001-04-19 - Agendas - Final POLICE PENSION AND RELIEF FUND BOARD • AGENDA April 19, 2001 A meeting of the Fayetteville Police Pension and Relief Fund Board will be held on April 19, 2001 at 1 :3 O.m. in Room 326 of the City Administration Building located at 113 West Mountain. 1 . Approval of the minutes 2. Pension list 3 . Gary Dugger, formal approval of retirement 4. Bill Brooks, payment of death benefits 5 . Investment Report • MINUTES OF A MEETING OF THE FAYETTEVILLE POLICE PENSION AND RELIEF FUND BOARD JANUARY 18, 2001 A meeting of the Fayetteville Police Pension and Relief Fund Board was held on January 18, 2001 at 1 :30 p.m. in Room 326 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. PRESENT: Mayor Coody, Eldon Roberts, Hollis Spencer, Jerry Friend, Dr. Mashburn, Randy Bradley, and City Clerk Heather Woodruff. APPROVAL OF THE MINUTES Mr. Roberts moved to approve the minutes. Mr. Spencer seconded the motion. The motion carried unanimously. PENSION LIST Ms. Woodruff stated Mr. Gary Dugger had been added to the pension list. GARY DUGGER • Mr. Roberts explained Mr. Dugger was up for retirement January 5, 2001 . It was a standard ordinary retirement. He had twenty years in. When they got ready to process his paperwork, it was learned that if he stayed on the payroll for one more pay period, after his retirement, then the city pay plan allowed him to add $ 1 ,000 to his yearly pension for longevity. This would allow him to draw $900 a year more on this pension plan. They were going to hire Gary at the police department in a civilian position. So, Gary stayed on, instead of retiring on January 5, he was still in the Police roll and is drawing police salary. He will retire on January 22. He was also going to by some military time. They were not quite ready to vote to formally retire Mr. Dugger. In response to questions, Mr. Roberts stated that in order to receive the longevity pay you have to work one full pay period past your twenty year anniversary date. He had to wait until he retired to buy his military time. They had to pay the Pension Plan a certain amount of dollars to use those years. Gary's was approximately $800. They could formally approve his retirement at the next meeting. INVESTMENT REPORT . Ms. Elaine Longer, Longer Investments, stated the market closed for the year down about 10% on the S&P and about 79% on the NASDQ. The equity portion of your account was down about 10%. Bonds were up about 9%. The total account was off about .2 for the year. They were in a good position coming into this year because they had purchasing power. They had asset allocation to the equities were at 40%, which was at the lower range of their allocations. They had plenty of room • to increase exposure as they moved forward. The first quarter of this year was looking very weak. 1 • Police Pension January 18, 2001 Page 2 There was a lot of economic weakness out there. The Bush administration did plan to put forth a tax-cut proposal within the first six-weeks. If they could make it retroactive it would affect withholdings immediately. Combined Portfolio, which combined the bonds and the stocks, the total equity exposure was at 40%. If they looked at the common stocks and the equity mutual funds. They have hedged several of their technology stocks. Last year they made over $60,000 just on hedging. The Bond Portfolio, the Corporate Bonds made up 20% . They had to be very diligent on credit quality. They had to sell the AT&T Bonds which had been in the portfolio because in the break up announcement of AT&T where they were breaking into four smaller companies. There wasnothing disclosed to the creditors on here the 52 billion dollars in debt will be apportioned. Holding a AT&T Bond with a AA credit rating was quite different than ending up with a bond that was backed by the cable operations. Rather than wait for a credit downgrade they went ahead and sold the AT&T Bonds. They had also sold the Tyson Bond, because when the announced the acquisition of IBP there was a potential of a down grade. This was a part cash and part stock. It would take their debt to total capitol up to over 57%. They sold the bonds in anticipation of a down grade. When the acquisition was completed the bonds were down graded. Government Treasuries made up about 15.5% of the • portfolio. They rolled forward a lot of the maturities during the raising interest rates period. For the . total portfolio they had 5% purchasing power, which they were holding in cash reserves to use on the equity side to eventually increase the 40% equity. The overall portfolio income yield, dividends and interest, was $484,000. That represented approximately 4.3% yield on market value. Combined Total Report, realized gains for the year were at $ 1 ,700, net income in the form of dividends and interest was $345,000 for last year. Bond Portfolio, the yield on fixed income was 6.6 %. The weighted net maturity was 3 .6 years. Return summary for the year 2000, equities were down about 10%. Bonds returned about 9%. The total portfolio was off 20 basis points. Their ten year average return was 12.5% on stocks, 6.6 % on fixed income and 9% total. That was net of all expenses. Total return on dollar bases, the investment appreciation was 3 .964 million. That was net of all expenses. In response to questions regarding the pension investment policy, Ms. Longer stated they reviewed the policy last year during the first quarter, because there was some questions on the impact on the portfolio when the market was down. They had reviewed what their volatility could be given the change in the stock market. They could do that on an annual basis if they wanted to do that. • Mr. Roberts asked her to review it for herself and if she felt they needed to address something to bring Police Pension • January 18, 2001 Page 3 it to their attention. Expense Summary, their management fees were about 75 basis points. Custody fees were 8/100 of 1 %. Each year their expenses have gone down. As they have consolidated their portfolio, they have been able to minimize the expenses to the portfolio by staggering the fees out. The larger their account the less their custody fees are percent. Meeting adjourned at 2:25 p.m. z • •