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HomeMy WebLinkAbout2004-01-15 - Agendas - Final O Police Pension and Relief Fund Board of Trustees Agenda January 15, 2004 A meeting of the Fayetteville Policemen's Pension and Relief Fund Board wil] be held on January 15, 2004 at 1 :30 p.m. in room 326 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. 1 . Approval of the Minutes of the July 17, 2003 Meeting, August 28, 2003 Special Meeting and the October 16, 2003 Meeting 2. Approval of Pension List for January 2004 and February 2004 3. Schedule of Meetings for 2004 1 4. Arkansas Fire & Police Pension Review Board Letter ® 5. Parking Tags 6. Investment Report f 7. Other Business - Police Pension Meeting Minutes July 17, 2003 I _ Page 1 or 12 Police Pension and Relief Fund Board of Trustees Meeting Minutes . July 17, 2003 A meeting of the Fayetteville Police Pension and Relief Fund Board of Trustess was .held on July 17, 2003 at 1 :30 p.m. in Room 219 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. PRESENT: Mayor Coody, Jerry Friend, Tim Helder, Dr. James Mashburn, Jerry Surles, Randy Bradley; City Attorney Kit Williams, City Clerk Sondra Smith, Marsha Farthing, Denise Grizzle and audience. LOPFI PRESENTATION: Cathyrn Hinshaw: This is the cost study; this is what it would actually cost you to convert. The purpose of this meeting is to discuss the theory and mechanics of conversion. The purpose of this study is to reveal to the Board of Trustee's of the city how much it will actually cost to convert. Page 5 of the report that I have handed out, you will see under Column A, for a straight conversion of your benefits as they are now, to LOPF] administration it would be 9.85% of payroll. In the second paragraph at the bottom you will see that would be a cost of $37003 in the first year, again as your payroll changes this dollar amount changes and the percent changes every year based on your experience. For a simple COLA the employer contribution rate in the first year would be 14.87% which generates a cost of $558,709 in the first year. To go to a compounded COLA for your old plan members the cost will :be 16.25% of payroll or a cost of $610,560 based on the payroll that was reported to us. The state projection of police state turn back funds for this year will be approximately $605;360, .when you compare that against $610,560 it looks like the city would have to come up with $5,200 to give you, guys a 3.% compounded COLA this year. Again these numbers change every year. The $605,360 is just state insurance tum back; you have other revenue resources also. You have other revenue sources and again under law they can't be spent anywhere but on your 1 pension fund or LOPFI cost. It certainly for this year looks to be very affordable for a compounded COLA. We have experienced. recently LOPFI rates, because of superior l investment performance for the past ten years, that's gone now, but LOPFI rates come down because we bad, earned so much more money over our investments assumption that your LOPFI rate this year is .92% of payroll. It will not be that low again in future years. So if you're going to make this move now .is. the time but again, so everybody understands the rate is recomputed every year, it might not always remain this low and it can up. It can go up one percent of payroll every year. ® The second paragraph, based upon the combined annual payroll submitted for this evaluation, $3,357;290, that's what you told us your police department payroll was in 2002. If you apply these percents against the payroll you reported to us, these are the dollar. contributions from the Police Pension Meeting Minutes July 17, 2003 Page 2 of 12 City of Fayetteville that we'd have to receive to support this level of payment. That's the LOPFI • and the old plan. Tim Helder: How do you figure the 3% COLA on $3,357;000? Cathyrn Hinshaw: 16.25% times $3,757,290 comes to $610,560. Jerry Surles : But the LOPFI people already receive the 3% COLA . Cathyrn Hinshaw: That's correct. Jerry Surles: So what would the cost be for just the old pension plan? Cathyrn Hinshaw: The financing advantage for the city is that they can pay off debts of the old plan across the lives of the younger LOPFI guys. We have a 30 year amortization period in LOPFI; the old plan is done amortizating debt years. Everybody' s allowed to retire after 20 years and everybody can retire this year. Jerry Surles: What makes that sound like is for us to be able to get a 3% COLA is that it is going to cost the city $610,000 a year. Cathyrn Hinshaw : It is. • Eldon Roberts: In addition to helping pay off the unfunded liability of $3,000,000. That' s what the city is going to owe in one year to help retire the debt that we have and fund the 3%n COLA. Jerry Friend: And to pay in on the guys that's on LOPFI. Cathyrn Hinshaw: Right, those three things. Jerry Friend: What we're going to cost .them on the old fund, we need to separate that out. Cathyrn Hinshaw: I don't know that that's a useful number because the financing mechanism here is to let the city have the thirty years over the lives of the young guys to pay for the more mature guys on the police pension fund. Sondra Smith: The $610,000 is for current employees and retirees, is that correct? Cathyrn Hinshaw: It would pay toward retirement benefits it is 16.25% against payroll. That's what you pay us, your monthly payroll report form the police in Fayetteville times 16.25% and that is what you send to LOPFI. Jerry Friend: Before you send that $610,000 to LOPFI do they subtract all the income first? Cathyrn Hinshaw: It doesn't work like that. The first month if you bought the compound • COLA you do 16.25%against that monthly payroll and you remit that to LOPFI. Police Pension Mecting Minutes - July 17, 200 1 _ Page 3 or 12 Jerry Friend : The tum back fees, millage, and other income are used to offset the $610,000 cost. Cathyrn Hinshaw: The city is allowed to use all the funding sources they have now to pay for this. Sondra Smith: That's what Cathym was saying when she said the $605,000 would probably be covered by current state revenue and revenue coming in so that the difference might be $5,000. Randy Bradley: That they're putting towards our pension anyway? Sondra Smith: Yes. Pete Reagan : Cathyrn what happens to the millage rate. when the system is retired and completely turned over to LOPFI, when the last dependent on the fund passes away there's still a .04 of a mil for police and .04 for fire. Cathyrn Hinshaw: Current law allows the City of Fayetteville to use that for their LOPFI only members, as long as there's an existing old plan member it can only go to the old plan but i it's allowed for departments who have LOPFI only coverage, it's allowed for the voters to vote to use it for the LOPFI plan. Eldon Roberts: Do they have to vote again or does it just roll over to LOPFI? Cathyrn Hinshaw: Oh no, it just continues since it's already approved. Jerry Surles: When do the LOPFI checks go out for retirees? Cathyrn Hinshaw: First day of the month. Jerry Surles: Who is going to take this to the City Council or ask them if they will go along with the COLA and the transfer to LOPFI? Eldon Roberts: Steve Davis. The fire and police pension boards are to complete resolutions asking for what we want and what we hope to gain. Steve said to give the resolutions to him and he would go before the City Councii and Cathyrn has also agreed to come back up the night it goes before the City Council in case they want more information than .Steve can give them. Steve will explain to thein the financial setting of why they should endorse this and adopt it. That's basically how I understood it was going to work. Cathyrn Hinshaw: This study is good for one year from the date that is on it, this study will expire July 15, 2004, in a year 'so much changes, the numbers become unreliable. Given the revenue sources as we understand them and again I can not emphasis this enough as we ® understand them in 2003, this looks like a very affordable deal for the City of Fayetteville and . Police Pension Meering Minutes , July 17, 2003 Page 4 of 12 advantageous to the old plan members. The old plan members will get the same COLA that • LOPFI has. Eldon Roberts: For the police pension board members that are here, Pete has given me a copy of their resolution that they have drawn up if you want to look at it. Cathyrn Hinshaw: Does everybody understand that all power will leave here and go to LOPFI, on the plans that we've converted, the biggest problem has been that you have no control locally, specifically to approve disabilities. Rick Hoyt: You stated that they will get paid on the first of month and that's an electronic fund transfer, right now they're getting paid around the 15th so if this was done, say it was voted on in September and they've already received their September retirement check from the city, then in October they will receive the next one, are we behind when they get that? Eldon Roberts : I think that when they receive their benefit around the 151h of each month the check is for that month. Rick Hoyt: So the check they receive from LOPFI on the first would be for the current month that you are in. CathyrnHinshaw : It would be a very smooth transition. • Denise Grizzle: What you get your check on the 15'h is for the month that you're in. Rick Hoyt: Okay. Cathyrn Hinshaw: I' d like to think we work very well with retirees when they have questions. We' d love to administer you. We'll do a very good job I promise. Rick Hoyt: Will everything stay the same? Like the amount of withholdings from your check?. Cathyrn Hinshaw : Yes sir, we do tax withholding. Do you offer health insurance? Eldon Roberts : Not through the pension. Cathyrn Hinshaw: Funeral benefits? Okay, we'll just make that part of the contract. Pete Reagan : How many old plans, fire and police that you have under your management have COLA's that have changed their benefit structure? Cathyrn Hinshaw : Using the specific cities, Fort Smith police and fire bought a 3% COLA in 1996. Hot Springs police and fire just bought a 3% COLA in 2003. Mountain Home paid fire, bought a 3% COLA in 2003. . . Eldon Roberts: But those are cities that bought the COLA after they transferred to LOPFL r _ Police Pension Meeting Minutes . - July 17, 2003 Page 5 of 12 Cathyrn Hinshaw: That's right. Eldon Roberts: We're talking about doing ours on the front end once we start being administered by LOPFI. Jerry Friend: We just hate the idea of thinking that we don't have a say. Person in Audience: 1'd like to thank our pension board for all the service they've done for us over the years they've been doing this. 1'd also like to thank Elaine Longer as our money manager because she's been wonderful. Our pension board has been really great. Person in Audience: The first of the month when the check is deposited, is that done by the state? i ! Cathyrn Hinshaw: It leaves our bank goes to the Federal Reserve System and posts to your t account. Person in Audience: If you're already drawing a retirement check from the State of Arkansas, this will not affectit. 1 i Cathyrn Hinshaw: Not for me. Well I hope we have the honor to serve you in this capacity. It's always a pleasure and I guess we're going to see you again. End ofLOPFIpresentation. Jerry Friend called the Police Pension regular board meeting to order. Tim Helder: I would like to discuss a resolution to transfer our pension to LOPFI. Dr. -Mashburn: If we're 'going to do this today do we want to have a motion to put that 3% compounded COLA in there prior to sending this to the City Council. Eldon Roberts : You need to get the resolution together of what we're going to ask for from the a City t { Jerry Friend: I think our resolution is to ask the city to look into it. We can't vote to go until ll the contract is all made out. Eldon Roberts: You can vote today to proceed forward with it and to prepare the resolution to present to the city. Denise told me that they would like to have the fire and police moving ahead on this by early August. Jerry Surles: Does some one have a strong objection to changing over to. LOPFI? Police Pension Meeting Minutes , July 17, 2003 Page 6 of 12 • Jerry Friend : Depending on what kind of contract the city wants to give us. Tim Helder: What can we do with LOPFI? Sondra Smith : I think if you're moving in the direction of LOPFI or the COLA you just need to propose a resolution as you see fit and let it be taken before the Council as you have proposed it . Jerry Surles: What did the firemen do? Tim Helder: They asked for the 3% compounded COLA. l think that' s what we need to do. While it is attractive to the city to get rid of us and if I understood her right, it's only going to cost the city an additional $5,000? Jerry Friend : The first year no body knows the future. Kit Williams : Surely by August they will know what the tum back amount will be. Sondra Smith: The $5,000 is the cost to city including the turn back fees that cost may decrease depending on other revenues that have not been factored in. Eldon Roberts: That's why you are guaranteed your benefit, because LOPFI sends the city a bill every year for the amount that is determined to keep your benefits at 90%, the amount could fluctuant. That's not going to guarantee that our benefit will never be cut because if something bad happens then the city has to pay the money to keep our benefit at 90%. LOPFI computes the money it takes to keep this plan going at the current level and they send the city a bill. That bill may change yearly according to a lot of things that factor in. It has to be to enough to keep our benefits at 90%. LOPFI can never go broke, whatever has to be paid to keep the plan solvent the city has to pay it. Sondra Smith: If I understand correctly Eldon correct me if I'm wrong, but right now there is millage of .4 on the old plan but they can raise that even after it goes to LOPFI to up to l mil. Tim Helder: Up to 1 . Eldon Roberts: My understanding was to raise millage it had to go to a vote of the people. Tim Helder: Well 1 think what we need to know first of all how quickly we need to have this thing in and then maybe we can make a motion. I' d bemilling to work on it with somebody. Sondra Smith: You need to decide how you want the resolution to read that you want to go before the City Council . It will be up to the City Council to approve the resolution as you have it written. • Tim Helder: I'd be more than happy to work on it. Police Pension Meeting Minutes July 17, 2003 Page 7 of 12 Dr. Mashburn: Tim, I'd like to see that 3% COLA in the resolution. Sondra Smith : I would just move to adopt a resolution to go before the City Council to move the pension benefits to LOPFI with the 3% compounded COLA. Tim Helder moved to draft a resolution to move the pension benefits to LOPF7 with a 3% compounded COLA. Dr. Mashburn seconded the motion. Randy Bradley: Elaine, do you have anything either way you want to say or add? Elaine Longer: I will hate to lose the fire and police pension but a $9 million liability is huge. I can't blame the City Council if they approve it; Ijust think it's great. There's no other way to guarantee the benefit increase liability. I think to secure those benefits there's no way to do it. 4 Jerry Friend : We appreciate Elaine's work and I think she's done` a fantastic job above most . other investment counselors. Sol just want to say that I appreciate your work. Sondra Smith : The Mayor just walked in the door so we might read to him the motion. Randy Bradley: A motion has been made and seconded. t $ Sondra Smith : There's a motion on the floor Mayor to do a resolution to move the pension i benefits to the LOPFI program with' a 3%compounded COLA, if the City Council approves it with a 3% compounded COLA. Mayor Coody: Is the COLA 3% regardless of what the actual consumer price index reflects. + Pete Reagan : Yes sir: It is whether it's higher or lower. Mayor Coody: Shall the motion "pass. All in favor say aye. Board: Aye!' Mayor Coody: All opposed sayno? The motion passes'unanimougly. INVESTMENT REPORT: Elaine Longer: The first page of your report shows your portfolio appraisal as of June 30th. It's changed a little bit since June 30 so we have an update right behind it. June 30th your weighting in equities was about 25.7% and that doesn't include the stock mutual funds up 2.5%. So your equity weighting was getting close to 30% which is still within the guidelines of your policy but up from the low level that we had last year. The total portfolio value is on page 6. You're at ® $ 10. 142 million and an income yield of 4.5%. We've been trying to keep that incomeyield above 4% and even in the declining interest rate environment you've got 30% of your portfolio Police Pension Meeting Minutes July 17, 2003 Page 8 of 12 invested in stocks but you 're still earning about the yield on a 30 year treasury on the total • portfolio. The combined portfolio on July 15th follows, the equity exposure has increased to about 33% in July, part of that is from appreciation that the market has had this month but also we had some cash reserves we applied to the equity side, so your total portfolio value as of July 15 listed on page 12 is roughly $ 10.15 million. The next report we have the stock accounts which is broken out separately from the bond accounts. The largest holdings, I don't think anything has changed there since our last meeting. Realized gains year to date on page 17 are about $10,000 and Net Income is about $ 183,000, so we've used the market appreciation in the portfolio, we've taken some gains, when we take the gains we offset them with a loss. As you can see on the July 1 l th report pretty much of all of the unrealized losses on the stock side of the portfolio have been cleaned out. We've used this advance to sort of cleanup the whole portfolio, get all the high cost stocks out of there and net your realized gains year to date. Your portfolio shows unrealized gains at this time. The industry report, 1 won't go through that, there is not that much change from the last time we were here we're slightly over weighted in technology and that' s been real good as far as the equity performance is concerned. We're in .the middle of an earnings reporting season so everyday the sentiment changes. Intel • came out with real good numbers and the market went up. IBM disappointed a little bit yesterday so the market's down. So it's still very volatile out there but over all I think the market still has a pretty good tone to it. The fixed income portfolio follows on page 23 and the over all income on the portfolio on the fixed income side is still 6%, that's without taking any less than investment grade bonds into your account, and really without extending maturity to the point to where you have a lot of price risk from the bond maturity spectrum, so you really have an excellent bond portfolio. On page 27 your weighted average maturity is only seven years, the income is about 6%. The long end of the bond market since the feds cut interest rates, the feds cut rates by 25 basis points and interest rates on the 10 year to 30 year have gone up by almost a frill percent. Mortgage rates have gone up by almost a full percent but the fed cut rates. People don't understand how can that happen, the 10 year treasury is what the mortgage market keys off of and the interest rate on the 10 year treasury has gone up to about 4% from 3 . 13 when the feds cut, what that means in terms of price is that the 10 year treasury is down about 8 points in price and the 30 year bond has come down about 14 points in price. The longer your maturity out there the more risks you have to any kind of an increase in interest rates and with a six or seven year maturity you're in a good spot as far as price risk is concerned but you still have a very high income. The next page shows the contributions and withdraws year to date and about $417,000 has gone out in distribution. • - Police Pension Meeting Minutes July I7, 2003 Page 9 of 12 The performance on page 29 just gives a performance summary from the inception to date and year-to-date through June 30'h equities are up about 8.8%, bonds which have been the support for the portfolio in the last three years are under performing now, they are at 2.5%. The total is up about 4.5% and through yesterday your equity is worth about 12.5%, and total was up over 5% year-to-date. The important thing is that you only declined by about 5% from 12/31 /99 so as of June 30'h your portfolio has fully recovered from the bear market which is real important because you know the whole thing that we've been playing is defense, keeping the portfolio whole and now you've got the capital to make it back up. You can see how quickly you canget back to break even as long as you don't lose a lot. I really appreciate the support and comments that have been made because as you know we really do work hard and we've enjoyed this relationship since 1989. We really hate to lose the account but I really appreciate the effort the people in this room are making to protect us from any misrepresentation of our performance or investment advice, because we do operate in a kind of high visibility position. I appreciate your positive comments. For the city to take this and guarantee the liability, I think it's really a wonderful gift to firemen and to the policemen because we certainly couldn't do that. To look at the expected returns on the investment side to get you to fully funded with the increase in benefits that went through in 1999, it exceeds what we project as expected returns on asset classes. Mayor Coody: How much has it exceeded? • Elaine Longer: When we were looking at the firemen and trying to run the projections, if you say that the unfunded liability I think at -the end of 12/31 /02 was approximately $6 or $7 million and the fund value was down to $ 10 million, to be at a fully funded position at $ 16 million, to stay funded they need to achieve a 6% annual return; that 6% is not on the current $ 10 million it's 6% on. $ 16 million, just to stay funded. When we back into that, that requires on the $ 10 million that's left about a 10% average rate of return. When you are in a balanced portfolio between fixed income and stocks and the bond side is only yielding, current rate is only 4%, 5% if you get creative, then that makes the stock side have to carry a 15% annual return compounded !!!1 and that's quite a bit higher than what our expected returns are, going forward from this level. When I looked at it and I mentioned it several times in the first meetings that we'd had, there are three parts of the equation, there are the benefits, the contributions from the active members, the pay backs and then there's performance. It's too hard with realistic expectations of return to dig out of the hole assuming that the markets will get you there. Mayor Coody: Let's assume that they will not be met does that mean that the city is going to have to boost the contribution? Elaine Longer: I didn't have a copy of Cathryn's report so I don't know what her .assumptions . are. I have the best of interest in not seeing them go like I said and I say go, it's really the best way to secure the benefits to the retirees and the ones that are currently active. • Mayor Coody: Well it's also good for us too because we get to plan for and budget for these numbers instead of having to panic later on. Police Pension Meeting Minutes July 17; 2003 Page 10 of 12 Elaine Longer: It's a win-win situation. I'm just really happy for the firemen and the policemen that there' s a resolution like this for them. Mayor Coody: Well 1 think everybody will say that you have done a great job for us. Elaine Longer: I appreciate that. We've enjoyed a long relationship with the policemen. It goes back to 1989. Jerry Friend: I don 't know of any hold stocks. Elaine Longer: What will happen is that your assets will transfer into their big pool . Jerry Friend: Just like they are? Elaine Longer: Yes. Jerry Friend : We don't have to sell everything? Elaine Longer: No. Mayor Coody: What I understand that they will do is they will take our investment portfolio and they will compare it to their investment portfolio and if there are some stocks that we own • that really don't go well with their theory then they'll have us sell the odds and ends that they don't want. Then they will absorb it, so there may be some transactions to go through before we get transferred . Elaine Longer: That won't be a problem, that' s a real easy thing to handle. We'll just have wiring instructions and be able to handle that without you having to worry about it. Mayor Coody: Anything else? Thanks Elaine. Sondra Smith: Thanks Elaine you have done an excellent job. We really appreciate it. OTHER BUSINESS: Mayor Coody: Approval of minutes of the April 17, 2003 and the April 24, 2003 meetings. I would entertain a motion and second to approve the minutes. Jerry Friend moved to approve the minutes. Jerry Surles seconded the motion. Mayor Coody: All in favor say aye. Board: Aye. • Mayor Coody: Any opposed? The minutes are approved unanimously. - Police Pension Meeting Minutes July 17, 2003 1 Page I J of 12 s i Mayor Coody: Approval of the Pension Lista Are there any modifications to the pension list? I would entertain a motion for them to be approved. Jerry Friend moved to approve the Pension List. Randy Bradley seconded the motion. Mayor Coody: If there's no discussion we have a motion and second, shall the pension list be approved? All in favor say aye. Board: Aye! 1 Mayor Coody: Opposed? The pension list is approved unanimously, Mayor Coody: Parking Permits: Sondra Smith: I gave out your parking permits, they're good until December 31 ,2003 then you need to let me know if you want a new one. Jerry Friend : That's a popular thing. I appreciate that, we need to have it. Mayor Coody: Approval of $ 1 ,500 for the consolidation study. Sondra Smith : That is the expense for the study that was done. Jerry Friend: Is ours half of that? Sondra Smith: The police and fire boards paid $ 1 ,500 each for a total of $3,000. Mayor Coody: Is there any discussion on this $ 1;500 if not I would entertain a motion to approve the payment. Jerry Friend moved to approve the payment of $1,500 for the study. Randy Bradley seconded. Mayor Coody: All in favor say aye. Board: Aye! Mayor Coody: Any opposed? The motion carried unanimously. Mayor Coody: Discussion on House Bills 1122, 1226, 1228, 1239 and 1254. Sondra Smith: These are some house bills that pertain to pension plans, so I wanted to make . sure that everyone had a copy of them. Mayor Coody: Is there any discussion on any of the House Bills? ; I Police Pension Meeting Minutes July 17, 2003 Page 12 of 12 Jerry Friend : They look pretty self explanatory. Mayor Coody: The Signed Investment Policy. Sondra Smith : That is a signed copy of the investment policy that we signed with Longer Investments, for your records. Mayor Coody: Is there any discussion on that? Is there any other business? Sondra Smith : Yes. We need to elect a vice-chairperson so that when the Mayor is not able to attend the meetings someone is in charge of running the meetings. Jerry Friend moved to elect Randy Bradley as Vice Chairman. Tim Helder seconded. Mayor Coody: We have a motion and second to elect Randy as Vice Chair. All in favor say aye. Board: Aye! Mayor Coody: Any opposed? • Randy Bradley: Aye. Mayor Coody: The motion passed. Meeting Adjourned at 3:30 PM • Police Pension August 28, 2003 Page I of 13 Police Pension Board of Trustees Minutes of a Special Meeting August 28, 2003 A special meeting of the Fayetteville Police Pension and Relief Fund Board was held on August 28, 2003 at 1 :30 p.m. in Room 111 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. PRESENT: Mayor Coody, Jerry Friend, Tim Helder, Dr. James Mashburn, Jerry Surles, Randy Bradley, City Attorney Kit Williams, Marsha Farthing, Steve Davis, City Clerk, Sondra Smith, and audience. Randy Bradley called the meeting to order. Randy Bradley: Eldon I think you're up to speed on everything aren't you. Willyou enlighten the board? Eldon Roberts: A merge with LOPFI was on the City Council agenda for the City Council members to discuss and possibly vote on a merger of this old police pension plan with LOPFI. Prior to this meeting, Steve Davis asked the actuaries in Little Rock to do an up to. the minute study on the old fire plan and the old police plan so that the city would know, and we would know exactly where we stood at the time that we might merge. The city wanted to. know what their liability was and we wanted to know too. The actuary report came in at noon on the day this was to go to City Council. Steve Davis called Tim Helder and told him that we had just gotten the report that he had requested from the actuaries on the old fire and police pension plan. The actuary is recommending that at least with the old police pension plan that we should not merge with LOPFI at this time. This is the letter that I received today from out of the actuary's office. The reason that the actuary recommended that we not merge right now at this point in time is that at the last legislative session there was a change on the method or the formula that's used to disperse the insurance turn back money. Kit .Williams: A good change. Eldon Roberts: Yes for us. For years the police and fire plans that didn't 'really need that money were still getting it. They were already fully funded or actuarially sound therefore they did not need that money but they were still getting it. It was just going into their fund. The cities that have those kinds of pension plans that were already fully funded actually did not take that money and do anything else with it because it's .prescribed primarily for pension plans. Therefore this brought about the change in the method of passing out the insurance tum back money. They are going to quit funding all the funds that are fully funded or actuarially sound and not give them anymore insurance tum back money. They are going to take that money from those plans and they are going to give it to the plans that really need it. The total check that came in this time to the city for the LOPFI and the old police plan, not • counting fire pension, was $605,000 of which the old police plan is scheduled to receive :s Police Pension August 28, 2003 Page 2 of 13 $385,000 of that. Last year I think we received approximately $ 135,000, this is a substantial i increase. The actuary was saying in short just continue on like you are and you will receive this additional money is what he is basically recommending. Be said if you merge with LOPFI right now we would look somewhat stronger financially on paper, if you look better on paper then you are not going to get as much tum back money. Therefore he recommended that we look at merging with LOPFI sometime between the next five .and ten years. Kit Williams: We're going to actually look at it in two years if the legislative changes anything. Hopefully they won't change the insurance turn back again for a while. Eldon Roberts: They have the option of doing that. They can change the formula again in the next two years. l don't know what their plans are and nobody knows what their plans are for the future. I talked to the actuary' s in Little Rock and they said that we passed on the cash flow study to be able to do the 3% compounded COLA, on the actuarial study that was done regarding sending the plan to LOPFI. There' s two ways to do a benefit increase, one is the actuarial soundness test the other is the cash flow evaluation test. We passed on the cash flow evaluation test according to the actuary in Little Rock and we have a letter from them to verify that we can do a 3% COLA on the old pension plan right now. The COLA has to be labeled a temporary 3% compounded temporary COLA and in five years we will want to look at it again, by then we will be somewhat financially stronger. The insurance turn back money would be less because of us being somewhat financially stronger, so therefore we would be getting less insurance turn back money, at that point in time if we merged with .LOPFI we wouldn't be leaving as much money on the table, unless they change the formula over the next five years. The actuary says that in five years it will be a less cost to the city but the city has that approximate $9 million debt. Tim Helder: What percentage of that nine million dollar debt is ours, as far as the police? Kit Williams: That's police and fire together. Tim Helder: It's mostly fire though isn't it? Kit Williams: They're in worse shape than you are. Randy Bradley: You know how much approximately? Eldon Roberts: I think our amount is a little less than $3,000,000. Tim Helder: That' s what 1 thought. Jerry Friend: The night the City Council tabled the .police pension merger with LOPFI .they tabled the fire pension merger also. • fjf I Police Pension August 28, 2003 Page 3. of 13 Kit Williams: Yes. F Mayor Coody: This situation is the same for both organizations. Dr. Mashburn : I believe the City Council tabled this to a meeting in October. Eldon Roberts: My understanding is the fire department is in a different boat. They have litigation against Merrill Lynch and I think LOPFI mentioned to the Fire . Pension Board of Trustees that they don 't really want them to move to LOPF1 as long as their plan is in litigation. They would rather them wait until they get the lawsuit settled. Dr. Mashburn : Does the city want the fire and police to merge with LOPFI at the same time? Mayor Coody: Yes. We don't want to move one organization to Little Rock without moving both. It sounds like that both organizations have an advantage of staying where they are right now. Kit Williams: The Merrill Lynch suit is a potential two million or more. . Mayor Coody: Well I was talking about what the actuary said about leaving money on the table, that's outside the lawsuit. Eldon Roberts: They had a number on what they thought we might lose in the insurance turn back if we moved the funds to LOPFI at this time. Mayor Coody: That's outside the lawsuit. Eldon Roberts: Assuming no mergers we estimate that over the next eight years the plan would receive about $2 million more in turn back money than under a merger. Mayor Coody: How many years. Tim Helder: Eight. 11(it Williams: The real key time we're looking at really is two years. In two. years the legislature might meet again and you don't know what they're going to do when they meet. Hopefully the case that the fire pension plan has will be resolved and so they will receive whatever money they have in litigation. Dr. Mashburn: I am assuming that the city prefers that we wait a couple years. Kit Williams: From your perspective and the city's perspective both I think that makes sense. Randy Bradley: Even though we're showing as a debt to the city? • Police Pension August 28, 2003 Page 4 of 13 Mayor Coody: You may appear as a debt but that is just relieving ourselves of debt on paper, we don't think that's worth loosing a potential couple million bucks. Eldon Roberts: The current plan with no changes, that means without a 3% COLA, they think will be fully funded in 10 to 15 years. Jerry Friend : I heard someone say that the city would like to put the fire and police together. Randy Bradley: Does that mean going to Little Rock or not? Kit Williams: No they can't really; I don't think they can actually put your plans together. They just treat you the same way. Mayor Coody: We deal with both organizations the same way at the same time is what that means. Eldon Roberts: LOPF] would not know how much to bill the city for our old plan every year if they just threw all of our money in with theirs, it would all be commingled. There will be a separate ledger kept in Little Rock for the old fire plan and the old police plan so that way the actuaries know how to compute what to bill the city for every year. Tim Helder: So the question was asked of the people doing the actuary if they would do a cash flow study which they have already done. Kit Williams: That is correct. Tim Helder: With that cash flow study in your hand, could we handle this compounded COLA and they say yes. Kit Williams: That' s correct. Tim Helder: On a temporary basis which means what? Eldon Roberts: They mentioned something like five years. They looked at three different scenarios, no changes made to the old plan, a permanent 3% compounded COLA is added to the old plan and a temporary five year 3% compounded COLA is added to the old plan. Scenario two is a permanent 3% compounded COLA added to the old plan, it won't work, the report states that the 3% permanent COLA in scenario two can not be substained under the current assumptions. The plan would be projected to deplete all assets in about 20 years and this could not be considered actuarially sound. Scenario three, a temporary five year 3% compounded COLA added to the old plan for the next five years, those benefit levels are projected to have assets sufficient to meet all benefit obligations in the future. This benefit increase would be considered actuarially sound under the rules of the Arkansas Fire and Police pension Review Board. t . . Police Pension - August 28, 2003 Page 5 of 13 Kit Williams: Does that mean in five years they could stop the compounded COLA or go back to the level like it was before it was started? Eldon Roberts: He states that at the end of five years should the city and the police pension decide to merge with LOPFI at that point in time you reclassify your temporary COLA as a permanent COLA. The city stands to do better by getting the insurance turn back because it will cost less .when you do merge, because we're going to be financially stronger and our unfunded liability should not be as high as it is now. Jerry Friend : I don't see how we can be actuarially sound to the point that we can give a COLA. How can we be actuarially sound enough to give a COLA and still be shown as a debt to the city that does not compute. Kit Williams: I don't know how that works either. Mayor Coody: What he's saying is how can we be actuarially unsound and have a COLA adjustment. Is that right? Jerry Friend: 7f we're unsound in the city's view and we're shown as debt on the city how can the actuary say that we're actuarially sound? SEldon Roberts: But we're not actuarially sound. Jerry Friend: It said if we give them a temporary we'd be alright. Kit Williams: -I guess they're just talking about on a cash flow evaluation. Eldon Roberts: That's right according to the cash flow evaluation we are sound. Kit Williams: Instead of looking at the whole thing all the way to the end they're just talking about what's going out now. rEldon Roberts: Cash flow means what's corning in now and what's going out now. Mayor Coody: I guess the fund will just go bankrupt a little bit earlier with a 3% COLA. 'Dr. Mashburn: I have a question along those lines. There's four still on this plan that have not retired. Jerry Surles: Three. Dr. Mashburn: Those three when they retire their pension will amount to about the first 30 that retired on the police pension list, is any of the three planning -to retire in the next two to five years? I mean as long as you haven't retired you won't be hitting this fund during the next five years. Police Pension August 280 2003 Page 6 of 13 Kit Williams: In fact money would be going into the plan. Dr. Mashburn: I guess that is kind of an important question. Are you all going to stay on and keep us sound? Eldon Roberts: The actuary knows that the three of us could walk out today and start drawing our retirement, so they calculated that and took that into consideration. The longer we stay, the less we're going to live and draw a pension. I know I 'm not going to be here that much longer. Dr. Mashburn: If the three of you would retire, that would hit the plan big and it would change from money coming into the retirement plan to going out, those three would be the three highest we'd be paying of the entire retirement list. Eldon Roberts: What did the fire department do this morning, are they even allowed to consider a 3% temporary COLA? Kit Williams: They can do a 1 % COLA. They are concerned about the same thing you are concerned about, that it didn't really look financially sound. I think basically they decided that they were going to stand pat for a couple of years and get through the litigation with Merrill Lynch. Dr. Mashburn: Did they have to make a motion to do that. Kit Williams : They actually did nothing officially. They just talked about it. Tim Helder: Well they're in a lot different situation then we are in because they are in the middle -of that litigation. They're also not nearly as sound as we are. Eldon Roberts: They're less sound. Tim Helder: If they've done the cash flow study, and they say we can do the COLA on a temporary basis, in my finite thinking 1 don't see why we don't move in that direction. I would rather have something in place before we have to go to Council. Mayor Coody: We will be making the recommendation to the City Council. Kit Williams: City Council still has to decide though. Mayor Coody: They'll decide but we're going to make the decision easy for them. We're going to make a recommendation and I'm sure they'll follow it, with the police and fire department behind it. Tim Helder: Are you talking about moving it to LOPFI? - - - Police Pension Augusi 28, 2003 Page 7 of 13 Mayor Coody: Yes. Steve will work with the police department and the fire department. We're going to make a recommendation to table sending the fund to LOPFI until further notice to the City Council. Tim Helder: That aside, why would we not as a local board go ahead and do the temporary COLA? Jerry Friend: I'm with you on that except that as Mayor Coody said I think Steve has to present this to the City Council. I think it would be better to wait until October to hear what he has to say. Tim Helder: I'm brand new to the Pension Board; tell me how this process works. Do we just make a recommendation to adopt a COLA as a local pension board but the Council has to approve it? r Board: No. Tim Helder: Okay what are you talking about then? Randy Bradley: If this goes to LOPFI. , Mayor Coody: We're talking. about the LOPFI, keeping the fund locally or sending it to LOPFI. I ` Tim Helder: That's one issue. Mayor Coody: Right. Kit Williams: We're talking about the COLA now. Tim Helder: I'm talking about the old plan, adopting a 3% COLA now on the old plan. 'Why couldn't we do that? Eldon Roberts: All the hoops have already been jumped through to adopt a 3% COLA on the 'old plan today. Whetheryou do that or not, that's your call. Tim Helder: Right. Eldon Roberts: This board can act on that, it doesn't take Council action. 'Dr. Mashburn: Right I agree with that. `s Jerry Friend: I know we can vote on the COLA, if we listen to Steve and Steve says yes then when the move to LOPFI comes up later he will say this board acted reasonably. Tim Helder: I've had conversations with Steve about this study, its basically already common knowledge about the 3% COLA on the cash flow study. Steve is not in the dark on this. Police Pension Augusl 28, 2003 Page 8 of 13 Eldon Roberts: I spoke to him yesterday and he didn't say either way, I don't think you should do that or that's okay. I didn't ask him if he intended on being here. All our investments are with Longer Investments at this time and they will remain there as to such time as we decide to merge with LOPFI. Randy Bradley: 1 move that we put the merger with LOPFI on hold. Dr. Mashburn: I second that. Mayor Coody: We have a motion and second to withhold any further action on the merge with LOPFI. All those in favor of that motion say aye. Board : Aye! Mayor Coody: Any opposed? There was no opposition. The motion passed unanimously. Mayor Coody : What about this 3% COLA, how is that going to have a bearing on the future if they vote to adopt this 3% COLA? Will it look like an irresponsible decision? Randy Bradley: It's a temporary-COLA. Kit Williams: I've got a question for the pension board because I only know what your powers . are. I know that the state law says that if there's a minimum payment that you have to make at least the minimum. Can this board actually raise that minimum? I mean if you were really trying to help the people that were getting so little because they retired a long time ago and some of them don't receive very much, can you actually raise the minimum or is that something that is beyond your power? Do you know? Eldon Roberts: It would be a benefit increase. We would have to go through Little Rock, because this board doesn't have the power to raise benefits one dollar without doing what the state law requires. We would have to go through Little Rock and the actuaries. Everybody is at the minimum of $350 and the state supplement money that they've been given the last several years is $ 50 a month. So we don't have anyone drawing less than $400 a month. That is way over 100% of what a lot of those people were drawing when they were working here. Jerry Friend: It would be nice to raise their minimum pension amount. Eldon Roberts: I've beard that argument for the 21 years I was on this pension board, from my standpoint, what those people contributed to this plan, they' re doing well. Tim Helder: I'm prepared to make a motion based on the letter that we have to adopt the temporary 3% compounded COLA. Steve, the actuary did the cash flow study and said that we could do a compounded 3% temporary COLA for up to five years, would that be the responsible . . Police Peosion- August 28, 2003 Page 9 of 13 thing to do? Whenever we go before the Council in the next few years to go ahead and move to LOPFI would that affect your thinking on making a representation of our plan if we're acting responsibly? That's why you were called in. Steve Davis: Is it responsible for this board to take this action at this time and then ask the City Council to merge us with a permanent COLA afsome level, the City Council is really the ones in whose eyes you should be concerned not mine. Jerry Friend : But Steve they're going to listen to you. Kit Williams: You can ask them for an opinion through a resolution. Steve Davis: Regardless of what you all do, I'm going to look at the financials at that time and express an opinion. The options that you have according to the actuary's findings, their recommendation would be a temporary COLA for up to five years and then present to City Council for merger. When it is presented to the City Council for merger with LOPFI, at that point the City Council and this board have the opportunity to look it over and say okay do we want to lock it in at either the base rate or whatever the rate would be when the proposal is brought before City Council for a merge with LOPFI. Those kind of questions have to be answered in the context of what does the financial future look like for the city. to what the cost is going to be at that time and I can't answer that question because I don't know. • Tim Helder: Steve you don't stand in total opposition if we were to take that action now? Steve Davis: Your state tum back money is going to increase if you retain control of the pension plan here. The actuary estimates that that number is in the range of $2,000,000. He also recommends that we look at this every couple of years to make sure that these projects are still on track and that the future that he is looking at today doesn't materially change from the conditions that he's thinking they are going to be like. The dollars of revenue coming in on the turn back fund from the foreign insurance companies, the foreign insurance companies have a :limited amount of money that the state can raise from the foreign insurance company so if they raise the tax too much they can say we're not writing any more policies in Arkansas and the revenue source dries up, then the next time the state legislature meets they will say they no Monger have as much revenue and that they will have to reduce the insurance tax rate or we're going to have to change the formula. Tim Helder: That's when we make our merger with LOPFI. Steve Davis: That's right. Eldon Roberts: If I understand this right Steve, the actuaries are telling this board that they can go ahead and adopt a 3% temporary compounded COLA to date for this old plan for the next three to five years whatever the case may be. Tim Helder: As long as the term lasts. s Police Pmion August 28, 2003 Page 10 of 13 Steve Davis: This fund is partially funded by millage. The millage aspect of funding is going to grow. They expect that if no changes are made to the plan in 10 to 15 years with no COLA it will be fully funded and the millage could drop off. With the COLA the millage will have to stay especially if it goes to Little Rock. Tim Helder moved to adopt a 3% compounded temporary COLA for the next five years effective October 1 , 2003. Eldon Roberts: You have the option of having it reviewed anytime you want to if you want to pay the money. Jerry Friend: Dont we have to have an actuary completed. Eldon Roberts: They do one free for you every two years but that's an actuarial study as opposed to a cash flow evaluation. Tim Helder: Read the motion please. Sondra Smith: Adopt a 3% compounded temporary COLA for the next five years effective October 1 , 2003 . Randy Bradley: Who's this letter from? Eldon Roberts: The actuarial fine under contract by the State of Arkansas to do actuarial evaluations and other financial computations for police and fire pension plans. Dr. Mashburn: If all the projections are any where at all correct with the growth that's predicted for this area then I think we would continue to be actuarially sound on a cash flow basis. Randy Bradley: Okay we have a motion, do we have a second? Dr. Mashburn seconded the motion. Randy Bradley : The motion is a cost of living, compound cost of living adjustment of 3% for five years, effective October 1 , 2003. Do we want an evaluation date in there or do you want it as it stands? Steve Davis: We will probably do one any way, an annual evaluation, every time the legislature meets and concludes we're going to ask for another one. Jerry Friend: What did this last one cost? Steve Davis: $3,000. Eldon Roberts: Police pension paid half, $ 1 ,500. Police Pension August 28, 2003 Pagt 11 of 13 .Randy Bradley: We have a motion and we have a second. All favor say aye. Board: Aye! The motion carried unanimously. Dr. Mashburn : I'd like to have a copy of the actuary' s report. I want that to be made a part of the record so we have something to show that we acted in a sound manner. I want to show that we had a recommendation from the actuary and that we were acting in a sound manner. Sondra Smith : I will make copies of the actuary report and give it to the board before you leave today. Kit Williams: We'll probably need to get a letter from them. I want something in black and white. Eldon Roberts: I asked specifically for one and they said the cover letter that was on this first ; report that was sent to. Steve, August the 51h would suffice. I received a fax today but it doesn't have the heading on it of the Pension Review Board and LOPFI out of Little Rock which is where Cathyrn Hinshaw is. Kit Williams: Have they told us in writing, we want to be able to point to something in black and white and not have someone say well I really didn't say any of that. Jerry Friend: We want something in writing. Eldon Roberts: I can't believe they didn't send me a letter signed by Cathym Hinshaw stating that after reviewing the actuarial evaluation and the actuarial firm's computation we grant a benefit increase. I asked for it specifically and could not get it in writing. Kit Williams: How do we force them to give us something in writing? Eldon Roberts: When you apply for a benefit increase you send a letter to Cathyrn I3lnshaIWS office asking her office for approval of the benefit increase. Kit Williams: Steve sent that letter. Eldon Roberts: Steve sent a letter asking the old fire and police pension plan to be studied and brought up to date. Steve Davis: Right. Jerry Friend: Seems like we still need to send a letter saying we plan to raise the benefit. Eldon Roberts: They told me no, they said we don't have to do that. �' Kit Williams: I want that in black and white. Police Pension August 28, 2003 Page 12 of 13 Steve Davis: I think what we're talking about is that we've got an actuarial report that says you can do this from an actuarial standpoint on a cash flow basis. But there's a block on the check list that isn't checked and that is the letter from PRB saying that we ratify the conclusion of the firm of Osborn and Carreiro, the actuary. Kit Williams: Do you send a request for that or does the city send that? Steve Davis: It' s the pension board. What the city does relative to the pension board is we implement whatever they tell us to pay. Eldon Roberts: In the past a letter has come from the Pension Review Board stating that you can grant the increase, after they received the information back from the actuaries. Randy Bradley: But if we've never requested one how are they going to send us one back? Marsha Farthing: This study was requested under different circumstances. You didn't ask them to do this study for a benefit increase. Randy Bradley: I think we need to send a tetter to Cathym stating that this board voted to give a 3% compounded temporary COLA to the pensioners. Kit Williams : Cathym should send us the appropriate letter authorizing that action. Randy Bradley: I think they'll answer. They may not authorize it but I hope they will. Kit Williams: I think for our accounting we need to have that letter. Eldon Roberts: l asked for it and wanted it faxed to me for today's meeting, but I could not get it. Kit Williams: Well the Mayor' s a member of this board right? Eldon Roberts: Yes. Kit Williams: So he can send a letter down asking for that. I'll talk to him and tell him that he needs to do it. Let me ask the mover of the motion, is your motion contingent upon the Police Pension Board of the city receiving the proper letter from the State Pension Board prior to the date of the COLA. Tim Helder: That would be my assumption overall. Kit Williams: As long as we get that letter in time then we're alright. Tim Helder: The date will just move out. Police Pension Augusl 28, 2003 Page 13 of 13 Steve Davis: What's the date? Sondra Smith : So we need to amend the motion to include a letter from Cathyrn Hinshaw. Kit Williams: I think what you could do is to make a note that their motion stated it is contingent upon receiving the appropriate letter from the pension board. Jerry Friend: In the past we've asked the secretary to write the letter. Kit Williams: I bet they're going to send a letter they just didn't have it ready. Well get the City Clerk and the Mayor to get together and send this motion to them. Sondra Smith: I 'll draft it for the Mayor's signature. Jerry Friend : The motion was that the raise would go into effect October I ". If the letter doesn't get there in time and the. city can't implement it until the next month, can they retro it? Kit Williams: When will you send the checks out in October? Marsha Farthing: The 61h or 7m of October Kit Williams: Okay, so we have some time. Steve Davis: I think checks have to be out by the ] 01h. Sondra Smith: The letter needs to go to Cathyrn Hinshaw? Kit Williams: That's right. Steve Davis: In the letter to Cathyrn you might attach a copy of the actuarial study. Eldon Roberts: They have it; they just faxed it to us. r Randy Bradley: Any other business to discuss if not, I will entertain a motion to adjourn. Tim Helder: So moved. Meeting Adjourned at 2 :25 P.M. Police Pension and Relief Fund Meeting Alinutes Oclober 16, 2003 Pagel of 3 Police Pension and Relief Fund Board of Trustees Meeting Minutes October l6, 2003 A meeting of the Fayetteville Police Pension and Relief Fund Board of Trustees was held on October 16, 2003 at 1 :30 p.m. in Room 326 of the City Administration Building located at 1 ] 3 West Mountain Street, Fayetteville, Arkansas. PRESENT: Jerry Friend, Tim Helder, Dr. James Mashburn, Jerry Surles, Randy Bradley; City Attorney Kit Williams, City Clerk Sondra Smith, Eldon Roberts and audience. The meeting was called to order by Randy Bradley. Approval of the minutes of a special meeting on September 10, 2003 : Jerry Friend moved to approve the minutes. Jerry Surles seconded the motion. Upon roll call the motion passed unanimously. • Approval of Pension List: Jerry Surles moved to approve the Pension List. Tim fielder seconded. Upon roll the motion passed unanimously. Kit Williams: You all were going to have Craig Westbrook look at GUST. I did not do anything in relation to that has anyone else done anything on that? Sondra Smith: He did look at GUST and he charged the board I think $75.00 for his opinion. Kit Williams: Did we get a.written report Sondra Smith : No. Kit Williams : Did he give you an oral report? Sondra Smith :' I am not the one that took* care of that, because he deals with our Human Resource on a regular basis Steve Davis asked Michele in HR speak with him. Kit Williams: Did he say we are okay? . Sondra Smith : Yes. s Police Pension and Relief Fund Meeting Minutes October 16, 2003 Page 2 of 3 Randy Brady: We need to try to get something in writing. Sondra Smith: I will check with Michele and see if she can get something in writing. Jerry Friend : When we get the resolution back from the Police Pension Board do we have to vote on it again? Kit Williams: No. I will look at the statues again when we get the resolution back and we will follow step by step exactly how it is suppose to be done. I think you all can do that without the City Council though, but again I will look at the statues and make sure. Eldon Roberts : I think you are correct that it can be done without the City Council approval . We have done two or three benefit increases in the past and as long as we follow the law and go through the actuary and then through the Pension Review Board and everything is okay according to them and the law then this board can do it. Sondra Smith : Do you think for safety sake we should have this board sign the resolution? We can go ahead and do a signature page while they are here and then if we don't need it we don't have to use it. Kit Williams: I don't think so, the statues state it must pass by 75% or three fourths of the membership of the Board of Trustees. Investment Report: Elaine Longer, Longer Investments: The equity exposure is about 33% plus the mutual funds that you have in the foreign market which are 2.4% so you are about 35% to 36%, this is as of September 30, 2003. The real estate investment trust is about 2.5% the rest is a combination of corporate bonds, government agency bonds and US Treasury Bonds. The value of the portfolio as of September 30, 2003 was about $ 10.3 million. The income on the portfolio is still holding at 4.2%. Your total market value as of October 10, 2003 was about $10.4 million. The stock accounts and the bond accounts are on page 13, right now you are probably going to show an over draft in the bond account relative to the stock account, it is only a statement on our computer, so when you see the bonds are a minus $200,000 and stocks are at $200,000 it is really balanced. The largest stock holdings you have are Pfizer, General Electric, Citigroup, Minnesota Mining & Mfg. and Microsoft, the largest position being 2.6% of equity portfolio and 1 .4% of total portfolio. Realized gains year to date are $278.96. We have been over weighted in technology. The income yield on the book value of your fixed income security is still at 6%. This has held fairly constant for the past few years even though we have had a dramatic decline in interest rates. The balance in the bond account is within the next three years you have about 13% of the portfolio maturing, within a five year maturity we have almost 30% maturing. This is a good position to be in. Your performance historyinception to date, as of June of this year you have fully recovered from where you started the bear market in 1999, that is because of the fact that you only went down about 5%. Your total return ' Police Pension and Relief Fund Meeting Minutes October 16, 2003 Page 3 of 3 is close to 7%. The weighted average on the stock that you own is 3 .4% which puts the Portfolio at about an A-. I brought along the Carreiro report. According to their report the assumed rate of return on the asset value that they are using needs to be, 6% return on current market value of the portfolio, not on the actuarially accrued liability, to get back to actuarial soundness. Kit Williams: Do you think that is reasonable that the overall portfolio can gain the 6% as assumed by Carreiro. Elaine Longer: I think it is very reasonable, it is an assumption that is very close to what we are using in our retirement plans for private clients. I think their assumptions are good. Eldon Roberts: The insurance turn back check has it come in yet and do you know how much it is. Sondra Smith : The last time I checked with accounting they had not received it, I will check with them and see if it has come in and thecamount. Meeting Adjourned at 2: 15 PM. • POLICE PENSION FUND .i JANUARY 2004 6WD 9800 5335-00 5335.05 . EMP# NAME GROSS YTD Wages SupPl. YTD Suppl. Fed Tax ST. TAX NET 154 ALLEN, CHARLES 2,296.42 2,296.42 50.00 50.00 220.00 66.89 2,059.53 152 ARNOLD, WILLADEAN 863.14 863.14 50.00 50.00 913.14 130 BAYLES, DON 1 ,410.39 1,410.39 50.00 50.00 1 ,460.39 107 BLACK, JOE P 1,000.12 1,000.12 50.00 50.00 100.00 20.00 930,12 120 BOWEN, J R 616.14 616.14 50.00 50.00 10.00 656.14 147 BRADLEY, GERALD 4,282:59 4,282.59 50.00 50.00 940.53 17.32 3,374.74 139 BRADLEY, RANDALL 2,541.22 2,541.22 50.00 50.00 382.00 100.00 2,109.22 167 BROWN, JOHN 3,875.58 3,875.58 50.00 50.00 600.00 200.00 3,125.58 157 CARROLL,RONALD L 1,871.19 1,871.19 50.00 50.00 250.00 105.00 1 ,566.19 151 COLE, RUSTON . 2,723.87 2,723.87 50.00 50.00 600.00 200.00. 1 ,973.87 109 COOPER, ADRIAN 567.23 567.23 50.00 50.00 617.23 108 DENNIS, WARREN 1,223.34 1,223.34 50.00 50.00 0.00 1273.34 160 DUGGER,GARY 2,810.94 2,810.94 50.00 50.00 300.00 120.00 - 2,440.94 125 FLOWERS, HAROLD 766.42 766.42 50.00 50.00 816.42 140 FOSTER, BILLIE D. 2,849.68 2,849.68 50.00 50.00 300.00 120.00 2,479.68 148 FRIEND, JERRY 2,801.12 2,801.12 50.00 50.00 725.00 150.00 1 ,976.12 161 HANNA, JANICE 1 ,739.21 1 ,739.21 175.00 50.00 1 ,514.21 145 HANNA, MARK 692.74 692.74 50.00 - 50.00. 742.74 162 HASKINS, IRENE 386.10 386.10 50.00 50.00 436.10 103 HELDER, TIM 5,187.10 5,187.10 50.00 50.00 750.00 250.00 4,237.10 146 HUTCHENS, BERNICE 901.10 - .901.10 50.00 50.00 130.00 821.10 143 JOHNSON, CHARLES 2,181 .68 2,181 .68 50.00 50.00 42.67 2,189.01 103 JOHNSON, WENDELL 695.82 695.82 50.00 50.00 745.82 118 JONES, BOB 2,932.41 2,932.41 50.00 50.00 0.00 2,982.41 144 kILGORE, DONALD. 1 ,81827 1 ,818.27 50.00 50.00 19.72 1,848.55 129 LAWSON, FORREST 1,393.05 1,393.05 50.00 50.00 350.00 1,093.05 150 LITTLE, PATSY R 360.50 360.50 50.00 50.00 410.50 153 LORCH, DONNA G 360.50 360.50 50.00 50.00 410.50 . . 156 MARTIN, KENNETH 3,281.05 3,281.05 50.00 50.00 50000 140011 2,691.05 128 MCCAWLEY, LARRY 1,505.80 1 ,505.80 50.00 50.00 180.00 20.00 1,355.80 116 MCCHRISTIAN, MARIE 360.50 360.50 50.00 50.00 410.50 126 MCWHORTER, KAREN 499.57 499.57 50.00 50.00 549.57 136 MITCHELL, MICHAEL 2,048.22 2,048.22 50.00 . 50.00 150.00 1,948.22 141 MUELLER, ROSEMARY 1,833.79 1,833.79 50.00 50.00 1 ,883.79 158 MUNSONANGELA 3,730.00 3,730.00 50.00 50.00 500.00 183.00 3,097.00 112 MURPHY, JAKE 360.50 360.50 50.00 50.00 0.00 410.50 137 PERDUE, LARRY 2,063.66 2,063.66 - 50.00 50.00 200.00 25.00 1,888.66 164 PERSHALL, ROBIN 1,355.00 1,355.00 29D.00 92.00 973.00 132 PHILLIPS, HOMER GENE 1,558.80. 1,556.80 50.06 50.00 300.00 1,308.80 105 PRESTON, GEORGE DAVID 1 ,422.81 11422.81 50.00 50.00 100.00 100.00 1 ,272.81 135 RICKMAN, LOREN 1,982.28 1 ,982.28 50.00 50.00 230.00 65.00 1 ,73728 104 RIGGINS, RAYMOND C 1,483.21 1,483.21 50.00 50.00 125.00 25.00 1 ,383.21 159 SCHUSTER,JOHN H. 2,769.74 2,769.74 50.00 50.00 340.00 110.00 2,369.74 122 SKELTON, FRANK 735.08 735.08 50.00 50.00 785.08 168 STANLEY, MELVIN 4,335.87 4,335.87 50.00 50.00 1 ,100.00 300.00 2,985.87 155 STOUT, BETTY 427.71 427.71 50.00 50.00 0.00 477.71 133 SURLES, JERRY 2,477.93 2,417:93 50.00 50.00 412.50 50.00 2,005.43 - 142 TAYLOR, DENNIS 1 ,833.79 1 ,833.79 - 50.00 50.00 105.00 40.00 1 ,738.79 106 UPTON, FRANKLIN 939.20 939.20 50.00 50.00 . 10.00 979.20 163 WATSON, RICHARD 7,015.33 7,015.33 50.00 50.00 1,950.00 400.00 4,715.33 149 WILLIAMS, JOYCE 1,253.58 1,253.58 50.00 50.00 217.07 - - 1 ,086.51 134 WITT, DON 1,569.81 1 ,569.81 50.00 50.00 115.00 64.00 1 ,440.81 127 WOOD, PAUL J 11404.63 - 1,404.63 50.00 50.00 0.00 1,454.63 • 99,335.73 99,335.73 2,550.00 - 2,550.00 12 657 10 3 075 60 86,153.03 6800-9900 mmg900 5335-00 5335-05 TOW Yearto Date 99,335.73 2,550.00 101,885.73