Loading...
HomeMy WebLinkAbout2007-04-26 MinutesPolicemen's Pension & Relief Fund Board of Trustees Meeting Minutes April 26, 2007 Page l of 10 Policemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 26, 2007 A meeting of the Fayetteville Policemen's Pension and Relief Fund Board was held on April 26, 2007 at 9:00 AM in Room 326 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. Mayor Coody called the meeting to order. Present: Mayor Coody, Frank Johnson, Jerry Friend, Melvin Stanley, Tim Helder, Eldon Roberts, Sondra Smith, Kit Williams, Amber Wood, Trish Leach, and Kim Cooper of Longer Investments. Approval of the Minutes: Approval of the January 18, 2007 Meeting Minutes Tim Helder moved to approve the minutes. Melvin Stanley seconded the motion. Upon roll call the motion carried 7-0. Approval of the Pension List: Approval of the Revised February 2007 Pension List Mayor Coody: Are there any changes? Sondra Smith: The revised pension list for February 2007 was removing one pensioner that deceased and adding his wife. There were no changes in the total but the pension list that you approved in January had the pensioner on it and we needed to take him off and do the revised list. The deceased pensioner was Warren Dennis. Mayor Coody: Is that the only change? Sondra Smith: That is the only change to the revised list. Melvin Stanley moved to approve the Revised Pension List. Jerry Friend seconded the motion. Upon roll call the motion carried 7-0. Policemen's Pension & Relief Fund Board of Trustees Meeting Minutes April 26, 2007 Page 2 of 10 Approval of the March, April and May 2007 Pension List Mayor Coody: Any changes? Sondra Smith: No, there are no changes to the March, April and May as of now. We haven't done the May yet so something could happen in between now and May. Mayor Coody: Okay, so we need to approve this as well. Sondra Smith: Yes sir. Eldon Roberts moved to approve the Pension Lists. Tim Helder seconded the motion. Upon roll call the motion carried 7-0. Old Business: 3% COLA Discussion — Percent versus equal distribution Sondra Smith: If you remember one of the pensioners came to a meeting and wanted to know the possibility of on your 3% COLA instead of doing a percentage and everyone getting a 3% of their gross amount they would take the total gross amount of all the pensioners times 3% and divide that evenly among all the pensioners. So instead of one pensioner getting $300 and someone else getting $100 everyone would get the same amount. You tabled that at the last meeting and wanted to bring it forward at this meeting because there weren't very many people at the last meeting to discuss that issue. Mayor Coody: Who wants to bring it up? Eldon Roberts: If memory serves me correctly Kit you were going to check with Little Rock and see what they thought about it. Am I right? Kit Williams: Looking at the last meeting minutes where my option was that since it says that any benefit increase must be done strictly in compliance with the statute. My opinion is still the same that you can't change what was approved without going back and getting another study done with your new proposal. Even though potentially it won't cost more but we are not actuaries we can't really say it wouldn't cost more because it would be based on different life expectances now with people receiving this increased benefit. It would probably help the older members more than the younger members like you all. It would probably cost less but I'm not an actuary and I'm not about to say. I'm a lawyer and when the law says that it must be done in strict compliance with this statue than that is what I'm going to tell you. You could ask the actuaries to look at it again from that perspective. I would guess especially after this most recent investment report that they would probably say yes there is money to do that just like there's money to continue your 3% for the next year. You could do that but it would require six out of seven votes to ask for the study and you would have to undo the 3% that you have remaining that is across the board. I think I said at that point in the meeting that we weren't interested in doing Policemen's Pension & Relief Fund Board of Trustees Meeting Minutes April 26, 2007 Page 3 of 10 a ton of work unless there was a lot of support on this board. We don't want to just go through the motions and then we come to the board and can't get a second. So you all need to let us know if you want us to prepare a resolution to that and send it down to the state. Mayor Coody: Since I missed that meeting let me ask what are the bottom lines here? What are the differences between the 3% verse the even distribution. Kit Williams: What it would do is persons that retired a long time ago and they were making less money at the time so their benefit is less and they didn't work as many years, 3% to them would be much less than it is to some of our more recent retirees. So the recent retirees would lose the older retires would gain under that basically. Jerry Friend: Is there a way that it dies and goes anyway without bringing it up for a vote and voting it down. Eldon Roberts: Can you just keep tabling it? Kit Williams: Was there an actual motion before? Sondra Smith: No, there has not been a motion. Tim Helder: I think all there was was a request for you to look at that and I think you responded last time and somehow it was tabled at the last meeting. Jerry Friend: I promised several people that I thought it was something we should talk about. We have talked about it and I told the people that I have talked to that when it ever came to a vote, if it did, I may very well vote against it too. I was open about that. I know there are not enough votes on this board to pass it. Kit Williams: There could be a motion that we just continue on course without changing. That you continue to do the 3% as has already been approved. That would demonstrate the board's position. Eldon Roberts: There is only one more year of that left. Kit Williams: Right. Eldon Roberts: Then we are going to have to revisit it and either can or cannot get a benefit increase to continue. At that time we can look at it and maybe consider an across the board raise for everybody which would be the same amount. There is only one more 3%, it's coming up in January of 2008 and that is the last one. We had a five year temporary 3% COLA adjustment. I also agree with Jerry I would like to continue on in the same course. Let this one come and go in January. Benefit increases are going to be hard to come by from here on out. I know with the Fire Department just tried for a 1% I believe. Kit Williams: No, I think they tried for a 3% didn't they? Policemen's Pension & Relief Fund Board of Trustees Meeting Minutes April 26, 2007 Page 4 of 10 Sondra Smith: They tried for 3% but the actuary came back and said they didn't even qualify for a 1%. Eldon Roberts: I knew I saw a 1% in some information that I read on that. They may not be as financially sound as we are. We might not even pass a benefit increase for a COLA through Little Rock. I have some concern if we sent this one down there and them coming back and saying you can't even do any benefit increases. I don't know that we could keep the 3% we still have in the bank or not. Kit Williams: I don't think you could ask for that without undoing the other. Eldon Roberts: Then we are out in the open to actually lose that 3% that we do have coming in January if they say you can't do any benefit increases which they did to the Fire Pension. I think at least we have a 3% in the bank so to speak coming up in January and those older members are going to get whatever it does amount to for them. They could stand to get nothing if we undo the 3% and go back to Little Rock and they say you can't do any benefit increases. Then we have lost that 3% that we have in our hand. Mayor Coody: It sounds like that is the consensus of the board. Jerry Friend moved to make no changes in the COLA at this time. Eldon Roberts seconded the motion. Upon roll call the motion carried 7-0. New Business: Warren Dennis Deceased Mayor Coody: Warren Dennis has deceased. We have the obituary in our packet. Sondra Smith: I also put a copy of the $200 check that was issued as a death benefit so that you would know that that was taken care of. Investment Presentation Craig Canard 464-8133 (would like to attend a meeting) Sondra Smith: I received an email from a current pensioner and from what I understand from the current pensioner, Dennis Taylor. He would like for this gentleman to come and give a presentation at one of our meetings. He said he is a real good investment person. From the email he said he talked to Tim and that they would like to put this on the agenda to see if willing to have him come and give a presentation. Mayor Coody: He basically wants to compete with Elaine for management. Sondra Smith: Yes. Policemen's Pension & Relief Fund Board of Trustees Meeting Minutes April 26, 2007 Page 5 of 10 Kit Williams: He talked you Tim? Tim Helder: He called me and I said we are satisfied with whom we have but the person to contact would be Sondra. I don't even know what the procedure is on that. Kit Williams: We have to do a RFP for every investment advisor and it is a long interview process. The Firefighters did that because the person they liked changed brokerage firms and they wanted to just stay with him. I told them you can't just stay with him you have to go through the whole process. They did and very wisely chose Elaine and have done much better since they chose her than what they had done before with Merrill Lynch. Mayor Coody: They sure have. Eldon Roberts: We have had other people do this too Sondra, ask to come and give us a presentation and once you start that it is a never ending process. We would have to sit through countless hours of those. Jerry Friend: We use to do it and it wasted a lot of time. Eldon Roberts: Yes. Mayor Coody: We are wasting time now talking about it. Sondra Smith: He called a couple times. I have got an email from the Taylor Family so I do need to let him know. He was just going to come to the meeting and I said no we don't do it that way. Mayor Coody: Do we need a motion to deny or just tell them no. Sondra Smith: Send a letter thanks but no thanks? Mayor Coody: Yes. Kit Williams: Our policy is and it's the same to hire any professional if you are going to do it don't bring just one guy in you go through the whole process. Eldon Roberts: Advertise. Jerry Friend: And were not looking for someone else. Do we need to vote or just say no? Mayor Coody: I don't know why we would even need to vote on it because we are not even in the mood to go out for a RFP. Jerry Friend: Can we ask you to write them a letter saying no? Sondra Smith: Yes. Policemen's Pension & Relief Fund Board of Trustees Meeting Minutes April 26, 2007 Page 6 of 10 Kit Williams: Just tell them we are not sending out RFP's and we don't need to hear from them. Sondra Smith: Okay. Mayor Coody: Alright thanks. Longer Investments: Monthly Investments Report Mayor Coody: Is it good news? Kim Cooper: It's good news. Mayor Cooper: Excellent the stock market broke 13,000. What's the outlook? Kim Cooper: I can start with the outlook since you asked. First Elaine is not here this morning because we are in the middle of earning season. We had several companies that reported earnings on the open today so she wanted to be there to watch that and see what happened with the stock market. So I will be delivering your report today. Elaine passed along some of her words of wisdom. The Mayor asked about the outlook, with the stock market going through 13,000 she wanted to let you know that that was a new high in that but its also being confirmed by new highs in the transports and the utilities. We have also hit a new 6 1/2 year high in the NASDAQ, so it's not just that one single index it's very broad based. It's a strong advance it's confirmed by the technical in the charts with the prices but we are also seeing very strong earnings. They are much better than expected and the new highs are being confirmed by all of the averages. Elaine feels very good about this fact but we may see the market take a breather now that we are through that 13,000 level that everybody has been watching. The economy may be slowing as we go into the second half and the estimates are about 2% growth going into the second half but the earnings picture again is still very good. The first report is the portfolio appraisal through the end of March. Page one the domestic equities are 45% of your portfolio. Page two your foreign stocks are 6.8% of portfolio and that comes to 13% of your total equity exposure. So your total equities, foreign plus domestic were 51.8% as of March 31st so we need your authorization to be at that level since we are between the 50% to 55%. Mayor Coody: The policy is 50%? Kim Cooper: The policy is 50% with a variance of 5% above or below. Mayor Coody: Okay. Policemen's Pension & Relief Fund Board of Trustees Meeting Minutes April 26, 2007 Page 7 of 10 Eldon Roberts moved to approve the equity overage. Tim Helder seconded the motion. Upon roll call the motion passed 7-0. Your corporate, government and government agency bonds are listed after the equities. Your current yield on corporate bonds is 6.3%. The current yield on your treasury bonds is 5.1%. The bottom of page two going through page four are your government agency bonds and those are yielding 5.4%. So as of March 31" your portfolio value was $10,559,000. In your cash and equivalents there is restricted cash of $107,000 listed and that was cash that we were holding for distribution that went out shortly after the first of April. We were holding it so it wouldn't be invested. Since there has been a lot of activity in the market since March 31st we went ahead and put in an updated report in as of April 20th. I won't go through everything on the April 20th report but on page eight your portfolio value as of April 20th was $10.730 million. That includes the $107,000 that went out the first of April. Just for the month through April 201h your stocks were up 5.3%, your foreign stocks were up 3.8% and the total account was up 2.7% just in those first 20 days of the month. That doesn't include what we have seen this week which makes that go up even more. Page nine is a summary of your realized gains and income for the first quarter. Your realized gains have been $70,879 and your net income has been $43,460. Page 10 is a summary of your fixed income holdings, your bonds. Your weighted average yield to maturity is 5.4% and your average maturity is 4.4 years and that compares to a five year treasury bond which only yields 4.5%. So you have a lower maturity than a five year treasury but you have a higher yield on it than you would in the five year treasury. The lower table shows distribution by maturity. Your under one year and your one to three year bonds are 40% or your bond portfolio. So you still have 40% of your bonds that mature in less than three years. So you still have a lot of flexibility if interest rates go up we can use those shorter term bonds to increase the yield on the portfolio. Page 11 is a list of your largest stock holdings. All of the holdings are less than the policy requirements of 2.5% of total portfolio. Page 12 is your industry weighting. We are over weight in capital goods, consumer non-cyclical, cyclical stocks and energy. We are still under weight consumer cyclical stocks because of continued concern about the weakness in housing and the slow down in mortgage equity extractions. That's been what's propping up spending for the consumer so we think that consumer spending will still be a bit weak. We are under weight health care and utilities. The only utility company that we own is AT&T. We are even weighted with the S&P on financial and technology. Page 13 is your year to date distributions. We have received some class action law suit proceeds about $700 this year. Your withdrawals through the end of March were $330,000. Policemen's Pension & Relief Fund Board of Trustees Meeting Minutes April 26, 2007 Page 8 of 10 Page 14 is a summary of your performance since inception. Through the end of the first quarter your stocks were down about 0.5%, your foreign equity mutual funds were up 2.2%, your bonds were up 1.3% and the total account was about 0.4%. That compared to the indices which too were about flat for the first quarter. Year to date the S& P is up about 4.4%, your stocks are up 4.6% for the domestic stocks, 5.3% for foreign stocks and your total account year to date is up 3%. The bottom of the page is a summary of your contributions, distributions and income in the account. The total investment returns since we have been managing the account is $6.350 million. That compares to your withdrawals in the account of $4.4 million. Your investment income has been higher than your withdrawals since inception by 1.9%. Your total annualized return since inception has been 7% and that compares to that 6% number that we shoot for that's in your actuary reports. The actuaries use that 6% number and your annualized has been 7% so you have been over one percent over that. There are no changes on the investment policy other than getting new signatures for the new members. Mayor Coody: Do we have any questions? Thanks very much, tell Elaine you did a very good job. Kim Cooper: I will pass that along. Thank you. Quarterly Report A copy of the Longer Investment Quarterly Report was given to the board to review. Informational Eldon Roberts: Sondra do we have elections coming up in May? Sondra Smith: Yes we do. We will be getting letters out probably if not tomorrow Monday for sure. Eldon Roberts: Okay. Kit Williams: How many positions do we have available? Eldon Roberts: Three. Sondra Smith: Two or three. Eldon Roberts: I think Melvin was elected to fulfill Dr. Mashburn's unexpired term which has now expired. He has to run again and then myself and Tim. We serve until the end of May? Sondra Smith: End of May, yes sir. Policemen's Pension & Relief Fund Board of Trustees Meeting Minutes April 26, 2007 Page 9 of 10 Melvin Stanley: Frank is scheduled one more year? Sondra Smith: We voted to go ahead and do that by a sending a letter out and asking them to elect whoever they want to. Kit Williams: So they will vote for three is what they will do? Sondra Smith: Yes, they will choose three off of the list that is eligible. We send them a list of eligible pensioners. The widows aren't eligible and the ones sitting on the board are not. Jerry Friend: Can I bring up a short complaint that some of the pensioners gave me? Kit Williams: If it's short. Jerry Friend: It's short. Could you devise a way that the ballots are secret by maybe putting a return address on the envelope having someone take the ballot out and throw it to the side? That way you know who voted and then when you count them they would all be mixed up. Sondra Smith: By not having their name on there. Jerry Friend: On the ballot. Sondra Smith: We can take off the blank for their name. Jerry Friend: I know you need to know who sent a letter back. Sondra Smith: We just need to know that one person is not sending in ten ballots and running a color copy. Kit Williams: Sondra, what they do when you vote for people on the Bar Association you sign the envelope. You don't sign the ballot but you sign the outside of the envelope. So you check the envelope that way you know that is somebody's signature. Sondra Smith: I will do it however you all want us to just let me know. Jerry Friend: I've just some complaints that they would rather have secret ballots. Mayor Coolly: Sure, that is one of the hallmarks of our process is secret ballot. Kit Williams: But we need to know who is voting too to make sure they are qualified to vote. Jerry Friend: I think we would have to mark the return envelope. Let them sign it and assure them that when it's opened you will just pile them all out and count them. Sondra Smith: So just have them sign the envelope. Policemen's Pension & Relief Fund Board of Trustees Meeting Minutes April 26, 2007 Page 10 of 10 Mayor Coody: But not the ballot. Sondra Smith: But not the ballot. Mayor Coody: Tell them Sondra can be trusted to take care of it. Jerry Friend: Everybody trusts Sondra. Kit Williams: You might want to have them print and sign so you can actually figure out who it was in case they sign like me. Jerry Friend: Their return address on the envelope would be printed. Sondra Smith: A tot of them don't put their return address on the envelope. Mayor Coody: Just make sure it is printed clearly on the envelope. Sondra Smith: Just do an envelope with their return address on it. Jerry Friend: Stick in with the ballot and when they mail it we could read their name and check them off. Sondra Smith: Okay, we can do that. Jerry Friend: That might be the simplest way. Kit Williams: I would still like for them to signing somewhere to. Sondra Smith: I can do the return address with labels we have labels printed. Eldon Roberts: If those go out Monday they would back by two weeks? Sondra Smith: Yes, I usually give two weeks. If I give them longer than that they wait until the deadline to turn it back in. Kit Williams: That should be enough otherwise they lose them. Sondra Smith: You are right, Eldon's term ends May 31, 2007, Jerry's ends May 31, 2008, Tim's ends May 31, 2007, Melvin Stanley's ends May 31, 2007 and Frank is May 31, 2008. So we will have three. Meeting Adjourned at 9:35 AM