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HomeMy WebLinkAbout1995-04-10 MinutesFAYETTEVILLE PUBLIC LIBRARY BOARD OF TRUSTEES April 10, 1995 Present: Mark Burdette, Jeff Koenig, Michael Thomas, trustees; Linda Harrison, Fayetteville library director; Karen Duree, Ozarks Regional Library director; Mary Jo Godfrey, Lynaire Hartsell, June Jefferson, Lolly Maxey, Susan Sissom, staff; Mark Lungaro, Theresa Ewing, Boatman's Trust Company; Steve Davis, City of Fayetteville; Amanda Fincher, Northwest Arkansas Times. Special Board Meeting President Thomas called the meeting to order. There was no quorum, so no business was enacted. Only Thomas and Koenig were present. He said, in compliance with the Arkansas Freedom of Information Act, he was announcing the special meeting, dealing with personnel policy manual matters, was being held at 3 p.m. Mark Lungaro introduced himself and Theresa Ewing, saying that they were involved with the library's retirement plan. He said that in previous years, the retirement plan involved investments mostly in insurance -type products. He said he and Ewing were interested in getting the board's input on investments and to determine what "flavor" that body would want to consider for future investments. He said the board and the professional investment team shared responsibility for the fund. He handed out documents outlining different types of investment plans, going from the most conservative to least conservative options, he said, including money-market plans and instruments with variable rates of interest and also international instruments. He recommended a portfolio that contained both bonds and stocks. The documents he gave to the board outlined the holdings. He suggested looking at four or five plans. Koenig asked if the board had the option of asking Boatman's to get information on plans and make recommendations. Lungaro said it did. Koenig said that would somewhat reduce the board's fiduciary responsibility. He said the investment officers were better qualified to make decisions on investment plans than board members are. Lungaro said he had gotten the impression from Bob Hall, an banking official who previously had worked on the library's retirement plan, that the board had wanted to give bankers guidelines on investments. Harrison said that had come about because of low returns on previous investments. 2 Ewing said many companies like to take an active role in retirement -fund planning. Koenig said he felt comfortable with experts advising on investments. In a litigious society, he said, he did not want the responsibility as a board member to make investment decisions on subjects on which he was not an expert. Lungaro reiterated that he and Ewing were involved as trustees for a number of companies that wanted to take an active role in selecting pension plans, and the library board could exercise that option. Koenig said he would be comfortable in the pension trustees asking the board for an opinion and the board's accepting the advise of the financial trustees, because their advice would probably be conservative and would not involve risking the funds in the retirement plan. O'Hara said there was always some risk with investing in stocks, although in the long-term the risk was small. Koenig said as long as the planners did not advise investing the whole plan in "junk bonds" or "derivatives" or other risky ventures, he thought the board would be safe in following the advice. Lungaro said the board could always dismiss the planners if the members considered they were not doing their jobs. Koenig noted that a one or two percent return on investments in the last year would be considered good. Lungaro agreed but added that some groups wanted a 14 or 15 percent return, "which is not the real world." Jefferson said that with newspapers reporting accounts of groups losing their entire retirement funds, employees just wanted to be sure that bankers were investing the pension money wisely; she said she believed the staff members would be satisfied with a lower return on the investment if that meant that the fund was secure. She asked if she were correct in her interpretation of the discussion that the board was asking the plan trustees to be relatively conservative in investing the library retirement fund but to also seek some instruments that could make money for the fund. Lungaro said that she was. Lumgaro explained that security for the principle of the fund was not guaranteed by the Federal Deposit Insurance Corporation (FDIC), because the money was not being invested in savings accounts or certificates of deposit, which are covered by the insurance. The safety of the funds, he said, is only as good as the securities in the portfolio, such as McDonalds' and other products. If the money was placed in the insured accounts, he said, they would not return the income that money placed in non-insured investments do. Another aspect in the planning of the retirement fund money, he said, is that the planners look at a three- to five-year investment period, not six months. These accounts should out -perform CD rates and money-market accounts in three-, five-, or 10 -year periods, he said, as they historically have. 3 Koenig said that the board could step in when they receive quarterly reports on the fund if they should determine that some of the money was being invested in risky ventures and request a more conservative investment instrument. The board could ask the planners to alter to either more conservative or more lucrative investments, Koenig said, but he added that he did not have the expertise to make the day-to-day decisions that are involved in the management of retirement fund accounts. Jefferson said that part of the language of the retirement fund benefit is that it would be "employee directed," and that is a matter that will come up soon. She said the employees can use this experience to determine if they want to have an employee -directed plan. Koenig said that several possible versions of "employee -directed plans" exist and that the degree of participation and decision-making could vary. Jefferson asked if rewording of the description might be necessary. She said that rewording decision could wait, but she needed to know if the action taken at this meeting countermanded last year's action that made the board the deciding body on investment decisions. Koenig said a number of decisions would have to be made on an employee -directed plan. Jefferson and Harrison suggested talking to Hall to determine appropriate wording on that portion of the personnel manual. Lungaro told Jefferson his employer offered prototype documents if that would be helpful. Koenig said the library board had used a prototype document last year when changes to the retirement plan were made. There are several advantages to using a prototype document, he said. The group further discussed the transition of the library's retirement account. Koenig said the board had received enough information to execute the document when it met in full session. The meeting was adjourned. * * * The regular meeting was called to order at 4:03 p.m. Thomas reported on the special meeting. He named Burdette and Carol Phillips, board treasurer, to serve as liaisons between the library board and the trust company on the matter of the library's retirement plan investments. The minutes were corrected by Jefferson, who said a statement 4 had been misattributed to her. The minutes were approved with the correction (Koenig, Burdette). Thomas asked if the Washington County Library Board had written to the Washington County Observer to ask for a retraction of an editorial discussed at the March meeting of the Fayetteville library board. (The Fayetteville board said that the editorial had misrepresented the financial situation of the county library board and that it contained statements that would prove detrimental to an effort to gain voter approval of an increase in the county's library millage.) Duree said she had not received an official notification from the Fayetteville board to relate to the Washington County board; all she had was an extraction of the discussion of the editorial from the Fayetteville board's minutes. Duree said that Thomas might make the request in the form of a letter to the chairman of the Washington County board. Harrison introduced a letter from LaGayle McCarty, assistant city attorney, responding to the board's request for clarification on problem -children policies. She told the board she "bogged down" on McCarty's assertion that the library was not a division or department within the structure of the City. Harrison said she needed the board's direction on how she should respond to McCarty, because it had long been Harrison's understanding that the library was a division of the city, at the very least. Thomas said Jerry Rose, city attorney, considered the library a city division; he had indicated that the library had the same concerns of liability as the city. Thomas asked Davis for his view on the subject. Davis said there is some confusion on the status of the library's relationship with the city. Thomas said he recalled that Kevin Crosson, director of public works, had asked him if the board of trustees considered the library a non-profit organization of some sort or part of the city. He said with the budgeting the library received, a little of both. Thomas asked Davis: "Are we or are we not part of the city?" Koenig pointed out that the library goes through the city budgeting process and that the library uses the city point -evaluation process for reviews. Davis said some non-profit organizations use that process, too, but they don't receive money from the city. Harrison said that she took the issue back to 1959, although she has not been able to find the board minutes from that meeting. Newspaper accounts of the meeting, however, indicate that the city council adopted ownership and operations of the library. Thomas suggested that Harrison call McCarty and tell her that the library is part of the city and that Rose could clarify any questions on the subject. Davis said that approach would