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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