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HomeMy WebLinkAbout2007-10-25 MinutesBoard Members Mayor Coody Chairman Sondra E. Smith Secretary Marion Doss Position 1/Retired Pete Reagan Position 2/Retired Gene Warford Position 3/Retired Ron Wood Position 4/Rctired Marshall E. Mahan Position 5/Highest Ranking 17a*ye evl e ARKANSAS Firemen's Pension and Relief Fund Meeting Minutes October 25, 2007 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes October 25, 2007 Page l of 5 A meeting of the Fayetteville Firemen's Pension and Relief Fund was held at 11:00 AM on October 25, 2007 in Room 326 of the City Administration Building Mayor Coody called the meeting to order. Present: Mayor Coody, Marion Doss, Gene Warford, Ronnie Wood, Trish Leach & Wendy Moore, Accounting, Deputy City Clerk Amber Wood, Assistant City Attorney David Whitaker. Absent: Pete Reagan, Marshall E. Mahan and Sondra Smith were absent. Approval of the Minutes: Approval of the September 25, 2007 Meeting Minutes Gene Warford moved to approve the September 25, 2007 Meeting Minutes. Ronnie Wood seconded the motion. Upon roll call the motion passed 4-0. Pete Reagan, Marshall E. Mahan and Sondra Smith were absent. Approval of the Pension List: Approval of the November, 2007 Pension List Mayor Coody: Any changes to the Pension list? Amber Wood: No, changes. Marion Doss moved to approve the November, 2007 Pension List. Mayor Coody seconded the motion. Upon roll call the motion passed 4-0. Pete Reagan, Marshall E. Mahan and Sondra Smith were absent. Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes October 25, 2007 Page 2 of 5 Old Business: Dennis Mullens retirement classification (Tabled from the September 25, 2007 meeting.) Gene Warford moved to table Dennis Mullen's Retirement Classification to the November meeting. Ronnie Wood seconded the motion. Upon roll call the motion passed 4-0. Pete Reagan, Marshall E. Mahan and Sondra Smith were absent. Pension Protection Act (Tabled from the September, 2007 meeting) Mayor Coody: Can I make seconds on this David? David Whitaker: You're the chair. No. Gene Warford moved to table Pension Protection Act to the November meeting. Marion Doss seconded the motion. Upon roll call the motion passed 4-0. Pete Reagan, Marshall E. Mahan and Sondra Smith were absent. New Business: Kim Skelton Proof of Enrollment Amber Wood: That's an informational item only. We included a copy of her enrollment just to let you know she has enrolled another year. Change Meetings to Ouarterly — State Statue 24-11-802 Mayor Coody: Sondra has done some homework and if she were here she would be making this request herself. The Police Pension Board meets quarterly instead of monthly. There has been talk that the Fire Pension Board has to meet monthly. She looked at the law and the Fire Pension can meet quarterly if it so chose. We are down to four minute meetings, the finance folks are doing an excellent job, and I don't see why the Fire Pension Board couldn't go to quarterly meetings unless you just love to meet on a regular basis. Gene Warford: I think that sounds like something that needs to be up for discussion at our next meeting and we can vote on it. Marion Doss: I think the full board should. Mayor Coody: I understand. I just wanted you to think about this. Gene Warford: I personally think it is a good idea. Mayor Coody: There is nothing that can't wait two months instead of every month. Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes October 25, 2007 Page 3 of 5 Marion Doss: I always thought it was in the state statue for Fire Pension that they had to meet monthly. Gene Warford: If it's not there's no reason for these four and six minute meetings. Mayor Coody: I couldn't agree more. If I can get out of a meeting I'm all over it. Amber Wood: We included a copy of the state statue where it states that a meeting can be called by the chair or by a majority of the members in a manner established by the board. So you can establish when you would like to meet, whether it's monthly or quarterly. Mayor Coody: Even the Police Pension meetings that are done quarterly are short too. Basically it's the minutes, pension list and the financial report and that is pretty much 99% of what goes on. You all think about this and the next time we meet we will take a vote because it would save everybody time. Sondra's over worked as it is so it would save us all some time. Gene Warford moved to table to the November meeting. Ronnie Wood seconded the motion. Upon roll call the motion Passed 4-0. Pete Reagan, Marshall E. Mahan and Sondra Smith were absent. Longer Investments: Monthly Report Page one of the report is the portfolio appraisal the cut off date of this report was quarter end which is September 30th. Your policy allows us to go to 55% plus 5% overage on the equities side and we did close at about 55% so that is why that needs to be approved. The equities that you have are 47.5% and the International stocks that you own are 7.7%. Page four is the total value of the portfolio which it closed the quarter at $8.897 million. In cash we had $108,000 restricted to go out after the end of the quarter. The income yield on the bonds is 5.3%. Through today the five year treasury is trading right at 4%. Page five is a report that gives a cut off date in this week and you can see month to date your stocks are up another 1.5% or so. Stocks are 47.5% and foreign is 7.7% so you are right there again at about 55.2%. Page eight is the value, which is $8.845 million. The income yield on the total portfolio which includes your dividends plus your bond interest income is 3.5%. That's income that comes in regardless of what the stock market does. Page nine is the summary of your realized gains and losses. These are just the gains that we have taking on stocks that we have sold, $307,736 year to date and the income is $164,363. Page 10 is a summary of your fixed income holdings. The average yield to maturity is 5.5% which includes your corporate bonds as well as government bonds. The average maturity is 4.6 years so you have a shorter maturity than that five year treasury but your income is 150 basis Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes October 25, 2007 Page 4 of 5 points above the yield or 1.5% higher. Within the bond portfolio you have about 30% of your bonds that will mature in the next three years, so we still have a fairly short term structure, a lot of flexibility in the portfolio to be able to continue to roll forward as opportunities present themselves to increase income yield. Page 11 is a summary of your largest holdings Johnson & Johnson, Google, Microsoft Corp., Teva Pharmaceuticals and Kraft Foods Inc. Page 12 is a summary of the industry weightings verses the S&P 500. We are underweight the consumer, consumer cyclical, financials, which has really helped performance this year being underweight the financials, the cyclicals and utilities. We are overweight the energy, healthcare and technology. Page 13 is a summary of the distributions and contributions inception to date. The contributions that have come in since August of 2002 are $824,907 and the distributions are $5.24 million. Page 14 is a summary of performance through September 30"'. Stocks were up 11.5% that compares to 7.7% on the S&P 500, 9.2% with compounding dividends. The small cap stocks which are the Russell 2000 are only up 2.3% this year. International's are up 6.5%, bonds are up about 4%, cash 5% and so the total was 7.7%. As of yesterday equities are up 13% verses the S&P of 7.14% and your total account is up 8.3% for the year. Your compound annual returns have averaged 11 % for stocks, 10.2% for your international holdings, approximately 4% average annual return on bonds, 21.2% on real estate investment trust and a compound annual return of 7.4% compares to 6% in your actuary assumptions. The bottom summary shows the contributions that have come in. The beginning value which is $9.9 million, the contributions $824,907, distributions $5.24 million and the net investment return has been $3.411 million so that your ending value is $8.897 million. Contributions plus investment return have been about $4.2 million verses the $5.2 million distribution and that accounts for the $1 million decline. The investment policy is included. We made a change in the Police Pension policy and I wanted to make the same recommendation to you too. We are at 55% equities but because stocks are so out performing bonds what happens is there are times in the middle of the quarter where we are still bumping up. Today if the market is up one percent I'll be at 55.7% by the end of the day. They increased their overage by 10%. We are still shooting to hold it at 55% but that allows us to a least be a 55.7%, if an interim price increase happens, without us being out of compliance. The paragraph we added to theirs is the manager can operate outside the equity guidelines by not more than 10%; we changed it from not more than 5% to not more than 10%. Gene Warford moved change the Investment Policy to allow Longer Investments to go plus or minus 10% of the current Equity range with approval of the Board. Ronnie Wood seconded the motion. Upon roll call the motion passed 4-0. Pete Reagan, Marshall E. Mahan and Sondra Smith were absent. We got a call from someone from the city and we had gone to 55.6% or 55.7% on one account. It just happens on a big day. In this kind of volatility where we are having 200 and 300 point Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes October 25, 2007 Page 5 of 5 days on a regular basis that makes a big difference when you are right at the 55%. We can easily be at 56% by tomorrow. Mayor Coody: That's just a policy change and it doesn't hurt anything. Elaine Longer: No, it just keeps us in compliance. A copy of the Longer Investments monthly report was given to the board. Longer Investments Informational Letter A copy of the Longer Investments informational letter was given to the board. Meeting Adjourned at 11:25 AM