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HomeMy WebLinkAbout2010-04-29 MinutesBoard Members Mayor Jordan Chairman Sondra E. Smith Secretary Marion Doss Position 1/Retired Pete Reagan Position 2/Retired Gene Warford Position 3/Retired Ronnie Wood Position 4/Retired Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page l of 22 A meeting of the Fayetteville Firemen's Pension and Relief Fund Board of Trustees was held at 3:00 PM on April 29, 2010 in Room 326 of the City Administration Building. Mayor Jordan called the meeting to order. Present: Marion Doss, Ronnie Wood, Pete Reagan, Sondra Smith, Mayor Jordan, City Attorney Kit Williams, Elaine Longer and Kim Cooper, Longer Investments, Trish Leach, Lisa Branson, Kim Johnson, Emily Dockery, Audience, and Press. Gene Warford was absent. Approval of the Minutes: March 25, 2010 Meeting Minutes Pete Reagan moved to approve the March 25, 2010 Firemen's Pension and Relief Fund Board of Trustees meeting minutes. Ronnie Wood seconded the motion. Upon roll call the motion passed 4-0. Marion Doss was absent during the vote and Gene Warford was absent. Pension List Changes: Mayor Jordan: Sondra have there been any changes? Sondra Smith: No changes. Approval of the Pension List: May, 2010 Pension List 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page 2 of 22 Pete Reagan moved to approve the May, 2010 Pension List. Ronnie Wood seconded the motion. Upon roll call the motion passed 4-0. Marion Doss was absent during the vote and Gene Warford was absent. Old Business: None New Business: Revenue Expense Report — March 31, 2010 Pete Reagan: That is in the packet Mayor as informational only. Kit Williams: Trish is this what you present? Trish Leach: Yes. Election Process Sondra Smith: There is information in the packet about the election process. There have been some concerns about the election process. I feel like my integrity has been called to question. I have concerns about the election process myself because some of the ballots that I received back are not the ballots I sent out. Kit Williams: How did you come to that conclusion? Sondra Smith: Because we use a dark green letterhead that comes from a printing company. We don't make copies of the ballots we use letterhead. Some of the ballots that we have received are light green. Kit Williams: It's not as dark as the letterhead? Sondra Smith: It's not as dark. It's obvious that it is different. Kit Williams Memo Kit Williams: The first issue that came up is Mr. Reagan didn't receive his ballot on time and notified Sondra and asked for a replacement ballot. Sondra came to me and I looked at the statute, and you all have the authority as a board to set up the election procedures. Sondra or a separate board member does not have any sort of power to do that. I thought that the election procedure had been set up in such away that she sent out the ballots but there was nothing in 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page 3 of 22 there for her to send out replacement ballots. That was the memo that I wrote to you all that I felt like the board could authorize something like that but Sondra had no power to do that and I advised that she should not do that. That would be something the board would need to decide. Fortunately I understand you got your ballot evidentially when snail mail finally decided to send it to you. That particular issue that I commented on went away. I think Sondra started to talk about a second issue that came up and I will let her explain what that is. Sondra Smith: First of all I want to explain the process so everyone will understand how we handle it in our office. We do a mail merge on original letterhead on all the ballots and letters we send out. I set down after we do the mail merge, sign all the letters, I give them to Emily to stuff and verify that everybody was going to get a ballot in the mail out. Then when they come back to us Kim date stamps them, opens them and puts them in a folder. Then she gives them to Emily to log in when she is at work. She only works two days a week. We have several people involved in the election process to make sure that there is not one person doing it and that there is no failure. We received the ballots back and after they logged them in, our letterhead at the top is a very dark green, and we noticed that several ballots that are a light green. We've checked our box of letterhead it's all dark green, and we checked the Police Pension that goes out on the same letterhead. Kit Williams: Police Pension election. Sondra Smith: Police Pension election is all dark green that we received. We checked the nominations that came back from the Fire Pension and they are all dark green. It's only the ballots that I am questioning. I don't believe they are the ballots that I sent out. Kit Williams: The ones that are light. Sondra Smith: Yes, it is pretty obvious. Pete Reagan: How many of those are there? Sondra Smith: There are 12. Ronnie Wood: 12 that are a different color? Mayor Jordan: You can look at the colors on them. Marion Doss: What was the total number of ballots you got back? Sondra Smith: The total number of ballots we received back was 32. Kit Williams: That means 20 were dark green? Sondra Smith: That's about 12 more than what we normally get. Marion Doss: The statutes say secret ballot election don't they? 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page 4 of 22 Kit Williams: No, it says the board shall have the power to make all rules and regulations needful for its guidance to implement the provisions regarding board composition. It really leaves it totally up to you all as the board to make the decisions. As long as it is going to be something that would be free and fair, in other words there is a limit to who can vote. You can't say everyone in the City can vote or all your buddies can vote. You can only have retirees voting and then it needs to be a system that will be fair and accurately report the voting so that people that are not eligible to vote can't vote but people that are not eligible to vote can vote and their votes will be counted. As long as your system works like that then it is pretty much up to you all about how to do it. The Police responded to my memo and we explained the problem that had happened where a ballot had been lost in the mail and it wasn't right that Pete would be denied a vote because the mail system failed but we had no way under the current system to say who had voted and who hadn't. We didn't know who had sent a ballot in and that put us in a bad situation, so we explained that to the Police and even though they didn't have problems they went ahead and adopted my five point procedure which would have the name of the retiree on the envelope, not the ballot. So when the envelope would be received in the City Clerk's office they would note the name and mark it off the masters list, open the envelope and stick the ballot unread in a file or box and probably keep the envelope anyway just for future reference if you wanted to. That way if there was an issue, like what Pete suffered, Sondra could easily look and see whether or not he had voted. If he hadn't voted then at that point she would be able to supply a provisional replacement ballot and probably mark it differently and send it to Pete and if he got his regular ballot in the mail, like he evidentially did, he would vote one of them and have his name on the envelope. Sondra or her crew would mark off that the ballot had been received and the vote would be placed with all the rest of the votes and counted when it came through. That is why I tried to suggest something like this. When we elect members of the board for the Bar Association they send out a ballot. The ballot doesn't have our name on it but on the outside of the envelope we print our name with our ABA number and then we sign it and sent it in and they count them up. It's not like this is unusual where the ballot doesn't have a name on it for privacy and secrecy but yet you've got it on the envelope so you know the right people have voted. Pete Reaean Emails Pete Reagan: I have a few comments on that and I would like to address Sondra and her staff on an issue that was brought forward in one of the previous emails from Sondra. I want to publicly state that I never questioned the integrity of you or your office or the way the election was conducted. I believe I stated that in an email to you. I do however have a lot of questions and problems with the way the process evolves. I know we have done it that way in the past and if it hadn't happened to me it would have happened to someone else, with that being said we need to have something. I thank Kit for his explanation of what we need to do. I went back through the Department of Labor, which I was former State President of the Arkansas Professional Firefighters for 22 years and conducted 22 elections. We had a lot of different statewide elections but this one is written and guidance for conducting union elections. This 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page 5 of 22 deals strictly with mail out ballot systems. It's a ninety four page Department of Labor policy if anyone would like to sit down and read it. I have an electronic copy of it but I did go through and highlight some items that I brought today. A copy was passed out to all the board members. I think this will eliminate all the problems that we saw with this last election process. Kit made the suggestion that we open the envelopes and place them unread in a file. To me that's not a secret ballot. A secret ballot needs to be opened in public and there is a process there that the envelope needs to be marked. Observers have always been welcomed as far as I'm concerned and I think that was a question here on whether someone could be present. The envelope that the ballot is mailed back in needs to have some type of marking and placed unopened in a locked box and a date set for them to be opened and certified as a eligible voter. Then the process is opening the envelopes, keeping the envelopes and shuffling the ballots so nobody can see who pulled what from what envelope and then a count take place. That should all be open to anyone that wants to see it. Sondra Smith: There was no question on anybody being there for the ballots to be counted. The problem was we had already received the ballots in, opened them, and they had already been given to someone else to start doing a spread sheet. Unless we stuffed them back in an envelope, there was no way we could have someone present when opened them, because we had already opened them before we got the email from Pete wanting us not to open them. There was no question about anybody being present. I have no problem with that. It was not feasible because we had already opened them. We did the same process we've done since I have been here. We use to put the pensioners name on the ballot and you requested we take that off. At that time I had a concern that we might have a problem in the future. Mayor Jordan: Can we back up just a little bit? We seem to be getting into the procedures of the election. I think we need to address the ballots that were a different color before we get into the procedures. I want to take this one thing at a time. I want the boards input on the different colored ballots. Marion Doss: My thought is if there is any question about the integrity of the election we might need to do it over. I was thinking about the possibility of putting a number on each ballot and shuffle those up and not send them in any special order. Mayor Jordan: I appreciate both of your comments I just need to know what you want to do as far as both of these ballots are concerned. Sondra Smith: I have the ballots if anyone would like to view them. Kit Williams: They should probably be able to see them and see whether or not it's obvious that some appear to have been copied. Sondra Smith: I really don't want you to see the votes but you can come and look at each one and you can see the ones that are lighter and that are in question. 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page 6 of 22 Pete Reagan: I'm a candidate for one of those positions so I will trust the other two. Marion Doss: I am too, so I guess you're the one that gets to look at the color. Ronnie Wood: I don't see very well. Kit Williams: You will probably see this. Pete Reagan: Mayor your thoughts were? Mayor Jordan: I want to decide if we are going to do a new election. Pete Reagan: You've looked at the ballots. Mayor Jordan: They look different. They're a different color. Kit Williams: Sondra put them side by side rather than one at a time if you are going to compare the darkness of the green. Even with bad eyes you can see that. Ronnie Wood: I can see that. Kit Williams: In my opinion you have two options. You can determine that it is apparent that some ballots were copied, because the green letterhead is not as sharp and just say those are voided ballots and use the 20 something that are dark green that you know are good ballots. The other option is like Marion said you can do an election all over again. Both of those have pluses and minuses. The plus for discarding the ballots, which are obliviously copies and not good ballots, would mean that the election would be decided on all the good ballots that were received within the time frame that was called for. You will comply with state law in getting the board reelected in a timely fashion and save you all from reimbursing the clerk for the extra money to go through this whole process again and try to come out with a new system to do it. The pluses on the other way is that way you can have a brand new election with hopefully enough safe guards in that something like this could not happen again. You get to decide which way you want to go. Mayor Jordan: I agree, so basically you've got 12 ballots you can either throw them out or do a new election. If you do a new election then we need to discuss how the election procedures are going to be done. I need your advice now on what you think we need to do. Ronnie Wood: We are looking at over a third of the ballots. Sondra Smith: To answer that questions Ronnie, there were 45 ballots sent and 32 received. Last year there were 47 ballots sent and only 20 received. On the nominations for last year 47 were sent out and 17 were received one after the deadline. On the nominations for this year 45 were sent and only 15 nomination letters came back. 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page 7 of 22 Kit Williams: I think you indicated that all the nomination letters came back as the originals not copies. Sondra Smith: There were no copies of the nomination letters. Marion Doss: Sounds to me like if they are obvious copies or counterfeit ballots they should be trashed. Kit Williams: That is the normal procedure in an election. Pete Reagan: Then it becomes subjective as to what color is the original. Kit Williams: You can look at them and see if you can't see the difference either. Pete Reagan: I would just as soon not. I will take his word for it but I think in the effort of fairness to everyone I think we ought to declare the election invalid. Mayor Jordan: That was my thinking on it too. Pete Reagan: I thought that was the way you were going. Mayor Jordan: I'm just running the meeting. Pate made a motion to declare the election invalid. Ronnie Wood seconded the motion. Upon roll call the motion passed 5-0. Gene Warford was absent. Mayor Jordan: Now we start all over again. Now we talk about procedure. Marion Doss: I suggest numbering the ballots and shuffle them. Pete Reagan: Did you read that? Marion Doss: No, I didn't read that. Mayor Jordan: That's the problem Pete I just got this about 20 minutes before I came in here. Pete Reagan: I did a lot of research and I apologize for it being late. Mayor Jordan: I just haven't had time to absorb it. Marion Doss: I think the way we have been doing it has worked. We just didn't expect anybody to send any counterfeit ballots in. Mayor Jordan: Nobody does. 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page 8 of 22 Pete Reagan: I think we need to have not only ballots but we need to have envelopes. If we are going to have a true secret ballot election they don't need to be opened until a certain designated time and the envelope needs to marked with the name or seal to designate it as an official ballot. Once on the deadline day when they are opened the names are matched against the retiree that is eligible to vote. Kit Williams: I think she can do that ahead of time, because if someone is in a position like you that did not get a ballot, then she can easily look and see that Pete has not voted and send another ballot that will be specially marked as a replacement ballot. Pete Reagan: That is the Department of Labor standard that's nothing I dreamed up. Kit Williams: No, that's fine. I haven't looked at yours long enough either. On number six I was a little concerned where it said that a replacement ballot would be counted and the original ballot would be deemed void if you get two votes from one person. Normally in most regular elections the original is always going to be the one that is counted. I think you should try to concentrate on trying to have the original ballot as the one that is returned and counted. I don't think replacement ballots need to be sent out by the Clerk unless it is a situation like you faced where you did not get your ballot. Then she could clearly mark on the ballot that she would send back to you "replacement". Even though one problem with that is that you might be the only one with the replacement ballot so it would be obvious who voted. Every system has a little bit of a problem but I think it's probably better for you to have a vote even if it can't be a private vote then to not have a vote at all. Pete Reagan: Would the envelope not take care of that? Kit Williams: Except that if she is going to mark on the ballot itself that it is a replacement. Pete Reagan: It's marked on the envelope and the replacement ballot. Mayor Jordan: It got a "D" on it right. Pete Reagan: It will have a "D" on it. Kit Williams: On the envelope or ballot? Pete Reagan: Both. Kit Williams: If you are the only one that gets a replacement ballot then we are going to know how you voted if it's marked on the ballot. Pete Reagan: Only those counting will. Kit Williams: Right. Pete Reagan: And you have a chance to vote. 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page 9 of 22 Kit Williams: I think it is better for you to have a vote then to keep the privacy. Pete Reagan: I agree with your thoughts on that but that's wording straight from the Department of Labor. Why it's in there I have no idea. Kit Williams: We haven't always agreed with the Department of Labor right down the line. Pete Reagan: I pretty much do. Sondra Smith: I would also like to note that Pete's ballot was mailed from our office at the same time as everybody else's. It was put in the wrong box at the Post Office. It had nothing to do with our process. Mayor Jordan: I'm sure that is true Sondra. Pete Reagan: I've got the original right here. Sondra Smith: I move to accept Kit's process. Kit Williams: With the addition of what Marion said about having the ballots numbered but having them mixed up so there not in alphabetical order. Marion Doss: I second you motion if that is what that was. Sondra Smith: We can do that. A copy of the process that Kit suggested is in the packet and that has also been approved by the Policemen's Pension. Kit Williams: My number five says "after the date for the election passes the ballots will all be taken from the file, read, counted, and winners announced." It doesn't mean that Pete or someone else can't be there when the ballots are taken as long as the secrecy is remained as much as possible. The name is going to be on the envelope. Actually the envelope is going to be put in a different spot, isn't it? Sondra Smith: My concern with the name being on the envelope is the way the Firemen's Pension does the election, they send out nominations and if I put that name on the envelope for the nomination and they choose not to send the nomination back they can still send back two ballots if they choose to be dishonest. They can make a copy of the ballot and they would have two envelopes to use. Mayor Jordan: We have Kit's memo and his suggestions and we have a motion and second to do it however according to the way we do things you can put amendments on what you've read to add in whatever you think you need to add in. Kit Williams: One thing we could do to take care of this is you would send only one envelope for both the vote and nomination. Don't they come in at the same time? 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page 10 of 22 Sondra Smith: No, we send out the nominations first, only on the Fire Pension, with the envelope, then we get the nominations in and that is who we put on the ballot for an election if they are willing to serve. Marion Doss: We could send an unmarked return envelope just like you have been doing for nominations. Kit Williams: That doesn't really control anything. Mayor Jordan: That's going to take amendments added to what you have already put out, right? Kit Williams: No, mine is just for the ballot not for the nominations. Sondra Smith: We are talking about just the ballot. I'm concerned about the nominations too. Kit Williams: Like Marion said you wouldn't have to same the envelope. Sondra Smith: Okay. Pete Reagan: If you look at number five on my draft it addresses all that. Kit Williams: What is a double blind envelope? Pete Reagan: It's one you can't see through. Isn't that what they are called? Sondra Smith: No, it's called a security envelope. Pete Reagan: Department of Labor calls it double blind. Marion Doss: One envelope could be marked nominations and the other could be marked ballot. Mayor Jordan: That's the way we did at the University. They would send out one for nominations and the other would be the actual election. Marion Doss: That sounds like that would be a simple way to take care of it. Mayor Jordan: Kit, can we add that on? Well we are talking about an entirely different thing right? Sondra Smith: Right. Kit Williams: That can just be administratively done. The ballot is the only thing I am talking about rather than the nomination form. 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page 11 of 22 Mayor Jordan: We vote on your measure then we come back and talk about the nominations and add whatever amendments we want to. Does everybody understand? Marion Doss: In this case we have already got the nominations. There is no question on the nominations it's just on the ballot so I don't think there is any need to redo anything but with the ballots. Sondra Smith: Exactly. Mayor Jordan: Is everybody okay with that. Pete Reagan: Yes. Pete Reagan: Would you please restate what we are voting on? Kit Williams: If you look on page two of my memo I have five provisions. Even though the ballot would not have the voters name on it there would be a number on the ballot which would be mixed up and not in any sequential number, alphabetically, or anything like that. The ballots would be numbered one to 45 and then they would be shuffled up and put in no particular order in the envelopes going out. Everything else would be handled as stated in one through five. Pete Reagan: Just for the record I'm going to vote against that because I don't believe that we can have a true secret ballot election if we have open ballots in a file that are unread. I think we have to secure the envelope and leave it as it is with the name on the envelope of the voting member who is eligible and then the process starts. Mayor Jordan: Kit, can he put that amendment on this document? Kit Williams: Theoretically he could although if you look at how absentee ballots are counted, they are opened up and the election people count them. They don't count them before the Election Day. Pete Reagan: But they stay in a locked box. They don't come out of the locked box. Kit Williams: The problem we would have is they need to note on the master list who has voted so that if there is a request for a second ballot she needs to know whether there is a vote out already. Pete Reagan: I understand that. Kit Williams: It does not require that you have to have the ballots opened. You can keep the ballots in a separate locked place and then they are opened on Election Day if you want to do that. The Clerk would need to keep a list of who has returned an envelope. Which I don't think would be a problem for the Clerk. 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page 12 of 22 Pete Reagan: I don't think we have a problem with that it's number five or six that talks about that. The envelope is secure, the name is checked off, the ballots are opened, all that is taken care of. Mayor Jordan: If all that is put in there is that going to be an issue. Sondra Smith: If we go by Pete's process than someone else will have to do the election. As you know Mayor we are in a down economy, my budget has been cut, and my staff has been cut. We are already doing nominations and elections and this election has caused undo grief for my office and staff. Kit Williams: Do you have a file cabinet that locks in your office? Sondra Smith: I keep these ballots locked in a file cabinet in my office where I am the only one that has a key to that file cabinet. Kit Williams: Would it be alright instead of opening the envelopes and putting them in a place unread that you put the envelopes in your locked cabinet and not open them until Election Day. Sondra Smith: The reason we couldn't do that in the past is because we used all the same envelopes and all that was on the outside was my return address. Kit Williams: These would be different envelopes. Sondra Smith: We had no way of knowing if that was a Firemen's Pension ballot, Policemen's Pension ballot, or something else coming in the mail so we had to open the envelopes. Mayor Jordan: Basically what we are saying if we go with what Kit wants to do. Kit Williams: Except not open the envelopes. Mayor Jordan: That you could handle that. Sondra Smith: Right, we will just date stamp the envelope instead of the document. Mayor Jordan: With the document we got today you don't have the amount of people to handle an election like this. Sondra Smith: No. Kit Williams: I think it will satisfy Pete's problem in that they will all be in a locked container unopened up until Election Day. In fact if you want you can have them opened in your meeting. Sondra Smith: That would be fine. Marion Doss: That would be good. 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page 13 of 22 Pete Reagan: It would be fine will me. Mayor Jordan: We will just open them up the day of the election in here. Will that be fine with everybody? Pete Reagan: As long as they are not open I have no problem with it. Mayor Jordan: You have my word they won't be open. How will that work. Pete Reagan: That will be great. Sondra Smith: Made a motion to use Kit's process and the ballots will not be opened. They will be put in a locked cabinet and a number will be put on each ballot in random order. So we can not determine whose ballot that was and who it went too. Mayor Jordan and they won't be opened until Election Day, right? Sondra Smith: Until our first board meeting after the election. Kit Williams: At that point we will be opening them as part of that meeting. Mayor Jordan: Are there any more comments on it? Pete Reagan: I would like to make a comment on the process Mayor. I would like to submit this as what I submitted as a draft policy, or I plan on submitting it as policy, so that we can have a written policy for these elections so that we don't have to go through this. This will addresses all of our situations. There will be no more time spent by city staff. We will open them in here we have a chalk board. We can all do cowboy arithmetic there is only 35 ballots. Sondra Smith: 45. Mayor Jordan: So you are saying Sondra doesn't have to be involved in it then. Pete Reagan: No, she can be involved in it. I'm not saying that. She said her office didn't have the time to do it. I think we can open them in here as long as all of them are sealed. Then it becomes a secret ballot. Kit Williams: Basically you're saying you should vote against this. If this fails then you will present your plan. Pete Reagan: I plan on it. Sondra Smith made a motion to use Kit's process and the ballots will remain unopened and in a locked cabinet until Election Day or the first Firemen's Pension meeting after the ballot deadline. Marion Doss seconded the motion. Upon roll call the motion passed 4-1. 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page 14 of 22 Gene Warford was absent. Mayor Jordan, Marion Doss, Ronnie Wood and Sondra Smith voting yes. Pete Reagan voting no. Kit Williams: I will convert this into writing and send it out to you to make sure that you all agree that I put down exactly what you all wanted. Mayor Jordan: What we basically are going to do form now on is we will open the ballots in here and count them. Kit Williams: Right. Mayor Jordan: And you will have all of that written up in this document, correct? Kit Williams: Do we need a special meeting in order to get people on board in time? Sondra Smith: We have the meeting before May 30tH Kit Williams: You need to make sure and be at the meeting in May because we need to have the officers on board before the end of May. Pete Reagan: When is the election going to? Have we set a date? Mayor Jordan: No, we have not. Sondra Smith: The next meeting is May 27th and the positions are through the end of May. Kit Williams: How long do you usually give people to vote when you send the ballots back? Sondra Smith: I usually give them two weeks. That's the process that was set before. Kit Williams: You all are going to need to set the time relatively quickly but give her enough time to get the ballots together so that people can have the same two weeks again and have enough time. We don't want to have stuff that comes in late because the mail screwed up and then we open them up at the next meeting and count the ballots. When do you want to schedule this? Marion Doss: I'm looking at Sondra for time because she is the one that does all the leg work on this. So what ever she suggests. Sondra Smith: If you want them mailed out Monday we will drop everything else and get them mailed out Monday. Tuesday would be better because I have additional staff. Kit Williams: Yes, give yourself a little more time. Sondra Smith: We can do them next Tuesday, May 4tH 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page 15 of 22 Kit Williams: That is our City Council meeting. Sondra Smith: That's fine. Pete Reagan: We will give you an extra day if we do it on the fifth and get them back by the I9th Sondra Smith: Okay. Pete Reagan: That's the middle of the week. Kit Williams: Let me make sure I understand. If they mail them back do we give them any grace period beyond the 19th? Do they have to be postmarked by the 19th or do you receive them by the 19"'1 I want that decided now. Mayor Jordan: I want the board to be in agreement with all this stuff. Pete Reagan: Normally it's postmarked isn't it? Sondra Smith: I usually put on there received or postmarked so if someone walks it in on the 19th or if it's postmarked. Kit Williams: That still gives them a week to get here. Pete Reagan: That's true. Kit Williams: I would hope that would be enough for the post office. That should work. Marion Doss: We need a brief letter of explanation too, so they know why they are getting another ballot and won't say I've already voted in this and toss it. Sondra Smith: I can do that. The nomination envelopes will not have a name on it, correct? Kit Williams: We have already got the nominations done. Sondra Smith: No, for next year so that we don't go through this next year. Pete Reagan: I think we need to look at that later on. Kit Williams: I think the nominating procedure is okay we just need to make sure that the envelope can't be confused. Mayor Jordan: You can put amendments on this. Pete Reagan: I know but I think we need to set down with a policy. 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page 16 of 22 Kit Williams: We are okay with nominations now, this is just the election. Sondra Smith: Kit's process is going to be the policy. Kit Williams: It's what we just voted on. Pete Reagan: Ballots are going out on the 5th? Received or postmarked by the 19th Sondra Smith: Yes, sir. Marion Doss: Does that give you enough time? Kit Williams: We almost have to do it like that because we want to have enough time for anything that is postmarked by the 19th to make it in. Ronnie Wood: Our next meeting date is what. Marion Doss: The 25th. Pete Reagan: The 27"' Mayor Jordan: Is everyone going to be here when we count this stuff? Kit Williams: We need a quorum for sure. Sondra Smith: It's going to be May 27`h. Ronnie Wood: It's a shame we have to do something like this. Kit Williams: Yes, it's pretty surprising. Mayor Jordan: It is what it is. Longer Investments: Elaine Longer: Good afternoon, we are back to some volatility in the markets if you have been watching this past week. Down 200, up 50, up 100 today, so we have had some more volatility. A lot of it is related to what's going on internationally with Greece and Portugal and the down grades there. We have just finished the first quarter earnings season. The earnings have come through good. Interest rates, at this point in time, are not troublesome. We are still very low on the 10 year, about 3.70%. The five year is about 2.5%. The six month treasury will get you 0.22%. If you are willing to go out to two years you can get a 1% interest rate fully taxable. Kit Williams: At least so far they are not charging you to take your money. 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page 17 of 22 Elaine Longer: Not yet, it's interesting because even though you have some much economic growth that has come about since last year, interest rates even on the long end curve are still not showing any inflation concerns, part of that is because you have almost two forces at work, you have excess capacity and labor. Excess plant capacity is at about 72%, you have excess real estate on the market, excess commercial real estate, and then on the other side you have rising energy and commodity prices. As these deflationary and inflationary forces fight out what ends up happening is the Consumer Pricing Index (CPI) that was reported last month was 0.1%. At this point in time the inflationary concerns are not being reflected in the fixed income market. With what is going on in the Euro zone with Greece, Portugal, and Spain, they're starting to talk down grade on the credit quality of Spain, which is a much bigger economy then Portugal and Greece. The Euro has declined in value relative to the dollar. Kit Williams: What do you think about the Chinese currency? Is it going to start coming up? Elaine Longer: The Chinese currency is not a free floating currency. They control the peg of the yuan to the dollar. Mayor Jordan: Will you explain free flowing currency? Elaine Longer: Other currencies for instance the Yen, Euro, and the US dollar are the three main currencies. The US dollar is the world reserve currency and that means is that most of the trade in world is dominated in US dollars. A lot of that comes from the fact that crude oil is priced in dollars. You look at those currencies they trade freely on the exchanges every day. On my screens I can tell you exactly where the Euro is relative to the dollar, exactly where the Yen is, the Australian, and Canadian dollar. All of these are free trading currencies and they trade relative to each other and a lot of that is based upon domestic inflation, government policies, the deficit as a percent of GDP, and deficit as a percent of a nation's income. These currencies trade freely on international exchanges and they trade 24 hours. When our market closes it is about time for Asia to open, when Asia closes it's about time for Europe to open. It's a very liquid market and that means that billions and billions are traded everyday. It's a great way to maintain the equilibrium because the markets punish a currency quickly if there is a policy mishap, like what we see going on with Greece and Portugal, and it brings about results from a policy stand point very quickly. There are other parties that are negatively affected and have a lot to lose if the Euro goes down. The beauty about freely trading currencies is that it keeps the equilibrium in balance and restores equilibrium quickly if things get out of line. When you look at China, China does not trade, you can't go out there and freely trade a yuan the government determines the price of the yuan relative to the US dollar. At this point in time there is a lot of discussion that the yuan is under valued relative to the dollar and should be higher priced. A lower currency relative to the dollar gives the Chinese a trade advantage in terms of manufacturing and costs are lower there than they are here. That is why you see Washington putting so much pressure on the Chinese to revalue the yuan. They don't have to do that with Europe and Japan because the market forces are constantly setting the relative valuations of currencies based on economic considerations and domestic policy considerations. In a case like China it is set by the government without regard to these various economic factors. 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page 18 of 22 Kit Williams: Their doing it to export. Elaine Longer: They decide what it is going to be and that is what it is going to be. There is a lot of political pressure to change that. You can see why there is so much political pressure, because it is a relative price advantage in trade when you can pick your currency price. Page one is the portfolio report which is dated March 31st. We closed the quarter with about 48% invested in stocks. We have 3.7% invested in preferred debt that yields 6.38%. Page two shows the international holdings are 7.4% of total portfolio. With the international plus the domestic stocks your equity exposure is about 55% which is over the 50% that requires a vote. Your policy is 50% plus or minus 10%. Pete Reagan made a motion to approve the equity overage. Ronnie Wood seconded the motion. Upon roll call the motion passed 5-0. Gene Warford was absent. Elaine Longer: The portfolio value is $5.6 million on March 31st. The income, which is the annual income that comes in from dividends, interest, preferred debt, is at a 3.48% yield. The important thing is that your portfolio, even though you have a 55% growth component, your over all income yield is still close to the 10 year treasury. That means you are getting the same income yield as if your whole portfolio was invested in bonds. The reason for that is we have been able to focus on high income stocks. On page one the yield on your stock part of your portfolio is 2.75%. That means you're earning over the five year treasury yield just on the dividends you receive off the stocks. We've been emphasizing high income stocks as much as possible. There are still stocks that you need to own in the portfolio that don't pay a dividend like Cisco, EMC, some of the higher tech, high growth names, that don't pay a dividend, but we offset that by holding companies that pay over 6% BP. The over all income yield we try to keep between the yield of five and 10 year treasury. Page three has been updated for April 28th. The market is up about 3% month to date. Cash balances are about $256,000 or about 5%. We've taken the equity exposure. We're a little more conservatively postured than where we were at the end of the quarter. You will see that the domestic is about 45% and 6% on the intemationals. You're about 51% down from about 56%.l think as we move into May it's possible that we will see the highs for the next several months sometime between now and the end of May. The reason I say that is because a lot of our sentiment indicators are getting a little bit frothy. The party hats are starting to come out of the closet. That makes people like me scared. They always say buy when no one is buying and sell when no one wants to sell. At this point in time the sentiment indicators are just the reverse opposite of where they were in March of last year when the market bottomed. There are a number of other indicators that are starting to look at little toppie. Also as we head into the second quarter you are looking at the mid term elections that are coming up in October and I think there will be a lot of political discourse in the news and that will be a heated political season. As we move into next year the Bush tax cuts will expire and the capital gains tax which is currently 15% will roll up to 20% and in the health care bill they've attached an additional 3.8% surtax on top of capital gains and dividend income. In essence you have the capital gains 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page 19 of 22 tax going up by 60% from 15% to 24% next year I have to think there will be some harvesting of gains that takes place at some point between now and the end of the year. We are up about 8% or 9% year to date and I'm just saying I wouldn't be surprised to see some backing and filling as we go into the end of the year. Page seven is the fixed income report. The average yield to maturity is 4.6% with the average maturity being 7.1 years. You have an income yield locked in that's about 100 basis points or 1% above the comparable 10 year treasury but your maturity length is only 7.1 years as opposed to 10 years. We have been able to pick our times to opportunistically extend maturities and lock in higher interest rate. We have had a lot of volatility in the past year even though interest rates are pretty similar to where they were a year ago. In the mean time we have been all over the place between nearly 4% on this 10 year and all the way down to 3.25%. We have had periods in time where we've been able to extend maturities and to lock into these rates so you haven't seen a big change in your bond interest rates even though short term rates have dropped. Bonds that mature within one year the percent of your bond holdings is now down to 3.1%. For us anything that we hold in the fixed income market is as good as cash because we trade on an institutional basis we can convert a treasury to cash the next day. We are watching it but when we go into a 4% treasury that has an eight year maturity we are using that as a cash equivalent. It does not mean that we will be holding that bond to 2018. At this point in time we are comfortable holding it but if the 10 year treasury yield starts to go through 4% I will be lightening up on how much I own in that kind of a maturity. Page eight is the performance report year to date through March 31s`. Stocks were up 4.5%, foreign was up 2.4% with a fixed income of 1.4%. The total is up 2.8%. Through yesterday the market has added another 3% to 3.5% to that 4.5%. You're closer to an 8% return on equities year to date. Your compounded annualized returns the equities now, because of the rebound from the low in 2008, we have recovered a good part of that decline so that your compounded return on equities is 4.2%. The S&P return during that time period has been 3.1% on a cash basis, 5.1% on a compounded basis on return. You are right there with the indices. The international has compounded at 2.7% and fixed income at 4.2%. The bonds have carried the portfolio through the big decline we had. The year the market was down 40% your account was down 20% because the fixed income helped to offset the negative impact. Last year stocks were up by 29% with the S&P up about 23%. So you had a 16% return on total portfolio and then followed by 3% year to date. 2008 was a terrible year. The recovery has been fairly strong and fairly quick. Especially off the lows of March because even though last year was up 29% the first part of the year last year was down 25% before we bottomed in March and then started the rally off of that low so that for the year it looks at 29% but off that low the rally has been more like 70%. Because we went down so hard before we went back up before we got to break even and then we were able to tack on another 30%. That was a very volatile year and we are still going through the repercussions. You can see in the news the policy prescriptions coming out now to regulate the financial industry and try to put into place safe guards so that this can't happen again. They are not even close to getting that resolved yet but you can see that Congress is finally starting to work. Last year was all about saving the patient and moving the patient from ICU to the patient bed and starting to take away some of the support systems and let the patient breathe on his own. You're seeing now that there is this exit strategy being developed both at a policy level, the Federal Reserve which has quit buying mortgages as of March 31" 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page 20 of 22 You see the battle beginning to be fought in Congress on how much deficit spending will we continue to do in light of the fact that the economy is recovering. This is a year of transition from crisis to stabilizing the patient and moving forward. Page nine shows from August 2002 through March 31, 2010 the total contributions to the fund have been $995,000. The total distributions from the fund have been $8.1 million. The net draw down contributions verse distributions has been about $7 million. Page 10 shows the net invest return has been about $2.88 million. That's why as you discuss your situation with the unfunded liabilities and all the pensions throughout the state and country are going through this because of the fact that we finished a decade at the end of last year that is the first time in this century that you've actually finished a decade of negative returns. Elaine Longer handed out a chart that shows long term returns. I think I've shown this chart in prior meetings. It goes back and looks at the large cap US stocks. This pre dates the S&P 500 index returns and looks at large capitalization US companies. Going back to 1836 is where this study starts and it shows 10 year rolling average returns in the stock market. Where ever you have these low points with the red dots those are periods in time where the 10 year average annual return approached zero. You will see the only time prior to this past year that the 10 year average annual return was at zero was in 1936. That means in 1936 if you had held stocks for the past 10 years you were actually at a negative return. Prior to this year that was the worst point. If you look at February 2009 the 10 year compound annual return reached a new low of -4% for that decade. This is a real dramatic time period that you have been to and it answers the question about what went wrong with so many pension funds. When they set the actuarial assumptions and when we started managing the account in 2002 we thought 6% was a reasonable assumption given the fact that you historically had 9% to 10% on stocks and at that point in time in the fixed income market we were able to achieve a 6% return. We are not comfortable with a 7% change that they have made because the fixed income returns have declined so much and you are still in balanced portfolio where half of it is in fixed income. If you look at this chart you can see that this decade of return is really a historical anomaly. The numbers below are interesting because they take these points in time where these climatic decade lows have been achieved and they say what happens the decade following a decade like this. If you look at the first column it says if you had purchased the market bottom minus one year, if you had bought stocks a year before the market bottomed your next decade compound annual return is 12.3% with a low standard deviation of 2.7%. If you bought the actual bottom your next decade return is a compound annual 13% and if you missed the bottom by the whole year and didn't buy anything until a year after the stock market bottom the next decades return on average was 10.1% compound annual. Historically what this says is there is light at the end at this kind of a tunnel. You've just been through this kind of a tunnel as far as the market returns. Kit Williams: If you did a curve for today would we be back to zero yet? 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page 21 of 22 Elaine Longer: I actually calculated that the other day for someone and I can't remember where we were but it had come back up just above the line. You were still hugging the zero from where this February dot is. Mayor Jordan: Everybody is excited about getting back to zero. Elaine Longer: You have come through a perfect storm. When you look at that and the fact is we don't go back as far with your plan as we do with the Policemen but they have recovered to their actuary rate of return assumption but we have a 21 year history there. Going back to where you started in the eighties it would be interesting to go forward and look at the study because you probably recovered to your original assumption as well. These assumptions are built over a long term time period so they take into account declines like this. I can't speak to your twenty some year history. I can to the Policemen. Within a balanced portfolio structure given reasonable expectations of return by asset class, typically the equilibrium does come back but it can be quite painful when you are going through it. We appreciate your patience. You've been very patient going through this and very understanding. Pete Reagan: We appreciate everything you do for us. You do a great job. Elaine Longer: Thank you. Pete Reagan: This is S&P this isn't the DOW? Elaine Longer: This is a study that pre dates the S&P 500. It goes back and it's into the 1800's so it includes large cap US stocks. Kit Williams: When the S&P 500 came that is what it used. Elaine Longer: That's right. Kit Williams: Would the DOW be similar to this? Elaine Longer: The Dow probably would be similar. The DOW is composed of thirty stocks and when a DOW thirty stock leaves, that's a bigger percentage of the index changing they always substitute a new stock. Whereas when an S&P 500 company drops out it's a much smaller part of the index so from a smoothing stand point I think the S&P 500 probably has less single issue noise than what the DOW has. That is why usually that's the benchmark that is used. Monthly Report A copy of the report was given to the Board 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes April 29, 2010 Page 22 of 22 lat Quarter, 2010 Report A copy of the report was given to the Board Informational: 2010 MeetinE Schedule A copy of the meeting schedule was handed out to the board. Meeting Adjourned at 4:06 PM 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316