HomeMy WebLinkAbout1987-08-11 Minutes (2)MINUTES OF A FIRE PENSION BOARD MEETING
A meeting of the Fire Pension and Relief Fund Board of Trustees
was held on Tuesday, August 11, 1987 at 1:40 p.m. in Room 313 of
City Hall, 113 West Mountain Street.
PRESENT: Acting City Manager Scott Linebaugh, Fire Chief
Mickey Jackson, City Clerk Suzanne McWethy,
Firemen John Dill, Mike Bonaduce and Pete Reagan;
Accounting Supervisor Zelda Parson.
ABSENT: Retiree Carl Springston
ML -LEE ACQUISITION FUND
The meeting was called to order by Acting City Manager Scott
Linebaugh, who commented that the meeting had been called to
discuss the Merrill -Lynch presentation which had been given that
morning.
Linebaugh said he had made several calls to obtain more
information about the proposal that the Board invest funds in the
ML -Lee Acquisition Fund. He said this was a limited partnership
and any investment made could not be treated as stocks which can
be traded, but can only be traded among Merrill -Lynch investors.
He said he saw this as a problem because the investment would not
be truly marketable like the Board's other investments. He said
the fee quoted of 7 1/2% may not be the only fee, as other fees
could be incurred later on. He said it could be difficult
getting money back. He said Cathyrn Hinshaw of LOPFI told him
the law requires the Board use a money manager to make its
investments. He said Merrill -Lynch was a broker, not a money
manager (the Board uses RNC as its money manager for our other
investments). Linebaugh said, according to Hinshaw, although
North Little Rock's Fire Pension Board invested in this program,
RNC did not recommend they do so. He said Hinshaw also made him
aware of the Board's legal liability since this would be
considered a "high risk" investment, with not only the Board
being liable but the Board members themselves being personally
liable, in the case of a loss of funds.
Linebaugh recommended that, if the Board should choose to make
such an investment, it be done through the money manager, RNC.
It was pointed out that RNC would probably charge its own
commission on top of that charged by Merrill -Lynch.
Fire Pension Minutes
August 11, 1987
Page 2
Linebaugh cautioned the Board that it could lose its entire
investment with this kind of a program, pointing out that the law
requires a warning be printed on the front of the prospectus that
"investing in leveraged buyouts and recapitalizations is
speculative and involves a high degree of risk."
Linebaugh pointed out that, in the event of a failure of a
company, banks would be paid off first, the Pension Board being
the secondary investor. He also said the funds could be held
before being used for a buyout and during that time there is no
guarantee they will earn even money market rates.
Chief Jackson said he was bothered by something so urgent that it
has to be decided upon in two days. He pointed out that,
although Curtis Williams said Merrill -Lynch may not have such a
good program for another year, it could happen next week.
Jackson said since the presentation this morning he had a change
of heart, thinking it's so speculative he didn't want to be
involved.
Linebaugh said Cathyrn Hinshaw had commented that she would not
invest LOPFI money in anything like this.
In reference to Jackson's comment about having to decide on the
issue in two days, John Dill said he had known about this new
program for about a month, and that Jacques Devore (of RNC) had
visited the fire station and discussed the program.
John Dill said he wouldn't be in favor of paying a fee to a money
manager in addition to paying a fee to Merrill -Lynch.
Chief Jackson made a motion that the Board decide not to invest
in this program. The motion was seconded by Reagan and passed
unanimously.
John Dill asked for more information regarding liability of Board
members. Bonaduce asked for information on what kind of
insurance covers the Board. Linebaugh said he would get this
information to the Board.
ROY SKELTON
Chief Jackson said Roy Skelton had asked about a refund on his
pension funds. Jackson asked that a check be written for
Skelton. Linebaugh said he would make sure this is done.
Fire Pension Minutes
August 11, 1987
Page 3
TURNBACK ERROR
Mickey Jackson asked for a breakdown on turnback funds. Zelda
Parson told the Board that auditors discovered that, in 1984,
$11,686 too much of turnback funds was deposited in the Fire
Pension Fund, in 1985 $18,196 too much was deposited, and in 1986
$32,585 too much was deposited. She said that during those years
the calculation for splitting the turnback between Fire Pension
Fund and LOPFI was done incorrectly. She said in the first year
this was the auditors' mistake and the Accounting staff followed
their pattern for the next two years. Linebaugh said the funds
would be paid back to LOPFI.
NEXT MEETING
It was announced that the next regular meeting would be held on
Thursday, August 27 at 1:30 p.m.
ADJOURNMENT
The meeting was adjourned at 2:15 p.m.