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HomeMy WebLinkAbout1989-12-28 MinutesMINUTES OF A MEETING OF THE FIRE PENSION BOARD A meeting of the Fayetteville Fire Pension and Relief Fund Board of Trustees was held on Thursday, December 28, 1989, at 1:30 p.m. in Room 26 of City Hall. PRESENT: Fire Chief Mickey Jackson, Ex -Officio Treasurer Scott Linebaugh, Secretary Sherry Thomas, Firemen Pete Reagan and Mike Bonaduce, and Ben Mayes, Accounting Supervisor. Also present Curtis Williams and Richard Yada of Merrill Lynch. ABSENT: Fireman John Dill and Retiree Carl Springston CALL TO ORDER The meeting was called to order by Scott Linebaugh. MINUTES Motion was made by Bonaduce, seconded by Reagan, to approve the minutes of the October 26, 1989 and November 22, 1989 Board meetings. The motion passed unanimously. PENSION LIST Linebaugh stated the December and January pension lists needed to be approved. There were no changes in the December list, but the January list has an addition of Rod Lewis at $878.33 per month. Also, the amount from Lewis' retirement effective December 11 through December 31, $577.33, will be added to the January list for payment. Motion was made by Reagan, seconded by Bonaduce, to approve the pension list. OLD BUSINESS Linebaugh asked if Roy had decided to retire. Jackson stated he had decided but was unsure of the date. The issue the Board will have to deal with is that he has requested it be a line -of -duty disability retirement. WAYNE WATTS RETIREMENT Jackson stated he had discussed this issue with Jerry Rose, City Attorney. Rose gave him an opinion that (1) any refund had to be repaid with interest, and (2) the law says that his contribution to the pension fund is suspended during the time he is in the armed services. There is a requirement that he returns to work within one year from the time of discharge. So, Rose's opinion is that he does not have to pay for the time while he is in the service. Jackson stated that the amount Watts owes to the fund is $121.26 at 8.46% interest for 19 years which comes to $567.33 to be eligible to retire on January 26, 1990. The interest rate is calculated as the average of the last three years rate of return on the audit. Bonaduce asked what time Watts was getting credit for. Jackson stated the Board has already approved granting him credit for the time he was in the military and for the time he waited to come back to work. Reagan stated he understood that the Board was giving him credit for the time, but that he had to buy back the time into the pension fund. Jackson stated he felt the Board had the authority to require that Watts pay back into the pension fund. He felt the Board would be creating potential problems is the time was not credited. Jackson wants the Board to decide on what should be done so that he can tell Watts an exact amount to pay to make his January 26 retirement date effective. Bonaduce asked Linebaugh how he felt the situation should be handled. Linebaugh stated he felt it would be fair to ask him to pay for the time he was not in the military. He also saw where Watts may have a claim against the Board, but he felt it was not very strong. He also sees a potential problem with the Board "giving away" time. Bonaduce asked if Watts could be presented with two choices: (1) the $567.33 and the military time or (2) all the combined time and paying back for both periods of time. (The Board will take up this item at the end of the meeting when the actual figures have been computed.) DARRELL JUDY RETIREMENT Reagan stated he felt the Board needed documentation on Judy's injury before any decision is made. Jackson asked that a letter be written to Judy requesting the date of his back injury, how his back was hurt, and if he was cleared by his doctor to return to full duty work. The Board also needs to asked Jerry Rose to research the legality of changing his type of disability. NEW BUSINESS Jackson stated that Charlie Jordan has asked that his retirement date be calculated. Don Bailey researched his retirement records and calculated that his eligible date is August 10, 1990. The issue here is that Jordan was working for the water department for the City and a part paid (volunteer) fireman during the time. There is no record of all the time he served. Charlie McWhorter had a record for part of the time. Jordan was told if he could produce records that showed different dates than what the City has, then his retirement date could be reconsidered. INVESTMENTS Richard Yada stated as of December 27, the equity account was valued at $604,728 and the income account was valued at $2,195,615. The equity account is up $100,238, and the income account is up $272,859. ML Lee is up $15,941. The equity account for the year is up 19.87%; however, it is still below the average for the stock market and other major indexes. RNC has not performed as well as many other managers for the year. Williams recommended that the Board not sell Occidental, rather move the stock into an outside account and hold it. The prospects of the stock are very good, and it would be better to hold onto it for a while than sell it and take such a large loss. It is paying a fairly good dividend of 9%. Williams gave the Board members copies of the New Mexico Capital Management report for them to consider as the top recommendation for the balanced managerial position. He stated New Mexico Capital was a more conservative manager than Delta in that they limit their stock selections to the hi -cap section of the market. Their fixed income philosophy is extremely conservative. They buy and hold long term government bonds. They are a yield oriented type of manager. He stated the market for the past 10 years has averaged about 16% which is about 6% above the long term average. If the market goes down or flat, a different type of management may need to be looked into. Linebaugh stated he saw problems with Delta for several reasons. First, they are a new firm and do not have a tract record. They only have 5-6 years with Commerce Capital, and that is not much time for a large company. Commerce Capital was not a very large investment company. Also, he has trouble crediting their time as investment officers in a bank toward being a money manager. They might be really good at what they do, but he does not understand why the Board would want to take a risk with a new company when they could hire a larger, more well-known company for the same amount of money. Also, since they only owned 20% of Commerce Capital, he felt the bank, who owned the other 80%, had a significant influence over the investment decisions and policies. Williams stated that Commerce Capital was a spin-off of the bank and was a separate entity from the bank. They were created because the bank trust department was performing well but needed to be able to perform outside the restrictions of a bank trust department. Linebaugh also raised the objection that Delta is a two -person firm. There could be major problems if something happened to one of the parties. Also, there is too much research work and too many decisions to be made for two people to do accurately. For the amount of money the pension fund will be paying a manager, a good reputable company could be hired. He further stated that Conaway had started in banking in 1980; therefore, he would be considered very weak in experience in handling money. Again, he could not see taking a risk on a company that has two men --one with a very weak background and the other that could be okay. Jackson asked if Delta was on the Merrill Lynch recommended list. Williams stated Commerce Capital had been, but Delta was not at this time because they have chosen not to be on the list. By being on the list, they have to handle smaller accounts that Delta does not want to do. Williams stated Roxbury, their second choice, was a good company that had been in existence longer and had a larger decision making force. They would be a little less negative correlation with them than Delta which was one of the aspects he was trying to obtain for the fund. He stated they were specifically looking for a smaller firm to handle the pension fund so that this account will be important to a manager. Linebaugh asked if any of the money managers would liquidate the entire portfolio. Williams stated he felt they would. New Mexico will keep a few of the RNC positions. Linebaugh asked if the fund lost much by changing managers. Williams stated the total charge to the pension fund is the 1% per year no matter what they do with managers. Bonaduce asked a hypothetical questions: What if the Board decided to go with the New Mexico firm today, what would RNC do the investments? Williams stated he would recommend moving Occidental to another account. RNC would get a letter from the Pension Board that they have been fired and to return the unused portion of the management fee, if any. The portfolio, along with the copy of the investment guideline, would be turned over to New Mexico. If there are any stocks that meet New Mexico's guidelines, they would keep them. Then in an orderly fashion, the portfolio would be liquidated and reinvested. Jackson asked what would happen if they Board hired Delta, and then Conaway and his partner split up. Williams stated then his job would be to inform the Board of a potential problem with the money manager and recommend a change of manager. However, changing money managers too often will cost the fund in terms of not being able to wait out the investments long enough for them to grow. The Board decided to have a special meeting at 1:30 p.m. on January 8, 1990 to decide on a manager. WAYNE WATTS RETIREMENT Linebaugh stated the figures had been completed for Watts' retirement options. The additional contribution would be $486.51. That is calculated at $122.32 at 8.46% for 17 years. The options for Watts are then $1,053.84 and retire on January 26, 1990 or $567.33 and retire 283 days after January 26, 1990. Reagan, seconded by Jackson, made a motion to approve the options being offered to Watts. The motion passed unanimously. ADJOURNMENT The meeting adjourned at 3:05 p.m.