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HomeMy WebLinkAbout1981-09-14 MinutesMINUTES OF A FIREMEN'S PENSION AND RELIEF BOARD MEETING A meeting of the Firemen's Pension and Relief Board was held on Monday, September 14, 1981, at 4:30 p.m. in the Finance Director's Office, City Administration Building, Fayetteville, Arkansas, 72701. PRESENT: Paul Logue, Larry Freedle, John Dill, Ralph Tate, Robert Johnson, and Treasurer Scott Linebaugh ABSENT: City Manager Grimes and Secretary Vivian Koettel CALL TO ORDER The meeting was called to order by Treasurer Linebaugh. MINUTES The minutes of the 8-3-81 meeting were approved as submitted. PENSION LIST There were no changes to the pension list for September. Motion was made and seconded to approve the pension list. The motion passed unanimously. SAVINGS AND LOANS DISCUSSION Treasurer Linebaugh stated that nationwide, savings and loans are having troubles. Linebaugh reported that investments in savings and loans are only insured for up to a total of $100,000. However, anyone that has an accrued interest has that amount insured. But before a person is technically accrued, he must have at least twenty years of service. Linebaugh explained that the Police Pension had $115,000 in First National Bank, and the Fire Pension had $115,000 in Heritage Federal. The Fire Pension took over the investment in First National, and the Police Pension t000k over the one in Heritage Federal. Linebaugh pointed out that no interest was lost, and this was only done so the deposits could be insured. In reply to a question, Linebaugh stated that the Treasury Bills are secure at the present time and are paying good money now. Freedle asked what the normal investment time is, and Linebaugh replied that usually these investments were made for at least one year. Linebaugh stated that the City of Fayetteville pulled all of its money out of the savings and loans because it was against the law for the City to have money in savings and loans. One board member asked how one went about getting Treasury Bills, and Linebaugh reported that this is usually done through a broker. Linebaugh stated that he felt the pension board would reach a point where the banks could no longer cope with the amount of money handled through the fund. He stated that one item to consider was whether or not the board wanted to go outside of the City of Fayetteville to make investments. The Police Pension had decided not to go outside the City. He read from the Police Pension's decision, "Funds will be invested in savings and loans with home offices in Fayetteville, up to the insured amount of $100,000, and City funds will be separated from the Police Pension funds as discussed, and the savings and loans will be asked to pledge government securities." Linebaugh stated that his recommendation is to invest only up to the insured amount in savings and loans. He reported that the last time he had checked, (a month or two ago) Worthen Bank in Little Rock was paying more than the page 2 Firemen's Pension and Relief Board Meeting local banks. Linebaugh informed the board that if they decided to invest out of town with other banks, or go with government securities, the local banks would probably be angered. Linebaugh reported to the board that he would check and see how much the Treasury Bills are guaranteed for. Linebaugh told the board that the Finance Department trys to keep up with the institutions and all three banks are in good shape now. One board member asked Linebaugh if the banks would drop their interest rates when they discovered that the pension board was only investing in banks and their competition was lessened. Linebaugh stated he felt they would not drop the rates until they reached an amount of money where they no longer needed investments. Linebaugh stated that he felt they might not be far from that point now. INVESTMENTS Linebaugh reported that one CD would come due 9-28-81 for $115,000 presently in First National Bank, and two would come due 10-5-81. One is for $100,000 and is in Heritage Federal, and the other is for $188,000 and is in Northwest National. Linebaugh gave a brief rundown on interest rates for the last three months of July, August. and September. 30 days - from 17.75% to 17.5% to 17.25% 90 days - from 17.5%,remaining at 17.5%,to 17.65% 180 days - from 17.0% to 16.75%, to 17.0% 1 year - from 16.0% to 15.75%, to 16.0% Linebaugh recommended that the investments be made for a year at approximately 16%. Linebaugh stated that he was recommending the CD due 9-28-81 be reinvested for one year, and that the ones due 10-5-81 be reinvested for a year if the rates are still up. If not, he would recommend a six month investment. Motion was made and seconded to invest in savings and loans only up to the insured amount of $100,000. Motion carried. A motion was made to check with Worthen Bank and other major banks in the State of Arkansas, and if the interest rate is competitive with local banks, that these banks be asked to bid on the CD's, with the pledge of governmental securities. Motion carried. NEW BUSINESS Larry Freedle asked if the benefits for the retired firemen could be raised. He pointed out that some of the retired firemen are making less than $200 per month and he asked if the board could increase their benefits to $200 per month. Linebaugh answered that the only way benefits can be increased is for the pension fund to be determined to be actuarially sound. Linebaugh told the board that the Police Pension board had sent letters to all their retired people explaining this, and that the fire pension board might consider doing the same thing. No action was taken on this item. ADJOURNMENT There being no further discussion, the meeting adjourned. Vivian Koett , Secre ary --tot-et-a( onald L. Grimes, Chairman