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HomeMy WebLinkAbout2011-01-27 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 January 27, 2011 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes January 27, 2011 Page l of 10 A meeting of the Fayetteville Firemen's Pension and Relief Fund Board of Trustees was held at 3:00 PM on January 27, 2011 in Room 326 of the City Administration Building. Mayor Jordan called the meeting to order. Present: Gene Warford, Marion Doss, Pete Reagan, Sondra Smith, Mayor Jordan, Paul Becker, Jason Kelley, Trish Leach, Kim Cooper, Longer Investments, Press and Audience. Ronnie Wood was absent. Longer Investments: Ouarterly Report — 4th Ouarter 2010 Sondra Smith: Do we want to go ahead and let Longer Investments give their report? Mayor Jordan: Yes, I would. Kim Cooper, Longer Investments: Elaine is attending an investment conference today. She is sorry that she missed your meeting. I will deliver your reports and try to answer any questions that you may have. The first page is a portfolio appraisal as of year end. Your equities or common stocks are listed first and they were 53.7% of portfolio. Your foreign stocks are 4.6% of portfolio. Your total equities were 58.3% so we need your approval to be at that level. Equity Overage Pete Reagan moved to approve the equity overage. Gene Warford seconded the motion. Upon roll call the motion passed 5-0. Ronnie Wood was absent. Kim Cooper: Continuing on page two you can see your fixed income holdings. We own a couple of fixed income mutual funds that are yielding 4.8%. Your preferred debt is yielding 6.3%. You've got a couple of corporate bonds in there that are yielding over 7%. The government bonds are at 4% and on page three government agencies are yielding 5.9%. The alternative investments that are listed on that page, The Central Fund of Canada, that is a gold and sliver fund that we are using to get some precious metal exposure for you. Your cash is 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 January 27, 2011 Page 2 of 10 about 4% of portfolio. Your total portfolio value as of December 31st was $5,541,883.00. Your overall yield on the portfolio is 3.6% and that includes your stock dividends and your bond interest. As an update the portfolio appraisal as of yesterdays close is on pages four, five and six. Your value is still at that $5.5 million level. Page seven is your realized gains and losses and income and expense summary for the year. Your realized gains and losses for the year were $244,000 and your net income which is your dividends and interest net of any fees was $132,971.00. Page eight is a summary of your bond holdings. The right hand side of the page lists your weighted average yield to maturity as of December 31" which was 4.8%. Your average maturity was just under 10 years and your average coupon was 4.85% and the average duration was 7.2%. That 4.8% yield to maturity compares to the current 10 year yield which is now 3.45% so you are still well in excessive of the 10 year yield even though that is where your average maturity is as well. The lower portion is a breakdown by maturity of the various bonds that you hold. Page nine has a lot of information. That is your performance summary. It lists each year and then for 2010 in the equity column your equity is up at 12.5% which is in line with the S&P 500 cash basis index. Your equity mutual funds in 2010 were up 9.4%. Your bonds were up 8% and that compares to the Lehman Bond Index which is 4% for the year so we about doubled that index. Your gold and silver is not listed on this report but that gold and silver fund was up 32% for the year. Your total account performance for 2010 was 11.5%. The blended S&P 500 50% government bond index was up 8.9% so that 11.5% compares with that 8.9% so we outperformed that as well. Your annualized return on equities is 4.7% and that compares to the S&P cash basis return of 3.7%. Your total annualized return over the time that we have been managing the account has been 5%. Paul Becker: And that is over the period that you have managed it since 2002. Just to point out that is 5% and that is what the actuarial basis was. That was their discount rate the last time they did the evaluation so that is right in line with that actuarial. Kim Cooper: As of year end your account had fully recovered from the decline that began in the beginning of 2008 and in fact was up about 3.7% from January 2008 through year end. Mayor Jordan: That's good. Kim Cooper: We are glad to be able to see that. The next page is a contribution and withdraw report. Contributions since inception were about $1.12 million and distributions have been $8.79 million. The next page is an account reconciliation, that takes your beginning value, interest income, realized gains, the contributions and distributions that have gone in and come out of the account and reconciles back to your ending value. Your net investment return since 2002 has been $3,313,000. 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 January 27, 2011 Page 3 of 10 As always we included a copy of your investment policy in the packet. We are currently in the process of updating all of our investment policies for our clients to comply with any recent SEC regulations and advisories that we have been getting. We will get a proposed investment policy to you sometime in the next few weeks. I will get it to Sondra and she can get it to all of you. We will incorporate into that new policy the use of utility funds and some high dividend funds for the income side of the portfolio, we can get some higher yields for you than we have been able to get in bonds so right now you own a fund called the Guggenheim Multi Asset Income Fund and we are using that for income and will incorporate that into your investment policy that we do for you. Are there any questions? Mayor Jordan: This is a lot better than what I have seen in a long time. The last time we had a meeting they said the retirement plan was in trouble, do you think there is a change? Kim Cooper: I don't think there is any change because those numbers were based on actuarial assumptions of what was coming in and what was going out and a fixed rate of income on it. Mayor Jordan: So you are telling me that even though everything is up it's still not good. Kim Cooper: That's right. Paul Becker: On page two under Government Bonds you have a $150,000 U.S. Treasury Note, and the maturity is 2038, is that true? Kim Cooper: Yes, that is the long bond with a 30 year maturity. It's a couple of years old. We addressed the underfunded status at the time that we started managing the account. Mayor Jordan: Even though it is up a little bit it is not up where it needs to be then, is that what you are saying? Kim Cooper: Right. Anything else? Pete Reagan: I would just like to thank you for what you do for us. You have always done a great job for us and we appreciate you coming and giving us our report. Approval of the Minutes: November 18, 2010 Meeting Minutes Pete Reagan moved to approve the November 18, 2010 Firemen's Pension and Relief Fund Board of Trustees meeting minutes. Gene Warford seconded the motion. Upon roll call the motion passed 5-0. Ronnie Wood was absent. Pension List Changes: None 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 January 27, 2011 Page 4 of 10 Approval of the Pension List January, February, March and April 2011 Pension List Pete Reagan moved to approve the January, February, March and April 2011 Pension Lists. Gene Warford seconded the motion. Upon roll call the motion passed 5-0. Ronnie Wood was absent. NCPERS Membership Has Been Paid Pete Reagan: That was $150 I believe. Mayor Jordan: Everything is good and we don't need any motions or anything? Sondra Smith: I just wanted to let them know that that has been taken care of. Pete Reagan: I wanted to thank Sondra for sending that out to all the members because they give us a weekly report from around the entire United States and it is very interesting what is going on. We are not the only ones in the duck pond. Favetteville Firefighters Pension Fund Special Report dated 10/18/2010 Sondra Smith: That report is in the packet and that is what was handed out at that special meeting that we had. I enclosed it in the packet so you would have it for future reference and also because of us receiving the PRB letter stating that we need to send them a letter stating what we plan to do with the fund since it is insolvent. PRB Letter Regarding the Projected Insolvencv Status of the Fund Mayor Jordan: I did not want to write that letter until I talked to you all and see what you wanted to do on that. Marion Doss: I tried to answer some of those questions. I was hoping that all of us would go ahead and try to answer those. I have something written. Mayor Jordan: Do you want me to go through these questions and then take them one at a time? How do you all want to do it? Marion Doss: I can read my response as a member of the board to the Pension Review Boards letter of December 16, 2010. A copy of the response letter is attached. I would like to make a motion that our secretary prepare a response to this special report as requested by PRB that includes my questions and any other questions that board members may 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 January 27, 2011 Page 5 of 10 have by February 17, 2011. We need to have a special meeting once the letter is prepared and officially approve the contents before it is sent. If that sounds acceptable I would like to make a motion that we setup a special meeting for February 17, 2011 in order to approve that. I might add this is my personal answer to those questions and I would really like to have each board member answer the questions too. Pete Reagan: From my point, if we are having problems understanding, David Clark is available via email and phone to answer any of these questions. Also Jody Carreiro who did the actuarial study on the fund is available for that. I don't see any reason for a special meeting on it. We had a special meeting in September with the City Council and PRB. Marion Doss: The Council members were here, I don't know that we had an open discussion. They presented their report and we wanted to digest it for a while and we haven't done anything since. Pete Reagan: When do these have to be sent in? Mayor Jordan: The end of February. I don't care how we handle this but a letter is going to have to be sent to answer these questions. If you all would like to submit your answers we can compile a letter, email it to you and then get you something back. I think the board as a whole needs to get a letter back to these folks by the end of February. That is what they are asking for. Marion Doss: I agree. They want information to present at their March meeting and I am afraid if we do not send a letter back to them and ask questions they will say we want to help them but they are not telling us what to do and they are not asking us for anything. Mayor Jordan: I don't care how we do it. We are going to have to send it. Pete Reagan: I like your thought process on the situation and I will submit my answers to the questions. Gene Warford: I can't see much change. Mayor Jordan: All I'm saying is we have to answer these questions and get them a letter back. Gene Warford: Well I will have you some answers. Marion Doss: We need to be working with them and not be adversarial or anything like that and the same with the Council. We need to work together to try do something to solve it. It looks like we are not doing anything to solve it. We have had the same meetings time after time, the same discussion and information. Elaine Longer at almost every one of her presentations has had the caveat at the end stating that the fund is not going to sustain itself. Sondra Smith: I think this board needs to work together too because what if Pete sends something we do not agree with. How are we going to work out those differences? We need to have a consensus from this 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 January 27, 2011 Page 6 of 10 Jason Kelley: We have an FOI issue about working on a letter all together and emailing it back and forth. There needs to be a proposal and then consideration and discussion and a vote on whether that is the boards answer before it's sent. Sondra Smith: Exactly. Mayor Jordan: That is a very good point. Pete Reagan: I do recall that we voted to wait to see what happened in the Legislative Session. Sondra Smith: We didn't vote on that. That was your suggestion but we didn't vote on that. Mayor Jordan: I thought we did. Sondra Smith: At the October meeting there was no vote taken on that because we weren't set up to really do any voting or anything at that meeting. That was just an informational meeting. Unless we did it some other time but in October we did not vote. I checked the minutes and reviewed the tape. Mayor Jordan: Okay, do that. Sondra Smith: I did today. Someone said: I move we wait and see what is going to happen with the tumback fund and in the Legislative Session and Gene said I will second that but nothing was ever done. No vote was taken. Marion Doss: We can only do what the law says now. We can't wait for the legislature to do something. We have waited two or three years and we keep thinking they are going to do something. Well it's been the same. Mayor Jordan: Jason, I want to make sure we are in compliance with the law, if they submit their questions and it comes in here by email or letter? Jason Kelley: You and Sondra are members of the board and they are members of the board. You can't be submitting and working out responses to this letter without the press being notified. Mayor Jordan: So that applies to any board. Jason Kelley: That applies to any board or commission of the City. Sondra Smith: We are all members of the governing body of this pension. Mayor Jordan: So what do we need to do here? Jason Kelley: This is an opportunity to go through these questions and have a majority vote of what the answers are going to be and the majority vote is the answer and then submit it. 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 January 27, 2011 Page 7 of 10 Mayor Jordan: Okay, so the recommendation is to discuss each of these questions and..... Jason Kelley: And come up with a board answer in public. Mayor Jordan: Okay, do you all want to do this today or on the 17th ? Marion Doss: I have my questions written out. If I did not have mine written out I would want to go home and think about it and write it out which is what I did after I got that letter. Mayor Jordan: Then we will all meet at a certain time. Marion Doss: Yes. That is why I suggested the February 17th meeting. I didn't know that Ronnie wouldn't be here but that way Ronnie would have an opportunity to present his input into it. Pete Reagan: Why could we not each individually answer the questions and they be submitted to PRB? Jason Kelley: That is not an official Board response. They want a Board response. You can send your individual response but they need to know what the board has agreed to. Mayor Jordan: What you are saying is if we do that we are not doing it in public where everybody can view it. Sondra Smith: We are not doing it as a board. You are doing it as individual people. I can send what I feel down there and Pete can send what he feels like down there but they are asking for a reply from the board. Mayor Jordan: What if we don't agree on anything? Jason Kelley: You would have a majority vote. It may not be everyone's answer but it's a majority vote. Mayor Jordan: So let me get this straight, we can do this today or we can meet another time when you think Ronnie might be here. Marion Doss: That was just a guess on that date because that is two weeks away and I that might conflict with everyone else's schedule. Mayor Jordan: I don't even know what my schedule is that day. Marion Doss: Sondra is the one that we rely on for that. Mayor Jordan: My next question would be if all the board members are not here on the 17th then it's just majority rule. 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 January 27, 2011 Page 8 of 10 Jason Kelley: As long as you have a quorum to do business. Mayor Jordan: What is your decision? A discussion followed on a date for a Special meeting of the Board. Jason Kelley: The board could vote to authorize the Mayor to answer the questions. Marion Doss: If I would have known we could do that I would not have had to answer the questions. Mayor Jordan: As Mayor I would be more comfortable with this board meeting as a whole and deciding. I do not want to decide what needs to be done for the board and the board not be pleased with my answers. Marion Doss: Pete is right about the PRB being helpful. I have called down there before with questions and they have been helpful and answered them. You can't ask for anything better than that. Mayor Jordan: We can answer them individually and bring them here correct? Jason Kelley: Right. A discussion continued on a date for a Special Board meeting. Sondra Smith: I sent the letter out in December. We have had time to look at the letter from PRB and think about our responses. So I don't know why we can't work on it today. We have had it a month or longer. Mayor Jordan: I guess that will be the determination of the board. Pete Reagan: I know Ronnie planned to be here and he is tied up in another meeting but I would hate to do it without him at least knowing that we are going to do it. Not that I am trying to stall anything. Gene Warford: I think we are going to have to plan another meeting so that Ronnie has a chance to be here. Jason Kelley: I probably will not be at this meeting but I am trying to think of a way to focus discussion regarding this. Even though Mayor, you are not comfortable with drafting something with authority it could be that perhaps someone might desire you to draft something for discussion at the board meeting. Mayor Jordan: I will have something. Jason Kelley: So you will have something on letterhead ready to be voted on. 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 January 27, 2011 Page 9 of 10 Mayor Jordan: I will bring a proposal and then we can adjust it. I won't send anything out. Jason Kelley: They can have a copy as part of the packet, there just can't be a discussion. It's just like it is on Council. All the documents have been presented before hand and we have all had a chance to look at them and review them. A discussion followed on who it can and cannot be sent to. Jason Kelley: You have to be given the agenda with the information before it can be discussed at the meeting. You just don't need to be calling one another, emailing and discussing it. A discussion followed on what was acceptable under the FOIA Law. Paul Becker: Can't each person who has a response submit it to Sondra and she put it all together and then they can look at them? Jason Kelley: That would be okay. Paul Becker: Each has their own specific response and then you can select from among them when you meet. Everyone agreed that this was a good idea. Marion Doss: This way everyone has a chance to look at it before hand. Paul Becker: If you don't have something you will be all day. Mayor Jordan: So we are good for February 14th at 3:00 p.m. We can send answers to these questions to Sondra. Jason Kelley: She will gather them all and distribute the responses in the agenda for the next meeting. Mayor Jordan: That will be a wonderful thing. 2011 Annual NCPERS Conference Information Sondra Smith: At one point in time we were sending people to the NCPERS Conference. I do not think the fund can afford to do that but there is information in the packet regarding that conference. Pete Reagan: I have been twice and maybe three times but I have never been to a legislative conference. I always went to the trustee educational workshops. 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 January 27, 2011 Page 10 of 10 Revenue/Expense Report for 12/31/2010 Sondra Smith: That is the report that Trish prepares for us that shows the revenue and expenses. Pete Reagan: So last year we were $335,876.80 in the hole if I am reading that correctly. Sondra Smith: We had a loss. The book value in 2009 was $5,441,000. The book value now is a little over $5 million. The market value in 2009 was $5,700,000 and the market value now is $5,500,000. Paul Becker: That is correct Pete. You had a loss, before the market adjustment, of $355,876 so that was your loss before mark to market. Pete Reagan: Thanks Trish for this. 2011 Meefrne Schedule Sondra Smith: This shows the meetings that we have scheduled for this year. There is also a letter in there from Elaine Longer stating that the Northern Trust Report was incorrect. Pete Reagan moved to adjourn the meeting. Gene Warford seconded the motion. No vote was taken. Meeting adjourned at 3:40 p.m. 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316 January 27, 2011 This is my response, as a member of this board, to the Pension Review Board's letter dated December 16, 2010. I ask that a copy of this response be attached to the minutes of this meeting. The second sentence in paragraph two says, "These included adding income streams and consolidation with LOPFI." What are these "income streams" and where will they come from? What exactly is the PRB referring to when they say "income streams?" Question #1: What actions have you planned as a result of the Special Report? We as a board have met two times since the October special meeting when the PRB presented their special report. According to the minutes of our regular October 28th meeting, the only discussion on this special report was that Sondra had emailed a copy of that report to us. Kit mentioned that the report was discussed on Monday. I assume that he meant Monday, October 18. The minutes of our November 18th meeting shows that we did not discuss at all this special report. The answer then to this first question is nothing. We, as a board, have not planned any actions as a result of the special report. We need to address this. Question #2: What discussion have you had with the city officials to explore solutions? How has your city board been made aware? We as the pension board have had no discussions with any city official about this special report. Over the past several years we have occasionally discussed during regular meetings the soundness of the fund: the mayor, city attorney, finance director and occasional city council member have been present. We have not arrived at any solution. Several times I have expressed my belief that consolidation with LOPFI is the best solution. I understand that this solution will cost the city some money. The special report of October 18 has not been discussed with city officials by this board. The answer to the second part of question #2 is that a copy of a report was presented to the city council at their January 4, 2011 meeting. I assume this means that a copy of the PRB's special report of October 18, was given to the council members at this meeting. Question #3: Did you find the Special Report helpful in your planning? I found the information provided was somewhat understandable. Exhibit 1 that discusses possible changes along with positive and negative effects was interesting and fairly understandable. I have lots of questions about Exhibit 3, pages 9 and 10. This exhibit consists of two tables one labeled "Projected Cost of Possible Actions" and the other "Projected Cost of Possible Actions -Future LOPFI Costs." I need a better explanation from the PRB in order to fully understand what it is these tables mean. For example: what does the last column on the right of the table on page 10 mean? What does FY mean in that column's heading? What is meant by "FY Net Pay after other sources?" I need more guidance from the PRB in order to fully understand what it is that I am looking at when I look at this special report. Question #4: what would you have wanted to have been included in the Special Report that was not previously included? I need a more complete and/or simplified explanation of the exhibits and charts. Question #5: what additional information could be provided by the PRB to assist your fund? I would like to know, step by step, what happens when a local fund consolidates with LOPFI. I want to know exactly what happens when a local fund becomes insolvent and then, by law (Act 1266 of 1995) goes to the Arkansas Fire and Police Pension Guarantee Fund (the Fund). Since our pension fund is only receiving Amills does that mean that we cannot expect to be eligible for this guarantee fund? It is my understanding that to be eligible for this guarantee fund the city must be collecting a dedicated millage of Imill for the fire pension fund. I think everybody needs to know whether or not we would be eligible for this guarantee fund in order to make good decisions. As a board we need to answer these questions that the PRB has asked us. We need to do this as they have requested by the end of February. Therefore I make a motion that our secretary prepare a response to the special report as requested by the PRB that includes my questions and any other questions that any board member may have by February 17, 2011. WILL WE NEED TO HAVE A SPECIAL MEETING ONCE THAT LETTER IS PREPARED AND OFFICIALLY APPROVE ITS CONTENTS BEFORE SHE SENDS IT? IF SO .... I make a motion to have a special meeting on Thursday, February 17, 2011 in order to approve our response to the PRB.