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HomeMy WebLinkAbout2013-01-31 MinutesBoard Members Mayor Jordan Chairman Sondra E. Smith Secretary Roy Cate Position I/Retired Pete Reagan Position 2/Retired Dennis Mullen Position 3/Retired Ronnie Wood Position 4/Retired Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes January 31, 2013 Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes January 31, 2013 Page l of 10 A meeting of the Fayetteville Firemen's Pension and Relief Fund Board of Trustees was held at 00 p.m. on January 31, 2013 in Room 326 of the City Administration Building. Sondra Smith, Secretary called the meeting to order and acted as Chairman until Mayor Jordan arrived at 3:05 p.m. Present: Mayor Jordan, Pete Reagan, Ronnie Wood, Dennis Mullens, Sondra Smith, City Clerk, Paul Becker, Finance Director, Kit Williams, City Attorney, Lisa Branson, Deputy City Clerk, James Bell and Glenn Atkins, Garrison Financial. Absent: Roy Cate Approval of the Minutes: October 25, 2012 meeting minutes. Pete Reagan moved to approve the October 25, 2012 meeting minutes. Ronnie Wood seconded the motion. Upon roll call the motion passed 5-0. Roy Cate was absent. Pension List Changes: There were no changes to the pension lists Approval of the Pension Lists: Approval of the February, March and April, 2013 pension lists Pete Reagan moved to approve the February, March and April, 2013 pension lists. Ronnie Wood seconded the motion. Upon roll call the motion passed 5-0. Roy Cate was absent. 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 31, 2013 Page 2 of 10 New Business: GFOA Best Practices on the Governance of Public Employee Post -Retirement Sondra Smith: PRB sent a copy of this to Accounting and they forwarded a copy to us as a recommendation that we adopt Best Practices for our pension plan. I emailed it out to everybody to preview it before we came to the meeting, to see if anybody had any discussion on it. It's probably a good idea to develop some Best Practices for our pension plan. Mayor Jordan: What are your thoughts on it? Pete Reagan: Is this just the guidelines? Sondra Smith: That is what PRB sent as suggested guidelines. Mayor Jordan: You don't have to approve it this meeting. If you want a month or how ever long you want to look at them I'm good with that. It was sent to us and now we are sending it on to you. Pete Reagan: I think that's a good idea. We have one board member absent. Personally, I have not read it. Mayor Jordan: You would like to table it? Do we have a formal tabling on that? Pete Reagan: According to Robert's Rules you can table to a specific date. Mayor Jordan: That's not my specialty, so whatever you all want to do. Sondra Smith: Usually if you tell us you want it on the next agenda we put it on the next agenda. We can do it however you all want to do it. Mayor Jordan: Whatever you all want to do. Pete Reagan: Put it on the next agenda. NCPERS invoice paid A copy of the paid NCPERS invoice was given to the board. Sondra Smith: That is just an informational item to let you know that we did pay that NCPERS invoice. Mayor Jordan: Everybody good with that? 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 31, 2013 Page 3 of 10 Pete Reagan: Yes. Local pension fund report to the Council A copy of the local pension fund report that was presented to the City Council at the first Council meeting in January, 2013 was given to the board. Sondra Smith: That is the report Mayor that you gave in open session at City Council meeting. It has to be given, according to state law, by the first meeting of the year. That is just a copy for the board so they can be aware of what was given to the Council. Paul Becker: Essentially the information in there came from the actuarial reports. They created the numbers. Mayor Jordan: We printed off what they sent us. Paul Becker: It discusses some of the correspondence between PRB about the condition of the fund. Revenue & expense report A copy of the December 31, 2012 revenue and expense report that was completed by Accounting was given to the board. Sondra Smith: This is a report that Accounting gives to the board each quarter so that they can see how their fund has done over the past few years. Paul Becker: At the end of 2012 you can see prior to mark to market there was a $463,000 loss in the fund. Based on the information report given today we will mark to market which will increase the value of that fund and put a loss at $260,000 to $270,000 probably. Mayor Jordan: Any questions on that? Pete Reagan: No sir. Discuss special meetine date in May to open ballots Sondra Smith: Since the board has chosen to open the ballots in open session, then we need to set up a meeting date in late May to open those ballots and count the ballots. A discussion followed on possible dates for the special meeting to open the ballots. The meeting was scheduled for May 30, 2013 at 3:00 p.m. in Room 326. 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 31, 2013 Page 4 of 10 Chairman's role at a pension meeting regarding motions, seconds and votes Sondra Smith: Pete had a question on that. His thinking is that if you are running the meeting as Chairman that you can not make a motion or second because you are the Chairman. The Mayor has made motions and seconds before as Chairman and so I wanted to get that clarified. I spoke to Kit and he didn't see a problem with it because it's not like the City Council meeting. We haven't formally adopted Robert's Rules of Order for this board meeting. Kit Williams: In most situations Chairmen do not make motions and second them, however Robert's Rules of Order is made for larger bodies because the more people you have, the more you have to be formal in order to get things done or otherwise it is chaos. That is why you have many more rules to establish exactly this or exactly that. We have a lot of Aldermen committees where you have four Aldermen and the Chairmen on those make motions all the time. You can do it either way you want. I was looking at the code and it says that the board may make all rules needful for its guidance to implement the provisions regarding board composition. That sounds like elections rather than procedures and policies. You all are self governing so that if you felt like it was improper for the Mayor in the future to make a motion, you could adopt that as your policy and procedure. The meetings are a lot less formal, but you are a self governing board of trustees primarily and so you can adopt reasonable rules of procedure if you want to. In most cases in any large committee the Chairman does not make motions or second motions. This is a small group so if the Mayor couldn't do one of those things it could be that you might need some support on the committee for a motion and it could not be seconded. That is up to you all and you can decide that. If there were two people in favor of a motion and the Mayor being one, well it's not going to pass anyway. It is however you all want to run it. We are generally not so formal when we have various different committees. There are certain things you must be very formal about. For example when you were raising your benefits, it took all but one person to sign the resolution to get it done and that was called for in the statute. If it's called for in the statute we will do it exactly as the statute says, but this is not. How you run your meetings is not in the statute, so you can decide what you want to do. Sondra Smith: My concern was the Mayor has done that before in the past and if we are changing something then we are changing it in mid stream against what we've done previously and with us being such a small board it will be very difficult if we implement that, but it doesn't matter to me. Pete Reagan: I've conducted lots of meetings, attended lots of meetings and Robert's Rules of Order was written for meetings. LOPE board, pension review board all operate under Robert's Rules of Order and the reason I brought it to Sondra's attention was because I was Chairman of the meeting at our last pension board meeting because the Mayor was absent and came in late. I asked her to make note of that in the minutes because it was my understanding that a Chairman couldn't make a motion. Mayor Jordan: For the record, I have not ever made a motion here, but I've seconded some motions. I've seconded two, three or four motions, but I've not formally made a motion. 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 31, 2013 Page 5 of 10 Pete Reagan: I understand and I would have questioned that under Robert's Rules of Order. When I was elected Chairman of different boards, I never made a motion. I just assumed we were under Robert's Rules of Order and there is a reason for parliamentary procedure and I know that you all abide by that at City Council. Kit Williams: We don't follow Robert's Rules of Order in reality. The Mayor introduces a resolution by reading the title of the resolution and City Council discusses it and then gets citizen comments. In Robert's Rules of Order, only members of the committee get to discuss anything, not the citizens. We let citizens comment and then at the very end someone makes a motion to approve it. Under Robert's Rules you make a motion first. If you don't have a motion to second, there is no discussion. Why we do that is because it works and the reason for parliamentary procedure is so that the group that's trying to make a decision can function well, that people understand what is going on, people have the right to have their say and it makes us dutifully functioning in a meeting. Robert's Rules is a good way to do it. I've been in many groups that have followed Robert's Rules of Order and that's a good way to do it. It is the established standard for most committees, but when I became City Attorney after being on City Council for over six years and we had never done that. I saw it was functioning well and I said why put form over substance, substance being is it working, the form being let's follow Robert's Rules even though this other way is working. The real reason for this is so that the group can function and that the Chairman doesn't totally dominate something. That's the reason I think the Chairman in big groups is not allowed to make motions because there is concern the Chairman will totally dominate. The Chairman can decide who has the floor. If two people want to have the floor, the Chairman gets to decide who has the floor and who he is going to recognize. The Chairman makes all kinds of decisions and so Robert's Rules has removed the power to make motions from the chair. In big groups you really do need much more clear rules and parliamentary procedure to be fair to everybody that is a member of that group. Here you have a very small group and you don't need do that, but you can. You can make that rule if you want to and that's something this group can do. I think you are self governing. I'm just saying we are pretty small and informal except when you are going to raise benefits where the state tells you what you are going to have to do. Sondra Smith: If we want to follow Robert's Rules of Order the books about an inch thick and someone will have to sit here and check the book for parliamentary procedure during the meeting. Kit Williams: We don't really want to follow that. If you just want to say the Mayor doesn't make motions or whoever is Chairman doesn't make motions, then say that and let's not follow Robert's Rules to a tee because it's complicated. If you all don't say a motion just right, the chair is not suppose to recognize it and we don't want to go down that road. Pete Reagan: I just wanted to bring it to attention. Sondra Smith: I don't want that confusion in the future, either you can or you can't. I don't want you running a meeting and think you can't make a motion. When the Mayor is running the 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 31, 2013 Page 6 of 10 meeting and he can make a motion. I have been here for ten years and it has never come up before. Kit Williams: A Vice Mayor can take over, if Lioneld ever missed a meeting, and that happened when Hanna was Mayor. I was Vice Chair when he got very ill and he missed about six months of meetings. I was running the meeting and I still had the right to make a motion. I didn't lose that right because I stepped in. Lioneld Jordan: Kit's right about that because I was Vice Mayor and I ran about sixteen City Council meetings in the time that I was on the Council. Kit Williams: You still had the right to make the motion and second. Pete Reagan: Under Robert's Rules of Order you would have give up the chair to someone else designated. Mayor Jordan: I'm not arguing that point. I'm not disagreeing with you on that. Pete Reagan: I don't have a problem with you making a motion. Kit Williams: When you made a motion the last time, I thought it was ok. Mayor Jordan: We will do it anyway you want to. That's kind of the way we have always run it. Pete Reagan: I have no problem with it. Kit Williams: I don't think it's improper to run your procedure the way you want to. The key is there are a couple things you must have, a quorum and majority vote to pass something. Sondra Smith: If everybody is ok with that, we will just leave it that the chair can make a motion and second. Pete are you ok with that. Pete Reagan: That is fine. Mayor Jordan: I am good with that. Pete Reagan: The chair can always entertain a motion. Mayor Jordan: Yes, that is true and I have done that a few times when I've chaired a meeting. Garrison Financial: Garrison Financial Monthly Report 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 31, 2013 Page 7 of 10 A copy was given to the Board James Bell: At the end of the year the portfolio was $4.54 million. Your policy is 60% equities, 40% fixed income. We are right on the policy for the equity portion and just a little bit below on the fixed income. The reason for that is because we keep substantial cash reserve to cover the payouts that come almost monthly. We also have a few fixed income securities that matured or were called right before year end and we have had a couple more mature and be called right after year end so that explains the cash balance. Next week there will be $91,000 going out for February payment, so that's the reason for the cash in the portfolio. The second page of the portfolio appraisal is where you will see under the market value column $4,539,000 in the portfolio at year end. The page after that is the purchase and sale. Today is the one year anniversary that Garrison began managing the portfolio. This report is through year end and you can see that we purchased over the course of the year a number of mutual funds, both equity and some fixed income funds as well. That is part of our charter. Your policy restricts us to buying only mutual funds and you can see that is what we have done. You will see the sales that we have made over the course of the year. Sales were made mainly to restructure the portfolio and to be sure it is within the policy limits and also to raise cash periodically for the payouts that are going out to the members of the fund. Pete Reagan: The AT&T first sale, was that the bonds that were called? James Bell: Yes, that was one that was called. The General Electric preferred stocks were called some right before year end and some right after year end. Other than that the Hershey Foods Bond matured as well on August 15th A couple pages after that is the performance summary. We will walk through what has happened in the portfolio since we started managing the portfolio on January 31, 2012. We started at $4.8 million. Over the course of the year there have been withdraws of $574,000 and you end the year at $4.54 million. So, if you want to look at the contribution from the investment management portion that has been about $312,000 and that would equate to the 6.63% you see on the chart below the account line inception to date 6.63% return on the portfolio. Since it's been a month since the end of the year, I have brought along another separate package that is going to show you what has happened to the portfolio since the end of the year through yesterday. Stock market have had a very good start for 2013 through yesterday the portfolio is $4,669,000 and that is up about $144,000 through January, a little over 3% for the year. Regarding the equity markets, we continue to think the stocks are reasonably valued and attractively priced. We know there is a potential economic disruption with what is going on in Washington D.C. We saw Congress and the President get together and get us through the fiscal cliff negotiation at the thirteenth hour, but they got it done and we think they did a reasonable job resolving that issue. We still have sequestration to come, debt ceiling discussions, so there is a potential for what is happening in Washington to affect the economy. That is something we are watching very closely. As far as your policy goes and what we are seeing in the markets, there is really nothing to suggest any change from your current investment policy. Now Glenn will talk about the fixed income. Glenn Atkins: As James alluded to the General Electric preferred stock about $133,000 of that was called on January 2nd in full and that brings us to the cash balance at the end of the year at 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 31, 2013 Page 8 of 10 337,000. A continuing theme in the fixed income market, since we began managing the portfolio, was we wanted extreme volatility and we follow the ten year treasury yield as a proxy for the market. If you look at the chart of the yield on the ten year it was very high back in February and March very low and extremely volatile for the rest of the year. Since these two issues were called, that generated the bulk of the cash, the market has been essentially straight down or up in yield. For the year the treasury had been since about March in a range of 1.45% yield to about 1.85% yield, but again with much volatility between there. Near the end of the year the market backed up to where the yield was about 1.62% and then since the end of the year it's gone to where the yield on the ten year yield treasury right now is around 2%. We have seen a drastic decline in the market since the end of the year. I've been reluctant to invest that cash that rightfully belongs in the fixed income portion of the portfolio given the drastic move that we've had in the last four weeks. The plan will be to invest roughly $200,000 or so of that and that would get us fully invested on the fixed income side. In retrospect, that was a good decision not to invest that money immediately that was called, the ten year treasury is down over 2% just in the month of January alone. The mix of your portfolio is not down that much, but that gives you an indication of the decline in the market overall and the volatility. So long story short, we will invest that money approximately $200,000 to $225,000 and that will leave you with your required cash balances and the portfolio will be exactly in line with 60% equity and 40% fixed policy directed. The Fed came out yesterday and basically said they are going to keep rates low for the rest of eternity apparently, but what they really said was until employment got to below a certain level, the unemployment rate, and somewhere until 2015 they are going to try and keep rates low. To me that means, not much up from where they are now perhaps. We are positioned for that in terms of how the portfolio is structured. We've got some good funds and we're not taking a whole lot of maturity or interest rate risk. In the bonds you do have in there for example the IBM, and the Treasury those are throwing off a tremendous amount of income, so that is a actually a positive thing. We will reinvest that money and get as much return on it as we can within the confines of your policy statement and we should be in good shape. The economy was good in the third quarter and not so good in the fourth quarter. We think on balance risk is in favor of the stock market and not so much in favor of the bond market, because even with yields at 2% on a ten year treasury they are still at historic lows. So, we think 60% equity and 40% fixed as James alluded to earlier is still a good mix because we think stocks have had a good run, but on an evaluation basis they are not overvalued in fixed income. We've been in a bull market basically for the last 25 or 30 years and rates are very low, which lends it self to interest rate risk when rates begin to rise. That is the update since we met last. We will be happy to entertain comments, questions, ideas, suggestions, observations or anything on your mind. Mayor Jordan: What questions do we have? Pete Reagan: I think that the 60%/40% mix is still the way to go. James Bell: We have no disagreement on our end. I think that's very prudent. Pete Reagan: We appreciate you looking after our funds. 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 31, 2013 Page 9 of 10 Glenn Atkins: We are proud to do it and will do the best job we can. Pete Reagan: Thank you. Mayor Jordan: Thank you all very much. Garrison Financial 4th Quarter Report A copy was given to the Board Canada elieibility for benefits A copy of the Canada eligibility for benefits form that was completed and returned to Garrison Financial was given to the board. Sondra Smith: This is a form that we received and we have received the same one from Longer Investments. When you have Canadian investments there is a form you have to fill out and send in. I wanted you to be aware. I try to put everything in this packet that we take care of. We had to send in a form signed by the Mayor and myself because we sign pension items for you guys. Kit Williams: We have investments in Canada? Sondra Smith: Yes. That is just a copy of what we signed. A lot of times those have to be done in a certain time period. This one had to be signed and returned back to them in two days from me receiving it from Kerry at Garrison. Pete Reagan: That's fine. Sondra Smith: A lot of times I don't have the chance to contact everybody and say we are going to sign this form. Informational: A copy of the 2013 regular meeting schedule was given to the board. Mayor Jordan: Do we have any other kind of business today? Pete Reagan: Who is up for election this time? Sondra Smith: Dennis Mullens and Ronnie Wood. Are you both still willing to serve? Dennis Mullens: I am. 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 31, 2013 Page 10 of 10 Sondra Smith: I always call when someone gets nominated and make sure they want to serve. I do not want to put them on the ballot if they choose not to serve. Mayor Jordan: We will put a public announcement out, won't we? Sondra Smith: On the fire we send out nomination letters, when we get the nominations back we send out election ballots. It is a very busy process. Meeting adjourned at 3:40 p.m. 113 West Mountain 72701 (479) 575-8323 TDD (Telecommunications Device for the Deaf) (479) 521-1316