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HomeMy WebLinkAbout2013-10-31 MinutesFiremen's Pension and Relief Fund Board of Trustees Meeting Minutcs October 31, 2013 Page 1 of 8 Lioneld Jordan Chairman Pete Reagan Position 2 Retired Sondra E. Smith Secretary Dennis Mullens Position 3 Retired Roy Cate Position 1 Retired TayeVie Ron Wood Position 4 Retired S Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes October 31, 2013 A meeting of the Fayetteville Firemen's Pension and Relief Fund Board of Trustees was held at 3:00 PM on October 31, 2013 in Room 326 of the City Administration Building. Pete Reagan called the meeting to order. Present: Roy Cate, Pete Reagan, Ronnie Wood, Sondra Smith, City Clerk, Kit Williams, City Attorney, Glenn Atkins and James Bell of Garrison Financial. Absent: Mayor Jordan, Dennis Mullens Garrison Financial: 3rd quarter reports: A copy was given to the board. James Bell, Equity Portfolio Manager for Garrison Financial: Briefly I will go over your Yd quarter financial reports. At the end of the 3rd quarter the portfolio was at $4.48 million. The policy is 60% equity and 40% fixed income. The actual allocation at the end of the quarter was 61% equities, about 29.2% fixed income. We are slightly overweight equity and slightly underweight fixed income at the end of the quarter, the reason being is we hold plenty of cash in the portfolio in anticipation of future monthly distributions. We have about $400,000 in cash at the end of the quarter. That's also been a function of how well the equity markets have performed this year versus fixed income markets. Equity markets have been strong. We had no sales in the 3rd quarter, there was plenty of cash on hand to fund the distributions as we went through the 3' quarter. We had some sales early in the year to raise cash to fund distributions, but none in the Yd quarter. For the quarter, the portfolio as a whole was up 2.13%, and year to date, the portfolio is up almost 9%. Glenn Atkins, Fixed Income Manager for Garrison Financial: Thank you all for allowing us to come and visit every quarter. I'll direct you to this piece of information that I passed out a few minutes ago. Let's turn briefly to the second page. In the upper left hand corner, I used a portfolio value of $4.5 million, and that was as of a couple of days ago. So it's slightly different than quarter end. In the middle of the page, in the red box, $677,000 that is the withdrawals over the last twelve months. Then we have modeled in an 8% expected return on stocks, 3% on bonds at an allocation of 60% equities and 40% fixed income. On the third page, this is very similar to the information that we have been providing you guys now for a few quarters. It's an estimate of, given the Firemen's Pension and Relief Fund Board of Trustees Meeting Mimics October 31, 2013 Page 2 of 8 withdrawal rates and the expected returns, how might the portfolio perform over the next ten years. The portfolio is slightly healthier than it was when we were here on July 251i. Where you see the probabilities on the far right hand corner, the last green number there is the 78%, and that is the portfolio has a 78% chance of not running out of money in the seventh year. If I remember correctly, last time it was the sixth year. We've modeled it with current market value and last twelve month withdrawal to give you this kind of an estimate. We will continue to do that every quarter and provide you with whatever information that we can. At this point, we will open it up for questions, comments, observations, thoughts, ideas. Kit Williams, City Attorney: Are you also taking into consideration here the millage that is paid into the fund every year? There is a .4 mil that goes into the fund. Glenn Atkins: It's in the value of the $4.5 million, it doesn't show in this example as an income fund. Kit Williams: So otherwise the $677,000 would be more? James Bell: Correct. There are months when we don't do a distribution to the account because the money is substantial enough that it doesn't have to come from this portfolio. Pete Reagan: We are running this off of the $677,000 expense? Glenn Atkins: That is the actual withdrawals for the last twelve months. Pete Reagan: Right. Glenn Atkins: When we were here in July and did this, the figure that we used for withdrawals was $720,000. Every quarter we will do the last twelve months, or we can do it however you guys want too. Sondra Smith, City Clerk: The turn back money and any income is included in the $677,000. The millage, turn back money, all that is taken into account when you come up with that number? Glenn Atkins: Yes. Trish Leach: What we do each month, I look at the needs with the cash balances and the bank account that we keep for the Fire Pension. Then I send Garrison an e-mail and say, these are the expenses, this is how much money we need to draw. Deborah keeps me posted on how much money is coming in from the County. We try to take as little money out of Garrison as we can. When we get this income from other sources, it reduces the withdrawal. James Bell: The $677,000 isn't the total that is spent, it's just the total that is pulled from this portfolio. I would almost think of it as a net number, net of the tax receipts. Kit Williams: What is the actual gross that we are spending, do you know that? Firemen's Pension and Relief Fund Board of Trustees Meeting Mimics October 31, 2013 Page 3 of 8 Trish Leach: It's in the pension list. Pete Reagan: It is almost $1.2 million. There's no mortality rate figured in on that either? James Bell: No sir, this is strictly dollars in and dollars out. Pete Reagan: Right, and that's based off of the $677,000. Sondra Smith: We are currently paying out $113,000 per month. Pete Reagan: So it's $1.161 million. Sondra Smith: Some months they may ask for a draw of $100,000 and some months they may not even ask for a draw at all because of other incomes coming in. Glenn Atkins: What we can do, if you want, we can use a two year average withdrawal rate or we can do the last twelve months. However you guys think is the most accurate. Sondra Smith: I think the last twelve months is the most accurate. Glenn Atkins: Implicit in our net withdrawal number of $677,000 or $720,000 last quarter, it is off -set by the millage. But, within that number, it does have some degree of mortality assumption in it because the actuarial reports, and the commitments that the fund has, drive the withdrawals. So, there is some of that imbedded in there. We will just do it on a rolling twelve month basis every quarter and just take a snapshot of it. Pete Reagan: I think that's a good idea. Glenn Atkins: Again, anytime you're looking at something like this, the first year is going to be the twelve months forward. Kit Williams: So, in 2020 there's a reasonable chance that they could be out of the fund money? Glenn Atkins: Yes sir. Based on this statistical model, there is a 49% chance of not running out of money in 2020. What this model does, Mr. Williams, is it models 1,000 possible scenarios in each of the next ten years. Some of them the portfolio grows, some of them the portfolio declines based on market conditions. The far right hand column that we are looking at here, for example, the 78%, the last green number, of those 1,000 portfolio simulations 78% of them survive. What that tells you is that you have a 78% chance of not running out of money in the seventh year. The column immediately to the left of that, which is labeled average residual, the interpretation of that column is of the 78% of the portfolios that survive, the average balance of that is a million and one. In the first green column, the third one from the right, that is just a straight line assumption based on the withdrawal rates and the expected return. As we all know, the markets don't go up 6%,6%,6%, they go up 9% or 10%, down 4% or 5%. Pete Reagan: We don't want to be in the ones that go down. Firemen's Pension and Relief Fund Board of Trustees Meeting Mimics October 31, 2013 Page 4 of 8 Glenn Atkins: No, you don't and we don't either. Fortunately, for the last year or so, the market has done really well. The thing that you want to focus on is the last two columns there because that's a statistical analysis of 1,000 different things that could potentially happen to this and I think it's a more accurate representation than a pure straight line. Roy Cate: So the $677,000 is used through every year, the withdrawal? Will that change? Sondra Smith: We anticipate that probably going down. We hope maybe it doesn't. If it goes down, that means someone has deceased. Roy Cate: In July we were looking at $720,000 and now, when you put this together, you're using the $677,000. Everything can change, but, that's the only way you can do the present withdrawal. James Bell: That's kind of our thought. There is a function of mortality like Pete said, but that number can change again based on the receipts of other revenue as well. That's not really under our control if you will. There's two factors that play there on how hard you pull on the portfolio. Glenn Atkins: I think it would be equally correct to do it on a last twelve month withdrawal or an average of the last twenty-four months. If you are good with the last twelve months, we'll just do it that way. Pete Reagan: Last twelve months is fine. It wouldn't be that hard to go back twenty-four if we had too. Glenn Atkins: No. We can send this stuff to you guys in between quarterly meetings too, and look at it at a two or three year average. Trish Leach: I can think of one person that deceased, that was a significant amount going out of the fund and by looking at the last twelve months, you pick up the decreased withdrawal. When we pull money from Garrison, it's kind of like pulling money from your savings account. Like I said, we try to draw as little as we have too. James Bell: I've got a report here, I didn't include it in your packet, I just happen to have it, it's all of the withdrawals of the last twelve months. There are months when nothing gets pulled from this portfolio because there are funds from elsewhere. Trish Leach: We get turn back money from the state, and money from the county. We try to watch it as closely as possible. Pete Reagan: We get county money in November. Kit Williams: The end date to pay your property tax is October. Trish Leach: The money you will get coming up, there's a good chance we won't have to draw anything. We'll have to wait and see what we get in. Firemen's Pension and Relief Fund Board of Trustees Meeting Mimics October 31, 2013 Page 5 of 8 James Bell: It looks like December and January, nothing was pulled. Trish Leach: There's a delay on getting your money too. Pete Reagan: Do they pay it all at once, or do they pay it quarterly? Kit Williams: I think they pay it as they accumulate it. There are some regular payments, a lot of mortgages have property tax, so it goes in regularly as mortgage gets paid. Trish Leach: They give it to us once they've collected it. Glenn Atkins: How many beneficiaries are there for this portfolio? Sondra Smith: I'll give you a copy of this. Some of them are drawing extra benefits. You can't count each one of them because you have some that are drawing extra benefits, and you have some that drawing because of a qualified domestic relations order. If their ex-spouse deceases, then their portion would stop too. You've got to take all that into consideration Pete Reagan: Then if you would like, we can get you that information. Sondra Smith: I can give it to you in just a second. Trish and I put that on our spreadsheet that we do on the turn back money. Pete Reagan: Does it show those on the spousal benefits? Sondra Smith: Yes, I've got it broken down on the turn back money. You also have to take into consideration that some of them are volunteer firemen and their amount is a lot less than a regular fireman draws. All that makes a huge difference. If a volunteer fireman deceases, it's not going to affect your plan as much as somebody that's making $2,000 to $3,000 a month. There's nine volunteers, which includes the spouses, and forty-six pensioners, widows and other people drawing, no quatros included. Trish Leach: If you look at the list along that left hand side, the S is for spouse, the V is for volunteers, the VS is volunteer spouse. There are reports we have to do that we have to keep track of that. Glenn Atkins: So, roughly fifty-five or so? Sondra Smith: I have a total of fifty-seven, counting the quatro people that are drawing a check. The quatro splits 50150 between the ex-husband and the ex-wife, right? Kit Williams: It depends on what the judge says, but that's normal. James Bell: It looks like there's fifty-seven here in this actuarial report as well. Glenn Atkins: Ok, I appreciate that. I was curious. Firemen's Pension and Relief Fund Board of Trustees Meeting Mimics October 31, 2013 Page 6 of 8 Sondra Smith: The nine volunteers are really drawing a very small amount, under $200 a month and closer to $100 a month. Kit Williams: The older members of the regular firemen were also receiving smaller wages when they retired. They aren't going to be drawing as much as our later retirees. Sondra Smith: Then we have three that draw an extra benefit because of years of service. That's on that list too. Glenn Atkins: Do you guys have any questions or comments for us? What can we do to better serve you? Pete Reagan: I think you're doing an excellent job myself. Glenn Atkins: We appreciate that and we are grateful for the business and your relationship. Approval of the Minutes: Approval of the July 25, 2013 meeting minutes Pete Reagan: Any additions or deletions? Ron Cate moved to approve the July 25, 2013 meeting minutes. Ron Wood seconded the motion. Upon roll call the motion passed 4-0. Dennis Mullens and Mayor Jordan were absent. Pension List Changes: Maggie Watts — deceased August 4, 2013 Approval of the Pension List: Re -Approval of the September and October 2013 pension lists (Maggie Watts deceased 08/04/13. Monthly benefit was $437.09) Sondra Smith: Because you approve your pension list in advance, in July you approved the August, September and October pension lists. She deceased in August, so that one is correct. But, we've have revised the September and October pension list. We'll need to approve those revised ones, and we have the November, December and January list that we need to approve also. Roy Cate moved to re -approve the September and October 2013 pension lists. Ron Wood seconded the motion. Upon roll call the motion passed 4-0. Dennis Mullens and Mayor Jordan were absent. Firemen's Pension and Relief Fund Board of Trustees Meeting Mimics October 31, 2013 Page 7 of 8 Approval of the November and December 2013 and January 2014 pension lists Roy Cate moved to approve the November and December 2013 and January 2014 pension lists. Ron Wood seconded the motion. Upon roll call the motion passed 4-0. Dennis Mullens and Mayor Jordan were absent. New Business: Revenue & expense report: 311 Quarter — September 30, 2013 report Pete Reagan: This is one that Trish does for us. Trish Leach: Toni actually does it. I'll give her credit because she does all the work. 2012 Annual Actuarial Valuation Sondra Smith: This is the actuarial valuation we receive every year. The page that is a concern is where you have the unfunded liability. I'm looking on page ten, it shows that at the end of 12/31/2012 your unfunded liability is $15,159,613. According to the actuarial report, you are only 22.9% funded. In 12/31/2011 you had an unfunded liability of $14,915,285 and you were 26% funded. Pete Reagan: Trish, on page four, down at the bottom in bold, it said the actual 2012 contribution was $741,091 from the employer. Trish Leach: They get that from the report we prepare for them and that's based on the different revenues. It's not something the city contributes, it is the different sales tax revenues we take in. Pete Reagan: I'm going to say that's millage and insurance turn back. Kit Williams: Basically, everything they get through us, not including any special general fund money. It is the millage and other money we get. January 30, 2014 meeting is during the Arkansas Municipal League Conference. The Mayor and Sondra will be attending the conference. Do we want to reschedule the January 30, 2014 meeting? Pete Reagan: We've temporarily rescheduled that for January 23 at 3:00 p.m. here in this room if it is open. Sondra Smith: I've already booked it in this room as tentative. I will send you all an e-mail as a reminder. Did everyone receive the e-mail about the meeting and the minutes? We have a new e- mail system. Firemen's Pension and Relief Fund Board of Trustees Meeting Mimics October 31, 2013 Page 8 of 8 Roy Cate, Ron Wood and Pete Reagan stated they received their emails. NCPERS Invoice Sondra Smith: There is an invoice from NCPERS. It's really early to pay that, but they always send it to us early. It has gone up a lot, it is $250 now. Pete Reagan: It used to be $125. Sondra Smith: That's all the e-mails you receive from us. We get at least one if not two every day from NCPERS. Kit Williams: Did they say why they've gone up? Did they explain the increase? Sondra Smith: No. Pete Reagan: They have a board that governs them, so I'm sure it's a board decision. Sondra Smith: If we want to pay that, then the board has to approve that payment. I wanted to make everyone aware that it has gone up tremendously. Pete Reagan: I think it's the same as it was last year. I think it went up last year. Sondra Smith: It's gone up some the past two or three years. Last year it was $225. Pete Reagan: I do read those and keep up with what's going on around the county with pensions. This is a very good source and a good advocate for us on Capitol Hill for public employees. They don't just do fire, they do municipal and state employees. Roy Cate moved to approve NCPERS payment in December. Ron Wood seconded the motion. Upon roll call the motion passed 4-0. Dennis Mullens and Mayor Jordan were absent. Informational: 2014 meeting schedule Adiourn Time: 4:01 p.m.