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HomeMy WebLinkAbout2014-05-29 MinutesLioneld Jordan Chairman Sondra E. Smith Treasurer Eldon Roberts Secretary Retired Position I Policemen's Pension and Relief Fund Board of Trustees Meeting Minutes May 29, 2014 Page l of 14 Jerry Friend Retired Position 2 John Brown Retired Position 3 Melvin Stanley Retired Position 4 Frank Johnson Retired Position 5 Policemen's Pension and Relief Fund Board of Trustees Special Meeting Minutes May 29, 2014 A special meeting of the Fayetteville Policemen's Pension and Relief Fund Board of Trustees was held on May 29, 2014 at 3:00 p.m. in Room 326 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. Mayor Jordan called the meeting to order. PRESENT: Frank Johnson, Eldon Roberts, Jerry Friend, John Brown, Kit Williams, City Attorney, Sondra Smith, City Clerk, Dee McCoy, City Clerk office, Paul Becker, Finance Director, Press ABSENT: Melvin Stanley Roll Call Sondra Smith: Melvin Stanley said that he is in Nebraska with his ill father. Approval of the Minutes: Approval of the January 16, 2014 Meeting Minutes Jerry Friend moved to approve the January 16, 2014 meeting minutes. Eldon Roberts seconded the motion. The motion passed with a 4-0 vote. John Brown and Frank Johnson were absent during the vote. Melvin Stanley was absent. Pension List Changes: None Approval of the Pension List: Approval of the August, September and October 2014 pension lists Policemen's Pension and Relief Fund Board of Trustees Meeting Minutes May 29, 2014 Page 2 of 14 Sondra Smith: Eldon talked to me about maybe having this meeting and not doing the July meeting. I only heard back from one or two about whether or not they wanted to do that. I went ahead and put the pension list on here in case we decided to cancel the July meeting. Eldon Roberts: We mentioned that at our last meeting, I think the Mayor actually brought it up. I thought it sounded like a pretty good deal because it's next month that our regularly scheduled meeting is held. Sondra Smith: The only thing you won't have, and probably wouldn't in July either, is the Elaine Longer report because she only gives that quarterly. You wouldn't have had it today, but you probably wouldn't have it in July because by then you will probably have the new investment advisor. Jerry Friend moved to cancel the July meeting. Eldon Roberts seconded the motion. The motion passed with a 6-0 vote. Melvin Stanley was absent. Eldon Roberts: There's no changes? Sondra Smith: No changes. Eldon Roberts: We got Rick Hoyt's taken care of at the last meeting. It goes into effect in July. Eldon Roberts moved to approve the August, September and October 2014 pension lists. Jerry Friend seconded the motion. The motion passed with a 6-0 vote. Melvin Stanley was absent. Unfinished Business: "At Risk" Plan of Action Letter Sondra Smith: That is the letter that I e-mailed you that was sent to PRB at the request of the board. It's just a copy of the letter for your review. Frank Johnson: There was an exchange of e-mails that kind of went back and forth on this on the wording. I don't know if y'all want to talk about it, it's all semantics to me. Eldon Roberts: I think it just depends on how you read it. It's correct. I talked to Sondra about it on the phone also. It was bullet number two that we talked about, that we aren't in a position where we feel like we can, at this point, lower benefits which were approved by the Arkansas Fire and Police Pension Review Board because of the Attorney General's opinion. That's a true statement. I think the letter is fine. That doesn't require a motion to vote does it? Kit Williams: I don't think so, the letter's already been sent. It's just a discussion item. Policemen's Pension and Relief Fund Board of Trustees Meeting Minutes May 29, 2014 Page 3 of 14 Mayor Jordan: We got a few e-mails after we sent the letter. Sondra Smith: It was about a week later and we had a deadline to get that letter to PRB. Kit Williams: It could be clearer, like I said in my e-mail, but I think they should understand it. Eldon Roberts: It's a true statement. All the benefit increases were approved by the Arkansas Fire and Police Pension Review Board in Little Rock, but that's what you're basically saying in bullet two. This should suffice for what they were wanting. They were just wanting us to respond back to their letter. Kit Williams: I think it covers it. John Brown: All I wanted to say was my purpose for sending the e-mail that I sent was that I wanted on record that it could have been clearer. It can be misconstrued if you take it at word value. Like you said, you could read it either way depending on which side you were looking from. I just wanted to state my opinion. Kit Williams: The Pension Relief Board will know though. They've got some expertise in this area, so they know what you're talking about. John Brown: I just wanted to make my opinion known. Sondra Smith: If you remember, at the meeting I tried to get everybody to do the letter word for word so we would get exactly what the board wanted but nobody wanted to do that so we did the best job that we could. John Brown: I understand. Kit Williams: I appreciate Sondra and her hard work on this. Jerry Friend: Amen. Frank Johnson: She had the most cryptic response in her e-mail that I caught on, which I think in fairness to you we should probably be a little more attentive and spend more time on those things that we want to manage in the details before we get out of here instead of just throwing it on her. John Brown: I agree, it's our responsibility. Frank Johnson: Just based on the way the letter is now, their response is going to be interesting. Kit Williams: I would also say that, they sent you a form letter. It's not like, as Sondra said in her letter, that we didn't know about this already and have been looking at it for a long time, discussing it for a long time and we really have limited options especially after you adopt the Policemen's Pension and Relief Fund Board of Trustees Meeting Minutes May 29, 2014 Page 4 of 14 Attorney General's opinion that you cannot lower benefits. They are well aware of that opinion too, I'm sure. Financial Advisor Discussion Eldon Roberts: This is information that the Garrison Financial group passed out at the meeting we had with them. John Brown and I met with them three or four weeks ago. Kit Williams: Were they your first choice? Eldon Roberts: Right. We decided that at our last meeting. The board asked John Brown and I to be there and to visit with some of the representatives from Garrison Financial. We set up a meeting, it was open to the press. We had a few questions that we asked and I'll just touch on those right quick. I had wanted to know what kind of fees that we could expect to be charged and I leaned on them pretty hard. I said we would like to see a reduction in the fees starting out from what we've been paying to somebody that's been working for us for twenty years. On the front page, there's an estimated savings of about $29,000 a year from what we're paying right now. Secondly, they do not do business with Northern Trust like Elaine does. They use Charles Schwab for all of their transactions. Charles Schwab doesn't charge for every little thing that they do that Northern Trust charges for. It looked like another $3,700 annual savings there by going to Schwab and not doing business with Northern Trust. There's one other little issue that came up and I'm not sure where we're at on that. It's a deal about errors and omissions insurance. If we ask or require that Garrison have insurance for errors and omissions, our savings annually would only be $17,000. We checked into that, I think Trish did, and I don't believe that Elaine Longer carries that. According to the Garrison folks, all this does is help hire a lawyer and defend them if they do something that we instructed them not too, like maybe invest money in something that we don't want them to do. They weren't concerned about having it. I don't know where we are on that, I haven't heard back from Trish. We were going to get some inside information and have you look at it and see what you thought. Kit Williams: Normally an errors and omissions policy does more than just hire a lawyer for them. It doesn't mean that it does not hire a lawyer, because that probably would do that. But, it also says that if they make a $5 million mistake and they only have $3 million then we are still going to get $5 million back because the company will stand behind them. That's what they are paying the premiums for. On the other hand, I think Garrison has done a fine job for the Fire Pension Board to date. I think it would be very unlikely that they would do something that would be contrary to policy. It doesn't mean that the stock market won't go down or something. Eldon Roberts: That would not be there fault. This is going to have to be something they would inadvertently do. Kit Williams: It would almost be like one of their people was stealing and funneled so much money out that they can't even make it back, those chances are extremely low, not impossible, but extremely low. You're paying for their insurance policy. You have to decide if it's worth it Policemen's Pension and Relief Fund Board of Trustees Meeting Minutes May 29, 2014 Page 5 of 14 for the very low risk but a potential high loss. Even then, the high loss is somewhat questionable because I'm sure they have internal policies that should prevent that kind of conduct on behalf of one of their employees. There is some chance that something could happen. Sondra Smith: There's a couple of e-mails in your packet. There's one from Trish dated Thursday May 81h that contains discussion back and forth with Longer Investments. The next e- mail is the e-mail from Kerry Watkins -Bradley from Garrison Financial that explains what an errors and omission policy is and gives some information about why they do not carry it. Eldon Roberts: As you can see it makes quite a bit of difference on the annual savings from $29,000 without errors and omission insurance and that savings would be reduced to $17,847 with the insurance policy. Kit Williams: It's almost $12,000 that this policy is going to cost. Jerry Friend: The e-mail from Elaine says that Longer maintains the coverage. Plus the pension fund is covered by ERISA Bond that we're required to have in place. Frank Johnson: Is this an action item or just a discussion? Eldon Roberts: Depending on how we vote here, it's something that we can require that they carry. It's going to make a difference in our savings. Frank Johnson: It sounds like low risk to me. Eldon Roberts: I for one am not in favor of it but it depends on the pleasure of the board. The second question I asked them was if they manage other public retirement funds. I believe they mentioned the Fire Department was the only one. Out of the three representatives that was there, they have all had some experience in their careers doing so, some of them out of state, I don't know about anymore in state. They are doing the Fire Departments and have been now for two years. I don't think that is an issue. I also asked them if they had an opportunity to review investment policy objectives and guidelines that we currently operate with Elaine Longer and I gave them a copy of that. I told them if there were going to be any huge changes in their investment policy guidelines, or if they wanted any changes made and they were huge that we needed to know what they were. I gave them a copy of the contract we have with Elaine Longer and told them to review that and if there were going to be any drastic changes in their contract proposals that we wanted to know about that. The other thing I asked was if there would be someone from their firm available at every one of our quarterly scheduled meetings. They said yes they certainly would be. They are local, they are right here in Fayetteville. I think there's some information on them here on what all they already do. They do the United Way Charitable Trust and the Public Library. I think I understand the Mayor and Paul say they've done other things for the City in times past and they were pleased with their performances. I was pleased with the three people that we talked too, they are really Policemen's Pension and Relief Fund Board of Trustees Meeting Minutes May 29, 2014 Page 6 of 14 down to earth. I think they told me they have $226 million under management. I was impressed with the people. I am in favor of hiring Garrison Financial to take over our investment portfolio. Elaine wanted to have it changed by the end of June, and if we adopt measures today to hire Garrison Financial. It will give them over 30 days to move the assets and to get everything transferred. John Brown: I believe they told us they would need ten days to transfer. Eldon Roberts: They said they have a real good working relationship with Longer Investments and after the transfer of all the assets and all this, if anything else pops up they would be able to go right back to Elaine and get it ironed out. I don't think we'd miss a beat hiring this firm and going with them from what Elaine's done for us. Which, she has done a fantastic job for the last 20 years. I think we are way better off today financially because of her. Kit Williams: I think you're right. Eldon Roberts: I hate to lose her but we've got to move on. I think this group will serve us well. John Brown: They mentioned that in the event that something came up later that we didn't care for them, there's no termination fees or anything like that. We could fire them at any time we chose to do so. Eldon Roberts: I think they said their contract allowed either side the right to stop doing business with the other person. There's no fees for breaking the contract if we decided we didn't want to use them. Frank Johnson: Did you guys talk to them about some of our challenges with the fund? Eldon Roberts: Yes, we went over all of that with them, where we're at, that we're somewhat behind the eight ball on our unfunded liabilities down the road. I enlightened them on some things that I don't think they knew even from talking to the Fire Department. Jerry Friend: If there's some big changes, let us know but any change in the policy we all have to sign anyway. Kit Williams: They will probably present you a new policy but it should be very similar to the one you already have. Eldon Roberts: When that happens, if we elect to hire them today then I'm sure there's going to be a contract forthcoming and as you said, an investment policy. Can someone in yours or Paul's category look that over? Kit Williams: Well, what I would also ask that you do at this meeting, if you want to hire them, is to authorize the Mayor to sign the contract and the policy statement as long as it's been approved by Paul and me, and if the policy statement is virtually identical to what we have right now with Elaine. That way you don't have to have a separate meeting to approve it. Policemen's Pension and Relief Fund Board of Trustees Meeting Minutes May 29, 2014 Page 7 of 14 Paul Becker: I don't see why they'd have to change the investment policy from what you have now. Kit Williams: They took over the fire right when it was going below $5 million so they had restricted things that they could do. You're still right above that so. John Brown: Like Eldon said with them looking over our current policy they made the statement that, "we have no issue with the current policy, it looks great to us." They're not going to have any problems with it. Kit Williams: The contract probably won't be temporary. We can terminate it or amend it too if we look at it and we think that it's not what we want we can suggest to them that we want to change it and if they're agreeable then we can, if they're not agreeable then no, it takes two sides of the contract. Neither one you'll be doing is temporary, we think they'll be permanent but I think we do need the contract and the policy. You all won't sign the contract but the policy needs to come back and everybody needs to sign the policy. Paul Becker: If I understand correctly, you have no issues with the current investment policies, right? Eldon Roberts: I don't know. I don't think so. It suited Elaine. Paul Becker: So we just tell them that we want it in keeping with the current investment policies. Kit, I don't think they'll have an issue with that. If they do then we'll bring it for revision. Frank Johnson moved to hire Garrison Financial and authorize the Mayor to sign the contract and policy. Eldon Roberts seconded the motion. The motion passed with a 6-0 vote. Melvin Stanley was absent. Frank Johnson: Eldon and John, thank you for leading us on this. Eldon Roberts: Sondra, will you notify those folks or do you want me too and tell them that we officially hired them and ask if they would get us a contract and investment policy to you and you could distribute it to Kit and Paul. As soon as they did that then the Mayor would have the authority to sign the interim contracts or whatever you want to call them. Sondra Smith: I can do that Eldon Roberts: Okay, good for you. You'll find no argument from me here. New Business: Garrison Financial Investment Management Agreement Sample Policemen's Pension and Relief Fund Board of Trustees Meeting Minutes May 29, 2014 Page 8 of 14 Sondra Smith: There's a sample that Kerry sent of their investment management agreement so that you can see how it usually looks. You might want to look at that and see if you have any questions or concerns about the sample because that's similar to what they will be for our plan. Eldon Roberts: Just to back up a little bit, I believe in case they ask about the omissions and errors insurance, we didn't opt to have it. Sondra Smith: We're not concerned with them having that. Eldon Roberts: Right. Jerry Friend: If I can ask Eldon are they going to have to sell all of our securities and buy new ones or can they just move them? Kit Williams: No. It goes from Northern Trust to Charles Schwab. Eldon Roberts made a motion to decline requiring Garrison Financial to carry an errors and omission insurance policy. John Brown seconded the motion. The motion passed with a 6-0 vote. Melvin Stanley was absent. Revenue & Expense Report: April 30, 2014 Report Sondra Smith: There's no requirement to approve that. That's just a report that accounting does for you every quarter normally. Jerry Friend: We appreciate it. Wish it looked better, but we appreciate it. Mayor Jordan: Could be worse. Paul Becker: Remember that doesn't mark to market. It shows you before any adjustment for increase in value. Kit Williams: That's why the historical one is the one to look at, that's what its worth if you try to sell it today. Benefit Discussion Jerry Friend: That's my request. There's an excel sheet. Don't hold me to the numbers because some of them may be a little off. We've talked before about when we voted to include widows at 100%, what it did to our pension. The first page is police officers that's drawing pension and currently have a wife eligible to draw when they die. That $224,000 at the bottom right is the extra that actuaries look at when they look at our liabilities just for those officers. Policemen's Pension and Relief Fund Board of Trustees Meeting Minutes May 29, 2014 Page 9 of 14 On page 2, our raising the widows didn't affect the ex -spouses or the pensioners with no spouses Page 3 shows, in the first box, spouses currently drawing 100%, of what their deceased husband or wife drew, the liability is $124,269. That $248,000 is what it is yearly and they would draw half of that if we hadn't had voted the increase. Both of those added together, page 1 and this page, puts a big hurt on our pension. It's been brought out in actuaries. Do you understand my figures? And where they may be off, there's a few pensioners that drew less than a certain amount and state law raised them to $500 or $1,000. There's a minimum they can't be under. Eldon Roberts: I think its $500. Jerry Friend: On the last page over on the right hand side, it shows the reduction in each person's pension each year. So, every year they would lose $158. Mayor Jordan: This is the widows, correct? Jerry Friend: My feeling is when we raised the widows, we did it with the idea that we could always decrease it if we needed too. I remember back in the 1990's the county asked the Attorney General about a tax they were collecting and they said it was legal. Then the county got sued and the court said no it's not legal so in about 1999 the county was paying back thousands of dollars. Kit Williams: Are you talking about the property tax? Jerry Friend: Yes. And they paid an attorney $3 to $4 million. The Attorney General is not always right. Kit Williams: No, the Attorney General is not always right. Jerry Friend: Kit feels that we can reduce, it makes sense that we can reduce and that's what I'd like to do. Mayor Jordan: This would only be on the widows? Jerry Friend: Yes. Jerry Friend made a motion that as of today spousal benefits are lowered to 50% if the spouse is not receiving the benefits and to lower the amounts received by the widowed spouses who are currently drawing by 10% of their pension this year starting in September, and continue to reduce them by 10% for the following four years each September. This would exclude any spouse that has drawn an amount set by the State Law. Sondra Smith seconded the motion. Eldon Roberts: To me, the spouses that are drawing now from their deceased police officer are just as much a part of this as the police officers are because they are allowed to vote in our pension board elections. To me, if we reduce their benefits, we are going right against what the Policemen's Pension and Relief Fund Board of Trustees Meeting Minutes May 29, 2014 Page 10 of 14 Attorney General says, I know Kit has a different opinion. For right now I would like to think the Attorney General trumps your opinion. If we were to do this, we are going to be in violation of the Attorney General telling us we cannot lower benefits. Mayor Jordan: Let me ask just a point of understanding here. In this pension plan, the retirees and their spouses have the same voting rights. Jerry Friend: I didn't think they did, do they? Sondra Smith: On Police, they do. On Fire, they do not. Mayor Jordan: But they do on Police, so that's kind of like they are all hooked together so you are taking out a category of those that are receiving benefits and some of them won't be. Jerry Friend: If they can vote now than they would still be eligible to vote. Eldon Roberts: I'm not going at it from that angle that it would remove their eligibility to vote on these elections and who represents them. I'm going at it on the fact that they are a member of this Police Pension system and if we lower their benefits then we are in violation of what the Attorney General says that there's no mechanism in the law for us to lower benefits. Mayor Jordan: To me, it becomes an equality issue too. If you've got both of them with the same voting rights, you are excluding a group in the retirement plan, if they are a voting member. Sondra Smith: They are only a voting member if their husband has deceased. Mayor Jordan: But they are a part of the program. I have an issue with that. Kit Williams: None of them are drawing except for the ones whose husbands have died. Sondra Smith: Right. The ones that have a husband, they both don't get to vote. The husband gets to vote. Eldon Roberts: There's no way to look at it other than we're going to be lowering benefits should we do what Jerry's suggested. Mayor Jordan: To me, you would be. It would only be a segment of them. Eldon Roberts: The Attorney General says we cannot do that and until it's decided in a court of law, I'm going to stick to the Attorney General. Frank Johnson: Jerry, was this part of an effort to help us gain some solvency in the program? Jerry Friend: Yes. I think rather than to do nothing, I would at least like to do something. I agree that it's against what the Attorney General says. Policemen's Pension and Relief Fund Board of Trustees Meeting Minutes May 29, 2014 Page It of 14 Kit Williams: You can only do it in order to salvage the pension plan. If the pension plan was fine, I don't think you would have the right to lower the benefits. Now that the pension plan has been officially notified that it's not fine and that there is a risk of ruin, then that's a lot of what I had said that it's an inherit power of a board of trustees to maintain the liability of the trust that they are administering. The Attorney General did not agree with me on that. He interpreted one statute differently than me, lawyers do that. What I did tell the fire people, and I don't think I told you all because you were in far better shape, is that if they decided to see what would happen by attempting some lowering of the benefits then a pensioner could file suit. The pensioner would sue the board of trustees saying you can't lower it. Then the court would decide. If the pensioner was right, then you know who would pay the pensioner. It wouldn't be you, it would be the trust because he should have gotten the money he didn't get, so everybody would get refunded the additional money. If you wait and drive the pension plan into the dirt where there's no money left except for the annual millage, so there's enough to pay two or three months and then nothing for the rest of the year, and then a pensioner says you violated your fiduciary duty to me, you should have prevented that and reduced rates so we still have money, so they sue the pension board. If they win, then I would say what the Attorney General said was right because I would be defending you. Let's assume the Attorney General was wrong and my argument is going to work and the pensioner wins, where is he going to get the money? The fund is gone. That's the only place where you all would have some individual potential liability because you had not done anything. However, you have good arguments that you rely on the Attorney General. The personal risk would be to do nothing because if you go the other way, you've got the fund to support you. If you wait until the fund is gone, then you don't have a back stop. Frank Johnson: We've had this conversation a lot and I understand all that. I do appreciate what Jerry is proposing to his point of doing nothing. At least we have the dialogue. It's not like you randomly chose widowers as a target for a decrease in benefits. You are going back on the extension of benefits to the widows was the most recent action by the board. Kit Williams: Regardless, this is a possibility. There are some slight other dangers with your suggestion in that you are treating beneficiaries slightly differently. Jerry Friend: Right, I recognize that. Kit Williams: If you look at, even though I know it's not intentional, all of the beneficiaries that you are affecting are women. If I'm the lawyer on the other side, I'm saying that you're discriminating against them on the basis of sex. That might not be a winning argument but I know I will hear it. If you reduce benefits for all beneficiaries to a slight extent, they couldn't make that argument. Jerry Friend: On the other side, when we raised the benefit it was only that group of women too. Kit Williams: That's right, but I didn't hear anybody suing us. Eldon Roberts: It's okay when it was that way. Policemen's Pension and Relief Fund Board of Trustees Meeting Minutes May 29, 2014 Page 12 of 14 Frank Johnson: This could go all over the place, maybe it needs to be on the agenda for the next meeting. Someone could easily say, okay now that you're having a cogent discussion about reducing benefits, why don't we take these calculations and see what it looks like across the board. That's not a discussion I really want to have, I don't think anyone wants to have until we have to have it. Jerry Friend: My idea is that we have to have it now. I don't embarrass easy, if this dies or fails a second I'm good with that. Kit Williams: I would suggest if we really want a test case to see what kind of powers you would have, well that's not going work. I was going to suggest you make a very low benefit decrease but you have to make a decrease large enough to actually try to prevent your risk of ruin. If you are just reducing it and it's not really going to do anything effective, then you don't have power to do it. You only have power to do it, in my opinion, to avoid the failure of the fund that is reasonably foreseeable and reasonably likely to occur. Eldon Roberts: Somewhere this is going to get played out for us. There's eight or nine plans in the State of Arkansas that may not be financially solvent for five more years. They kind of talked about us being solvent for fifteen. Then we'll have to follow what that court prescient is. Once it is has been tested and stand then we're going to have to fall in line with what that is. You'd be silly to argue that cutting benefits wouldn't help the pension plan. Obviously that would help the pension plan to cut benefits today and quit paying out as much as we are. Sondra Smith: My concern would be for the current spouses drawing it. I could probably support the spouses that aren't drawing because they aren't getting that benefit. Kit Williams: Then you're making another distinction that I would have to justify why we are not going to pay them and you have similar people we are paying. Sondra Smith: I agree with that statement. I could probably support the ones that aren't drawing because they are not drawing it, they've never received it. You've to remember that when we increased the benefits there was spouses that drew for several years that did not get the same benefit that the spouses are currently getting. They were at 50% and then the benefits went to 100% and some people drew at 100% all the years and some people drew at 50% part of the years. I agree with you, I think an across the board decrease is more justifiable and would stand up in court easier. Kit Williams: I do agree with Eldon. I've told you this before that I don't think that you all are not going to be first. I only know truly about the Fire Pension. They are much closer to the ground then you all are. So, one way or another we are going to find out what happens to them before you're in terrible shape. Eldon Roberts: There may be some plans in the state worse than Fayetteville Fire. Policemen's Pension and Relief Fund Board of Trustees Meeting Minutes May 29, 2014 Page 13 of 14 Kit Williams: There are. Some cities have actually agreed, in order to get the benefits raised, to stand behind them. Those cities are on the hook. Eldon Roberts: They agreed to do it without a lawsuit. Kit Williams: In order to get the benefit increased for their police or fire, they agreed to put their full faith and credit of their town behind it. They're on the hook. Sondra Smith: I also agree with Jerry, I was at that meeting when benefits were increased and we were told we could reduce those benefits if we increased them. Frank Johnson: That can't be a separate provision or excluded from the overall law and what we can do with benefit increases or decreases. You can't carve out widows can you? Kit Williams: I don't think you can. I guess I need to see the minutes to that meeting because I don't remember that. Sondra Smith: I don't think that anybody looked at the law and at the time I don't think that anybody knew that benefits, once increased, could be reduced. Jerry Friend: The Attorney General hadn't made that decision. Sondra Smith: As a whole the board did not know that for pensioners or widows. Jerry Friend: I think that conversation was the board saying, well if this doesn't work we can go back. Sondra Smith: No matter what benefit increase it was, whether it was for a pensioner when we went from 50% to 90% or a spouse. We've always thought, until we got the Attorney General's opinion, that those benefits could be reduced. The motion to reduce the widow's benefits failed with a 1-5 vote. Jerry Friend voting yes. Frank Johnson, John Brown, Eldon Roberts, Mayor Jordan and Sondra Smith voting no. Melvin Stanley was absent. Election Results Sondra Smith: The ladies that are drawing because of QDRO are not eligible to vote, there's four of them. We sent out 41 ballots and we received 38 back. The two people that have been elected are Frank Johnson and Ruston Cole with a term beginning date of June 1, 2014. Jerry Friend: I've enjoyed the years that I've been privileged to sit on this board. I'm probably going to enjoy retirement too. Mayor Jordan: Thank you for your service. Policemen's Pension and Relief Fund Board of Trustees Meeting Minutes May 29, 2014 Page 14 of 14 Paul Becker: I have one question for Eldon because I wasn't at the presentation with Garrison. Their proposal was a 0.5% of assets, was that their fee? Am I understanding that correctly? Eldon Roberts: Elaine's is a sliding scale usually. Theirs is opposite from hers and it was a set fee. Kit Williams: It says on your thing 25%. Paul Becker: Let me just make sure because we are going to be reviewing it. Eldon Roberts: Elaine's would so much for the first amount of money and then so much for the rest. Paul Becker: 0.5%. Eldon Roberts: Across all the assets, right? Kit Williams: Was Elaine's starting at 0.84%? Paul Becker: No, Elaine's started at I% for the first $3 million. Kit Williams: So there's effective 0.84% for the whole range? Eldon Roberts: Probably. Then theirs is 0.50% all the way across the board for the whole range of assets that they are going to be managing. Informational: 2014 Meeting schedule Adjournment: 3:59 p.m.