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HomeMy WebLinkAbout2011-11-03 - Agendas - Final Lioneld Jordan Chairman Pete Reagan Position 2 Retired Sondra E.Smith Secretary Dennis Mullens Position 3 Retired Marion Doss Position I Retired PVI Ron Wood Position 4 Retired Faye . ile ARKANSAS Firemen's Pension and Relief Fund Board of Trustees Meeting Agenda November 3, 2011 A meeting of the Fayetteville Firemen's Pension and Relief Fund Board of Trustees will be held at 3:00 PM on November 3, 2011 in Room 326 of the City Administration Building. Approval of the Minutes: 0 July 28, 2011 meeting minutes Pension List Changes: 0 Gladys Nora Caselman deceased September 21, 2011 Approval of the Pension List: • Re-approval of the October 2011 Pension List (Gladys Caselman deceased) • Approval of the November and December, 2011 Pension List • Approval of the January, 2012 Pension List Old Business: • Consolidation with LOPFI New Business: Revenue and expense report 0 NCPERS invoice 0 Mayor Lioneld Jordan's letter dated August 10, 2011 to Representative Lindsey regarding a request for an Attorney General Opinion on the $5,000,000 balance * State Representative, Uvalde Lindsey letter dated August 13, 2011 to the Attorney General Opinion requesting an opinion on the $5,000,000 balance 0 Attorney General Opinion dated October 19, 2011 regarding the $5,000,000 balance 0 City Attorney Kit Williams memo dated October 20, 2011 to the Firemen's Pension Board regarding the Attorney General Opinion 0 City Attorney Kit Williams memo dated October 21, 2011 to Elaine Longer regarding the Attorney General Opinion 0 2012 Meeting Schedule Longer Investments: • Elaine Longer— resignation letter • Longer Investment letter dated August 5, 2011 — Northern Trust error • Longer Investment letter dated August 15, 2011 — market update • Quarterly Report—3rd Quarter 2011 • Longer View Informational: Firemen's Pension and Relief Fund Board Members Board of Trustees Meeting Minutes 01-1 July 28,2011 Mayor Jordan Chairman *�TeV- Page I of 23 Sondra E.Smith Secretary Marion Doss Position I/Retired Pete Reagan Position 2/Retired Tayve ille Dennis Mullens Position 3/Retired ARKANSAS Ronnie Wood Position 4/Retired Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes July 28,2011 A meeting of the Fayetteville Firemen's Pension and Relief Fun&i'�,#'bard of Trustees was held at 3:00 PM on July 28, 2011 in Room 326 of the City Adminis B,' Id ing. Mayor Jordan called the meeting to order. Present: Gene Warford, Marion Doss, Pete',",e udk. .a;;:-,Smith, Mayo�,.,�',,.,,".,,-,�'J"ordan, Paul Becker, Kit Williams,Elaine Longer and Ki Ager investments. Ronnie Wood was absent. M h s first meeting as Sondra Smith: Mayor, you might want tol:'::"�5'i7e"'c*'Ogn,i�zO�..",,Dennis ul Fps this is i a new Board member. Mayor Jordan: It's wond' fu. , -have you here,.,. Sondra Smith: W"coM d. p the par ........... es: e u. M" 011 in etin2 minu. s ie'May 19,2011 special meeting minutes e Marion Doisi�i4hoved to approve the April 28, 2011 meeting minutes and the May 19, 2011 special meeti inutes. PRer Reagan seconded the motion. Upon roll call the motion passed 5-0. on &A"'a' s absent. Pension List Changes: None Approval of the Pension List August, September, and October 2011 Pension List 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 July 28,2011 Page 2 of 23 Sondra Smith: At this time there are no changes to the pension lists. If something happens between now and then we will bring them back for re-approval. Dennis Mullens moved to approve the August, September, and October 2011 Pension Lists. Peter Reagan seconded the motion. Upon roll call the motion passed 5-0. Ronnie Wood was absent. NX, Old Business: None New Business: Revenue & Expense Repor Sondra Smith: That's the report that Trish NO approval is needed. `Th&,,X1.e, .Port shows that on 06/30/11 your book value was $4,807,736'.88""""4""i'l'd,� was $5`435 575.37. P.....your et value Actuarial Valuation Sondra Smith: This is a report from o y,,,,, arreirp,,:, a J t h s d predictions. Currently you are 29% funded and you have $14.5 millbn unffifi&d��:Ii PRB letter regarding.;:�-E.valuatifii��,.'�,iiiivestments dated June 7,2011 Mayor Jordan: This is,som would be of interest. I hope you all received a copy of this letterfrom PRB-`�ife' dated June 7,2011. You wanted to I -�7-�P�77�, know the p6gifi` :!"avid Cl4kiiW'.—th PRB if' e fund drops below $5,000,000. 1 assumed you 'a,:4,ett f all ouldl:ask me to g6i"I" er or, is meeting. w t Pe er Rea", I as e in the meeting. Mayor Jordaii`.'�ii,,��i�, is is t r we received back from them. Sondra Smith: The'Ju."I iS letter is the letter Paul Becker received back from PRB. Mayor Jordan: I asked Paul to look into that. Paul called David Clark and David sent a letter back. This is the letter we got back explaining the $5,000,000 situation. Sondra Smith: Elaine Longer's letter is in the agenda also. She states that if the fund goes below $5,000,000 and we have to change our investments, she doesn't feel like she can manage our account any longer. 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 July 28,2011 Page 3 of 23 Mayor Jordan: You can ask her questions when she is here later. I wanted to get you a letter from PRB and see what comments you had. Peter Reagan referred to sections of the letter dated July 8 1h from David Clark to Paul Becker. "The PRB is not directing the pension fund to sell such asset. The type of decision is soley with the pension fund Board of Trustees and its advisors. Mayor Jordan: That's true. Sondra Smith: But it also says, "however the pension fund,yhould,:�"';""n""ot�'ei�lter into new holdings that are outside those listed as acceptable for a sum less than $JAK:000. Mayor Jordan: I think PRB is basically saying they are"'tiot you make that decision. .......... Peter Regan: There was one firm in this state, o4ip,,.�group of in w&,RZ .for a certain ..... .. ,,.yestors that -s.:�an v firm that was selling annuities and loaded mutuaffafid""' d vhe','­.',.,y., ou try to get odf-'-fhose early it really cost you. They have called that firm and that task. This is tdall the pension funds in Arkansas saying you don't have to get out of it ri but you should at your earliest chance where you won't lose a lot of m6' y'.`,� Marion Doss: It looks to me like PR13"is' n"t"''" t advice. They are kind of 6�:�Kgoijqg. o give an keeping themselves in the clear, protecting Peter Reagan: It doesn7::t:,m' &`,:i&-.w. hole lot of'§-"e"rise, even if"you go below $5,000,000, to move your funds out of the st I'd bk marU;:f`:, d into 1% CD's Ave to. you, Marion Doss: That's X0 hk '-b Elaine will address. A lot of these questions can be Mayor � that's`?�.""mething asked Elaine Lo.ft"g."O" t gge s I don't know'the law. Paul brought this to our attention andh6:��.W, ,'�s,concerned. Th&�:?Oty sent out a memo and you all wanted a letter from the PRIi, Chairman a":�`:` is gro,up I got a letter from the PRB which is what I felt I would be instructed:�t&Uo Peter Reagan: Fappreciatq:,�,that and I personally called the Chairman of the PRB. Mayor Jordan: The ision will be left up to this Board to decide what we are going to do or not going to do. I personally thought, when I read the letter, that PRI3 agreed that was the law but they were not going to force this Board to make that decision. That would be up to us to make that call. Peter Reagan: Yes. Mayor Jordan: Is that a fair assessment? 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 July 28,2011 Page 4 of 23 Sondra Smith: It's up to us to abide by the law or not. Mayor Jordan: Any other discussion on this? Peter Reagan: I'm not in favor of making any changes. Sondra Smith: I'm in favor of abiding by the law. Mayor Jordan: This is where we need the City Attorney to ask him:,,,:isOme questions on this if it's a legal matter. If we become fiduciary responsible and we doq?ti:we can be in some trouble, if we're not then we're not. Let's move on from this because Kif.,,i��should be in here to answer some of the questions. We can come back to this when El `4 ere d we can ask her some questions. We are going to need some direction bec t t lue is at $5.1 and your book value is at$4.8 we are getting in that range. Peter Reagan: Again we are treading new waters e I'm sure th City Attorney Mayor Jordan: That's true and we have never be dtere...bo ore."' can advice us on that. City Attorney,letter referencin2 PRB let4r'A"', e 7,2 0 11 "'that indicated to me, that it was Kit Williams: My memo was-related to the'letter, e re _Vd PRB's conclusion, that Onb`-,'�`e`we.,'Vent below$5 00 i assets in the flind, we would lose the right to hire Elaingilonger to',anyest the money, in a much broader range, which she has done full "'f:`%all It *."'.6"uld then meal' ii.,that you all would be limited to investing in very success y or ytiv,", certain CD type mutual ,fffiids but nothing else. You could not own individual stock&�or;,an ything�,T I read thd'statute that d I put in my memo "Anything in this section to the contr�ar.y..,:;:.notwithstanding,-,..�,�until of the system amount to at least five million dollars P�YHN�Y., ($5 000,0,00-VO unds 6 ot in the checking account, may be invested in shares the f fithe ofno-load ds Basically that's cept ,f i buying CD's and other things like that which are even more conservative and inifl' you had to invest until you got up to a higher level. I think I agree with PRB that is in fad", at the situation is and that is the safest interpretation of that particular section. At the Mayors request Paul contacted PRB to clarify if that was really what they meant and the letter came back on July 8 1h. That letter is in your packet and that is their interpretation. They said if you own annuities or something like that you would take a substantial loss in selling you could wait until the annuity had paid off and they were not ordering us to sell. However, we need to follow the law. What is the valuation of the fund? Not what we paid, what it's actually worth. That market value is what counts at this point in time. Sondra Smith: We are $135,000 above $5 million. 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 July 28,2011 Page 5 of 23 Kit Williams: When was that updated? Sondra Smith: June 3 Oth. Kit Williams: As you're aware we are almost a full month more and recently with all the strife in DC, about whether or not they are going to extend the federal government debt limit, the market has been going down. We could very well be at or below $5,000,000 right now. If you are then I think the problem will be that you will have to follow the la*i'�`, d that point you would have to ask Elaine to liquidate any of the assets that are capable of..���bein"gY"":,Iiquidation without a substantial loss. That would be a lot of them, there might to §� mie long term bonds that she would say she could not get rid of without a si nificant loss and things like that I 9 think you have to sell them and transfer those Rmds into"ilo load"mutual fimds to meet the statute. X" If you do not then you're potentially violating the, '-.are bad rainifiddtifts.for that. If ej, you did not do that and there was ftirther substanti 1"""" 1 S st market stocks that you own, a beneficiary could claim that you have 1 i y duty tdthem to follow the law and that you could be personall liable for the lo With the fund at $5,000,000 that could be a big hit maybe more than whaf�`Oybody on the Bo&.d--.,':bould withstand. I think the safe route is to follow this statute and what PRB.'h, ',�said. Even if y6it"'A' t below$5,000,000 now, re no you would need to have a motion at this point say if i when that occurs, and we fu'i�"d h inancial know that is going to occur because the 'h' to instruct your f advisor to then follow this partigular statute at t I know there is somq,x eIuctanc6`:,,t'&-`do that and Fi--.,can understand. I think Elaine is going to do better then these n6`16' '&�' utual ftffids. I think sh' �i:has,a better track record and has done a very excellent service for you"' did"Ji'?1s,:-pass the statute you didn't, the legislature did and it's our duty not to questiqnmhethef"Vfi�h" t ih "s,' '"' es sense, but we still have to follow it. -nu� PC What'i"�'s"'i:'�'t�h'�&":.�statute,,,,, mber when it goes below$5,000,0009 ter stments and Securities Subsection G. Subsection G does Kit ill ACA 24-1 _.5 InvO not specificaffi��::say when it back below$5,000,000. It says when you obtain $5,000,000 or more then you""*"�,',':"*,"'C'�""�a�tft� do theseiii�,.'bther investments instead of just the no load funds. The PRB interprets that to ft,i.04,_that.. are above $5,000,000 and when g you can only do that as long as you you drop back beloW`$-:5's�,obb 000 you can't take advantage of Subsection G anymore to have the additional options. I giffik that is by far the safest interpretation, especially with their letters to the affect, my advice is that you follow what they have told you to do and do it. If you don't you could make an argument and say this doesn't say that if it ever goes below you can't do that anymore. I think that's a fair interpretation of the intent of that statute that only funds that have more money, $5,000,000 or more, are allowed these other sources of investments and when the fund doesn't have $5,000,000 they can't do it. Peter Reagan: I have a problem and you weren't here when I referenced the second to last sentence in the first paragraph of the July 8 1h letter from David Clark to Paul Becker: "The PRB 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 July 28,2011 Page 6 of 23 is not directing the pension fund to sell such asset. This type of decision rests solely with the pension fund Board of Trustees and its advisors." I was under the assumption that once you obtained the $5,000,000 goal that there was no looking back. I set on this Board when we obtained the $5,000,000 goal and we were able to invest in other investments other than CD's and treasury bills. I'm not ready to make any changes to our current investment policy at this meeting. I think we need to do some more research on it. Whether it is through the Attorney General's office or however we proceed to do it. I think there needs to be some other leg, t,remedy but we need to do some more study on this. Vit Williams: It says in the second paragraph of this letter siti n is maintained in X* terms ofpension funds with assets that were greater than, e since decreased below that threshold. Asset classes currently in the portf- li&,, t1,.those described in the memo may need to be held until the fund can t manner. Hidw`ever the pension ted f fund should not enter into new holdings that are as acceptahl und less than $5,000,000. He did say if you hold annuities or things like this that xit in a prudent manner that you wouldn't necessarily have to sell th6se,- The PRB they might not be directing you to do anything has advised you that'th6iV;intqr, ret i te is that you might not inte,p W hold those assets. You may not buy ean that our investment at would be beyond those advisor would not be allowed to buy anymo,re statutory requirements even-ifyou were holding,sp My concern is that iLy-' u delay &,d:do nothin and your fund is below $5,000,000 then you all 9 might be later heldt fi&V6��,rnade th �:wrong decisid �,and violated your fiduciary duty to the other pensioners, to a tune of h'i��W&,eds.,�,'bfi�thousands dolt. of losses, that you all as trustees and who 'cou:, would support,-;.that�,��position"':�"�'��""'�:""�',�', b&` &le. If you on the other hand follow the basic _y an ta ore p reasoning,,,, f"th""T"" ent and conservative point you would not face any is ett"61'"If"I" potentigaell',�,�'i,,',"i:ii'tiabilityv at allit l"" ing what the PRB has suggested, what the statute seems'l, -i4mply, althou Q6 11VL ecifically. It does not say decrease in the statute but what it S6611111'§-,to imply an at t e , le intent would be, at that point it would mean that you would iiot.,�".,be able to tak6i�,:full advantage of your financial advisors advice in being able to buy and sell stdd- for you iffid to basically do the excellent job that she has done through the years. ............................... You would be ta sk if you do not do that, if you delay and do not follow what seems to me to be prett i s ctions or advice from the PRB on what your rights are if you go below$5,000,000. Longer Investment letter referencing PRB letter dated June 7,2011 Elaine Longer: We sent a letter to the Pension Board here and our stand is if you have to go into a prescribed investment style of passive index funds, treasuries, agencies, we can no longer 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 July 28,2011 Page 7 of 23 manage the fund. The reason is because we lose the ability to do for you what we believe is really important, especially at this point in the market. As I review your portfolio you will see my concerns about holding a ten year treasury which is what you would be forced into. That is the reason that we said if this does come about we will have to leave. I don't mind having responsibility as long as I have control over what I do but I can't have responsibility and no control over what I do. You don't need to have a money manager overlaying a fee if you have to be in an index fund and I can't do for you what I've done on the fixed income side if they are,.,,:.p iescribing a certain fixed income fix. It would go contrary to where we have clients right now""', W would not be able to do anything for you and it would be a fiduciary responsibility,,eV'6h�:.,,though we don't have any control over what is being done. That is why we sent the letter t- is does come ton down under $5,000,000 we will be happy to help you trapsi longer be the money manager. PRB Letter re2arding Evaluating Investments ed 201 respoft g to Paul Becker telephone conversation 2011 Turnback Funds C Sondra Smith: They have already re eiv6 those. "'Ji pp the' checks. That's additional money we get ever year. J.......-have a packet that shows what we received this year and 11,,,,'1he way back',,,10 2002 and"what we have received each year. We disburse those Rin ��according�itb what the Sidte tells. That has all been taken care of X Marion Doss: The turnb plus,.`�,, d the fire future supplements is $29,618? nit" nent is you get on your checks. It was dispersed at $590 suppI Sondra S ........... for the'y6firees and spduses�:pf reti&O"�,-ajid$118 for the volunteers. ":,xx Peter Rea" n; There is a fi""J""" la the are required to go by. and I b.' th Sondra Smith" calculate it to make sure we match. The $139, 000 goes back into your fund. Peter Reagan: The ffitu,re supplement is the monies that are left over in the ftmd from cities that do not pick up their"checks, funds that do not qualify, or funds that have not done proper reporting. Rather than that money going back to the general fund the money is kept in a pot and distributed to all firefighters in the State of Arkansas on the old fire plan. Marion Doss: The $13 1,000 is that the only time we get turn back? Is that the only check we will get in 2011? Sondra Smith: Yes, and you only get it once a year. It usually comes in July or August. 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 July 28,2011 Page 8 of 23 Marion Doss: That diminishes each year. Sondra Smith: Last year you received $122,000. This year you received $13 1,000 so it went up a little bit. It varies, you never know how much you are going to get. Peter Reagan: It all depends on what the legislature does. Sondra Smith: Right, I know on Police and I'm not sure on Fire t is based on insurance premiums. Peter Reagan: Yes, and legislature toys with the formula every understanding is the new one is a five year spreadsheet that will increase to the t016 in the state. Fayetteville is one of them so our shares will increase. Sondra Smith: When you pay your insurance oe 0 to fun k to the 9 pension plans. Peter Reagan: State Police also gets a cut out of that. Wh s-Aeft the Governor gets. LOPF1 Consolidation of Local Pension A Sondra Smith: That's y of a I eq d. Sometimes we talk about consolidation and there is:�b` I�-Ki?perftltain e year that you can consolidate. If you want to do that, now e time to�:�$,jart the process:,. 9 Marion Doss: How long"-`do,.,:;w, e hW�b.�,Aoa,do that. MR 6 Sondra Smi: t "A"I'v, -fy,long think. Petef:�,R',' gan: An actuatY.,'::�has to ed, you have to send a check for $600 to Gabriel, Roeder, Sffii'th and they hav'""t" do :t I ation to compute the unfunded liabilities. ht be the time to request a consolidation. I would like to Marion Dos s to me 1 mig hear Elaine's re 6 V:4: st arjcv:�g e what she says with the investment policy. Mayor Jordan: It wiftke awhile. That's why I wanted to get as much of this other stuff done as I could because it's a pretty lengthy explanation. Alliant-Liability Insurance Pro2ram Sondra Smith: That is a letter we received regarding fiduciary responsibility and liability insurance. It's an informational item only. 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 July 28,2011 Page 9 of 23 Marion Doss: Are they trying to sell us something? Sondra Smith: Yes, insurance. Lonizer Investments: Investment Policy Review A copy was given to the Board Correction to the Ist Ouarter Repor ...... A ,X A copy was given to the Board Longer memo and information regarding SEC:,,,`,* opted Amendments Form ADV. A copy was given to the Board Elaine Longer and Associates A copy was given to the Board The Longer View A copy was given to' '&��Bpard Longer Investm Trivac`V..: A copy,�iwas given to th KBR� ard X Ouarterly',,': port—2nd 0 er 2 .......... �O Elaine Longei.-,�'.�"i�",,i��ii�",P�,age one ��""`ws the June 30" portfolio appraisal. We have gone to a more th conservative stancb':::�:As of Juft,"6 30 we were at 46% stocks and International was trimmed down to 0.8% of portfolio"":'' are numerous reasons for this but you see in the news all the things that are coming out a , as this prolonged financial crisis. What is going on in Europe with the Greece situation, Ital Ireland, but also what we are facing in the US as we got through this great debt unwind that has been a result of the 2008 financial crisis. We are dealing with it domestically just like the Europeans have to deal with Greece and Italy and some of the peripheral members of the EU. We are in more of a defensive posture. If you look at the dividend yield, at that time we were at 3.44%, which is the income yield on your stocks and compared to the ten year treasury the ten year treasury yields less than 3%. We have maintained a stock portfolio that has an income yield higher than the ten year treasury to be able to remain with a growth profile in a more defensive way. 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 July 28,2011 Page 10 of 23 The next asset class is called other income securities and we have 4% of portfolio in this Guggenheim Multi-Asset income fund which is a mutual fimd of high income stocks, utility stocks and also in that fund we have 8% in real estate investment trusts. The largest position in that fund is about 1.5% of total fund. This is a way for us to be able to put money to work to earn a 4.8% which is much higher than we can get on a fixed income but in a broadly diversified and high quality portfolio of income assets. You have the utility fund which yields 4.14% it's only weighted at 2.3% of portfolio but we can't anything close to a 4.5% income return unless we were to go to a 30 year treasury and I would not take anybody to a1.,,X0,,,:,y_. ear treasury at today's interest rates. On June 30th we had a ftmd that was invested in treasuries t110"Yi6t but we have since left it at our cost because of the concern about what wil appen 1 ,.W. Aon't end up with a creditable method of addressing this debt limit. I behey" ��O both sides"46'Ve incentive enough that they are not going to lead us over a cliff 1 1 ".."'taull . The problem less we have a down grade our d —l',, e aven't creditable plan to address the deficit the rating Xx e been there before. Since 1941 we've been a Tri i so 1,,10:,,,:pne really o to judge what that will cause in the markets in terms of latililt""'b" there are some"instit tions that Y111,11,ecause hold treasuries that hold them because they hav o hold RiPle, dit. Moody's and Standard A cre & Poor's have said if they downgrade`:�:.Ihe.jrea y debt tf"�:*:'�:they are also going to have to downgrade the agencies. They may o any as 7,000"i��s.tate,;,and municipality bonds. When you say the Triple A will be t e as that's probably true in a p some reg�o -x ha e exited anything that's on long term but in a short term it can caus �ill'i��y,����l-Il"�,��P,.WP�,� v the long term of the treas17,y­.,;.,..,qurve ntil gh'th"""""""""C""'r""lsis and see what they come up with. XK 0, We still have the JQ which is a st ent grade corporate bond fund and we have preferred debt that Yiiel" ds 6.3%',,,.,:�:�:This ag ik,-�, 1 6% of portfolio but you can see in this environment,.wb rp.,,y �fv r q e year q t at's only 1.5% and a ten year treasury that's you ha 2.95% and"'f166or o asset classes in a prudent manner to be able to get the,jiibome into th&,--ip;`Q,. 0 10 hat I was talking about in terms of if you go to this hat's w s ib five,ffifIlibn limit and you u k e to that defined rules of investing and including what f .�N"XI..". on the i ��:!A they wartf,:1, 1, me,.,-,§ide all of this would have to be sold. We aren't putting anyone in aleq..,:year treas t is point in time because there is price volatility in the longer dated bonds giV6h.`.,a,chan e t rest rates. X, at we just finished for the second quarter. If interest rates go up by This was in the new 3/4 %. That term is called one percentage point ice of the ten treasury will drop by 8 duration, it's a measure of the price volatility of a bond given the change in interest rate, the longer the maturity the more volatility there is. Even in the ten treasuries you have 8 3/4% price decline if that ten year just goes to 4%. Given what is going on out therein the world I can't rule that out, especially since I started managing money in the early eighties where interest rates on the ten year were about 15%. You can't rule it out and if you go through that kind of a price decline you eat up almost three years worth of income return, and the price decline on the bond from a one percentage point increase in rates. That's the reason we are being so careful about the exposure to the maturity length in the bond side of the portfolio because you have price risk. 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 July 28,2011 Page I I of 23 On the other side if you look at the treasury you own, this 4% that is due in 2018, we purchased it to yield 3.9%, and that was bought in the first quarter of 2010. Since then interest rates in the longer maturities have declined so that now the seven year that came at auction today was priced to yield about 2.28%. The price of that treasury has gone from what we paid for it 102 up to I 10 at this point, today it's closer to 114, that has been a beneficiary of that volatility factor, as interest rates decline you have price appreciation plus income. It can turn and go the other way. We are still holding onto these treasuries that we bought at a higher yield but we are not entering into new positions at this point in time except a fund like the Treasury,�i,.,Bond Fund where we can control the down side where to close stock. We still have the fedb"fal h�rne loan bonds. The _0 income yield on the total portfolio even with nearly 50% investe"djjh,growth it's a still a 3.93% which is higher than what you would get if you were just sItI'mg !4�,'*�100% bond fund. The reason is because we have bonds moved to where the stock part of th&:'�.`, tfolio also contributes to the income of the account. It's a more defensive,p, stu did maybe in the 0 r, than wl eighties or nineties but at this point and time it feels lik&a reasonable place to"bex, 1h Page three is an update as of July 26 Again ah ut"46% -4,is in d6mestic stocks an"out 1.7% in International. You have not seen us for quite some ask for a V ote to approve being over 50%. We are under 50% so we do not need:`,i1,6`,i,,,).yote today. The market value is $5,680,000 and the total income yield is 3i,,.!8J%. Kit Williams: That's as of today? 1h Elaine Longer: The 26 yes?_ Mayor Jordan: Thqr6",1"s a possib",thy within a month it could drop below$5,000,000. V'Y.� Elaine Longer: In a ,irp-ally look atit-you are 1.5% away. Yesterday the market gn y was down almost,2500 todaf:-',-�,w,.ib,?,were"up,���:,a _s:,�,mua as 82 points and closed down 65. These are very volatil;6:`:'�� imes,,�,*A,��,i,,.,,i,�,,;�,,,W- �t jft§',��:urge you if there is a question about what you can and -%X,XZX,X;�." cannot d&':'sliould it Q�I`J""der $5 0'0"'0,;0,00,,you need an answer. Re-pricing today it maybe under ....... in $59QOO':�::000, I don't knoW`..,'�i�ii�,`,ffhat is diny'Va 10/0 waver and if you look at it yesterday the stock in "�i�down almost wef6n't down as much as the market because we have a more arket was defensive sf dfige but then to"."day it's down another one half percent. So if you are at 2.5% and you are at 50OW,*dquities thaV.,W.,`ould be 1 34 % on the total portfolio if you drop as much as the ow, market. I don't ur value is today but you're close to the $5,000,000. Dennis Mullens: Hyp" etically it could go up in a second. Elaine Longer: It could. Dennis Mullens: I can't see them not doing something about that. Elaine Longer: You're close enough you need to have a definitive plan. 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 July 28,2011 Page 12 of 23 Page five shows the realized gains and losses year to date which are about $154,000 that's mostly because we've taken gains on some of the stocks that we've lightened up on. Page six shows the weighted average yield to maturity on your fixed income securities. What's important is, because of that risk for price fluctuation, we've reduced the average maturity on bonds from 9.9 to 7.0 years but the fact of the matter is this is as of June 3 01h and you're much lower than that in terms of average maturity because of the fact that we have actually sold that long term bond fund. We have not given up any of the income yield and that's because we incorporate a lot of other activity into the portfolio to get your fixed,ificome at 4.8%. To give you an idea the thirty year bond is at 4.2% and has a lot of price gsk"' You re at 4.8% yield but your weighted average maturity is only 7 years. Below that in tefffis%of the maturity distribution one to three years 6% of the bonds that you hold mature with�j :"Iffir Basically that means that's as good as cash to us because we don't have to hold ec te in the market X and basically execute at the price on the screen So 6.2%6:�:� 0 s t ally be rolled to longer maturities if we have an opportunity where that,.", akes sense. t t is I I i in time we are more defensively structured, as far as the becatfilse if e en 4:,,:'I,,#�:.�sone kind of n chaos relative to either congress doesn't see eye"to ey"O.'," pdgs�jhe August 2 ':.',��.dadline or we Noy,we _j face a debt down grade, we've got plenty flexibility in thb"':-��- 't I ,p " ,-or-,-fiSlio'o then extendmaturities and tap into higher yields, if they become available but at th poigt in time it's anyone's guess what is going to happen. Page seven shows the performance year t6*.".��'�id�i6��i�"�i.',�:�',,"�'$,,,tpcks are ab6idt-�*�',,-,,,,.,,2�:."5%, International is down 6% but that's mostly the Japan exposure andthat wii,`,", hIy-,,x-8% ,o.' portfolio so it doesn't really affect performance. Fixedincome is up 1.8%',�,sq,`2`2%. T`.",K,:1btaI return shows the annualized th index returns inception,16,:,,,,Jb&i:��i "1130, . S&P is db e 4%, yod cumulative annualized return has 0 has been 4"`�':2% and y ur cumulative annualized has been been 4.8%, and the bd"'d fund ret, ,U M- f he S&P and the Lefiblan,Bond Index is 4.4% and your compound 4.6%. A 50150 weig t'fff'jg"",�*,o t annual rate has been 4.9%- dofilit,,Iave as long',"bf a history with you as we do the Police but at least wheq,,,:,w since fully recovered and back to a 200, that e have 50%b`,,,`::'�3,etting c ""to the 6% that was enforced when we started. That's,�- n changed i a,,5% compound annual is what they are using in their calcpl' i� we've changdff.',,�'.the d we mention that in the new policy but up until that M. ""At wn n annu point in time:,:it was 60 o compou d Page eight shft§,.,,,i-,,:1he c tions inception to date going back to August of 2002. The contributions to th6`,:`if.ihn een $1.121 million and the distributions from the ftind have been $9.3 million. That's""" e dealing with in terms of the unfunded liability is the weight of "n v, the distributions on t inci al. Page nine shows the beginning value of the fund at $9.9million back in 2002, the contributions have been $1.1 million and the distributions $9.3. The components of return have been net income of$1.74 million. That comes in a form of dividends on stocks and interest income on bonds. Realized and unrealized gains would be about $1.7 million and that comes in a form of growth. It is interesting that you've has a 50150 allocation between bonds and stocks and even though we've been through such a historic year as 2008 where stocks got hit so hard.still 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 July 28,2011 Page 13 of 23 growth side of the portfolio has delivered about 50% of the returns of the total return which has been $3.4 million. We've revised the investment policy. When we where here the last time there was a clause that needed to be updated for the Police Pension and we went ahead and put that into the Fire policy as well. We went to the Friday Law Finn because we are dealing with a lot of changes in our business. We are in the process of updating all of the investment policies for everyone that is a client of Longer Investments and bringing everybody up to current rules and regulations. Their recommendation was to change to this investment policy which.,,�NAsically doesn't change anything as far as the definition of your asset allocation with the ej& that it gives us the ption authority within a policy to lay outside of the equity r e ",,,�X, t have already been authorized, but it puts it in a policy and says that we wi I line we are outside t those ranges at the next meeting. That protects us in the be out of line with t Vj::: ce ing. your policy by plus or minus 10% and then we will t It includes the new actuarial return assumption which is 5% inst& d of the 6% at wa I s I:,�.Ift,th rior policy. e p Nothing else changes in terms of your fee structurd;i".,��your adiffl-nistrat ve set up allocation, it just brings everything up to date. If you want to have more time to look at that we c asked that it be signed before -upd the next meeting, or whatever works for`��Ou.. I thi 1 is ate that and make sure that everything is current. Peter Reagan made a motion to approv6�:,�,:,th. e propos.,-d han -e's in the investment policy. Dennis Mullins seconded th.e.,motion. Sondra Smith: I wqpf, �yather i��41f�and let Paul�,!BQcker review it, because it is different then the one that we reviewed, aniv.,give us�,,i4ime to look it d`y' er..,,- Not that I don't trust Elaine, I just think it's good for us all to be 6 �:fhe saitid�,,,,pq, ge, Oss* A-' Ave,,you re'Iewe Marion D v- d this. o"' d dby. May6f, 6.z.. an: au i ............ Kit Willia ave er my advice to you all is that you are not going to be able to legally estments very much longer. I'm sure this policy is fine. I wouldn't think I w6;':`u�':J;, review it. I'm afraid that the way PRI3 has interrupted the statute Id and the danger to y ' i i ually if you do not follow their advice. Even though I don't think it's the best th ci 11 for the fund, I think Longer Investments would do a better job than if you were force into no load mutual funds and CD's. I don't think the statute allows you that option. If you want to approve this now I certainly don't have a problem with that. Marion Doss: Elaine, if you can't use you anymore,what kind of process would that be? Elaine Longer: As soon as we receive notification we would have to liquidate the portfolio, except for your treasuries the things that actually fall under the coverage of the new policies. 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 July 28,2011 Page 14 of 23 would be your entire stock portfolio, International, everything that is in the fixed income side except the treasuries. I don't know if they allow you to keep the agencies. Kit Williams: Then no load funds would have to be purchased and I don't know if you would be able assist them in doing that. Elaine Longer: We wouldn't be able to do that because our relationship would end as soon as we can not invest along the lines of what we are doing for other clients. We would be able to help with the liquidation and transfer the assets. I don't know if Paul.:*,ould be doing it or who would but past the point that we can't actually purchase what we w6uld b&purchasing for other clients, we can't do that for the Fire Pension. I have problems with:i�yypu moving in that direction anyt myself so I would not want to be part of that step. I will be �y hing I can do if that becomes the way it has to go to transition you smoothly but I— Idn t"'Wdht to be the one putting you into assets that I would otherwise not be buying. ktuata� there are Marion Doss: If you get rid of this in a hurry, s et value does f1i441, , r big losses. say you nt'. times to sell things, if it is a certain date you mig X f have to do all this for a certain time. That's the "0 an orderly anner which I think you're saying it would be when you talk A t 1, Elaine Longer: The best way I thi t ly transition is that Paul would have to set up an account that funds would b tr se again, don't need to be held at a custodian like Northern Trust and e i 61 you are not really holding anything but index funds aa( treasury. e coordinated in such way that when we liquidate, on settlei' '::date, the wir6:" es o what he is buying on the other side. It can be coordi ,riked that th&,-i.,,,,,4ccount thatAll be receiving the funds can be set up so there is very little time a,g e haiXi,' g to liquidat&ii�qnd what he will be buying on the purchase side. Kit William"s-"WAs"I 'eff,",:�,fimanci, li1dyisor if tfi&` had to do the liquidation of these separate sorts y of ftm&,`,'1,hat you t k§i`,i:Ahd things like that, would you advise them to maintain the s oc :ij,"'ii"fixed ass�6VX`, d the no same`�:,�dk.,of mix betwee load funds? The stocks that we have now in d fund, do you have any advice for the Board of what the mix place, th ':Inbney in the no"I "PAL would be would recom mend? Even though I know you can't buy any no-load funds. Elaine Longer: T,7,hf�i�,,is why...'i',fdon't understand how you're going to do this. I'm telling you this because I feel very �hi o our public servants who really depend on this. Right now you _p& etic t are dealing with a 5%,,"��' turn objective. When you take half the portfolio and you index it to treasuries they are not going to want to index you into a ten year maturity at this point in time. But say that you did go there you are talking about a 2.9% return. It would not be wise to take you to a ten year weighted average maturity so you say a five year weighted average maturity you are at 1.5%. Half the portfolio at 1.5% gives you 0.75. That means on the rest of it to even make the 5% you have to have 8.5% on the stock side to even hit the 5% bogie which is not going to get you to a ftmded position. 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 July 28,2011 Page 15 of 23 When you talk about what your plan is dealing with, which is risk of ruin, that is what the term is when you look at your unfunded liability, what you are really talking about is what is the risk of ruin. This would further that inability to come out of this in a good way. As far as your asset allocation you've seen it fluctuate anywhere from a low end of 35% or 40% equities up to where I'm asking for allowance to be at 60% instead of 50% and everywhere in between, I can't tell you where I will be thirty days from now. To tell you 50% and lock it in, I can't do that because it's a judgment call everyday. It's like you can stay with your senior investment policy but then it begs the question about who makes that on going asset allocation decision between equities and fixed income which is a moving target. This is a very fluid environment. So, in answer to your question you can stay with your same investment polic i.111""is 5% to 50% equities. I think that's a wide enough range to give you the flexibilit e but that's the question who is going to make that call? My concerns abo h are both on the ut 9 2` fixed income side and the equity side. Peter Reagan: I understand, Mr. Chairman I have a.im tion on the oor. Mayor Jordan: I have some reservation about'supp"O"'i" decide e� ly what we we are going to do. I personally think we need to have a spe,cia Ale.etin-g of the Board"as a whole. If we go two or three months and this thing has dropped b6l�' ",..w,�'.�,i�i,,$5,000,000, according to my City Attorney who is my legal advisory, I c '�,:�.he held personallkl',6`8ponsible for this fund. That is something we really need to consider lief. 'on estly, I'm not�,,i this pension. It's your pension fund. I have done what you want6'' m`&"',f �i,"ap;,,but when WC.,"get into a situation where a -X& court of law can hold me legally responsibl6;:.then a46 er matter, particularly when my City Attorney has adyis G" ",:�S, ,,.',5`000 000, then we can be held e idriPs bet me that if fl-%, personally responsible. Elffl' &i:.,1.`:1h`ink you do a'gt b but,,� e are getting into a situation where eatjo we can be going to cp I look at thAyery seriously. Elaine Longer: In the ,in comp iance. N Mayor Jo,r�,,"*d��ati.-�,�-s'ei:""e':'�'�':t�"h..tt we abovel�',000,000. Like you say it can change tomorrow. Elain&,':L`," nger: But youl"e""i'ibo close-',',�`:Or,comfort. . ........ Mayor Jor a,, ;��,,,,_We are goin&;to have to come up with a plan and we are going to have to make some sort of ;u.'! Sondra Smith: I the Mayor. Elaine Longer has done an excellent job but it looks like our hands are ti4and it doesn't sound like its going to be good for the plan to have to do this step but that's the state statute. I don't know how on one instance you don't want to follow the law and in another instance you want to follow the law. Mayor Jordan: What are your thoughts? Marion Doss: I know Pete has a motion on the floor. I would like to see exact differences and I would like for Kit to research this. Kit said he thought it would be okay to sign this change right now. Elaine in light of all these changes do you think it might be the time to seriously ask for 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 July 28,2011 Page 16 of 23 consolidation with the State fund. It looks like right now that is the best hope. They can invest their money in different ways and earn more. Elaine Longer: The City would have to pay to move it to LOPFI. Upon roll call the motion passed 4-1. Sondra Smith voting no. Ronnie Wood was absent. Elaine Longer: To answer your question and I haven't been a party to the meetings about moving into LOPFI except I do read the minutes to the meeting. It seems like the problem with that is the City has to buy the unfunded liability to move into aftrue? Kit Williams: It's a multi million dollar liability. When that the Aldermen `X1-11.`,X�-11 have attended they indicated they were not in a position, t because of the cost. That's why we got into the situation whether or not tbd,:� C ul ce benefits and the Attorney General indicated he did not think they cauf 'reduce ene its. Yii,`rbsearch was they could reduce benefits but they have not been redu' W. The longer we go on", reducing benefits the more expensive it will be to ever conso idq`di LO: Elaine Longer: Sounds like you are between a rock and" �ifikd place. I've been saying LOPF1 is a great idea but it sounds like you h0b,i�to get funded, redk*.&:�benefits, or the city has to pick i this prescribed program up the unfunded liability to move you In lieu of goil6gan definitely, either staying with a real investmen ftfolio like wha ',,,':�ye'run or go to LOPFI either one, would be preferable than to go into ind6"'R��;funds,.�:,tr-e,a�s,!� -,ies or ClYs. .... .. .. Peter Reagan: Thank you.' ""Ef in"'e', MarionDoss: have dondi',,axeal good job. Elaine ha"'*V"""e""',""t""0*"""4'*,I.I"""""""''"'�*�':o'�""'yed being a part ofthe Firemen's Pension so I really appreOW:` Pete.r,`,`:R gan: o &&flent job and I will do everything I can to keep you on B 0 ard. Elaine you. Dennis Mullens: Y6, we should have another meeting before October? Mayor Jordan: I think we need some resolution. I'm concerned about it and we need a plan. Elaine Longer: Kim mentioned to me when a distribution goes out it could drop. How much is a distribution a month. Kim Cooper: Usually they are over$100,000. Marion Doss: $119,000. 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 July 28,2011 Page 17 of 23 Elaine Longer: Besides the market activity you're close enough that a distribution could put you under$5,000,000. It would good to know what you do or do not have to do. Marion Doss: I'm open to anytime you have any ideas on calling a special meeting. Mayor Jordan: I thinking we give it a few weeks and next month we call another meeting. I would like all of the Board here before we do anything where everybody can weigh in. that we have to Peter Reagan: There is no state statute that says when we fall beiqw,: liquidate our assets. Is that correct? Kit Williams: Yes, there is a statute state that talks about th and the way it's interpreted. 5,� Peter Reagan: No, it doesn't talk about going It tal s- rachieving the $5,000,000. Kit Williams: The likely interpretation by t at statute is if you go below $5,000,000 you have to liquidate. Peter Reagan: But there is no state statd,6 thA8is�,gys%that we hav§">`t-""-`liquidate our assets when 0 we fall below$5,000,000. Kit Williams: There is,,n,-'o*"*"*-'s"t,"a",t'�"e"",":�'�"s"t'atute that say§iAhat precisely. Peter Reagan: Kit Williams,. ten t ut that does not mean that the courts will not say that x, Peter �gan: PRI3 has th ation but PRB is not a legislative body. Kit can say if�ij all don't do that and you get sued I will be trying to make that argument for s t e is no state statute that says that but that's not necessarily the �XXXII winning argumen Peter Reagan: I t t at and again that's the reason we have courts because attorneys can't agree and every day citizens can't agree. I'm saying we do not have a state statute that says that we have to liquidate assets when we fall below the $5,000,000 threshold. It's not real clear in the Pension Review Board letter because they are not directing us to sell such assets. So I'm not real concerned about it but what I am concerned about is that we have someone to determine for us what happens when we fall below $5,000,000. Is that something we ask the Attorney General? How do we go about doing that? I'm not going to act on something that says because PRB says we should and there is nothing in state statute that says we have to. I would rather take the chance on being sued by one of my pensioners that I serve on this Board representing. If we 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 July 28,2011 Page 18 of 23 have to liquidate our assets, our investment advisor already told us that our income is going down the tubes and I think there will be a lot more chance for a lawsuit personally against everyone on this Board by doing that than by staying with the investment folks. Mayor Jordan: I need a little direction from this Board on what you want me to do as the chair of this Board. Sondra Smith: What happens if we stay with the investment advisor, which we all agree we love, the market goes south again and we have another 20% decrease:��;J.n,,,our funds, what are we going to do then? Marion Doss: We could ask the Attorney General for an q means when it goes beyond $5,000,000 we have to change. Although, eve Attorney General's Ky at t ey want to say, opinion agrees with what they want they are all for it. h they say well that's just an opinion. Ji" an opal P Kit Williams: It is just an opinion just like mi"'e is�`:-J`u` gion so is the R13,"because this hasn't been taken into court. The big danger is if "y"e""'the"'PRI3 who ha"s been running these programs and giving you advice through the years, andii.f.you ignore my advice, I think it's more likely than not going to mean wlidt',�,'ithe.PRB says that'§",:',,i'," gre the biggest danger is to you all as a Board personally. I think there 0,,xery little the PRB's advice and you follow what this statute implies if it d0esfi`:f'i� �;,djrectl s something for you all to Y. decide and as your attorney in this particulk�,case representi 11 I'm trying to look after Av. your personal interest also. Xhat's why I felt like..,F'heed6d"�` e sure that you knew that you could be taking a large if you do not iollow t h with what PRB has said. Marion Doss: Vvlhd"d' �,,,YVdu think,i:,Aout requesting�ign:�Attomey General's opinion? Kv" -X .......... 6 A -b--tt'-i n that's not Kit Williams:..,.,,,That..Co kg.uyxagai a court of law. No matter what ............. the Attorney' '.- effera on't ow. I don't oppose you asking the Attorney General:�-`::�::,,,`- 1"ix Mayor f, 4u: Why don't:.'.`wt do t tak'&.�`a period of time before the Attorney General responds and you Kit wi might be in big pi' -Ibms bQAf ie that. "M Peter Reagan mad ion to ask for an Attorney General Opinion: Under A.C.A. 24- 11-805 if our fund falls below the $5,000,000 mark are we forced to liquidate assets and go into no load mutual, treasury bills, and CD's. Dennis Mullens seconded the motion. Mayor Jordan: So we might have big problems before that. Kit Williams: Yes because it takes a long time for the Attorney General to get a response and who knows what will happen in the mean time. I am very concerned about the market myself 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 July 28,2011 Page 19 of 23 Dennis Mullens: You think it applies to what the PRB Board says? Does it really mean that does apply? Kit Williams: PRI3 and I can both be wrong. We can both think that this said only when it goes up and therefore even if you only have $10.00 in your fund you can still have a financial advisor and do all this other kind of investment. I don't think that's a reasonable interpretation. I think PRB is correct. Mayor Jordan: This Board is making a suggestion that I get an A�, General's opinion, is that correct? Sondra Smith: It concerns me to wait. ';&y General. Kit Williams: Regardless of whether or not you wait you:Vaqa the Atfb Marion Doss: Sometimes those opinions come,bikk real quick and a long ............ time. Mayor Jordan: We keep up with the way this is going 8V&f.. r so. Elaine, can we get monthly reports on how this fund is doiri" T st bf,yern ru Elaine Longer: You get monthly reports ff� m fouii" "m , , 1 ingiZih an Attorney General's opinion Mayor Jordan: If this drags,put three or Q- _At s wa of P and this drops way down,f"d kind d tion. ant to be in t N Marion Doss: I thifi"k4e:,,-Ineed to M`�"`bet a little mor'4ivften. X" 'j.xR Peter Reagayj�,j:� Sondra-11S,inith: I don`f,*,"""" arter, I'm sorry. Kit William-s',i, You can ask%b k an Af General's opinion,that's the motion on the floor. X Mayor Jor b along with that. X. Upon roll C ssed 5-0. Ronnie Wood was absent. Mayor Jordan: That's s e , I will get an Attorney General's opinion. I will get something on that tomorrow. I also want you all to understand if we get a report and this starts going south in a hurry I want to call a special meeting. Marion Doss: Sounds good. Mayor Jordan: As I have said before this is your pension but also I have to protect myself and I want you to understand 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 July 28,2011 Page 20 of 23 Marion Doss: I would like to make a motion that we request the City to consolidate with LOPFI and express a realization that we may have to negotiate a temporary benefit decrease to make it work. The main thing is consolidation with LOPFI. Sondra Smith: With a benefit decrease? Marion Doss: Possible temporary. Kit Williams: Temporary benefit decrease. Marion Doss: I'm looking at something negotiable. e Atyy�:',, ouncil was here before realli one of them expressed that if we wouldn't bend they wo I ze we may have to. It looks like the way it is going we are not goin t hay in a f wk�m g o years so I would rather have less of something than nothing. 6ase because Kit Williams: What I was questioning was whe"' r y benefit d& they would not be able to do an actuarial study 0 into LOPFI. It would not be a temporary and they would have to know h nefit decrease was to be able to run the study. X. Marion Doss: The reason I don't put d�*.,'�.'.*.ntiffib-6f.,�i,iithere is be something we can negotiate. The reason I said temporary is that leave&�:.`Tt;i`Vb en years from now or if ,ffhat w6fit" things turned around there might be a possibiti-ty. ..., PFI we wouldn't have any control over it any,,,.Iftli""o""f"e""',,'�"i'�,f�,,;,�',:'�*'�:"�it went to 6 Fl. It lo s to me like the only answer is consolidation. The fu and t&re is not going to be anything left before long. %Ijs going'-own Ill. ............ Sondra Smith: Elaine ha&,sai'd alt,".;' long,me can t 6, ourselves out of this predicament. Kit 'it be s;x I e way :i:11hs en tor a tew years, you are right. Mari, if:AD.oss: Elaine that wfie-fi-""'she first took over that it had to have more income or less out Elaine Lon ei"'IN timc�i,,,.,w., e started it was 40% under fillided. You have to get 40% before you start tr in 0 o and'" w. investment returns just can't do that. Unless you bet the ranch and you can't t Clary account. It's always been the weight of the distributions on the asset size. In 2002 1 re'"ember that there was some turn back or something that was anticipated to kick in more princi le to the ftmd. Marion Doss: There was something where additional money came in but it only came in for two years. Mayor Jordan: What is your motion? Marion Doss: To request consolidation with LOPFI. 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 July 28,2011 Page 21 of 23 Sondra Smith: Does that include a benefit decrease or not? Marion Doss: A realization that we may have to negotiate a benefit decrease. The reason I'm saying that is because every time it comes up, when it says what it will cost the City every year that is the thing that kicks it out. Kit Williams: It's just too high a cost. Mayor Jordan: What does possible decrease mean? r s Two motions were Marion Doss: Sondra made a motion a while back about a 1 made to that affect. Then when we met with the City Counci ut consolidation one it of the Councilmen said I will work with them if they willii�, 6, H I J,`-i:iif they won't bend I won't bend. That's a realization and we may have tq,'�::do that. r li h e to do that but I don't have a number yet. That is something have"to di cuss. Mayor Jordan: Any thoughts on this? Elaine Longer: Mayor, I would have tfi'�,t�,,q on ans u can because I don't .,yesti on as yo know when the last discussion took place'W., he".:P'�.- -ou were consid6fingLOPI'l but it wasn't soon after the 2008 decline. Since then in 2009'�'ith6'*'.'f.."""o"-"'t""a'�t��,'��i,,,,etum was 16'.`3%arld then last year 11.5%. gum'"t That's 27% to 28% on the fund where the actuary a ion at that point in time was 6% so I would say just from a guess-the outlook woul"d,..b,e,".,�',,','b"etter tfhd&�I`- 6 last study you had done when you were seriously consi,pering.x&p. mg into F11. r 11Y would go off year end which your fiscal year end is Juna-,$3`0 th e arkets are pretty flat the last year end Eveif'�,iffib to`44t ugh ye th look ' 6'od. I thi fiscal through June,130�ii-.,,V o h lookin at because it could be it's a 9 different picture in terms�`�bf,`,*-. h t"J""gveritage o se you would have to take to be able to T. fold into LOPFI.:� as Mayor,-J rdan: As th&��`)U",,hair I -8d,to k the question so we are talking about consolidation .......... with�-`.LOPEI what are we n6d`lb take we need to look at possible decrease, what steps d you e wari o i',jine to tak ? �X'XO- Sondra bd:it,"onsolidation with LOPFI but there would probably have to be a benefit decrease f be able to afford it. Before I would second it, it would have to be with a benefit decre r for the City to afford that. Marion Doss: That's the reason I said that in the motion. I just think that is going to have to happen because the last time I forgot what it was going to cost. Kit Williams: It was about a 22%decrease. Sondra Smith: Between 22 and 23%. Kit Williams: To get to a fairly phenomenal cost to the City. 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 July 28,2011 Page 22 of 23 Marion Doss: I'm hoping maybe we can work something in between that. Mayor Jordan: So what you are saying is start looking into this. Marion Doss: Yes, and we have to do it now because we don't have too much longer to get it done or it will be like last time and they will say its too late in the year, you will have to wait another year. Elaine Longer: I don't know who did that study for you, do you know Kit- Kit Williams: Yes, Jody does it and we have to pay him do ctuar Marion Doss: Under consolidation doesn't PRI3 use a d r... iff-b Y9 X, Sondra Smith: Yes. `V XI Marion Doss: I don't think it costs as much. Peter Reagan: LOPH is Gabriel, Roed&',,:x-Smith. th .... ... .......... Elaine Longer: I think as of June 30 t 06 better than the last time o that you had it done. e right. t y Marion Doss: Thank yo,t�Ilt:�:�::'I,:"di�'d�i.i,�:'�,realize that I hope Mayor Jordan: 0 d6'.4hattoo won't we? e benefit decrease and consolidation with Marion Dos� -:i% a ........... -2. Ronnie "S""`*th'�second` d::,::, LOPF1. S., ndf-ak" mi e moti n. Upon roll call the motion passed 3 Woodwis absent. "X ............ §m1th made a motion i Sondra n light of PRB's report that we consider going ahead and o'd th doing what............ e have t0j�i:do to abide by the PRB letter and the requirements on the $5,000,000. rdan 90conded the motion. Mayor Jo _'t.h ey are in favor of that but okay. Marion Doss: We a reed we are going to get an Attorney General's opinion. Kit Williams: You can get an Attorney General's opinion either way it doesn't make any difference. Peter Reagan: It does too, it's whether you can keep regular assets or not. 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 July 28,2011 Page 23 of 23 Kit Williams: No, but you can get the Attorney General's opinion which ever way you decide to go. Sondra Smith: That doesn't mean we are going to liquidate tomorrow. It just means we are going to look into starting the process. Mayor Jordan: I have a little bit of difficulty with that until we have a full Board here. I know there are representations from all quadrants of this. We have a motion and a second but I probably won't support this until we have a full Board here. If we get:�;the Attorn ey General's opinion we can look at that and closely monitor this. I will call-,a,�,#eciaFmeeting if this starts heading south. d was absent. Upon roll call the motion failed 1-4. Sondra Smith votin S 17k, .......... Mayor Jordan: You want me to get an Attorney GpIl."6"fal i 0 PeterReagan: If you don't mind I would like tO*"'lo"O'k���:�:'�"4",T�,,;th wd'dip it is own. e g before Mayor Jordan: Sure, I won't send anything down that y6iii`i`Will.don't look at. Peter Reagan: Thank you. Kit Williams: Didn't you give him the wording? It--11,`§de,,1fi' ight forward. �Z t ke Peter Reagan: As the m.,60fl.."Id4he mo ion wotild li to I it. Mayor Jordan: Th -iWII,be fine will draft 4>,something and we will let you all look at it. Peter Reagan,:,;,�:,T:,hank you M—M.Or. 2011,,' ng Schedule A copy was gtven to the Board-,,,,.,:' "'X," x;� Meeting adjourne afl`,4*�3'0 p.m. 113 West Mountain 72701 (479)575-8323 TDD(Telecommunications Device for the Deaf)(479)521-1316 I OBITUAM V Gladys Nora gunddy,S6'pt-�'25 e. Url B- Caselman Ch-, Gladys Nor C a Will be�Atl Suft§&` In lieu of fllowers,contidbu- .,aselman, age 94, passed om this life Wednesday, c/b�Nald- 21, 2011, Tracts 106mational, E. Fayette- win 107 Ad',,, Ile, Ark. rn was bo AR 72701 'on ine,guest. 7,1917,at TO? the-4 I' modres S�p b 0-k Isl Hazel Valley, 'al,I, r k. She was Forn �the daughter Ujohn and Caselm n w- !May Schader Skelton. -She is preceded in death -,by her husband,Arthur;her .parents; and three brothers, Jee Skelton, Frank Skelton -,And Burl Skelton. ��,,'��'She is survived by ,son, "Randall and wife, Georgia, -,,'of Bella Vista; three very Special grandchildren,Karen 1,,McGee and husband, Greg, Kathy Chappell and husband, '-,Ed, and Keith Caselman and '-wife,Ana, all of Farrnington. Gladys had eight great-grand-' children and six great-great- grandchildren; one sister, ',Waggie Watts of Springdale; and brother-in-law, Robert S hern Cali elman of Sout 4ornia; as well as numerous ,nieces and nephews. Gladys and Arthur moved F ayetteville from Hazel valley in 1947,then to Farm- ington in 1973..They cele- brated t heir 72nd wedding anniversary before his death in February 2010. Gladys and Arthur were among the original members. of the Center Street Church of Christ in Fayetteville, 'where she taught Bible class and exercised her spiritual. gift of service to others. Grandma Gladys was best-known for her hospi-: tality. Many will recall with . fondness sittin around her ,9 table enjoying good food and fellowship. Her memorial service will .be 2 p.m.Monday,-Sept.26,at the Center Street Church of Christ,with Jack English and, -Robb Hadley officiating. Fayetteville,Arkansas FIREMEN'S PENSION&RELIEF FUND AFFIDAVIT RECEIVED JAN 2.8 2011 STATE OF )ss: CITY OF FAYETTEVILLE COUNTY OF )A) CITY CLERKS OFFICE do solemnly swear that I presently receive pension benefits from the Firenien's Pension and Relief Fund and I am eligible to continue receiving pension benefits as governed under state law. El I am a former firefighter for the Fayetteville Fire Department. I am the spouse/former spouse/widow of a former firefighter of the Fayetteville Fire Department,and that I have not remarried since becoming eligible for benefits. El I am an eligible dependent of a fbiTner firefighter for the Fayetteville Fire Department and have attached an affidavit verifying my school attendance. Address: la's 6 1Ae. ,FjM-RA- 'Fat wlrlaVoy)�- YAN' '7bO 7;�C Telephone: -3 54 P 0 Social Security No.: Birth date: PLEASE LISTALL BENEFICURIES BELOW(complete only forspouse,minorchildren andlorchildren under23 years of agethat are enrolled in a institute of higher education): NAME SociAL SEcuRiTy No. BiRTH DATE RELATioNsHip DATED this (953 day of Jan mar offidw seal APFIANT(Ognature) GRr=G MCGEE SUBSC!RIB*hDJM@"fAtW-W@ me,a Notary Public,this of J ctk). W NOTON COUNTY ASHI my comrMs.nion EXUreS 5-1-2014 NotiryPublite My Commission Expires: (This affidavit is required annually by the Firemen's Pension and Relief Fund Board of Trustees and must be properly completed and returned to the Fayetteville City Clerk, 113 West Mountain,Fayetteville,Arkansas,72701 by January 3 1 each year.) City Clerk Division City of Fayetteville, Arkansas ayve ev i le Sondra E. Smith, City Clerkrrreasurer ARKANSAS Lisa Branson, Deputy City Clerk Amber Wood, Deputy City Clerk Departmental Correspondence TO., Trish Leach,Accounting Summer Fallen,Accounting FROM: Sondra E. Smith, City Clerk/Treasurer DATE: September 26,2011 RE: Gladys Caselman Firemen's Pension I am forwarding this memo to you due to the death of a Firemen's Pensioner. Please stop the pension benefit for Ms. Caselman. She was receiving benefits due to being on the old Pension Plan. There are no survivors for the benefit Ms. Caselman was receiving. When the death certificate is received a copy will be forwarded to Accounting. FIREMEN'S RELIEF AND PENSION Oct Revised 10 10 2011 10 10 10 THE FOLLOWING ARE THE OBLIGATIONS OF THE FIREMEN'S RELIEF FUND FOR THE MONTH LISTED ABOVE YOU ARE HEREBY INSTRUCTED TO ISSUE CHECKS TO THE PAYEES,IN THE AMOUNTS SHOWN, AND FOR THE PURPOSE SO STATED. DATE OF Regular Mo Year To Date EMP#RETIREMENT NAME Benefit Reg Benefit Q 79 11/99 SMITH(ARMSTRONG)(DILL), PAMELA 1,812.74 18,127.40 R 177 4/04 BACHMAN,EDDIE 2,618.55 26,185.50 S 74 3/86 BAIRD,JULIA 1,802.08 18,020.80 V 63 5/72 BOLAIN,ANN 109.27 1,092.70 R 68 7/99 BONADUCE,MICHAEL 2,988.76 29,887.60 S 44 9/86 BOUDREY,BETTY MRS. 2,477.42 24,774.20 R 45 9/86 BOUDREY,HOWARD 2,089.28 20,892.80 R 49 7/88 BOUDREY,JACK 1,647.63 16,476.30 V 210 5172 CASELMAN,GLADY'S deceased Sept 21 0.00 1,180.17 R 57 5/90 CATE,ROY 1,788.90 17,889.00 V 6 4/68 CHRISTIE,ARNOLD 109.27 1,092.70 V 8 10[76 COUNTS,WAYNE 109.27 1,092.70 R 77 11/99 DILL,GARY JOHN 1,812.75 18,127.50 R 188 12/05 DOSS,MARION H 5,376.91 53,769.10 R 188 12/05 DOSS,MARION H plus 25 additional pay 731.61 7,316.10 R 11 2/76 FARRAR,ALONZO 998.86 9,988.60 R 192 4/06 FARRAR,DANNY 4,155.36 41,553.60 R 38 5/84 FRALEY,JOSEPH G. 1,768.12 17,681.20 R 170 5/03 FREEDLE,LARRY 3,816.75 38,167.50 R 170 5/03 FREEDLE,LARRY plus 25 additional pay 141.37 1,413.70 R 92 03/02 GAGE,TOMMY 2,596.69 25,966.90 V 34 6/79 HARRIS,JAMES E. 109.27 1,092.70 V 70 11/99 HARRIS,MARY RUTH 109.27 1,092.70 Q 182 10/04 JENKINS,EILEEN 1,788.75 17,887.50 R 93 06/02 JENKINS,JOHN 1,788.76 17,887.60 R 86 07/01 JOHNSON,ROBERT 3,073.47 30,734.70 R 64 4/95 JORDAN,CHARLIE 2,274.95 22,749.50 S 76 5/88 JUDY,JAN 1,647.63 16,476.30 R 37 3/84 KING,ARNOLD D. 1,522.37 15,223.70 R 54 5/89 KING,ARVIL 1,711.21 17,112.10 R 13 10/67 LAYER,MERLIN 456.22 4,562.20 R 173 12/03 LEDBETTER,DENNIS 3,775.80 37,758.00 R 51 10/88 LEWIS,CHARLES 1,647.63 16,476.30 R 40 9/85 LOGUE,PAUL D. 2,868.28 28,682.80 R 202 02/08 MAHAN,MARSHALL 4,077.28 40,772.80 R 50 9/88 MASON,LARRY 1,631.25 16,312.50 R 39 4/85 MC ARTHUR,RONALD A. 1,753.74 17,537.40 V 35 2/82 MC CHRISTIAN,DWAYNE 109.27 1,092.70 R 15 4177 MC WHORTER,CHARLES 1,334.51 13,345.10 S 209 8/81 MILLER,ALICE GAYLE 1,304.07 13,040.70 R 73 2/00 MILLER,KENNETH 3,180.02 31,800.20 R 73 2/00 MILLER,KENNETH plus 25 additional pay 170.60 1,706.00 V 42 2/86 MOORE,JAMES H. 109.27 1,092.70 V 176 4/04 MORRIS,DIXIE E. 125.66 1,256.60 R 48 7/88 MULLENS,DENNIS W. 2,191.30 21,913.00 R 184 3/05 NAPIER,LONNIE 3,518.28 35,182.80 R 196 01/02 ONEAL,TEDDY 4,120.99 41,209.90 R 46 5/88 OSBURN,TROY 1,899.66 18,996.60 R 81 02/01 PHILLIPS,LARRY 2,765.09 27,650.90 R 203 02/08 PIERCE,JOEY 3,647.18 36,471.80 R 53 2/89 POAGE,LARRY 2,346.70 23,467.00 R 186 06/05 REAGAN,PETE 3,535.71 35,357.10 V 201 A02/08 REED,JUNE 109.27 1,092.70 S 172 12/03 SCHADER,MADGE 1,386.01 13,860.10 R 41 9/85 SCHADER,TROY 1,524.99 15,249.90 R 190 04/06 SHACKELFORD,GLEN 3,647.18 36,471.80 R 36 5/76 SPRINGSTON,CARL 806.19 8,061.90 S 90 03/02 STOUT,IMOGENE W. 767.80 7,678.00 R 165 12/02 TATE,RALPH 3,668.10 36,681.00 V 65 3/66 TUNE,BILLIE SUE 136.59 1,365.90 R 71 1/00 WARFORD,THOMAS 2,502.72 25,027.20 S 207 7/68 WATTS,MAGGIE 437.09 4,370.90 R 88 01/02 WOOD,RONNIE D 3,077.15 30,771.50 S 208 9/88 WRIGHT,Barbara 1,691.34 16,913.40 119,300.21 1,194,182.27 11/1/2011 K:\Fire Pension\Pension List\Pension List 2011\FP 100111 RevisedWMI WE,THE UNDERSIGNED,DO SOLEMNLY SWEAR THAT THE ABOVE OBLIGATIONS ARE JUST AND CORRECT;THAT NO PART THEREOF HAS BEEN PREVIOUSLY PAID;THAT THE PENSION PAYMENTS SO CHARGED ARE IN ACCORDANCE WITH THE ACTIONS OF THE BOARD OF TRUSTEES OF THE FIREMEN'S RELIEF AND PENSION FUND;THAT THE SERVICES OR SUPPLIES FURNISHED,AS THE CASE MAY BE,WERE ACTUALLY RENDERED OR FURNISHED;AND THAT THE CHARGES MADE THEREFORE DO NOT EXCEED THE AMOUNT ALLOWED BY LAW OR THE CUSTOMARY CHARGE FOR SIMILAR SERVICES OR SUPPLIES SECRETARY CHAIRMAN AND PRESIDENT ACKNOWLEDGEMENT STATE OF ARKANSAS COUNTY OF WASHINGTON) SWORN TO AND SUBSCRIBED BEFORE ME THIS DAY OF NOTARY PUBLIC MY COMMISSION EXPIRES: 11/l/2011 K:\Fire Pension\Pension List\Pension List 201 1\FP 100111 Revised WM