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HomeMy WebLinkAboutCity Council Committees - Fireman's Relief and Pension Board - 06/04/1997 Firemen' s Relief & Pension Board June 4, 1997 Boardmembers Present: Mayor White, Brenda Jacober, Marvin Berg, Gene Grenstad, Alternate Sam Grubbs Others Present: John Hillman, Susan Narick Mayor White called the meeting to order at 4 : 10 p.m. Approval of Minutes. Berg moved to approve the minutes of May 7 , 1997 . Grenstad seconded and the motion carried. Approval of Financial Transactions. Hillman explained the March financial transactions, noting that the balance sheet shows very little change since December. He stated that operating revenues have been consistent all year, as have salaries and wages. Narick went over the investments, market value and cash flow, noting that the cash flow diagram goes through 1998 since the Board has been considering mutual funds. Berg moved to approve the March financial transactions. Grenstad seconded and the motion carried. 1 CPI Salary Comparison. Hillman distributed copies of the comparison showing what LEOFF pays, what the city benefit is, how much the pension fund would pay, and the amount per pay period. He explained that two people have been overpaid and that deductions would be made. Berg moved to approve the figures as presented. Grenstad seconded and the motion carried. Election. It was noted that Mary Berg was the only person nominated for the Board position, therefore no election was held. Distribution of Information. Jacober explained that the distribution of back up material was brought up at the last meeting. Berg noted that Board meetings are open and that back up material can be obtained at the meetings. Grenstad suggested sending out agendas to all, so that members can attend if interested. Upon Berg' s suggestion, Jacober agreed to send a letter to each member asking whether he would like to receive the agendas prior to the Board meetings. Oppenheimer Vote. Narick noted that she had received a ballot from Oppenheimer and explained that it is for an election of trustees, including a recommendation on how to vote. She said it also contains a vote for an auditing firm with a recommendation to vote yes, an issue regarding real estate investment trusts which she recommended abstaining on, and approval of the current investment advisory committee which has not changed but simply needs to be renewed. All agreed that Narick should mark the ballot as recommended. Mutual Fund Investments. Narick noted that rather than providing a twenty-year cash flow as previously discussed, she has instead brought actuarial studies, which is a more straight forward and professional way to look at it. Hillman noted that there is an excess of nearly $500, 000 over the total pension benefit obligation. Narick explained that this $500, 000 extra does not include any investments which will mature or any cash received on investments. Narick then provided information on the Washington Mutual Investors Fund, noting that it includes Blue Chip companies and no Phillip Morris stock, that it is a very conservative fund, and that the Morningstar rating is better than current mutual fund holdings. She said it has above average return and below average risk, and that the front end fee is built into the share price. She added that safekeeping at A. G. Edwards is free, as is a Personal Mutual Fund Analysis. She noted that quarterly dividends and annual capital gains can be reinvested or received as income. She emphasized that mutual funds are more volatile than treasury securities, but said the risk is less if they are purchased to hold. Narick said that there is no cash flow problem and that Washington Mutual Investors Fund would be a good way to earn a better yield. Berg explained that the Firemen' s Relief & Pension Fund pays for the medical reimbursement costs under LEOFF 1, so there could be increased medical costs as the work force gets older, and that it would be nice to have extra money to meet those costs. Narick noted for Grenstad that an occasional dip in mutual fund market value would not affect revenue over the long term, and that if cash flow were a problem in the future, the fund has other investments which could be sold. Narick pointed out that capital gains could be taken as cash rather than reinvesting the dividends. Narick said that she has based her figures on spending $250, 000, $133 , 000 of which will be available this year from maturities in August and November, and the remainder from the sale of one of the current investments to a different fund. She suggested selling $70, 000 of FICO Strip which matures 12-27-09 . She noted that a Zero pays nothing and the maturity date is 12 years away. She stated that there are also other Zeros. (Due to a prior commitment, Mayor White excused himself at this point. ) Narick noted that the Board could buy a mutual fund, and could spend only $100, 000, but would get less shares because the fee would be a little bit more. Berg said it would be a good idea to generate more revenue and that the risk is not great. Grenstad noted that Narick has done considerable research and that the recommended Fund is a reputable one. Narick said another option would be to buy only as much as will mature this year, and it may be that the front end fee rate would be lower once $250, 000 has been spent cumulatively, i.e. $100, 000 - 2 - I at 3-1/2% and $150, 000 later at 2-1/2%. She said that $138 , 000 will mature this year and will be in cash. Berg suggested taking the cash available on maturity and reinvesting it. Narick clarified that there is enough cash available that it is not necessary to wait for the maturity date. Grenstad moved to invest $120, 000 in the Washington Mutual Investors Fund. Jacober seconded and the motion carried. Upon Grenstad's request, Narick agreed to advise the Board when another maturity comes up. All agreed that future dividends and interest should be reinvested. Fire Insurance Premium Distribution. Jacober noted receipt of a letter from the State Treasurer showing the amount of money to be distributed to cities from the tax on fire insurance premiums. Hillman noted that the amount has dropped since last year, and agreed to check further and report at the next meeting. Next Meeting. It was noted that the next meeting will be held on July 2 , and Berg stated that he will not be able to attend. Adiournment. Grenstad moved to adjourn at 4 : 55 p.m. Jacober seconded and the motion carried. Brenda Jacober, CMC City Clerk/$oardmember 3