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MINUTI•rS <br />CITY COUNCIL <br />NOVUMB>JR 24, 2004 <br />the City Administrator. The City Administrator indicated that there was a <br />discussion about the underperformance of the fund as well as a discussion <br />of the potential fora 7-8% upswing in the fund after the election. The <br />City Administrator indicated that there was no direction from him to self <br />the f1IM Fund in October. <br />Croonquist indicated that the outcome of the November election was <br />uncertain, and the decision was made to sell in October with the best <br />information at the time. Croonquist felt that the market will do well in <br />2005, unless there is another devastating impact such as 9-I I . Croonquist <br />stated that decisions are made based ou what he feels would be best for his <br />client. High performance of the Fire ReliefPensiou Puud is not the first <br />goal Croonquist noted that of the past f ve years, there were only eight <br />months where the market was decent. Li a normalized market, the pension <br />fund will have good performance. He also noted that because of its <br />obligations to the fire fighters, the pension funds must be accessible. <br />Croonquist felt that based on the way the fund is now invested, there is no <br />reason to believe that it will not do well. <br />Blesener asked how the funding decision was made to get to the 60/40 <br />split, 60% in fixed income and 40% in equity funds. Blesener also <br />questioned Croonquist's projection of 8 to ] 0% earnings. Croonquist <br />indicated that the 60/40 split was based on discussions with Vitale. He <br />also felt fairly confident that there would be an 8% return in the equity <br />side of the investment and a 3-4% return on the fixed income side. <br />Croonquist felt that, as a result, there should be a 6-8% return for the fund. <br />Allan asked about the two CD's that are being held, asking if these were i^ <br />different banks. Croonquist stated that he believed they were two separate <br />entities, but upon further examination agreed that investments exceeded <br />$100,000 in the same bank. <br />Fahey felt that a 6-8% return per year would be reasonable and felt that <br />any assumptions relative to retirements, etc. should be made based on that <br />level of return. <br />Allan asked about investments in bonds. Croonquist felt that equities will <br />provide a better return, but felt it prudent to have an investment goal of a <br />6-8% return for the pension fund. Croonquist noted that it has only been <br />the last three years that the pension fund has been unfunded, and that the <br />last five years have not been a normalized mar]<et on the equity side. <br />Croonquist acknowledged that the past decisions that were made with <br />regard to the AIM and MFS Funds were wrong, but noted that the market <br />was a tough environment and underperformed. Croonquist felt that the <br />pension fwid will return to the point where it is fully fw~ded in a <br />4 <br />