HomeMy WebLinkAboutOrdinance 6676113 West Mountain Street
Fayetteville, AR 72701
(479) 575-8323
Ordinance: 6676
File Number: 2023-942
FAYETTEVILLE FIRE RELIEF AND PENSION PROGRAM CONSOLIDATION (LOPFI):
AN ORDINANCE TRANSFERRING ADMINISTRATION OF RETIREMENT COVERAGE FOR ELIGIBLE
MEMBERS OF THE FAYETTEVILLE FIRE RELIEF AND PENSION FUND TO THE ARKANSAS LOCAL
POLICE AND FIRE RETIREMENT SYSTEM (LOPFI) AND AUTHORIZING THE MAYOR TO ENTER INTO AN
IRREVOCABLE AGREEMENT WITH LOPFI
WHEREAS, the Board of Trustees of the Fayetteville Fire Relief and Pension Fund (Local Plan) has elected to have its
Local Plan administered by LOPFI as stated by Resolution approved and signed on July 10, 2023 (even though
mistakenly dated August 10, 2023); and
WHEREAS, the Board of Trustees has requested through that Resolution that the City of Fayetteville, Arkansas act as
its agent henceforth and agree by this ordinance to assign the Fayetteville Fire Relief and Pension Fund to be
administered by the Arkansas Local Police and Fire Retirement System.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
SECTION 1. If accepted by Arkansas Local Police and Fire Retirement System (LOPFI), the City Council of the City
of Fayetteville hereby determines that administration of the Fayetteville Fire Relief and Pension Fund (Local Plan)
shall be transferred to LOPFI under authority of Arkansas Code Annotated 24-10-101, et. seq., as amended. Such
transfer shall mean the administration of the Local Plan only and not a change in the Local Plan's benefit program
unless a benefit increase is formally approved by the City Council of the City of Fayetteville, Arkansas, by ordinance.
SECTION 2. The City Council of the City of Fayetteville hereby authorizes Mayor Jordan to enter into an irrevocable
Administrative Services Agreement which uses a fifteen (15) year amortization schedule and empowers LOPFI to
administer the Local Plan as stated in Section 1 hereof.
SECTION 3. The City Council of the City of Fayetteville hereby determines that the provisions of this Ordinance prior
to this section shall be codified into the Fayetteville Code of Ordinances as § 33.051 Local Fire and Relief Plan
Consolidated with LOFI as part of Article V Fire Department.
PASSED and APPROVED on August 15, 2023
Page 1
Ordinance: 6676
File Number.' 2023-942
Attest:
.,, i �&o-,-7
&A41-1
ton, City Cl- Treasurer
Page 2
CITY OF
FAYETTEVILLE
ARKANSAS
MEETING OF AUGUST 15, 2023
TO: Mayor Jordan and City Council
THRU:
CITY COUNCIL MEMO
2023-942
FROM: Paul Becker, Chief Financial Officer
DATE:
SUBJECT: Request by the Local Firemen's Pension and Relief Fund Board of Trustees for the
City Council to approve the Consolidation of the Local Plan with LOPFI.
RECOMMENDATION:
The Administration recommends the City Council approve to consolidate the Local Firemen's Pension and
Relief Fund with LOPFI.
BACKGROUND:
For over 15 years the Pension Review Board has reported the Local Fire Pension Fund to be actuarially
unsound based on annual reports conducted by the firm of Osborn, Carreiro & Associates. Until recently,
interest earnings and revenue sources, including a dedicated property tax approved by the citizens of
Fayetteville, provided sufficient resources to pay pensioners the total amount of current pension benefits.
However, available assets have been decreasing as benefit payments have exceeded investment earnings. In
2021 the assets available in the Local Fire Pension Fund fell below $2,000,000, placing additional legal
restrictions on investments. It is clear that in the near future, current pension benefits cannot be maintained
due to reduced assets and restrictions on investment options.
The Mayor reports the status of the Local Pension Funds to the City Council annually as required by law. The
Mayor indicated during this year's report that he would continue to monitor the conditions of the funds.
At the April 27, 2023 meeting of the Local Fire Pension Board, the feasibility of consolidation was reviewed,
and the Trustees voted to pay for an actuarial study to be performed by the LOPFI actuaries (which is a
required first step in the process) and to consider consolidation based on that study.
That study was completed and discussed at a subsequent meeting of the Local Fire Pension Board which took
place on July 15, 2023. At that meeting, the Board unanimously voted to request the City Council approve a
consolidation with LOPFI.
The actuarial report that was conducted indicated that if the consolidation is approved, the current revenues
remitted to the City could pay the full costs of the plan in 2024. This is because the actuarial report is based on
a 15-year amortization period and the LOPFI investment earning that the Local Fund would earn is projected at
7.25%.
DISCUSSION:
Mailing address:
113 W. Mountain Street www.fayetteville-ar.gov
Fayetteville, AR 72701
If the plan is sent to LOPFI for administration, full irrevocable control of the plan would be assumed by LOPFI
This is a risk since LOPFI may not earn the projected investment earnings which would result in the City
having to pay amounts over the current revenue stream being earned by the Local Fire Pension Fund.
However, consolidation would guarantee pension benefits to the pension members and administration tasks
would be transferred to LOPFI.
Based on the actuarial report, the administration is recommending this consolidation be approved. At this time,
current pension amounts are being requested without an automatic COLA (there is no COLA at this time for
Fayetteville Local Plans).
This is to ensure that current revenues are sufficient to pay current benefits. In the future, if the costs of the
plan are sufficiently covered, a COLA can be considered based on plan performance.
BUDGET/STAFF IMPACT:
Based on the actuarial study no additional costs would be incurred in 2024.
ATTACHMENTS: 2023-942 SRF, Administrative Services Agreement for consolidation from LOPFI, Board of
Trustees Resolution for consolidation, Actuarial Report for Firemen's Pension and Relief Fund, Mayor's report
of Local Pension Report 2022 given Jan 2023
Mailing address:
113 W. Mountain Street www.fayetteville-ar.gov
Fayetteville, AR 72701
City of Fayetteville, Arkansas 113 West Mountain Street
Fayetteville, AR 72701
(479) 575-8323
Legislation Text
File #: 2023-942
Request by the Local Firemen's Pension and Relief Fund Board of Trustees for the City Council
to approve the Consolidation of the Local Plan with LOPFI.
AN ORDINANCE TRANSFERRING ADMINISTRATION OF RETIREMENT COVERAGE FOR
ELIGIBLE MEMBERS OF THE FAYETTEVILLE FIRE RELIEF AND PENSION FUND TO THE
ARKANSAS LOCAL POLICE AND FIRE RETIREMENT SYSTEM (LOPFI) AND AUTHORIZING
THE MAYOR TO ENTER INTO AN IRREVOCABLE AGREEMENT WITH LOPFI
WHEREAS, the Board of Trustees of the Fayetteville Fire Relief and Pension Fund (Local Plan) has
elected to have its Local Plan administered by LOPFI as stated by Resolution approved and signed on
July 10, 2023 (even though mistakenly dated August 10, 2023); and
WHEREAS, the Board of Trustees has requested through that Resolution that the City of Fayetteville,
Arkansas act as its agent henceforth and agree by this ordinance to assign the Fayetteville Fire Relief
and Pension Fund to be administered by the Arkansas Local Police and Fire Retirement System.
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
SECTION 1. If accepted by Arkansas Local Police and Fire Retirement System (LOPFI), the City
Council of the City of Fayetteville hereby determines that administration of the Fayetteville Fire Relief
and Pension Fund (Local Plan) shall be transferred to LOPFI under authority of Arkansas Code
Annotated 24-10-101, et. seq., as amended. Such transfer shall mean the administration of the Local
Plan only and not a change in the Local Plan's benefit program unless a benefit increase is formally
approved by the City Council of the City of Fayetteville, Arkansas, by ordinance.
SECTION 2. The City Council of the City of Fayetteville hereby authorizes Mayor Jordan to enter into
an irrevocable Administrative Services Agreement which uses a fifteen (15) year amortization schedule
and empowers LOPFI to administer the Local Plan as stated in Section 1 hereof.
SECTION 3. The City Council of the City of Fayetteville hereby determines that the provisions of this
Ordinance prior to this section shall be codified into the Fayetteville Code of Ordinances as § 33.051
Local Fire and Relief Plan Consolidated with LOFI as part of Article V Fire Department.
Page 1
Paul Becker
Submitted By
City of Fayetteville Staff Review Form
2023-942
Item ID
8/15/2023
City Council Meeting Date - Agenda Item Only
N/A for Non -Agenda Item
7/20/2023 CHIEF FINANCIAL OFFICER (110)
Submitted Date Division / Department
Action Recommendation:
The Administration recommends the City Council approve to consolidate the Local Firemen's Pension and Relief
Fund with LOPFI.
Account Number
Project Number
Budgeted Item? No
Does item have a direct cost? No
Is a Budget Adjustment attached? No
Purchase Order Number:
Change Order Number:
Original Contract Number:
Comments:
Budget Impact:
Fund
Project Title
Total Amended Budget
$ -
Expenses (Actual+Encum)
$ -
Available Budget
Item Cost
$ -
Budget Adjustment
$ -
Remaining Budget
V20221130
Previous Ordinance or Resolution #
Approval Date:
A� LOPFI
�OQi
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement (Agreement) is entered into by and between the
ARKANSAS LOCAL POLICE AND FIRE RETIREMENT SYSTEM (LOPFI) and the CITY
OF FAYETTEVILLE for the benefit of its FIRE Relief and Pension Fund (Local Plan).
PARTIES
The City of FAYETTEVILLE, a political subdivision, currently has and administers a Local
Plan.
LOPFI is an agency created by statute (Arkansas Code Annotated 24-10-101, et. seq., as
amended) for the purpose of providing a statewide retirement system with pooled administration.
The Mayor and City Council of FAYETTEVILLE desire to enter into an irrevocable Agreement
with LOPFI to administer its Local Plan and in consideration of the mutual obligations
hereinafter enumerated the parties agree to all of the following:
This Agreement is made pursuant to the authority of A.C.A. 24-10-101, et. seq.,
as amended.
2. This Agreement shall be effective and permanent upon the executed date entered
Con page two of this Agreement. a
M_ 3. This Agreement is for the administration of the Local Plan and its benefit OJ
structure shall not change unless a benefit increase is formally approved by the
City of FAYETTEVILLE by Ordinance.
4. The actuaries for LOPFI have computed the initial employer contribution rate(s)
to be paid by the City of FAYETTEVILLE to support the benefits paid by the
Local Plan. The City of FAYETTEVILLE agrees to always remit payment at the
level established by the actuaries for LOPFI and in the monthly timeframe set by
LOPFI.
5. Benefits and any member refunds shall be paid effective the first business day of
each month and in accordance with LOPFI procedures and guidelines.
6. LOPFI covenants and agrees to provide the following services:
a. investment of Local Plan assets and the award of annual interest to the
employer reserve account at the end of each fiscal year consistent with the
interest awarded to other LOPFI employer accounts;
b. process retirement applications including determination of eligibility,
calculation of service credit and benefit payment amounts, payment of benefits
to eligible benefit recipients, and satisfaction of state and federal tax
withholding requirements, all in accordance with LOPFI procedures and
guidelines; and
/y O^
a0� LOPFI `�a
�O11 LOPFI lOAk
r
O
M
22
City of FAYETTEVILLE
Page 2 of 2
The City of FAYETTEVILLE covenants and agrees as follows:
a. upon execution of this Agreement all Local Plan assets and records shall be
promptly transferred to LOPFI. In the sole discretion of LOPFI certain
investments may be allowed to mature to avoid penalties;
b. all employer and applicable employee contributions shall be remitted to LOPFI
in time to be recorded by the tenth (101h) day of each month for each reporting
period. Remittance shall be made in the manner and amounts prescribed by
LOPFI, which shall include the use of LOPFI's electronic reporting and
LOPFI's e-Payment;
c. the City of FAYETTEVILLE shall execute all documents required by LOPFI to
aid in the administrative process;
d. all members and beneficiaries of the Local Plan have been deemed eligible
pursuant to the standards prevailing at the time of the determination of
eligibility. The parties agree that LOPFI is bound by any determination of
eligibility or ineligibility made by the board of trustees of the Local Plan as
long as such determination(s) conform to state law. The Local Plan and the
City of FAYETTEVILLE indemnify and hold LOPFI harmless for any
eligibility decisions made by the Local Plan.
the City of FAYETTEVILLE has disclosed to LOPFI all pending claims,
actions, suits, and threatened liabilities to the Local Plan.
8. FAYETTEVILLE Fire Relief and Pension Fund board of trustees' Resolution
dated �,,�. %M , 2023, and Ordinance No. 6676 , dated
2023, of the City of FAYETTEVILLE, are incorporated by
refere ce herein as though set forth word for word.
This irrevocable Agreement is executed this 1_T)_ day of , 2023.
CITY OF FAYETTEVILLE, ARKAN
. BY: /
Mayor eld Jordan
ATTEST:
City Clerk Trea rer Kara P torl' r
LOPFI BOLD O'F•TkUSTEES
ATTEST: (/
BY: /'2W,�� �->
PFI Board Chairman
a
O
J
LOPFI
Resolution to Assign Local Plan Administration to LOPFI
Whereas, the Board of Trustees (the Board) of the FAYETTEVILLE FIRE Relief and Pension
Fund (Local Plan), desires to assign administration of the Local Plan to the Arkansas Local
Police and Fire Retirement System (LOPFI) pursuant to Arkansas Code Annotated 24-10-101, et.
seq., as amended; and
Whereas, such action shall not change the benefit structure unless a benefit increase is formally
approved by the governing body of FAYETTEVILLE, Arkansas, by Ordinance; and
Whereas, the Board received and reviewed the latest actuarial report from LOPFI, which states
the initial required employer contribution rate(s); and
Whereas, the Board finds it is in the best interest of the Local Plan and its participants to have
LOPFI administer the Local Plan; therefore,
BE IT RESOLVED, the Board hereby elects to assign administration of the Local Plan to
LOPFI.
BE IT FURTHER RESOLVED the Board requests the CITY OF FAYETTEVILLE, a political
subdivision of the State of Arkansas, to act as its agent henceforth.
BE IT FURTHER RESOLVED the Board understands any agreement to administer the Local
Plan by LOPFI shall be entered into by and with the governing body of FAYETTEVILLE,
Arkansas, as the Board's agent, and that such agreement shall dissolve said Board.
CERTIFICATION
� tip
We certify this Resolut' curately states the action of said Board. Approved this day of
LiAiJA.L 1 .2023/ 1
Sec/Treasurer
Member
Member 'Ale
Member
Member
Member �Li
GRS
May 10, 2023
Mr. David B. Clark, Executive Director
Arkansas Local Police and Fire Retirement System
620 West 3rd, Suite 200
Little Rock, Arkansas 72201-2212
Re: Actuarial Analysis of Proposed Contribution Rates for the
Fayetteville Firemen's Pension and Relief Fund
Dear Mr. Clark:
800.521.0498 1 P:248.799.9000 1 www,grsconsulting.com
As requested, enclosed are the results of actuarial valuations which determine the employer contribution
rates which would result from having the Fayetteville Fire Pension and Relief Fund administered by the
Arkansas Local Police and Fire Retirement System (LOPFI).
Please call if you have any questions or comments.
Respectfully submitted,
Gabriel, Roeder, Smith & Company
"� t:� 6WA" ,
Heidi G. Barry, ASA, FCA, MAAA
Casey T. Ahlbrandt-Rains, ASA, MAAA
H G B/CTA:sc
Enclosure
Arkansas Local Police and Fire Retirement System
Fayetteville Firemen's Pension and Relief Fund
Actuarial Valuation of Proposals Under Consideration
as of December 31, 2022
Requested By: Mr. David B. Clark, Executive Director
Arkansas Local Police and Fire Retirement System
Date: May 10, 2023
Submitted By: Heidi G. Barry, ASA, FCA, MAAA and
Casey T. Ahlbrandt-Rains, ASA, MAAA
Gabriel, Roeder, Smith & Company
Submitted in this report are the results of actuarial valuations which determine the employer contribution
rates which would result from having the Fayetteville Firemen's "closed plan" (the Local Pension and
Relief Fund) administered by the Arkansas Local Police and Fire Retirement System (LOPFI).
The date of the study was as of December 31, 2022. This supplemental valuation does not predict the
result of the December 31, 2023 valuation or of any other future actuarial valuations. (Future activities
can affect future valuation results in an unpredictable manner.) Rather, the supplemental valuation gives
an indication of the probable effect of the proposed changes on future valuations without comment on
the complete end result of the future valuations.
In accordance with LOPFI Board policy, the employer contribution rates established by this valuation
report are valid for purposes of joining the System until October 31, 2023.
This report is intended to describe the financial effect of the proposed plan changes. No statement in this
report is intended to be interpreted as a recommendation in favor of the changes, or in opposition to
them. GRS is not responsible for unauthorized use of this report.
Heidi G. Barry and Casey T. Ahlbrandt-Rains are Members of the American Academy of Actuaries (MAAA)
and meet the Qualification Standards of the American Academy of Actuaries required to render the
actuarial opinions contained herein. The signing actuaries are independent of the plan sponsor.
The calculations are based upon assumptions regarding future events, which may or may not materialize.
They are also based upon present and proposed plan provisions that are outlined in the report. If you
have reason to believe that the assumptions that were used are unreasonable, that the plan provisions
are incorrectly described, that important plan provisions relevant to this proposal are not described, or
that conditions have changed since the calculations were made, you should contact the authors of this
report prior to relying on information in the report.
This report was prepared using our proprietary valuation model and related software which, in our
professional judgment, has the capability to provide results that are consistent with the purposes of the
valuation, and has no material limitations or known weaknesses. We performed tests to ensure that the
model reasonably represents that which is intended to be modeled.
4G R S 5/10/2023 1
Arkansas Local Police and Fire Retirement System
Fayetteville Firemen's Pension and Relief Fund
Actuarial Valuation of Proposals Under Consideration
as of December 31, 2022
If you have reason to believe that the information provided in this report is inaccurate, or is in any way
incomplete, or if you need further information in order to make an informed decision on the subject
matter of this report, please contact the authors of the report prior to making such decision.
In the event that more than one plan change is being considered, it is very important to remember that
the results of separate actuarial valuations cannot generally be added together to produce a correct
estimate of the combined effect of all of the changes. The total can be considerably greater than the sum
of the parts due to the interaction of various plan provisions with each other, and with the assumptions
that must be used.
4G w
5/10/2023
Arkansas Local Police and Fire Retirement System
Fayetteville Firemen's Pension and Relief Fund
Actuarial Valuation of Proposals Under Consideration
as of December 31, 2022
The actuarial methods and assumptions were the same as those in use for the regular valuation as of
December 31, 2022. In particular, the economic assumptions used in the supplemental actuarial valuation
were net investment return of 7.25% per year, wage inflation of 3.00% per year, and price inflation of
2.25% per year.
Member information is summarized in the following table:
December 31, 2022
Valuation Data
Paid Volunteer
Members:
Retired Lives:
Number
38 2
Total Monthly Benefits
$100,966 $219
Active Members:
Number
0 0
Average Age
N/A N/A
Average Service
N/A N/A
Major Local Fund Benefit Provisions:
Voluntary Retirement— Eligibility at 20 years of service regardless of age.
Paid base benefit: 90% of Final Salary per year (minimum $4,200 per month); 10-Year DROP
Volunteer base benefit: $1,200 per year.
Member Contributions— Member contribution rate 6% of pay for paid members and $12 per year for
volunteer members. Member contributions are refundable without interest if termination of employment
occurs before monthly benefits are payable.
Automatic Post -Retirement Benefit Increases — None.
Death Benefit— None.
4G R S 5/10/2023 3
Arkansas Local Police and Fire Retirement System
Fayetteville Firemen's Pension and Relief Fund
Actuarial Valuation of Proposals Under Consideration
as of December 31, 2022
Paid Results
Asset Information:
Asset information for the Fayetteville Firemen's Pension and Relief Fund was derived from the Fund's
annual financial report provided to us. The date of the report was December 31, 2022. The reported
market value of assets $1,702,542 for the Local Fund, as of December 31, 2022, was used in computing
the employer contribution rates. For the purposes of our calculation, we assumed the $1,702,542 Local
Fund balance was $1,700,153 for paid members and $2,389 for volunteer members. The computed
employer contribution rates are sensitive to changes in overall asset value. The actual amount transferred
to LOPA will depend on the market value of Local Fund assets when they are actually liquidated and may
differ substantially from the value as of December 31, 2022. This will likely impact the actual rate
computed in the next valuation of the combined plans.
Results:
No COLA
3% COLA
Actuarial Accrued Liabilities (AAL)
Active Members
$
-
$
-
Benefit Recipients
11,458,453
14,700,533
Total AAL
$
11,458,453
$
14,700,533
Assets
Available to Fund AAL
$
1,700,153
$
1,700,153
Member DROP Balance
-
-
Total Assets
$
1,700,153
$
1,700,153
Unfunded AAL
$
9,758,300
$
13,000,380
4G; 5/10/2023
Arkansas local Police and Fire Retirement System
Fayetteville Firemen's Pension and Relief Fund
Actuarial Valuation of Proposals Under Consideration
as of December 31, 2022
Paid Results
If the Local Fund becomes administered by LOPFI, the monthly employer contribution for calendar years
2023 and 2024 would be as follows:
Computed Employer Contribution
(15-Year Amortization)
COLA 2023 2024
0.00% $69, 243 $71, 320
3.00 % $93, 354 $96,155
These monthly contributions are in addition to the contribution determined for LOPFI members only.
These are the estimated contributions needed to pay off the unfunded accrued liability associated with
Closed Plan benefits and would be deposited in the Local Fund Employer Accumulation Account. The
contributions are assumed to increase with 3.00% wage inflation annually.
The Plan received $788,720 from Local Millage Tax, $217,164 from State Insurance Premium Tax, and
$108,582 in additional state allocations. The total from these revenue sources was split for this valuation
such that $1,112,902 was allocated to paid members and $1,564 was allocated to volunteer members. It
is expected that similar future inflows will partially or fully offset employer contributions.
Readers of this report may have an expectation that the contribution shown above will be paid for 15
years and the employer will be relieved of all liability at that time. That is not the case; as long as benefits
are payable, there is a possibility that employer contributions will be needed.
4G R S 5/10/2023
Arkansas Local Police and Fire Retirement System
Fayetteville Firemen's Pension and Relief Fund
Actuarial Valuation of Proposals Under Consideration
as of December 31, 2022
No COLA, 15-Year Amortization of UAL
Projected Cash Flow - Paid Members
Year Ended
December 31
Benefits
Contributions'
Investment
Earnings
Assets (MV)Z
2022
$ 1,700,153
2023
$
1,204,248
$ 948,410
$ 114,149
1,558,464
2024
1,188,043
855,843
101,157
1,327,421
2025
1,169,709
881,518
85,974
1,125,204
2026
1,149,113
907,964
72,989
957,044
2027
1,126,149
935,203
62,585
828,682
2028
1,100,734
963,259
55,183
746,391
2029
1,072,822
992,157
51,240
716,965
2030
1,042,412
1,021,921
51,250
747,725
2031
1,009,559
1,052,579
55,742
846,487
2032
974,379
1,084,156
65,280
1,021,544
2033
937,051
1,116,681
80,460
1,281,634
2034
897,797
1,150,181
101,907
1,635,926
2035
856,874
1,184,687
130,280
2,094,019
2036
814,555
1,220,227
166,265
2,665,956
2037
771,101
1,256,834
210,582
3,362,271
2038
726,768
1,294,539
263,986
4,194,028
2039
681,803
-
279,784
3,792,009
2040
636,442
252,253
3,407,820
2041
590,940
226,020
3,042,901
2042
545,562
201,180
2,698,518
2043
500,590
177,814
2,375,742
2044
456,318
155,989
2,075,413
2045
413,045
135,757
1,798,125
2046
371,065
117,148
1,544,208
2047
330,657
100,178
1,313,730
2048
292,066
84,843
1,106,507
2049
255,521
71,121
922,107
2050
221,245
58,973
759,835
2051
189,451
48,341
618,725
2052
160,324
39,147
497,548
2053
134,007
31,299
394,840
2054
110,565
24,688
308,964
2055
89,983
19,195
238,176
2056
72,177
14,697
180,696
2057
57,005
11,070
134,761
2058
44,278
8,193
98,676
2059
33,777
5,951
70,850
2060
25,268
4,237
49,819
2061
18,508
2,953
34,263
2062
13,251
2,012
23,025
C;S 5/10/2023 6
Arkansas Local Police and Fire Retirement System
Fayetteville Firemen's Pension and Relief Fund
Actuarial Valuation of Proposals Under Consideration
as of December 31, 2022
No COLA, 15-Year Amortization of UAL
Projected Cash Flow — Paid Members
(Concluded)
Projected
Year Ended
Investment
December3l
Benefits
Contributions' Earnings
Assets(MV)Z
2063
$ 9,263
$ $ 1,339
$ 15,101
2064
6,313
870
9,658
2065
4,191
- 551
6,018
2066
2,707
340
3,651
2067
1,700
204
2,155
2068
1,036
- 119
1,238
2069
614
68
692
2070
352
38
378
2071
197
- 20
201
2072
107
- 11
105
2073
56
6
54
2074
30
- 3
27
2075
15
- 1
14
2076
8
1
7
2077
4
- -
3
2078
2
1
2079
1
2080
- -
-
1 Local Plan contributions only; $69,243 monthly in 2023 in addition to the LOPFI rate (assumed to increase
yearly by 3.00% wage inflation thereafter). The first -year contribution assumes that the City will be under LOPFI
administration for the last seven (7) months of 2023. The last year contribution, based on a 15-year
amortization schedule, would be applied to calendar year 2038.
2 Reported market value of assets. Assets are projected at the assumed rate of return of 7.25% per year.
Note: The actual future contributions for this group are affected by investment return, number of
active members and life expectancy. This projection does not show the effect on future employer
contributions of differences between actual and assumed future experience. These differences can
have a significant effect on these results.
4 G V
5/10/2023 7
Arkansas local Police and Fire Retirement System
Fayetteville Firemen's Pension and Relief Fund
Actuarial Valuation of Proposals Under Consideration
as of December 31, 2022
3% COLA, 15-Year Amortization of UAL
Projected Cash Flow - Paid Members
Projected
Year Ended
Investment
December 31
Benefits
Contributions'
Earnings
Assets (MV)2
2022
$ 1,700,153
2023
$
1,222,311
$ 1,117,191
$ 119,517
1,714,550
2024
1,242,040
1,153,861
121,164
1,747,535
2025
1,259,558
1,188,477
124,165
1,800, 619
2026
1,274,502
1,224,132
128,751
1,879,000
2027
1,286,503
1,260,855
135,314
1,988,666
2028
1,295,193
1,298,681
144,303
2,136,457
2029
1,300,221
1,337,642
156,226
2,330,103
2030
1,301,266
1,377,771
171,657
2,578,265
2031
1,298,062
1,419,104
191,235
2,890,542
2032
1,290,414
1,461,677
215,664
3,277,469
2033
1,278,207
1,505,527
245,713
3,750,502
2034
1,261,402
1,550,693
282,215
4,322,008
2035
1,240,024
1,597,214
326,067
5,005,265
2036
1,214,143
1,645,130
378,232
5,814,485
2037
1,183,855
1,694,484
439,737
6,764,850
2038
1,149,266
1,745,319
511,681
7,872,584
2039
1,110,505
-
531,211
7,293,290
2040
1,067,722
490,736
6,716,303
2041
1,021,126
450,564
6,145,741
2042
970,996
410,983
5,585,729
2043
917,684
372,281
5,040,326
2044
861,619
334,736
4,513,443
2045
803,309
298,614
4,008,749
2046
743,315
264,161
3,529,594
2047
682,239
231,597
3,078,952
2048
620,693
201,118
2,659,377
2049
559,319
172,884
2,272,942
2050
498,820
147,022
1,921,145
2051
439,951
123,614
1,604,807
2052
383,482
102,691
1,324,016
2053
330,150
84,233
1,078,098
2054
280,568
68,169
865,700
2055
235,190
54,387
684,897
2056
194,310
42,735
533,321
2057
158,068
33,036
408,289
2058
126,458
25,097
306,928
2059
99,363
18,713
226,279
2060
76,564
13,678
163,393
2061
57,760
9,789
115,422
2062
42,598
6,851
79,675
4 G V
5/10/2023
Arkansas Local Police and Fire Retirement System
Fayetteville Firemen's Pension and Relief Fund
Actuarial Valuation of Proposals Under Consideration
as of December 31, 2022
3% COLA, IS -Year Amortization of UAL
Projected Cash Flow — Paid Members
(Concluded)
Year Ended
December3,
Benefits Contributions'
Investment
Earnings
Assets(MV)Z
2063
$
30,669 $ -
$ 4,684
$ 53,690
2064
21,531 -
3,126
35,285
2065
14,721 -
2,034
22,598
2066
9,794 -
1,290
14,093
2067
6,334 -
796
8,555
2068
3,979 -
479
5,055
2069
2,426 -
280
2,909
2070
1,436 -
160
1,633
2071
825 -
89
897
2072
462 -
49
483
2073
252 -
26
257
2074
136 -
14
135
2075
73 -
7
69
2076
38 -
4
35
2077
20 -
2
17
2078
10 -
1
7
2079
5 -
3
2080
2 -
1
2081
1 -
2082
1 Local Plan contributions only; $93,354 monthly in 2023 in addition to the LOPFI rate (assumed to increase
yearly by 3.00% wage inflation thereafter). The first -year contribution assumes that the City will be under LOPFI
administration for the last seven (7) months of 2023. The last year contribution, based on a 15-year
amortization schedule, would be applied to calendar year 2038.
2 Reported market value of assets. Assets are projected at the assumed rate of return of 7.25% per year.
Note: The actual future contributions for this group are affected by investment return, number of
active members and life expectancy. This projection does not show the effect on future employer
contributions of differences between actual and assumed future experience. These differences can
have a significant effect on these results.
4 G V
5/10/2023 9
Arkansas Local Police and Fire Retirement System
Fayetteville Firemen's Pension and Relief Fund
Actuarial Valuation of Proposals Under Consideration
as of December 31, 2022
Volunteer Results
Asset Information:
Asset information for the Fayetteville Firemen's Pension and Relief Fund was derived from the Fund's
annual financial report provided to us. The date of the report was December 31, 2022. The reported
market value of assets $1,702,542 for the Local Fund, as of December 31, 2022, was used in computing
the employer contribution rates. For the purposes of our calculation, we assumed the $1,702,542 Local
Fund balance was $1,700,153 for paid members and $2,389 for volunteer members. The computed
employer contribution rates are sensitive to changes in overall asset value. The actual amount transferred
to LOPFI will depend on the market value of Local Fund assets when they are actually liquidated and may
differ substantially from the value as of December 31, 2022. This will likely impact the actual rate
computed in the next valuation of the combined plans.
Results:
No COLA
3% COLA
Actuarial Accrued Liabilities (AAL)
Active Members
$
-
$
-
Benefit Recipients
16,101
18,651
Total AAL
$
16,101
$
18,651
Assets
Available to Fund AAL
$
2,389
$
2,389
Member DROP Balance
-
-
Total Assets
$
2,389
$
2,389
Unfunded AAL
$
13,712
$
16,262
4;v 5/10/2023 10
Arkansas Local Police and Fire Retirement System
Fayetteville Firemen's Pension and Relief Fund
Actuarial Valuation of Proposals Under Consideration
as of December 31, 2022
Volunteer Results
If the Local Fund becomes administered by LOPFI, the monthly employer contribution for calendar years
2023 and 2024 would be as follows:
Computed Employer Contribution
(15-Year Amortization)
COLA
2023
2024
0.00%
$102
$105
3.00%
$122
$125
These monthly contributions are in addition to the contribution determined for LOPFI members only.
These are the estimated contributions needed to pay off the unfunded accrued liability associated with
Closed Plan benefits and would be deposited in the Local Fund Employer Accumulation Account. The
contributions are assumed to increase with 2.25% price inflation annually.
The Plan received $788,720 from Local Millage Tax, $217,164 from State Insurance Premium Tax, and
$108,582 in additional state allocations. The total from these revenue sources was split for this valuation
such that $1,112,902 was allocated to paid members and $1,564 was allocated to volunteer members. It
is expected that similar future inflows will partially or fully offset employer contributions.
Readers of this report may have an expectation that the contribution shown above will be paid for 15
years and the employer will be relieved of all liability at that time. That is not the case; as long as benefits
are payable, there is a possibility that employer contributions will be needed.
4G v
5/10/2023 11
Arkansas Local Police and Fire Retirement System
Fayetteville Firemen's Pension and Relief Fund
Actuarial Valuation of Proposals Under Consideration
as of December 31, 2022
No COLA, 15-Year Amortization of UAL
Projected Cash Flow — Volunteer Members
Projected
Year Ended
Investment
December 31
Benefits
Contributions'
Earnings
Assets (MV)Z
2022
$ 2,389
2023
$ 2,574
$ 1,368
$ 130
1,313
2024
2,465
1,255
52
155
2025
2,339
1,283
(26)
(927)
2026
2,197
1,312
(99)
(1,911)
2027
2,038
1,341
(163)
(2,771)
2028
1,866
1,372
(219)
(3,484)
2029
1,684
1,402
(263)
(4,029)
2030
1,496
1,434
(294)
(4,385)
2031
1,307
1,466
(312)
(4,538)
2032
1,122
1,499
(316)
(4,476)
2033
947
1,533
(304)
(4,194)
2034
784
1,567
(276)
(3,686)
2035
637
1,603
(233)
(2,954)
2036
506
1,639
(174)
(1,995)
2037
393
1,676
(99)
(811)
2038
298
1,713
(8)
596
2039
221
-
35
410
2040
159
24
276
2041
112
16
180
2042
76
10
114
2043
50
6
70
2044
33
4
41
2045
20
2
24
2046
12
1
13
2047
7
1
7
2048
4
3
2049
2
1
2050
1
2051
1 The Local Plan contributions only; $102 monthly in 2023 in addition to the LOPFI rate (assumed to increase
yearly by 2.25% price inflation thereafter). The first -year contribution assumes that the City will be under LOPFI
administration for the last seven (7) months of 2023. The last year contribution, based on a 15-year
amortization schedule, would be applied to calendar year 2038.
2 Reported market value of assets. Assets are projected at the assumed rate of return of 7.25% per year.
Assets are projected to be below $0 during the projection period. Local Plan assets are assumed to be
pooled with LOPFI assets. LOPFI would load the shortage until the financing period is completed and LOPFI
has been paid back.
Note: The actual future contributions for this group are affected by investment return, number of active
members and life expectancy. This projection does not show the effect on future employer contributions
of differences between actual and assumed future experience. These differences can have a significant
effect on these results.
4Gw5/10/2023 12
Arkansas Local Police and Fire Retirement System
Fayetteville Firemen's Pension and Relief Fund
Actuarial Valuation of Proposals Under Consideration
as of December 31, 2022
3% COLA, 15-Year Amortization of UAL
Projected Cash Flow - Volunteer Members
Year Ended
December 31
Benefits
Contributions'
Investment
Earnings
Assets (MV)Z
2022
$ 2,389
2023
$ 2,613
$ 1,507 $
134
1,417
2024
2,578
1,499
64
403
2025
2,519
1,533
(6)
(589)
2026
2,437
1,568
(74)
(1,532)
2027
2,329
1,603
(137)
(2,395)
2028
2,195
1,639
(193)
(3,145)
2029
2,040
1,676
(241)
(3,750)
2030
1,867
1,713
(277)
(4,181)
2031
1,681
1,752
(301)
(4,410)
2032
1,487
1,791
(309)
(4,415)
2033
1,292
1,832
(301)
(4,176)
2034
1,102
1,873
(275)
(3,680)
2035
921
1,915
(231)
(2,917)
2036
754
1,958
(169)
(1,882)
2037
604
2,002
(87)
(570)
2038
472
2,047
15
1,020
2039
360
-
61
721
2040
267
43
497
2041
193
29
333
2042
135
19
218
2043
92
13
138
2044
61
8
85
2045
39
5
51
2046
24
3
30
2047
14
2
17
2048
9
1
9
2049
5
5
2050
3
2
2051
1
1
2052
1
2053
1 The Local Plan contributions only; $122 monthly in 2023 in addition to the LOPFI rate (assumed to increase
yearly by 2.25% price inflation thereafter). The first -year contribution assumes that the City will be under LOPFI
administration for the last seven (7) months of 2023. The last year contribution, based on a 15-year
amortization schedule, would be applied to calendar year 2038.
2 Reported market value of assets. Assets are projected at the assumed rate of return of 7.25% per year.
Assets are projected to be below $0 during the projection period. Local Plan assets are assumed to be
pooled with LOPFI assets. LOPFI would load the shortage until the financing period is completed and LOPFI
has been paid back.
Note: The actual future contributions for this group are affected by investment return, number of active
members and life expectancy. This projection does not show the effect on future employer contributions
of differences between actual and assumed future experience. These differences can have a significant
effect on these results.
4 GW
5/10/2023 13
LOCAL PENSION FUND REPORT 2022
In keeping with statutory requirements, I am
presenting this report for 2022 on the local Police and
Fire Retirement and Relief Funds for the City of
Fayetteville. Both of these plans were closed, by law,
in 1983 and there are no longer any active working
members remaining. There are currently 3 8 Police and
39 fire retirees and beneficiaries in the system.
At December 2022 projected expenses from the
fire pension fund were approximately $1.3 million as
compared to fund revenues of $1.1 million. Projected
police pension fund expenses were approximately
$1.5 million as compared to fund revenues in excess
of $1.1 million. This is before adjusting investments
to current market value.
Actuarial evaluations are the responsibility of the
State of Arkansas Fire and Police Pension Review
Board. The last evaluations completed were as of May
2022 for the year ending December 31, 2021. Based
on those evaluations the total pension liability of the
Police and Fire Funds were $15.3 million and $13.8
million respectively. The net pension liabilities for
these funds were approximately $8.7 million for
police and $11.9 million for fire. In the annual reports
issued by the Arkansas Pension Review Board neither
the fire nor police pension fund were found to be
actuarially sound pursuant to established financial
tests.
The Fire Pension Fund has been classified as
"projected insolvent "since 2009. The Fire Pension
Board has been discussing the unstable condition of
the fund and possible alternatives since that time.
No specific request was made by the Fire Pension
Board to the City Council in 2020.
The Police Pension Fund is also considered
actuarially unsound but not in immediate danger of
becoming insolvent. The Police Pension Board is also
aware of the Police Pension Fund status and has been
considering options that would guarantee long term
solvency.
I will continue to monitor these pension funds in
the future and keep you apprised of any new
developments if necessary.
LOPFI
LOCAL POLICE & FIRE RETIREMENT SYSTEM
August 30, 2023
Kara Paxton, City Clerk Treasurer
Fayetteville Fire Pension Fund
113 W. Mountain
Fayetteville, AR 72701
Via: UPS Overnight Service
Dear Ms. Paxton:
620 W. 3rd, Suite 200
Little Rock, Arkansas 72201-2223
Telephone: 501.682.1745
email: info@lopfi-prb.com
website: www.lopfi-prb.com
Enclosed is your copy of the LOPFI Board -approved Administrative Services
Agreement. To complete the consolidation process the following items are needed:
In order to verify data, please have each participant complete the data
form that was provided during our July 10, 2023 visit with the Local Plan
board of trustees. Keep in mind:
• The form includes areas for state and federal* tax withholding from
the monthly benefit. Even if a person does not want taxes withheld,
these areas must be completed instructing LOPFI of that decision.
This form also provides an area for direct deposit information,
which will be used to pay the monthly benefit to the participant. *A
Form W-4P was provided during the July 101h visit and is used to
ensure the benefit recipients elect the correct federal withholding.
• Please include clear and readable copies of each participant's
driver's license and social security card. These are used to verify
identity.
• If the participant is married, a copy of the marriage license needs to
be included.
• Ensure all above items are completed, in entirety, before they are
sent to us.
2. All Local Plan assets must promptly transfer to LOPFI. This must occur
before LOPFI will process benefit payments. Please contact us to
complete this step.
3. Copies are needed of all FY 2023 bank/financial statements related to the
Local Plan. The information should cover all the months your location
held Local Plan assets and/or made benefit payments. This includes
copies of statements that reveal all pension fund accounts are closed with a
zero balance.
Fayetteville Fire Pension Fund
August 30, 2023
Page 2 of 2
And simply to provide additional confirmation, we will NOT implement a
three percent (3%) compound Cost of Living Adjustment (COLA) for the Local Plan
members. The City indicated it would evaluate the fiscal condition of the Local Plan at
some point after the consolidation is completed to determine if a COLA could be added
to the benefit structure.
We warmly welcome you to LOPFI administration and are confident you will be
pleased with our service. The staff members who will assist in this process are Jeri Sines
and Lesley Weaver. Please feel free to contact them with any questions you may have.
Respectfully,
David B. Clark
Executive Director
Encl: