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Home My WebLink About4-24 RESOLUTION Page 1 113 West Mountain Street Fayetteville, AR 72701 (479) 575-8323 Resolution: 4-24 File Number: 2023-1548 FIRE PENSION FUND (NUMBER CHANGE AND LOAN AUTHORIZATION): A RESOLUTION TO CHANGE THE ASSIGNED FIRE PENSION FUND NUMBER IN THE 2024 BUDGET, TO AUTHORIZE THE MAYOR OR THE MAYOR’S DESIGNEE TO LOAN CASH FROM THE GENERAL FUND TO THE FIRE PENSION FUND FOR MONTHLY BENEFIT PAYMENTS, AND TO AUTHORIZE THE MAYOR OR THE MAYOR’S DESIGNEE TO REIMBURSE THE GENERAL FUND WHEN FIRE PENSION TAXES ARE RECEIVED WHEREAS, on August 15, 2023, the City Council passed Ordinance 6676 approving the consolidation of the Fayetteville local fire pension fund with the Arkansas Local Police and Fire (LOPFI) retirement system; and WHEREAS, at the time, the exact details concerning payments to LOPFI had not yet been communicated to the City so the budget for transfer payments to LOPFI and the related property taxes which fund those payments were budgeted in the Fire Pension Fund #6810; and WHEREAS, LOPFI has now communicated to the City that it requires monthly reimbursements from the City to LOPFI for benefit payments to retirees, which creates a cash flow issue because the majority of fire property tax funding is normally received from Washington County in two large distributions in April and October; and WHEREAS, Chief Financial Officer Paul Becker recommends that the City Council authorize the Mayor or the Mayor’s designee to loan necessary cash to the City’s Fire Pension Fund from the City General Fund in order to make the required payments to LOPFI for the reimbursement of monthly benefit payments; and WHEREAS, if so authorized, the Mayor or the Mayor’s designee will repay the cash loaned to the Fire Pension Fund as soon as possible based on Fire Pension property taxes received and reduce the loan liability amount to the General Fund to its lowest possible value with any cash available in the Fire Pension Fund, by the end of each fiscal year. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1: That the City Council of the City of Fayetteville, Arkansas hereby changes the assigned Fire Pension Fund number from 6810 to 2810 in the 2024 budget. Section 2: That the City Council of the City of Fayetteville, Arkansas hereby authorizes the Mayor or the Mayor’s designee to loan cash from the General Fund to the Fire Pension Fund to make monthly payments to LOPFI for benefit payments until fire pension tax payments are received from the County to provide necessary reimbursements. Section 3: That the City Council of the City of Fayetteville, Arkansas further authorizes the Mayor or the Mayor’s Resolution : 4-24 File Number: 2023-1548 designee to repay the cash loaned to the Fire Pension Fund as soon as possible based on Fire Pension property taxes received each year and reduce the loan liability amount to the General Fund to its lowest possible value with any cash available in the Fire Pension Fund by the end of each fiscal year. PASSED and APPROVED on January 2 , 2024 Page2 Mailing address: 113 W. Mountain Street Fayetteville, AR 72701 www.fayetteville-ar.gov CITY COUNCIL MEMO 2023-1548 MEETING OF JANUARY 2, 2024 TO: Mayor Jordan and City Council THRU: FROM: Paul Becker, Chief Financial Officer DATE: SUBJECT: Fire Pension Fund Number Change and Authorization to Loan Cash to the Fire Pension Fund from the General Fund When Necessary RECOMMENDATION: That the assigned Fire Pension Fund fund number be changed from 6810 to 2810 in the 2024 budget. This will identify the fund as a special revenue fund in the City of Fayetteville accounting structure. That the Mayor or his designee (Chief Financial Officer) be authorized to loan cash from the General Fund to the Fire Pension Fund to make monthly payments to LOPFI for benefit payments until fire pension tax payments are received from the County to provide necessary reimbursements for the remainder of the fiscal year. That loan repayments from the Fire Pension Fund be made to the General Fund when practicable. That the total loan liability amount due the General Fund in the Fire Pension Fund be reduced to its lowest amount based on available cash by the end of each fiscal year. BACKGROUND: The City Council, at the administration’s recommendation, approved the consolidation of the Fayetteville local fire pension fund with LOPFI (Arkansas Local Police and Fire retirement system) by the passage of Ordinance #6676 on August 15, 2023. At that time, the exact details had not yet been communicated to the City concerning payment amounts required by the City to LOPFI. Therefore, the budget for transfer payments to LOPFI and the related property taxes which fund those payments were budgeted in the Fire Pension Fund #6810. This is classified as a Trust Fund in the City of Fayetteville budget and accounting system. DISCUSSION: The final details received from LOPFI require monthly reimbursements be made by the City to LOPFI for benefit payments to retirees. This creates a cash flow problem because the majority of fire property tax funding is normally received from the County in two large distributions in April and October. Therefore, it is requested that the Mayor or his designee (CFO) be authorized to loan necessary cash to the City’s Fire Pension Fund from the City General Fund in order to meet monthly payments to LOPFI for the reimbursement of monthly benefit payments. The Mayor or his designee (CFO) would then be required to repay the cash loaned to the Fire Pension Fund Mailing address: 113 W. Mountain Street Fayetteville, AR 72701 www.fayetteville-ar.gov as soon as possible based on Fire Pension property taxes received. By the end of the fiscal year, the Mayor or his designee would be required to reduce the loan liability amount to the General Fund to its lowest possible value with any cash available in the Fire Pension Fund. BUDGET/STAFF IMPACT: The loans and repayment of the loans from the General Fund to the Fire Pension Fund would not require an adjustment to the budget but instead would create a loan payable on the Fire Pension Fund balance sheet and a receivable on the General Fund balance sheet until all cash loans are paid back. ATTACHMENTS: SRF (#3) Page 1 City of Fayetteville, Arkansas Legislation Text 113 West Mountain Street Fayetteville, AR 72701 (479) 575-8323 File #: 2023-1548 Fire Pension Fund Number Change and Authorization to Loan Cash to the Fire Pension Fund from the General Fund When Necessary A RESOLUTION TO CHANGE THE ASSIGNED FIRE PENSION FUND NUMBER IN THE 2024 BUDGET, TO AUTHORIZE THE MAYOR OR THE MAYOR’S DESIGNEE TO LOAN CASH FROM THE GENERAL FUND TO THE FIRE PENSION FUND FOR MONTHLY BENEFIT PAYMENTS, AND TO AUTHORIZE THE MAYOR OR THE MAYOR’S DESIGNEE TO REIMBURSE THE GENERAL FUND WHEN FIRE PENSION TAXES ARE RECEIVED WHEREAS, on August 15, 2023, the City Council passed Ordinance 6676 approving the consolidation of the Fayetteville local fire pension fund with the Arkansas Local Police and Fire (LOPFI) retirement system; and WHEREAS, at the time, the exact details concerning payments to LOPFI had not yet been communicated to the City so the budget for transfer payments to LOPFI and the related property taxes which fund those payments were budgeted in the Fire Pension Fund #6810; and WHEREAS, LOPFI has now communicated to the City that it requires monthly reimbursements from the City to LOPFI for benefit payments to retirees, which creates a cash flow issue because the majority of fire property tax funding is normally received from Washington County in two large distributions in April and October; and WHEREAS, Chief Financial Officer Paul Becker recommends that the City Council authorize the Mayor or the Mayor’s designee to loan necessary cash to the City’s Fire Pension Fund from the City General Fund in order to make the required payments to LOPFI for the reimbursement of monthly benefit payments; and WHEREAS, if so authorized, the Mayor or the Mayor’s designee will repay the cash loaned to the Fire Pension Fund as soon as possible based on Fire Pension property taxes received and reduce the loan liability amount to the General Fund to its lowest possible value with any cash available in the Fire Pension Fund, by the end of each fiscal year. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1: That the City Council of the City of Fayetteville, Arkansas hereby changes the assigned Fire Pension Fund number from 6810 to 2810 in the 2024 budget. Resolution: 4-24 File Number: 2023-1548 Page 2 Section 2: That the City Council of the City of Fayetteville, Arkansas hereby authorizes the Mayor or the Mayor’s designee to loan cash from the General Fund to the Fire Pension Fund to make monthly payments to LOPFI for benefit payments until fire pension tax payments are received from the County to provide necessary reimbursements. Section 3: That the City Council of the City of Fayetteville, Arkansas further authorizes the Mayor or the Mayor’s designee to repay the cash loaned to the Fire Pension Fund as soon as possible based on Fire Pension property taxes received each year and reduce the loan liability amount to the General Fund to its lowest possible value with any cash available in the Fire Pension Fund by the end of each fiscal year. City of Fayetteville Staff Review Form 2023-1548 Item ID 1/2/2024 City Council Meeting Date - Agenda Item Only N/A for Non-Agenda Item Paul Becker 12/14/2023 CHIEF FINANCIAL OFFICER (110) Submitted By Submitted Date Division / Department Action Recommendation: That the assigned “Fire Pension Fund” fund number be changed from 6810 to 2810 in the 2024 budget, and that the Mayor or his designee (Chief Financial Officer) be authorized to loan cash from the General Fund to the Fire Pension Fund to make monthly payments to LOPFI for benefit payments until fire pension tax payments are received from the County to provide necessary reimbursements for the remainder of the fiscal year. Budget Impact: 6810 - Fire Pension Fund Account Number Fund Project Number Project Title Budgeted Item?No Total Amended Budget $- Expenses (Actual+Encum)$- Available Budget $- Does item have a direct cost?No Item Cost $- Is a Budget Adjustment attached?No Budget Adjustment $- $92.00 Remaining Budget $- V20221130 Purchase Order Number:Previous Ordinance or Resolution #6676 Change Order Number:Approval Date:8/15/2023 Original Contract Number: Comments: