HomeMy WebLinkAbout1995-11-30 - Agendas - Final•
•
AGENDA
FIREMEN'S PENSION AND RELIEF BOARD
November 30, 1995
11:00 a.m.
City Hall Room 326
1. Approval of the minutes of October 26, 1995.
2. Approval of Pension List for December 1995.
3. Old Business
A. Report from Ben Mayes regarding the bank drafts.
4. New Business
A. Investment Report, Merrill Lynch
5. Adjournment
MINUTES OF A MEETING OF THE FIRE PENSION BOARD
A meeting of the Fayetteville Firemen's Pension and Relief Board
was held on Thursday, October 26, 1995, at 11:00 a.m. in room 326
of the City Administration Building, 113 W. Mountain,
Fayetteville, Arkansas.
PRESENT: Mayor Fred Hanna, Marion Doss, Ron Wood, Darrell Judy,
Pete Reagan, Howard Boudrey, City Clerk/Treasurer Traci
Paul, and City Attorney Jerry Rose.
CALL TO ORDER
Mayor Hanna called the meeting to order.
OLD BUSINESS
DROP PLAN REPORT - GREG JONES
Attorney Greg Jones explained he met with Pete and reviewed the
documents regarding possible adoption of the DROP plan. Jones
stated the first thing that came to mind was tax qualification,
whether the underlying multiple employment plan was qualified.
Jones explained that he talked with the City's Personnel
Director, Don Bailey; Katherine Henshaw; and Bob Ross and Beth
Ann Long with Arnold Grodamyer and Hailey.
Beth Ann Long indicated that the underlying plan was qualified
and they were seeking a letter of determination from the IRS on
the DROP plan.
Jones stated there was a miscommunication. The underlying plan
has not been qualified. No one has received a favorable
determination from the IRS. Approximately 17 locals have already
adopted the DROP plan. Their comfort level is the fact that this
is a State statute generated pension plan and amendment. They
feel the IRS will not rule unfavorably towards it for that
reason.
Jones stated the IRS can rule however they want towards the
pension plan. If the IRS comes up with an unfavorable
determination of the underlying plan and amendment, the locals
that have adopted the plan may have to pay taxes for the
distributions to the DROP plan and penalties and interest.
There does not seem to be much interest in getting the underlying
plan tax qualified. People may be fearful about receiving an
unfavorable determination. Jones explained he thought the
determination would be favorable. Oklahoma has a similar DROP
October 26, 1995
plan and it is qualified. The locals that have adopted the plan
have been relying on the Oklahoma plan. No other State or
Federal pension should rely on the opinion of that plan. It is
clearly written in the determination letter for the Oklahoma plan
that it is for that plan only. Jones suggested using information
from the Oklahoma plan when making the determination request.
Jones stated there is a great risk in adopting the DROP plan
without having the determination.
In answer to a question from Pete Reagan, Jones stated the
repercussions would first affect the individual. There would
also be some peripheral repercussions to the plan itself.
In response to a question from Reagan regarding a possible
disclaimer in the application, Jones stated a release form may
not hold up in court. If the plan is going to be adopted, then a
disclaimer should be a part of it but it would be better to get
the tax qualification prior to adopting the plan.
Reagan stated we are not going to get a letter of determination
on the DROP plan because we do not have one on the original plan.
Jones agreed and stated there does not seem to be any interest to
get a determination at all.
Reagan stated the active members of the pension system want to
adopt the DROP plan.
Jones stated if the plan is adopted, there are risks for the
participants. It is not tax qualified. There could be serious
consequences if adopted.
In answer to a question from Doss, Jones stated the old plan is
not qualified. A determination was probably never requested.
City Attorney Rose stated it is a hard decision. There are
people who want the program and then the attorney is advising
that there is a substantial risk of hurting both them and the
Board if the plan is adopted.
In answer to a question from Mayor Hanna, Pete stated this would
affect 22 people.
Mayor Hanna suggested Greg Jones or City Attorney Jerry Rose
prepare a statement explaining the risks and the facts regarding
the adoption of the DROP plan. Send each member a ballot and ask
them to vote on whether to take the risk or not.
Jones expressed his support for the Mayor's idea.
•
•
•
October 26, 1995
Doss expressed his support for the idea and stated the Pension
Board would be doing what the individuals voted for.
In answer to a question from Reagan, City Attorney Rose stated he
would help with preparing the statement. Rose explained he would
need some assistance from Greg Jones regarding the penalties.
Jones stated he would provide the City Attorney with a summation.
Wood stated there are guys who have over 20 years who are waiting
on the DROP plan.
Doss asked if the Board should seek a letter of determination for
the plan.
Jones explained that he did not think the Board could seek a
letter of determination on the DROP plan. Fayetteville is not
in a position to seek a letter of determination on the original
plan. Seeking a letter of determination on the general plan
would be at the State level. Don Bailey has reported that he
spoke to Katherine Henshaw who indicated that they did not want
to spend $2,500 to file for a letter of determination. It would
be great to have a letter of determination on the plan and then
on the amendment. Jones explained that trying to get a letter of
determination without cooperation from other people may be
difficult.
Doss stated in past discussions with Katherine Henshaw, she
indicated that the Pension Relief Board felt like the fire
department should have a letter of determination but the fire
departments did not want it.
Jones explained that he recently spoke to Henshaw and discovered
that she is very happy with the status quo.
NEW BUSINESS
INVESTMENT REPORT
Curtis Williams, Merrill Lynch, distributed a summary of the
portfolio performance as of September 30, 1995.
Williams stated we are going to have a good year. The Income
Account is up 13.19%, New Mexico is up 16.79% for the year, and
Keystone is down .72%. Keystone was establishing their portfolio
when this report was done. It is a little early to tell what
they are going to be doing.
•
•
October 26, 1995
New Mexico is substantially underperforming the two stock
indexes, the Dow and the S & P. The market is disfavoring value
stocks. New Mexico is a value manager. Money has been moved to
a growth manager because a growth manager is going to perform
better right now. New Mexico is performing as well as their
style is going to perform in this phase of the cycle.
The long term treasury bonds and the high grade corporate bonds
are not perfectly suited to the fixed income portfolio because
they both represent long term bonds. Our portfolio has a much
shorter average life than the long term index.
There has been more activity in the bond portfolio this year than
in other years. From 1987 to 1993 interest rates were headed
straight down. In 1987, 1988 and 1989, we were buying bonds that
no one else wanted at about 10%. With interest rates declining
from 10% in 1987 to 5 3/4% in 1993, it is impossible not to make
money.
The long term steady trend of downward rates is over now. We
will be moving within a trading range from this point forward.
Last year our portfolio, on paper, made 26% in 1993 and on paper
lost 4% in 1994 and on paper this year has made 13.19%. As
fluctuations of the value of the bonds go up and down, the value
of our portfolio goes up and down. At the end of the year, the
auditors will value the portfolio on December 31 relative to what
it was the year before. The bond market affects how the
portfolio looks. If we are going to have actuarial standing in
the back of our mind relative to the management of the portfolio,
we need to become more active.
Williams explained there will be a more detailed report given in
the first quarter of 1996.
In answer to a question from Reagan, Williams explained there
will be more information available regarding Keystone after the
first of the year.
MINUTES
Doss, seconded by Judy, made a motion to approve the minutes of
the September 28 meeting. The motion passed unanimously.
SCHEDULE OF TRANSACTIONS
Mayor Hanna submitted a schedule of transactions in City held
cash and investment accounts.
• Paul stated the schedule had been sent to each member with the
agenda.
•
•
•
October 26, 1995
Mayor Hanna left the meeting.
PENSION LIST
Doss, seconded by Boudrey, made a motion to approve the November
pension list. The motion passed unanimously.
SCHEDULE OF TRANSACTIONS - CONT'D DISCUSSION
Reagan stated he did not receive a copy of the schedule.
Paul handed a copy to Reagan.
In answer to a question from Reagan, Doss stated the schedule was
in response to a question from Richard Yada.
The Board reviewed and discussed the schedule of transactions.
Paul stated Administrative Services Director Ben Mayes offered to
attend the next meeting if the Board needed further explanation
of the schedule.
The Board requested that Mayes attend the next meeting.
Doss stated Richard's questions were about the debits in the
account. Money was being taken out and he did not know why.
Paul explained she thought the questions came from a 1995 bank
statement that Richard Yada brought in. She stated Richard
pointed out some withdrawals and asked for an explanation.
Paul read a portion of the minutes from July 27 meeting at which
Richard Yada suggested the Board find out why drafts were being
taken out of the checking account. Paul stated the report
submitted by Mayes is in response to that discussion.
Reagan made a suggestion that a copy of the schedule of
transactions be mailed to Richard Yada.
Paul stated she would mail a copy to him.
OTHER BUSINESS
BILL MORRIS
Wood explained he had been contacted by Bill Morris regarding the
recent benefit increases.
Paul explained he had visited with her also. Paul stated Morris
wanted the Board to know that he felt that the volunteers who put
in extra time should have also received an increase.
0
•
•
October 26, 1995
Doss stated retirement was based on so much for 20 years of
service and then for each year a person stayed over 20 they
received an additional $5 per month. That is why the amount that
volunteers receive varies. There was a State law passed that
raised the minimum for retired volunteers to $50 per month.
Wood suggested a letter of explanation be mailed to everyone on
the pension list.
Doss stated the letter could explain that any full paid that were
making under $350 would have been raised to $350 and any
volunteers making under $50 would have been raised to $50. It
only affected six people. A copy of the statute could be
attached to the letter.
Paul stated she would mail a letter of explanation to all the
retired members.
LETTER OF AUTHORIZATION
Paul explained she needed each Board member to sign a letter
giving Keystone the authority to take out quarterly management
fees. Paul stated Richard Yada has verified that it does need to
be done.
ADJOURNMENT
The meeting adjourned at 11:50 a.m.
•
FIREMEN'S RELIEF AND PENSION FUND
DECEMBER 1995
TRACI PAUL, TREASURER
THE FOLLOWING ARE THE OBLIGATIONS OF THE FIREMEN'S RELIEF FUND FOR THE
MONTH OF DECEMBER 1995. YOU ARE HEREBY INSTRUCTED TO ISSUE CHECKS TO THE
PAYEES, IN THE AMOUNTS SHOWN, AND FOR THE PURPOSE SO STATED.
EMP# NAME
43 BAIRD, RICHARD H.
1 BARNES, ELIZABETH
2 BLACKARD, PAUL
63 BOLAIN, ANN
44 BOUDREY, BETTY MRS.
45 BOUDREY, HOWARD
49 BOUDREY, JACK
4 CARL, FLOYD JR
5 CASELMAN, ARTHUR
57 CATE, ROY
6 CHRISTIE, ARNOLD
7 COLE EVERETT
8 COUNTS, WAYNE
61 DAVIS, BEULAH F.
10 DEARING, EMMA MRS.
11 FARRAR, ALONZO
38 FRALEY, JOSEPH G.
33 HARRIS, BILL C.
34 HARRIS, JAMES E.
64 JORDAN, CHARLIE
47 JUDY, DARRELL
37 KING, ARNOLD D.
54 KING, ARVIL
12 LANE, HOPE MRS
13 LAYER, MERLIN
14 LEE, HAROLD
51 LEWIS, CHARLES
60 LEWIS, MARVIE
55 LEWIS, ROGER
40 LOGUE, PAUL D.
50 MASON, LARRY
39 MC ARTHUR, RONALD A.
35 MC CHRISTIAN, DWAYNE
15 MC WHORTER, CHARLES
29 MILLER, DONALD
42 MOORE JAMES H.
17 MORRIS, WILKIE MRS.
16 MORRIS, WILLIAM H.
62 MORRISON, ELIENE
48 MULLENS, DENNIS W.
58 OSBURN, EDWARD
46 OSBURN, TROY
53 POAGE, LARRY
20 POLLY, GRACE A. MRS.
22 REED, JOE
30 SCHADER, EARVEL
41 SCHADER, TROY
23 SKELTON, BURL L.
24 SKELTON, LEE
56 SKELTON, ROY
36 SPRINGSTON, CARL
25 STOUT, ORVILLE
GROSS
FED. TAX ST. TAX NET
916.20 100.00
50.00
55.00
55.00
1,266.21 66.21
1,066.66
837.68 287.68
50.00
75.00
909.50
50.00
375.00 32.50
55.00
377.50
50.00
707.84
953.38 100.00
55.00
55.00
1,192.17
837.68
828.42 100 00
1,131.00 130.00
50.00
417.50
55.00
837.68
439.16
439.17
1,469.38 175.00
829.35 29 35
891.62 100.00
55.00 30.00
885.14 50.00
863.01 125.00
55.00
50.00
60.00
70.00
1,114.11
1,284.63 160.00
965.81 65.81
1,201.98 200.00
50.00
55.00
915.78
783.74 20.00
692.50 42.50
390.00
1,626.02 126.02
609.88
590.36 50.00
816.20
50.00
55.00
55.00
1,200.00
1,066.66
50.00 500 00
50.00
75.00
909.50
50.00
342.50
55.00
377 50
50.00
707.84
10.00 843.38
55.00
55.00
1,192.17
837.68
10.00 718.42
1,001.00
50.00
417.50
55.00
837.68
439.16
439.17
20.00 1,274.38
800.00
791.62
25.00
835.14
738.01
55.00
50.00
60.00
70.00
1,114.11
1,124.63
900.00
30.00 971.98
50.00
55.00
915.78
763.74
650.00
390.00
50.00 1,450.00
609.88
540.36
•
27 TUNE, MILDRED MRS.
26 TUNE, BILLIE SUE
28 WATTS, DONALD
59 WATTS, WAYNE
52 WRIGHT, RANDALL
70.00
70.00
400.00
921.17
877.68
96.17
150.00
70.00
70.00
400.00
825.00
727 68
32,034.91 2,236.24 170.00 29,628.67
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.
44acti kpvgiv
SECRETARY
CHAIRMAN 1 D PRE (DENT
ACKNOWLEDGEMENT
STATE OF ARKANSAS )
COUNTY OF WASHINGTON) )SS
• SWORN TO AND SUBSCRIBED BEFORE ME THIS /S( -DAY OF
ars ijt-
Npi ARY PUBLIC
MY COMMISSION EXPIRES' 3//aoor
Se.c• ,1995.
w
FAYETTEVI LLE
•R1E CITY OF FAYETTEVILLE, ARKANSAS TRACI PAUL CITY CLERK
•
•
TO: Fire Pension Recipients
FROM: Traci Paul, City Clerk/Treasurer Tp
DATE: November 21, 1995
SUBJECT: RECENT PENSION INCREASES
I understand that there has been some confusion regarding the
recent pension increases. Act 1197 of 1993 increased minimum
benefits for local pension plans covering police, paid
firefighters, and volunteer firefighters. The minimum paid
firefighter benefit was increased from $250 per month to $350 per
month. The volunteer firefighter minimum benefit was increased
from $30 to $50 per month. This increase went into effect on May
1, 1995.
The Pension Board voted at their October 31 meeting to grant
benefit increases as required by the State law. This increase
only affected six people. Anyone receiving more than the
increased benefit amount was not eligible for an increase.
Please find attached a copy of a letter from the Arkansas Fire &
Police Pension Review Board requesting the Pension Board to take
action on this issue. If you have any questions, please feel
free to call me at 575-8323.
113 WEST MOUNTAIN 72701 501 575-8323
ARKANSAS FIRE & POLICE PENSION REVIEW BOARD
Memorandum
To: All Boards of Trustees
Local Police Pension and Relief Funds
Local Fire Pension and Relief Funds
P.O. owwwwn 341 ea
1drnz Roca. Arran Ian 722013
74=n o t 10011924-9496
FAL 160 11 924-9497
From; Arkansas Fire and Police Pension Review Board
Re: Police and Fine Pension Funds Eligible for Act 1197 Benefits
Date: May 5, 1995
Act 1197 of 1993 increased minimum benefits for Local pension plans
covering pace, paid finighters, and volunteer fdrefighhss. The Act
increased minimum benefits in three categories. The minimum police and
paid firefighter benefit was increased from $250 per month to $350 per
month. The volunteer firefighter minimum benett was increased from $30
per month to $50 per month. The last sadden of the Act stases that to
be eligible for these increased minimum benefits, the pension plan must
be actuarially sound after the inclusion of the new minimum benefit
The Attorney General has opined that once a plan is considered eligible
for Act 1197 benefits, those benefits cannot betaken away.
The exhibits attached here show that all 16 pnlire plans that are
actuarially sound would be eligible for Act 1197 benefits. There are no
full paid firefighter pians that are actuarially sound and therefore
none are eligible for Act 1197 benefice. There are 18 mixed service
(paid and volunteer fingight:er) plans that are eligible. There are 68
volunteer plans that are eligible_
The Arkansas Fire and Police Pension Review Board met May 3, and
after reviewing the report of the actuary regarding Act 1197 eligible
plans, voted to notify all pension plans about the results of this
study. The Pension Review Board asks all local pension plans which are
shown as being eligible for Act 1197 benefits (see far right hand column
of Exhibits 1, 3, and 4) to immediately institute, as of May 1, 1995,
the new $350/month minimum benefit for paid retirants and $50/month
benefit for volunteer rebrants.
The Pension Review Board also asks that each local pension plan
which is Act 1197 eligible submit a letter indicating the date these new
benefits were adopted, or send a copy of the minutes of the pension
board meeting at which the increase was adopted. Please write to the
Board at:
P. 0. Drawer 34164
Tittle Rock, AR 72203
Thank you for your assistance in this matter.
10 'd
td:Vl f1H.L 56 -le -OM
•
•
•
RECEIVE
NOV 3 0 1993
CITY CLERK'S OFFICE
FAYETTEVILLE FIRE DEPT PENSION AND RELIEF FUND
PORTFOLIO PERFORMANCE 12/31/94 TO 10/31/95
NM CAPITAL MANAGEMENT
TSFR: 1,000,000 9/1/95
INCOME ACCOUNT
DEPOSIT: 9/1/95
KEYSTONE ASSET MGhlT
RC'VD: 1,000,000 9/1/95
3 - MONTHS TREASURY HILLS
DJIA W/DIV REINVESTED
S & P 500 W!DIV REINVEST
LUNG TERM TREASURY BONDS
H IGH GRADE CORP PONDS
CPI (sept)
NM CAPITAL (time wtd)
INCOME ACCT(tirne wtd)
KEYSTONE ASSET MGMT
W ITHDRAWALS:
02/10/95 L 20,000.
04/11/95 12 ,000.
07/14/95 8,000.
I'd
12/31/94
$4,240,646
3,260,081
1201000
12/31/94
4. 19
4.33
1.30
7.70
5.08
2.75
1.27
2.44
10/31/95
$3,773,814
3,803,957
977,500
10/31/95
+ 4.98
+26.76
+29.347
+24. 71
+21.02
+ 2.34
+ 12.1E
+•14.27
- 1.5C
429
nqi 7/3.
eus, 1I4. -
/ 0/1, o oS,
a 1 HDNA1 11I883W Wd07:2T
SE, 0E AON