Loading...
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