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HomeMy WebLinkAbout1996-07-25 Minutes• - • MINUTES OF A MEETING OF THE FIRE PENSION BOARD A meeting of the Fayetteville Firemen's Pension and Relief board was held on Thursday July 25, 1996, at 11;00 a.m., in room 326 of the City Administration Building 113 W. Mountain, Fayetteville, Arkansas. PRESENT: Mayor Fred Hanna, Marion Doss, Pete Reagan, Ron Wood, Howard Boudrey, Darrell Judy, and City Clerk/Treasurer Traci Paul CALL TO ORDER Mayor Hanna called the meeting to order. MINUTES Doss, seconded by Judy, moved to approve the minutes of the June 27, 1996, meeting. The motion passed unanimously. PENSION LIST Paul reported that Everett Cole has been removed from the list. Reagan, seconded by Doss, moved to approve the August pension list. The motion passed unanimously. NEW BUSINESS Investment Report Richard Yada, Merrill Lynch, gave a quick report going through the end of June. He noted a lot has changed since the end of June. As of June 30, the New Mexico capital account was $4,144,000 minus $40,000 at the end of December, 1995, which we transferred to the income account. The income account has $3,822,000 and the Keystone account $1,102,000. The New Mexico account is up 6.91. Keystone is up 7.38. The income account is down 1.47. The New Mexico has both bonds and stock. Their bonds are relatively short term, so they are not going to be affected by the minimum figures on the long-term treasury. The short term are up a little bit, the long term are way down. Keystone is 100% stocks, a fair rate of return. New Mexico is a good rate of return. We will probably see a choppy market, up and down, the rest of the year. We feel the interest rates are going to come down. Things are going to slow down. If there is a recession, it won't happen until after the election. At the end of this year and the first of next year, we need to be very cautious. • July 25, 1996 Yada commented on the audit. The actuary has a return of 13.4% last year. Looking at the fire and police return in the audit, police had about $7.1 million, the fire department had $8.8 million, a $1.7 million difference. The fire department had an investment return of $1.1 million, where the police department had $389,000. We are fortunate that we took some money out of New Mexico and transferred it to Keystone and got a lot of profit. The only thing the State auditors count on our rate of return is the actual profits we take. If you don't sell, there is no profit. That is the difference in accounting measurements between the auditors and Merrill Lynch. The police had $318,782 investment earnings; firemen had $1,047,672. We had a good year. The current income is good. Overall, we are in good shape. He will review the actuarial report further and comment on it at the next meeting. Election results on Retired Member Position Paul reported Darrell Judy won the election.. There were 11 votes for him, 7 for Morris, and Springston got 5 votes. Paul stated Marion Doss had asked her if we needed to have majority vote. We should have had a majority. LaGayle McCarty, from the City Attorney's office, said we should look at having a run-off election between the top two people. Paul would send out ballots to each person who receives a pension check to vote for Bill Morris or Darrell Judy. Reagan moved to accept Darrell Judy's 11 votes over Bill Morris's 7 as a simple majority. He stated there is nothing in the statutes, according to LaGayle, that says we have to have the majority vote. It will be more paperwork and more trouble. Boudrey seconded. The motion passed unanimously. Benefit Increase Reagan stated this is basically what we had last time, only we allowed section two, that widow benefits would be increased for volunteer fire fighters the same as her spouse's benefits. That was put in there because PRB sent us a letter saying we were not in compliance because we'd raised three widows from $45 to $50. PRB is saying they should be paid $45 a month. Reagan explained to them he'd rather have all his teeth pulled than take $5 away from a widow. They did grant a variance and he'd told them there would be a proposal for a benefit increase which would include them. Doss stated he was not sure about the third and fourth paragraphs. He asked if that means there will at a later time be another increase percentage -wise or across the board. He had talked earlier about the fact there are 11 people retired previous to 1982 who under this proposed deal would not get any increase. He wondered if that paragraph leaves open giving them a 15% increase on the base they retired at the time of their retirement, adding it to what they make now. The original figures he'd come up with are in • July 25, 1996 error as they were figured on what they make now including their raises of $200 and $50. What we are asking for is 15% increase on what they retired at. On Ray Davis, someone making $355, a 15% increase would be 65% of what he retired at, the same as everyone else. It would be $53 a month in his case. We'd just carry that on through to those 11 who retired previous to 1982. That does not get inconsistent with not going over 65% of base. The ones currently drawing more than 65% are doing so because of across-the- board increases. Reagan stated their original 50% of salary was figured on their monthly salary at retirement. Doss agreed but with this paragraph here we are leaving that open for further increases. It is more equatable to give everyone some raise. Everyone on the retirement list would have a raise. Mr. Yada pointed out that even though the raise given back in the 80's to those already retired was a small amount, page 10 of the actuary shows the percentage went down from 49% to 15%. It took four years to get it back up to where it was, and this year we made some good headway. He advised the board to keep in mind in looking back at some of those people who are only making $200 a month that, hopefully, they went to work in another career and got another retirement set up. Doss stated he felt this money belongs to everybody. He would feel it more equitable to request something for them. Fifteen percent of what they were making when they retired would not be that much and would make them feel a lot better. He would feel better, too, if asked about giving himself a raise. Reagan stated they've been given three benefit increases. While doing that, we've given none since '86. Everyone from '86 on has not received a raise. When this board gave the raises, we thought we were doing the correct thing, but what we were doing was cutting our own throats because we didn't give everyone a raise. If we'd given everyone a raise, that would have made everything more equitable. When we went under management, our management team asked us to not give out increases for 8 to 10 years so that they could build up the fund, which makes sense so we would have the money to give an increase. The point could be argued either way. He had no problem voting for this resolution but also saw there are some problems that could be addressed in the future with those who retired at such a low amount. We need to come up with a way that is fair and equitable. Doss was afraid if we do this increase now, we'll forget about them and not ever do an increase for them. We ought to tie it together and if it doesn't fly, it doesn't fly. He is talking about 15% of what they were making when they retired, not taking the $200 away from them. July 25, 1996 Reagan felt this was not equitable. He asked if Doss would want to give the guys who retired from '86 to '96 a $200 raise. Doss replied there is a paragraph that leaves that open for the future. It is better to give to everybody. A percentage is more equitable than an across-the-board increase. Reagan agreed. That is why we went the percentage route. Those not receiving the raise on this one, will more than likely receive one on the next one. Some who are over 1009s, way over 65%, won't. Wood asked if Reagan was saying it means we go with this and on the next raise it would be fair and equitable to go across the board with a percentage. Reagan gave examples of who would and who wouldn't, staying with the percentage route. Take Charlie for example, his 65% of salary at time of retirement was $871.19. He is currently drawing $885. There is a $14 difference which will be made up with a percentage raise next time. There are others who won't. Take Everett Cole, who is deceased. 65% of his salary at time of retirement was $227.50 but he was drawing $375, so the percentage would not be high enough to bring him up. Yada stated getting it up to 65% was great. That would take the disability question out and make life easy on the board as time goes on. His feeling was to get to 65% if possible and then go back and see if you could give some dollar increases to these people. Doss stated everybody would be getting something. It is great to say we will do it next month or next year. We may, but then we have to go through the actuary again. It might make it so close it will fail at that time. Mayor Hanna cautioned there is a lot to be considered here. Reagan moved to pass the resolution. Boudrey seconded. The resolution passed unanimously. Doss asked if he was the only one who felt these 11 people should get a raise. Boudrey stated they have been getting good raises for about 15 years. He supports them, but if you add up what they've drawn for 15 years and most haven't drawn one for ten years, they are way ahead. Wood stated he agreed with Doss. The cost of living has gone up a lot. • 1 July 25, 1996 Reagan had no problem with that. His main objective is to see that everyone receives raises. It may not fly, but we gave those guys raises because we felt like they needed them, not because we had the money. We left a lot of people out. Doss stated they've been drawing a long time, but everyone plans on drawing a long time. He stated he feels likehe is asking for an increase for himself and forgetting them. Mayor Hanna stated if this proves to be actuarially sound, it would be appropriate to bring this up under new business. It may be mute anyway. NEW BUSINESS Doss stated that several months ago we gave a PRB mandated increase raising the minimum to $50 for all retirees. He thought that meant just a $50 minimum, but what it meant was $50 for 20 years service and they still get their years of service. We had one retiree, Bill Morris, who had 23 years service. We raised him to $60. PRB pointed out he should have been raised to $50 for his 20 years service, which he should have been getting $65 instead of $60. We need to raise his to $65 a month and we owe him $5 a month from whenever that increase took place. Discussion ensued regarding when the Board took action on the increase. In response to a question from Reagan, Paul asked if it was Act 1197. Doss stated he believed it was. Reagan stated Act 1197 increased the volunteer firefighter minimum benefit from $30 per month to $50 per month. Doss stated we looked at each person making under $50 per month and raised them to $50. Doss stated Bill Morris should be getting paid $50 per month for his 20 years service. He had 23 years of service so he should be getting paid and additional $5 per month for the extra three years. His pension should be $65 per month. We owe him $5 per month from whenever the benefit increase took place. We have only been paying him $60 per month. Reagan pointed out that Act 1197 passed in 1993 but we were not actuarily sound until 1995. We were declared actuarily sound in May of 1995. Paul stated she would look up the date that the Board took action on the increase. • July 25, 1996 Doss, seconded by Wood, made a motion to raise Bill Morris' pension to $65 per month and pay him the $5 per month he has not received since the increase went into affect on May 1, 1995. The motion passed unanimously. The meeting adjourned at 11:52 a.m.