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HomeMy WebLinkAbout1997-03-27 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, March 27, 1997, at 11:00 a.m., in room 326, of the City Administration Building, 113 W. Mountain, Fayetteville, Arkansas. PRESENT: Mayor Doss, Traci Fred Hanna, Pete Ron Wood, Darrell Paul ABSENT: Howard Boudrey Reagan (arrived late), Marion Judy, and City Clerk/Treasurer CALL TO ORDER Mayor Hanna called the meeting to order. MINUTES Doss, seconded by Judy, moved to approve the minutes of the February 27, 1997 meeting. The motion passed unanimously. PENSION LIST Paul stated the benefit increase is included in the pension list for April. The DROP employees were also added to the list but it does not change any figures. Doss explained he reviewed the printout dated March 11, 1997, and felt the information was correct with the exception of four of the retired volunteer firemen. He stated the resolution says that they will get $55 for 20 years of service. Bill Morris served 23 years which should put him at $55 for his twenty years plus an additional $15 for the three years served over twenty. Morris should receive $70 instead of $65. Doyle Morrison's widow, Eliene Morrison, should receive $80 per month because he served 25 years. Milderd Tune and Billie Sue Tune should both receive $80 per month because their husbands each served 25 years. Paul stated she would check her records. Judy, seconded by Doss, made a motion to approve the April pension list. DROP DISCUSSION - MARILYN CRAMER Mayor Hanna stated Marilyn Cramer would like to discuss the DROP Plan with the Board. 1 March 27, 1997 Marilyn Cramer explained she needed some clarification so that everyone understands how the interest is going to be computed and when it is going to be credited. She stated at this point we have not credited any interest. The interest will be credited once the actuary certifies the interest rate. Cramer asked when the interest will be credited. She stated the plan, as adopted, says it will be credited annually. It does not explain when. Cramer suggested that once a year be December 31. She stated the amount will be unknown until July or whenever we get the certification. It would then be credited effective January 1 based on their balance from the previous year. Cramer explained she thought the actuary would certify it by calendar year. She stated it makes sense to do it as of December 31. Doss stated it would be best to do it on a calendar year to simplify things. Doss made a motion to credit the interest on December 31. In response to a comment from Doss, Cramer stated the interest rate is based on a report that is due to the Pension Review Board by March 31. The Accounting Division usually gets it out by the first week of February. It goes to the LOPFI office and they wait until everyone in the State has turned in the information. The actuarial firm receives them all at the same time. June or July is as early as it can be anticipated. In response to a comment from Doss, Cramer stated when an employee terminates as a DROP participant and takes his account balance he may take it as a lump sum or as an annuity. If he chooses to take it as an annuity, the annuity would be purchased without the interest. The interest would be a lump sum distribution once the amount is determined. Cramer asked for clarification on the computation of interest for the year of distribution of the DROP account. Cramer explained that samples on the DROP Plan did not credit any interest for the year of distribution. If they have interest for three months in a year, we would not find that out until probably 18 months later. Doss stated it seems like there should be. Cramer explained that currently if a participating firefighter does not stay twenty years, he can withdraw his contributions to the pension plan without interest. A firefighter would not have any interest at all during that time if he didn't stay the twenty years. 2 • • • March 27, 1997 Cramer stated that needs to be clarified. If someone retires in March, they will already get two checks. This would be a third check eighteen months later for the interest for three months. Doss asked if the Board should go ahead and vote on the motion regarding the calendar year. Wood seconded the motion. The motion passed unanimously. Cramer stated there needs to be an approved formula for determining how the interest on the DROP accounts will be computed. Some plans do it based on the account balance at the beginning of the year. Cramer suggested taking an average balance and multiplying it by the certified interest rate and then multiplying it by the portion of the year that the contributions were there. Doss stated a person should get the interest for whatever portion of the year it is in there. Cramer stated the draft of Board Rule #10 indicated there would be no interest in the final year of distribution. The final draft is silent on the issue. Cramer stated if there is to be interest for a partial year in the year of distribution, there should be some understanding that when a person is no longer a participant in the DROP Plan, he will make a choice as to whether his payment will be a lump sum distribution or an annuity. If an annuity is selected, it will not include the two interest amounts. Those will then later be distributed in a lump sum distribution once the amount is determined. It should be clear that there might possibly be two interest checks. Doss, seconded by Wood, made a motion to that effect. Doss stated it was probably not addressed because it is new and no one has done it yet. Cramer explained that the information on the final year is unknown until a long time after the person retires. Cramer explained she wanted verification that the formula for computing the interest meets the Board's approval. She stated the formula would be to take a simple average and multiply it by the interest rate and multiply that by the full month portions of the year that the money is in the DROP account. The Board discussed the proposed formula and decided it was satisfactory. 3 • • • March 27, 1997 Cramer added that she understood that the DROP contributions will be made on the last day of the month so if someone elects to participate in the plan on the first day of the month, the first contribution will be made on the last day of that month. We are always working with full months anyway. Judy made a motion to work with full months. Doss seconded the motion. The motion passed unanimously. Cramer stated the plan says that one half of the employer contribution is made to the DROP account. She asked if that contribution would change if the firefighter receives a pay increase during the time that he is participating in the DROP. She stated the contribution credited based on a person's salary does not change. In the five years, a person may have a pay increase. She asked if the amount of the employer contribution would increase at that time. Cramer stated in a normal instance, 120 of the firefighter's salary is contributed by the employer which means that if he gets a pay increase, there will be an increase in the contribution by the employer to the pension plan. Cramer asked if the contribution to the DROP participant's account is affected by that or not. In response to a comment from Doss, Cramer stated she understood that if a firefighter gets a pay increase, he will still be contributing 6% of his new salary to the pension plan. The City will put 120 of that new salary into the pension plan. The 12% goes into the pension plan and is then divided between the general pension plan and the DROP account. When an employee gets and increase, there will be an increased contribution by the City. The question is whether or not at the same time there will be an increase to the employee's DROP account. Doss stated for simplification if should be. Cramer stated it is easier for the Accounting Division for it not to have. Payroll does not really work with the DROP accounts. She explained that she and Denise Land have taken on the DROP accounts for the time being. She stated Payroll gets the increases. If the increase is to go to the DROP account, the Accounting Division would appreciate written notification for administering the DROP part of it that a pay increase has been awarded to a DROP Participant. Doss stated if a DROP participant receives a pay increase, the Board needs to remember to notify Marilyn Cramer. Doss stated the DROP participants could be permanently added to the pension list. 4 March 27, 1997 In answer to a question from Doss, Paul stated the pension list is distributed by the Accounting Division. Cramer explained that the DROP participants will be listed on the pension list from now on., Doss explained that Fire Chief Mickey Jackson signs off on all pay increases. The Board could get a copy of the Personnel Action sheet for any of the DROP participants who receive a pay increase. Cramer explained that it was her understanding that there will be an increase in the DROP participant's DROP account for the employer contribution only for one half of what employer is contributing. There will be changes to what the contributions are. The employee part is frozen. The employer part will be half of whatever the employer is contributing. The employee will contribute 6% of his current salary. INVESTMENT REPORT Mayor Hanna explained that Richard Yada would not be present to give an investment report. OLD BUSINESS Roger and Marvie Lewis Accounting Manager Marilyn Cramer stated the minutes indicate that the Board has agreed not to increase Roger Lewis' benefit until there is some other determination on it. Cramer requested something written from the Board when the situation is resolved. She expressed concern that the increase would fall through the cracks. Doss explained the situation to Cramer. Cramer stated the copy of the divorce decree says that Marvie Lewis will receive half. The Accounting Division planned to divide the new amount equally between the two. After reading the minutes, the benefit increase was not given to either Roger Lewis or Marvie Lewis. Ron Wood explained that Roger Lewis' attorney has been working on the issue. In answer to a question from Doss, Paul stated City Attorney Rose wrote a letter that says the divorce decree is silent on whether Marvie Lewis should get half of the increase or not. The City Attorney suggested Mr. Lewis see an attorney but in the meantime he recommended the City continue to divide the amount. 5 March 27, 1997 Pete Reagan arrived. In answer to a question from Doss, Paul stated the City Attorney recommended the City continue to pay half, whatever half is. Cramer stated based on the Fire Pension minutes, the Accounting Division has not done anything on any increase at all. Some decision needs to be made and the Accounting Division needs to be notified. In answer to a question from Cramer regarding the status of the situation, Reagan stated he talked to Mr. Lewis and Mr. Lewis' attorney. They are planning on asking for an opinion from Judge Butt's office as to whether any increase should be divided or not. The Board decided to continue to hold any increase until a decision is made. In answer to a question from Doss, Paul stated the letter from City Attorney Jerry Rose is dated February 21, 1997. In answer to another question from Doss, Paul stated any change in the situation will be discussed by the Board at a meeting. She stated she would send a copy of the minutes to Cramer. Doss explained that as soon as the situation is resolved the Board will approve any back pay that is necessary. He added he thought the City Attorney intended for the increase to be given and divided in half. Reagan stated the decree does not say that the City has to pay the benefit. The decree says that she shall receive it. The Board discussed that in any future situations, they will pay the full amount to the retired firefighter and let him pay an amount to his spouse. After some discussion about State statutes, Mayor Hanna suggested one of the Board members should visit with Jerry Rose about the Board's responsibility to actually write the check. Mayor Hanna left the meeting. Pension Affidavits Paul reported that Floyd Carl turned in his affidavit. She stated all affidavits have been turned in. 6 • • • March 27, 1997 Pension Review Board/Insurance Turnback Delay Paul stated in response to a question from the last meeting, the City received the police insurance turnback check on August 19, 1996. In answer to a question from Doss, Paul stated the City received the fire insurance turnback check 89 days after the July 11 meeting (October 8, 1996). There being no further business, the meeting adjourned at 11:52 a.m. 7