Loading...
HomeMy WebLinkAbout1998-01-30 - Agendas - FinalFIRE PENSION AGENDA Thursday, July 30, 1998 City Administration Building, Room 326 1. Call to order 2. Approval of minutes 3. Pension List 4. Investment Report a. Richard Yada, Merrill Lynch 5. Old Business • MINUTES OF FIRE PENSION BOARD A meeting of the Fayetteville Firemen's Pension and Relief Board was held on Thursday, May 28, 1998 at 11.00 a.m. in room 326 of the City Administration Building, 113 W. Mountain, Fayetteville, Arkansas. Present: Mayor Hanna, Marion Doss, Pete Reagan, Ron Wood, Darrel Judy, and Heather Woodruff. Absent: CALL TO ORDER Mayor Hanna called the meeting to order. APPROVAL OF MINUTES Mr. Reagan requested an excused absence from the last meeting. He was attending a conference. With the requested change, he moved to approve the minutes. Mr. Judy seconded the motion. The motion carried unanimously. PENSION LIST Ms. Woodruff noted Larry Freedle had been added to the pension list. Mr. Reagan moved to approve the pension list. Mr. Wood seconded the motion. The motion carried unanimously. INVESTMENT REPORT Mr. Yada, Merrill Lynch, explained the investment report through the end of April. He noted there was a growth from December 31, 1997 from 11.1 million to 11.8 million. All investments were doing well. The income account was a defensive account. If interest rates were to come down it should preform better. In response to comments from Mr. Reagan, Mr. Yada explained the Japanese Yin was going down compared to the American dollar. Fire Pension May 28, 1998 Page 2 Mr. Williams felt the trend would continue. He explained Japan was an export driven country, which had to make their currency cheaper than the dollar to support their economy. He thought it could cause the other Asian currencies to devalue, which was a concern because to would affect our economy in a few months. The trade numbers released two weeks ago were worst than people had expected. Southeast Asia was not buying our goods They could not afford them. Another round of devaluation would make the US currency and products more expensive in relation to theirs and would further weaken the economy. The US growth had been driven by internal investments and exports. Mr. Reagan asked when they planned to pull out of Japan. Mr. Yada replied they had not renewed the January Series. Overall, the pension fund continued to grow They were in the 8% range for the first four month of this year, which was ahead of the overall program. The plans original projection had been to hit 10 million by 1999. They were currently near 12 million. They should be receiving their actuary report between June and August. He suggested the retirement plan provide individual retirement plans for the firemen. Merrill Lynch had custom financial plans which would cover net worth, income taxes, education plans, spouse protection. This retirement planning would help set each individual's goals. The plans would go into detail for each individual. The cost for each plan was $250.00. He felt every individual should have a retirement plan to help make financial decisions. Once the plan was done for an individual it was down loaded into their computers and they owned it from then on. They could change any of the parameters as time went on, if an individuals situation changed. Mr. Reagan asked if there was a one time fee? Mr. Yada replied there would be no charge to update. There was normally no need to update, unless there was a large inheritance or a divorce. Mr. Reagan thought it was a good idea. He suggested sending a letter with the retirement checks to the retirees to see if they were interested. Mr. Williams did not believe some of the retirees had a need for the full financial plan. They could do a retirement analysis for free. Mr. Yada stated they would have to meet with each person individually. Mr. Doss liked the idea and thought they should send an informational letter out to all the firemen. Mr. Reagan asked Mr. Yada to compose an informational letter so they could send it out with a • • • • • • questionnaire. Fire Pension May 28, 1998 Page 3 Mr. Williams stated they would need an hour and half for each person of their turn around time would be four to six weeks. Mr. Reagan moved to table the item, until they could send out letters and get more information. Mr. Wood seconded the motion. Mayor Hanna requested the retirement date of each fireman be added to the pension list. He • suggested the month and year be added next to the name. OLD BUSINESS Mayor Hanna reported the result of the election for the retired position. Darrell Judy had received 20 votes; and Carl Springston had received 16 votes Mr. Reagan moved to reelect Darrell Judy. Mr. Wood seconded the motion. The motion carried unanimously. NEW BUSINESS Mr. Reagan stated he had attended NCEPERS conference in Denver. He presented a booklet which summarized the conference. He believed it was a great benefit to be a member of the organization. Their main goal was to keep track of Municipal and State pension systems and how the legislator affected them. He recommended they stay an active member of the organization. Mayor Hanna stated there was a strong effort being made to remove the State's property tax. He questioned how it would affect the fireman retirement. Mr. Reagan thought they received approximately $200,000 a year from the tax. Mayor Hanna questioned the affect on the retirement plan if they were to loose those funds. Mr. Reagan stated if the property tax were to get on the ballot and passed the retirement plan would be out of approximately $200,000 a year. Fire Pension May 28, 1998 Page 4 Mayor Hanna stated their interest was small compared to the millage that went to the schools. He did not want people believing the schools would be the only one affected. It would not affect the Fayetteville because they had removed their millage, but a lot of cities used the millage for their operations. He questioned where those cities would get their money. There were some small cities that did not have a sales tax base. Mr. Reagan asked Mr. Yada to work up an idea of how it would affect their pensions in the long term. Mr. Reagan stated there were some cities which did not have as good of a pension plan as Fayetteville, and they were receiving a full mill for both the Firemen and the Police. For other business, Mr. Reagan moved to send a letter to all the senators supporting the RAP Act. Mr. Judy seconded the motion. The motion carried unanimously. The meeting adjourned at 11:50 a.m. • • • MINUTES OF FIRE PENSION BOARD A meeting of the Fayetteville Firemen's Pension and Relief Board was held on Thursday, June 25, 1998 at 11;00 a.m. in room 326 of the City Administration Building, 113 W. Mountain, Fayetteville, Arkansas. PRESENT: Mayor Hanna, Marion Doss, Darrel Judy, Bill Moms. CALL TO ORDER Mayor Hanna called the meeting to order. APPROVAL OF MINUTES Mr. Doss moved to approve the minutes with a typo correction. Mr. Judy seconded the motion. The motion carried unanimously. PENSION LIST Mr. Morris moved to approve the pension list. Mr. Doss seconded the motion. The motion carried unanimously. INVESTMENT REPORT Mayor Hanna stated no action was required on the investment report. OLD BUSINESS Mayor Hanna stated it was the City Attorney's, Jerry Rose, opinion that it was not legal to use the pension's money to pay for individual financial plans. Mr. Doss asked if the survey had gone out to the retirees. Ms Woodruff replied she received a fax of the survey yesterday. Mr. Doss stated he had also spoken with Mr. Rose. It was Mr. Rose's opinion that the funds • could only be used for pension benefits and could not be used for financial plans. He had planned to ask Mr Yada if they would still provide the service if an individual wanted it. He was very cautious about using the pensions money after talking with Mr. Rose. He added some of the retired members might not like the idea of using pension money for individual retirement plans, because they had not been offered the same service. Mr. Wood moved to table the item. Mr. Doss seconded the motion. The motion carried unanimously. In reference to tax refund, Mayor Hanna thought it would be better to discuss the issue when Mr. Yada, Mr. Reagan and Mr. Rose were present: Mayor Hanna stated Dale Evans had offered to settle with the city on the property tax issue. He did not believe the city should settle because he was not sure the courts would order the city to refund the money. The city's portion to refund would be very small in comparison to the Fayetteville School System. He did not believe it would hurt them to wait for a court decision. If the courts did order the money to be refunded, it was his opinion money would have to come out of the retirement fund. Mr. Doss did not believe the Board could agree to a settlement. A refund would have to be court decreed. Mayor Hanna stated the city did not levy the tax. Every municipality that had a retirement fund would be affected by the refund. He added the municipalities did not have anything to do with the assessment or tax collection. Those were all done by the county and state All the cities were doing was taking advantage of what the legislature allowed them to do. To supplement the retirement funds. He added the county was in charge:ofthe reassessments, the city had nothing to do with them. He added the amount of each refund the tax pay would receive was very small. The meeting adjourned at 11:25 a.m. • • FIREMEN'S RELIEF AND PENSION FUND AUGUST1998 THE FOLLOWING ARE THE OBLIGATIONS OF THE FIREMEN'S RELIEF FUND FOR THE MONTH OF AUGUST 1998. YOU ARE HEREBY INSTRUCTED TO ISSUE CHECKS TO THE PAYEES, IN THE AMOUNTS SHOWN, AND FOR THE PURPOSE SO STATED. DATE OF EMP# RETIREMENT 43 3/86 2 3/75 63 5/72 44 9/86 45 9/86 49 7/88 4 6/67 5 5/72 57 5/90 6 4/68 8 10/76 61 6/66 10 2/66 11 2/76 38 5/84 33 5/80 34 6/79 64 4/95 47 5/88 37 3/84 54 5/89 12 3/60 13 10/67 14 7/74 51 10/88 60 12/89 55 12/89 40 9/85 50 9/88 39 4/85 35 2/82 15 4/77 29 8/81 42 2/86 17 2/66 16 4/64 62 10/68 48 7/88 58 9/90 46 5/88 53 2/89 20 12/52 22 4/73 30 3/81 41 9/85 23 4/71 24 4/56 56 2/90 36 5/76 25 2/75 NAME BAIRD, RICHARD H. BLACKARD, PAUL BOLAIN, ANN BOUDREY, BETTY MRS. BOUDREY, HOWARD BOUDREY, JACK CARL, FLOYD JR CASELMAN, ARTHUR CATE, ROY CHRISTIE ARNOLD COUNTS, WAYNE DAVIS, BEULAH F. DEARING, EMMA MRS. FARRAR, ALONZO FRALEY JOSEPH G. HARRIS, BILL C. HARRIS, JAMES E. JORDAN, CHARLIE JUDY, DARRELL KING, ARNOLD D. KING, ARVIL LANE, HOPE MRS LAYER, MERLIN LEE, HAROLD LEWIS, CHARLES LEWIS, MARVIE LEWIS, ROGER LOGUE, PAUL D. MASON, LARRY MC ARTHUR, RONALD A. MC CHRISTIAN, DWAYNE MC WHORTER, CHARLES MILLER, DONALD MOORE JAMES H. MORRIS, WILKIE MRS. MORRIS, WIWAM H. MORRISON, EUENE MULLENS, DENNIS W. OSBURN, EDWARD OSBURN, TROY POAGE, LARRY POLLY, GRACE A. MRS. REED, JOE SCHADER, EARVEL SCHADER, TROY SKELTON, BURL L. SKELTON, LEE SKELTON, ROY SPRINGSTON, CARL STOUT, ORVILLE. GROSS FED. TAX ST. TAX 1,191.06 100.00 55.00 55.00 1,641.57 180.00 1,383.66 1,088.98 287.68 55.00 75.00 1,182.35 55.00 55.00 377.50 55.00 707.84 1,171.39 100.00 55.00 55.00 1,525.81 1,088.98 1,008.97 100.00 1,131.00 130.00 55.00 417.50 55.00 1,088.98 570.91 570.92 50.00 1,902.69 200.00 1,078.16 78.16 1,159.11 100.00 55.00 30.00 886.19 80.00 863.01 125.00 55.00 55.00 70.00 80.00 1,448.31 1,646.01 160.00 1,255.55 65.81 1,556.57 210.00 55.00 55.00 923.01 1,007.92 57.00 692.50 42.50 390.00 1,626.02 126.02 60988 50.00 590.36 50.00 NET 1,091.06 55.00 55.00 1,461.57 1,383.66 50.00 751.30 55.00 75.00 1,182.35 55.00 55.00 377.50 55.00 707.84 10.00 1,061.39 55.00 55.00 1,525.81 1,088.98 10.00 898.97 1,001.00 55.00 417.50 55.00 1,088.98 570 91 10.00 510.92 25.00 1,677.69 1,000.00 1,059.11 25.00 806.19 738.01 55.00 55.00 70.00 80.00 1,448.31 1,486.01 1;189.74 60.00 1,286.57 55.00 55.00 923.01 950.92 650.00 390.00 50.00 1,450.00 9.88 550.00 540.36 27 3/71 TUNE, MILDRED MRS. 26 :3/66 TUNE, BILLIE SUE 28 7/68 WATTS, DONALD 59 5/91 WATTS, WAYNE 52 9/88 WRIGHT, RANDALL DROP EMPLOYEES !80:00 180:00 400:00 1,191!51 i ,128.98 96.17 150.00 80.00 80.00 400:00 1,095:34 978.98 37713:20 2,568.34 224:88 34;919 98 JOHNSON, ROBERT 2,04247 MILLER, KENNETH 2,129.57 WARFORD, THOMAS 1,659.70 BONADUCE, MICHAEL 1,975.38 DILL, GARY 2,396.21 GAGE, TOMMY 1,716.25 FREEDLE LARY 2;550:40 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. SECRETARY CHAIRMAN AND PRESIDENT ACKNOWLEDGEMENT STATE OF ARKANSAS ) COUNTY OF WASHINGTON) )SS SWORN TO AND SUBSCRIBED BEFORE ME THIS DAY OF , 1998. NOTARY PUBLIC MY COMMISSION EXPIRES: J • • JUN -2..1-199B 14:30 MERRILL LYNCH FAYETTEVILLE FIRE DEPT PENSION AND RELIEF FUND PORTFOLIO PERFORMANCE 12/31/97 TO 5/31/98 NM CAPITAL MANAGEMENT INCOME ACCOUNT ASHLAND ASSET MGNT 3 -MONTHS TREASURY BILLS DJIA W/DIV REINVESTED S & P 500 W/DIV REINVEST LONG TERM TREASURY BONDS HIGH GRADE CORP BONDS CPI {apr} NM CAPITAL (time wtd} • INCOME ACCOUNT ASHLAND ASSET MGNT JANUARY 1996 Dow United Kingdom Hong Kong MAY 1996 Dow United Kingdom Japan Hong Kong SEPT 1996 Dow United Kingdom Japan Hong Kong 12/31/97 4,647,115 4,897,44 1.561.424 11,106,027 12/31/95 +5.46 +35.53 +34.94 +27.63 +23.51 + 2.67 +15.68 +15.61 4/30/98 5/31/98 5,017,437 4,923,705 5,090,619 5,084,825 original inv. $75,000 75,000 75,000 575,000 75,000 75,000 75,000 575,000 75,000 75,000 75,000 1.739.640 1319.656 11,847,696 11,728,186 12/31/96 12/31/97 5/31/98 + 5.31 +29.49 +22.98 - 1.21 + 1.61 + 3.32 +11.37 + 4.25 +17.91 + 5.33 +24.87 +33.36 +15.38 +13.42 + 1.70 +16.97 + 6.38 +30.80 +2.18 +13.30 +13.05 +3.85 +4.25 +0.74 +6.23 +3.19 +10.13 4/30/98 5/31/98 5120,760 5118,592 111,903 110,128 48,950 39,736 5110,587 125,296 32,995 50,130 5111,665 115,410 35,523 48,340 5109,608 122,460 30,151 41,434 5111,304 112,662 31,317 39,411 P.03/05 Y SUN -23-1990 14:30 • MERRILL LYNCH P.04/05 Do you have answers to these critical questions concerning your financial future? • When can you retire? • Are you saving enough for your children's or grandchildren's education? • When should you sign up for the DROP program? • Are you paying too much in taxes or could you be keeping more of what you earn.? • Are your credit relationships helping or hurting your net assets? • Will you outlive your retirement income? • Will your family suffer financially if accident or illness strikes? • Will the government get more of your estate than your heirs? • Does your asset allocation match your investment needs? • Does your mvestment strategy assume too much risk-- or too little? • What are your goals and dreams? Planning -based approach to financial management helps you: —, Organize your finances and your assets. —► Manage all your assets as a whole. — > Make smarter financial decisions. —� Develop your income protection strategy. —� Reduce risk and maximize investment. - Manage your credit obligations. —) Minimize your tax obligations. 4 Findings of an annual survey published in 1996 indicate that individuals that practice financial planing, particularly those who have a professionally prepared financial plan, have less concern about the future, better saving habits, and are better prepared for managing debt. Planning helps you find objectives, pinpoint opportunities, and gather information that can help you reduce risk and make smarter financial decisions. - T i • JUN -23-1998 14:31 MERRILL LYNCH P.95/05 The Fayetteville Firefighters Pension Board is considering making available a one-time , benefit to the firefighters on the old pension plan, at no cost to you, however, there will be a cost to the Pension Plan of $250 per financial plan completed. A formal financial plan will help you in organizing your finances and assets and give a road map to help you achieve your goals. Should the board receive a favorable response from the membership and if you elect to complete the financial plan, you will be having a one-on-one meenng with a financial advisor from Memll Lynch to complete the plan. Another one-on-one meeting will then be scheduled with Merrill Lynch advisors to review their recommendations. Your report will be completely confidential between you and the Merrill Lynch advisor. You will have no other obligation to Merrill Lynch, any implementation may be completed, anywhere you choose. (Please see the benefits on the enclosed letter). Please indicate your interest by sending the attached coupon to: Pete Reagan 2340 No. Green Acres Suite #16 Fayetteville, AR 72703 This does not obligate you in any way. The board is trying to determine your interest. Return this coupon as soon as possible as this topic is scheduled to be discussed at the July 30, 1998, Pension Board meeting. ❑ I would be interested in obtaining a formal fmancial plan. 0 I have no interest In a financial plan. Signature TOTAL P 05 • .MARK LINDSAY •K. R. IASHtEE, L.L11. OF COUNSEL MARK LINDSAY, P. A. ATTORNEY AT LAW P.O. BOX 1612 FAYETTEVILLE, ARKANSAS 72702-1612 July 9, 1998 Mr. Joh Greenhaw Attorn at Law P.O. ox 4276 Faye teville, AR 72702-4276 RE: Bonaduce vs. Bonaduce; Washington County Chancery Court Case No. E 98-585 Dear John: Thank you for your letter of July 9, anticipate every question"I would have for of Fayetteville, the following is, I comprehensive list: Ila /INTI 1 OW= • 1TJIPHONE 601/121-4000 PAC 601/442-7671 1998, While I cannot Mr. Bailey at the City feel like, a fairly 1. What benefits does Mr. Bonaduce have under the Fireman's Pension Fund? When did/do these benefits vest? 3, When are the benefits payable? 4. Is there a specific balance in the Pension Fund under an account in the name of Mr. Bonaduce that is ascertainable at this time? 5. What is the dollar amount of the balance? 6. Is the account qualified under the Internal Revenue Code such as to be divisible by a Qualified Domestic Relations Order? 7. If ascertainable, how much has the City contributed, and how much has Mr. Bonaduce contributed? • 8. When will the benefits be payable, and will they be payable in a lump sum, or in increments? What amount will be paid whether in a lump sum, or in increments? 'Board Recognized Specialist In Tax Law • 1, Mr. John Greenhaw July 9, 1998 Page Two • 10. Is Mr. Bonaduce entitled to any other compensation from the City of Fayetteville or the Fire Department whether salary, bonuses, deferred compensation or otherwise other than in the Fireman's Pension Fund and as disclosed on his 1997 W-2? To avoid a time lag, since we have a trial date of August 13, 1998, I am forwarding a copy of this letter to Mr. Bailey in care of the City of Fayetteville, and would ask that he get back with both of us as soon as he feasibly can so we can set up a meeting. I thank you both for your cooperation. Sincerely, Mark Lin.sa • JML/hf cc: Don Bailey, c/o City of Fayetteville Renee Bonaduce JU..-07-98 TUE 10.04 P.10 • • • ARKANSAS FIRE & POLICE PENSION REVIEW BOARD i TO: The Board of Trustees I Fire Pension and Relief Fund of FAYETTEVILLE Police Pension Review 4ard FROM: RE: DATE: Arkansas Fire and 1997 Pension Fund Actuarial Valuation July 7, 1998 P.O. DRAWER 34164 LITTLE ROCK. ARKANSAS 72203 TELEPHONE (507 ) 682.1745 FAX: (5O 1) 682.1751 In accordance with State law, the actuary under contract to this office periodically tests all local fire and polLce:.pension .funds for actuarial soundness. The 1997 actuarial.study of your pension fund is attached. The financial tests for the pension fund are to answer the following questions: 1. Is there enough annual income to the pension fund to fully fund it? (See page 4 of the actuary's report.) 2. Are there enough assets in the pension fund; to cover all active member contributions, all payments to current retirants, and at least: 75% of future payments earned by active members (See page 11 of the actuary's report), OR are current assets sufficient to cover 90% of all accrued actuarial liabilities (See page 10 of the actuary's report). 3. Is this pension fund considered actuarially: sound under State law? YES HQ JUL-07-98 TUE 10;05 FAYETTEVILLE FIREFIGHTERS PENSION FUND ACTUARIAL VALUATION AS OF DECEMBER 31, 1997 P, 11 JUL-07-98 TUE 10:05 Osborn, Carreiro & Associates, Inc. • ACTUARIES • CONSULTANTS • ANALYSTS • July 7, 1998 Board of Trustees Fayetteville Firefighters Pension Fund Gentlemen: P. 12 One Union National PlazaSuite 1690 12.4 west Capitol Avenut Little Rock Arkansas22201 (501)376-804: This report presents the results of our actuarial valuation of the assets and Liabilities of the Fayetteville Firefighters Pension Fund as of December 31, 1997. This valuation is required by Arkansas Code Annotated 24-11-205. The purpose of this report is to (1) evaluate the actuarial status of the Fund, (2) determine the level contribution requirement needed, (3) review the development of the Fund over the past several years, and (4) present certain actuarial items on pages 8 and 9 for disclosure under Governmental Accounting Standards. This report is not intended for any other purpose. The member and financial information used in this report was supplied by the Arkansas Fire & Police Pension Review Board, whose cooperation is appreciate& We did not audit the information. although we did review it for reasonableness and consistency. I certify that this report has been prepared in accordance with generally accepted actuarial principles and practices. In my opinion, the actuarial methods used are appropriate and the actuarial assumptions produce results which, in the aggregate, arc reasonable. Sincerely, M Steve Osbom, F.S.A., M.A.A.A. Actuary JUL-07-98 TUE 10:05 1 EXHIBIT 1 EXHIBIT 2 EXHIBIT 3 EXHIBIT 4 EXHIBIT 5 EXHIBIT 6 EXHIBIT 7 EXHIBIT 8 TABLE OF CONTENTS CONTRIBUTIONS COST AND LIABILITIES SUMMARY OF FINANCIAL COMPARISON WITH PRIOR SHORT CONDITION TEST EMPLOYEE AND RETIREE PR ORMATION FILES PRINCIPLE PROVISIONS OF THE PLAN ACTUARIAL METHODS AND )SSUMPTIONS P.13 JUL-07-98 TUE 10:05 • P.14 EXHIBIT 1 CONTRIBUTIONS The following contribution level reflects the payment of the current year Normhl Cost for benefits attributable to said year (see Exhibit 2) plus an amount sufficient to pay off the Unfunded kctuarial Liability over a 10 - year period (5 -year period for any unfunded retiree liability). These costs DO FOT include the contributions due to the Local Police and Firefighters Retirement System ("WPM") for persons hired after 1982. Full 1998 Necessary Annual Contribution to pay: 1 Normal Cost, plus $ 231,299 $ 2 Pay off the Unfunded Actuarial Accrued Liability 145,191 3 Total necessary Less 4 Expected Employee Contribution (6.00% of salary. 312 per active volunteer) Necessary Employer Contribution (This is the amount needed in addition to investment income) Covered Payroll olunteer or Part -Pard, Total 0 $ 231,299 0 145,191 $ 376,490 $ 0 $ 376,490 36,516 - 0 - 36,516 $ 339,974 $ 0 $ 339 974 $ 608,602 N/A $ 608,602 Necessary Employer Rate 55.86% $ 0 55.86% These contributions assume that the dollar contribution grows at a rate of 4% per year. The contributions are assumed to be made continuously throughout the year. The actual 1997 contribution was $481,137 from the employer. 4 • JUL-07-08 TUE 10:06 • • EXHIBIT 2 COSTS AND LIABILITIES A Normal Cost (Cost to fund current active members) 1 Regular Retirement Benefits 2 Voluntary Termination Benefits 3 Survivors' Benefits 4 Disability Benefits TOTAL B Actuarial Accrued Liability 1 Active Lives Regular Retirement Benefits Voluntary Tennination Benefits Survivors' Benefits Disability Benefits TOTAL ACTIVE LIVES 2 Deferred Retirement Option DROP Accounts Future DROP Payments & Pensions TOTAL DROP 3 inactive Lives Retirees Disability Retirees Widows & Children TOTAL INACTIVE LIVES 4 Total Liability C Assets D Unfunded Actuarial Accrued Liability 5 P. 15 December 31, 1997 Dollar Percent Amount of pay 216,601 35.59% 3,099 0.51% 5,560 0.91% 6,039 0.99% $ 231,209 38.00% S 4,770,150 0 2,893 4,702 $ 4,777,745 S! 135,845 1,345.538 S' 1,481,383 4,739,155 794,740 300,427 $ 5,834,322 12,093,450 10,797.636 1,295,764 JUL-O7-98 TUE 10:06 • • A. INCOME P.16 EXIIiBIT 3 SUNO/LARY OF FINANCIAL INFORMATION: (Items D -E determined by Osborn, Carreiro and Associates, Inc.) Year Ended Yeas Ended Year Ended 12/31/95 12/31/96 12/31 /97 1 Contributions Employee $ 41,187 S 44,248 $ 44,797 Donations 50 I 300 0 Employer/Court Fines/Other 83,087 8,521 89,593 Insurance Tax 137,227 146,423 154,075 Local Millage 166,068 215,222 237,469 Adjustment to prior year asset value 0 0 0 2 Net Investment Incomc • 1,047,672 844,248 877,202 TOTAL INCOME $ 1,475,291 $ 1,338,962 $ 1,403,136 B. EXPENSES 1 Administrative $ 5,426 $ '4,775 $ 3,000 2 Benefits 379,530 311,670 452,558 3 Refunds 0 0 0 TOTAL EXPENSES $ 384,956 $ 386,445 $ 455,558 6 JUL-07-68 TUE 10:06 . -- EXHIBIT 3 (Continuea) P.17 C ASSETS (at book value) 12/31/95 12/31/96 12/31/97 1 Cash & Checking Accounts $ 0 S 0 $ 0 2 Bank Deposits 32,125 59,911 66,202 3 Savings and Loan Deposits 0 0 0 4 Other Cash Equivalents 647,238 371,374 650,784 5 US Govt. Securities 1,640,239 1,7163,736 2,184,012 6 Non -US Govt Securities 0 0 0 7 Mortgages 0 0 0 8 Corporate Bonds 2,152,304 2,315,155 2,377,472 9 Common Stocks 4,357,651 5,212,056 5,401,209 10 Other 68,616 ?7,876 118,007 11 •Payables (582) 0 0 TOTAL ASSETS $ 8,897,591 $ 9,850,108 $ 10,797,686 D. RATIO OF ASSETS TO ANNUAI EXPENSES: 23.1 25.5 23.7 E. NET INVESTMENT RETURN: 13.4% 9.4% 8.9% F. TOTAL MARKET VALUE 9,826,212 11,225,602 (Used only for GASB calculations) 7 JUL-07-98 TUE 10:06 • • EXHIBIT 3 (Continueal ACCOUNTING INFORMATION P. 18 This page is included to provide the information required by the Govetnmentall Accounting Standards Board Statement No. 5. The values below are based on the assumpuons contained in Exhibit 8. STATEMENT OF CREDITED PROJECTED BENEFIT$ Actuarial present value of credited protected plan benefits Participants currently receiving benefits Terminated employees not yet receiving benefits DROP Balances Future DROP Payments & Pensions Active employees Accumulated employee contributions Employer Financed Vested Nnnvcsted December 31, 1997 S 5,834,322 0 135,845 1,345,538 401,937 2,025,857 2,375,693 Total actuarial present value of credited projected benefits S 12,119,192 The actuarial present value of credited projected benefits is used in the financial, statements of the plan and the Employer. These numbers are used for disclosure purposes only, and arc not used in determining the actuarial contribution requirements. Note: GASB No. 27 is effective January 1, 1998. The GASB No. 5 inforttiation on this page is being shown for transition purposes only, and will not be shown in the future. 8 JUL-07-98 TUE 10:07 • EXHIBIT 3 (Continued) • • P, 19 ACCOUNTING LNFORMATTON This page is included to provide the information required by the Governmental Accounting Standards Board Statement No. 25 and 27, effective January 1, 1998. The values below are based on the assumptions contained in Exhibit 8. The Annual Pension Cost disclosed in this exhibit will almost always differ froth the actual cash contribution to the fund. We must emphasize that these disclosures are shown in the city's financial statements; Sound actuarial projections should be used to determine the actual cash contribution requirements. RECONCILIATION OF NET PENSION OBLIGATI 1. Actuarially Required Contribution 2. Interest on NPO 3. Adjustment to (1) 4. Annual Pension Cost (1)+(2)-(3) 5. Actual Contribution Made 6. Increase in NPO (4)-(5) 7. NPO Beginning of Year 8. NPO End of Year 1997 173,401 (77,367) (107.055) 203,089 481,137 (278,048) (I,289,450) (1,567,498) (NPO) 1998 292,026 (94,050) (175,639) 373,615 I REQUIRED SUPPLEMENTARY INFORMATION (a) (b) (c) (d) (e) Unfunded Entry Age Accrued Actuarial Market Actuarial Liability Valuation Value of Accrued (UAL) Date Plan Assets' Liability . (c) -(b) 12/31/93 7,271,255 7,816,034 544,779 12/31/95 8,897,591 9,045,983 148,392 12/31/97 11,225,602 12,093,450 867,848 ' Note: Funded Ratio (b)/(c) 93.0% 98.4% 92.8% 12/31/93 and 12/31/95 are at amortized cost value. 9 (1,567,498) (0 Annual Covered Payroll 620,116 676,847 608,602 (g) UALasa% of Covered Payroll (d)/(t) 87.9% 21.9% 142.6% JUL-07-98 TUE 10:07 • EXHIBIT 4 COMPARISON WITH PRIOR YEARS This exhibit compares current valuation results with those of prior years. Valuation Date 12/31/82 12/31/84 12/31/86 12/31/87 12/31/89 12/31/91 12/31/93 12/31/95 12/31/97 Full Paid Active Members 50 45 37 38 27 23 22 21 17 Annual Payroll 810,926 807,438 723,894 788,348 639,962 585,898 620,116 676,847 608,602 'Benefits changed Actuarial Computed Employer Contribution Percent Dollar of Pay Amount 22.1% 179,271 27.7% 223,455 29.6% 213,935 31.3% 246,479 36.0% 230 328 33.3% 195273 25.2% 156,484 25.6% 173,401 55.9% 339,974 P.20 Total Plan Assets 2,202,969 3,078,619 4,006,484 4,460,9481 5,189,84& 5,999,9641 7,271,2551 8,897,591 10,797,686 Unfunded Actuarial Liability 811,186 1,193,660 1,379,340 1,455,161 1,976,463 1,427,422 544,779 148,392 1,295,764 Note: Normal cost prior to 12/31/89 is net of 6% employee contridutions. Valuation Datc 12/31/82 12/31/R4 12/31/86 12/31/87 * 12/31/89 12/31/91 12/31/93 12/31/95 ' 12/31/97 Part -Paid/ Volunteer Active Members 1 1 0 0 0 0 0 0 0 Actuarial Computed Employer Contribution 10 227 274 0 0 0 0 0 0 0 Normal Cost Funded Percent Percent 18.5% 22.1% 21.8% 23.4% 26.6% 25.5% 25.4% 29.8% 38.0% 73.1% 72.1% 74.4% 75.4% 72.4% 80.8% 93.0% 98.4% 89.3% dIJL-07-98 TUE 10 07 • P.21 EXHIBIT 5 SHORT CONDITION TEST The Arkansas General Assembly has stated that the funding objective for thesetplans is to pay for • benefits with contributions that remain level as a percentage of employee payro)l. Thus, the long-term condition test is met when thc actual contributions are fairly level and are paid when due. A short condition test can be used to measure a plan's progress. Under the short condition test, the fund's assets are compared with: 1) Active mcmber contributions; 2) The liabilities for future benefits to the present retirees and inactive members; 3) The Liabilities for service already rendered by active members. If the plan has been following level cost funding, liability (I) and liability (2) above will almost always be fully covered by thc rcst of the present assets. In addition, liability (3) above will at least partially funded. The larger the funded portion of liability (3), the stronger the condition of the fund.For a closed fund i.e., one like yours, where no new members are admitted), the funded portion of liability (3) should be steadily increasing. The following table illustrates the history of the short condition test for this plant valuation Date 12/31/82 12/31/84 12/31/86 12/31/87 1251/89 12/31/91 12/31/93 12/31/95 12/31/97 Computed Actuarial Liabilities (1) Active Members Contributions 160,669 . 236,541 263,129 308,829 274,405 292,477 353,891 418,412 401,937 (2) Retirees, Inactives. and DROPS 898,272 1,464,696 2,753,772 2,754,276 4,560,672 5,072,169 5,005,131 5,101,995 7,315,705 (3) Actives - Employer Financed 1,955,214 2,571,042 2,368,923 2,853,004 2,33I,232 2,062,740 2,457,012 3,525,576 4,375,808 1! Portion of Liabilities covered by Assets Valuation Assets ( ) (2) (3) 2202,969 3,078,619 4,006,484 4,460,948 5,189,846 5,999,964 7,271,255 8,897,591 10,797,686 100% 100% 59% 100% 100% 54% 100% 100% 42% 100% 100% 49% 100% 100% 15% 100% 100% 31% 1d0% 100% 78% 100% 100% 96% 100% 100% 70% 'JUL-07-98 TUE 10:08 • P.22 Exhibit 6 Employee Profile Employee data needed for the valuation was obtained from the records furnished by the Arkansas Fire and Police Pension Review Board. Thej following table shows a detailed breakdown of the present participants by the number of participants and total salary. Actives Years of Service 0-5 5-10 10-15 15-20 20-25 25-30 30 and Over Under 25 Count Salary 0 0 0 0 0 0 0 0 0 0 I 0 0 0 :: 0 ,' , 0' 0 25-29 Count Salary 0 0 0 0 0 0 0 0 0 0 0 0 0 0'.'..... •>_ ;0. 0 30-34 Count Salary 0 0 0 0 0 0 0 0 0 0 0 0 0 •-•. i; • 24:0 0.: . Q' 35-39 Count 0 0 0 5 0 0 0 `•.. ';5: Salary 0 0 0 151.706 0 f 0 0 ';.1'51;706. 404 Count 0 0 1 1 2 0 Salary 0 0 35,068 35,626 61,365 • 0 0 1324059 45-49 Count 0 0 0 3 3 0 0 6 Sal 0 0 0 111,934. 113,911 0 0 .223;845 50-54 Count 0 0 0 0 0 I 1 Sala 0 0 0 0 0 42,438 0 ... 42;138 55-59 Count 0 0 0 0 1 0 I 1 Salary 0 0 0 0 0 i 0 56,555. 56;555 60-64 Count 0 0 0 0 O i 0 0 0 Salary 0 0 0 0 0 0 0 0 65 & Count 0 0 0 0 0 0 0 0' Over Salary 0 0 0 0 0 0 0 0. Unknown Count 0 0 0 0 0 0 0 0: Age Salary 0 0 0 0 0 0 Total Count 0 0 ::. " 1'` 9 .: 5 1 1 l Salary 0 0 :. ' 35,068 ' 299;266 175,276 42,438 - 56,555 608,603' 12 -3UL-07-98 TUE 10:08 • • Age 1),23 Exhibit 6 Employee Profile Employee data needed for the valuation was obtained from the recordsifumished by the Arkansas Fire and Police Pension Review Board. The following table shows a detailed breakdown of the present participants by the number of participants_ Volunteers/Part-Paid Actives Years of Service 0-5 5-10 10-15 7n- 7i - 30 and 13 Under 25 Count 0 0 0 0 0 0 0 25-29 Count 0 0 0 0 0 0 0 0 30-34 Count 0 0 0 0 0 1 0 0 rlY 35-39 Count 0 0 0 0 0 i 0 0 '' ` 40-44 Count 0 0 0 0 0 1 0 0 45-49 Count 0 0 0 0 0 0 0 .. .. ;;- 0; 50-54 Count 0 0 0 0 0, 0 0 0 55.59 I Count 0 0 0 0 0 i 0 0 0. 60-64 Count 0 0 0 0 0 0 0 0 65 & Over Count 0 0 0 0 0 0 0 Unknown Age Count 0 0 0 0 0 0 0 t0: 1 Total Count 13 JUL-07-08 TUE 10:08 • Aee P.24 Exhibit 6 Inactive Profile Employee data needed for the valuation was obtained from the records famished by the Arkansas Fire and Police Pension Review Board. The following table Ishows a detailed breakdown of the present payees by the number of payees and total annual benefit. Retirees and Survivors Years Since Retirement 0-1 4-5 10 and This includes This includes This includes 42 retirees with annual benefit of $361,395 . 5 disableds with annual benefit of 561.416 . 8 survivors with annual benefit of 528,789 . 14 V v c I. ial Under Count 0 0 0 0 0 0 0 ::. -.4 V'. 0f. 40 Benefit 0 0 0 0 0 1 0 0 `, ;:;i3O' 40-44 Count 0 0 0 0 0 j 0 0 ., . 0. Benefit 0 0 0 0 0 j 0 0 ,•.. 0 45-49 Count 0 0 0 0 0 2 Benefit 0 0 0 0 0 28,486 0.;.`:128;4.86, 50-54 Cotten 0 0 0 1 0 j 8 0:; ;• q: Benefit 0 0 0 18.310 0 121,820 0• �.t4Q;13d. 55-59 Count 0 0 0 0 0 j 5 7: .'12: Benefit 0 0 0 0 0 60,574 89,368 ` 149042 60-64 Count 0 0 o 0 0 0 3 ". ;...3 Benefit 0 0 0 0 i 0. 0 30.811 .c. 30,$1• 65-69 Count 0 0 0 0 0 0 6 : ". 15 Benefit 0 0 0 0 0 0 45,303 .-- 4%303 70-74 Count 0 0 0 0 0 0 6' :. . .6 Benefit 0 0 0 0 0 0 20,358 -._20,358. 75-79 Count 0 0 0 0 0 0 7' 7 Benefit 0 0 0 0 0 0 13,110 .13410 80-84 Count 0 0 0 0 0 0 6 .. 6 Benefit 0 0 0 0 0 0 16,650 16,650 85 & Count 0 0 0 0 0 0 4 .: 4 Over Benefit 0 0 0 0 0 0 6,810 _- 6;810 Unknown Count 0 0 0 0 0 0 0 O. Age Benefit 0 0 0 0 0 0 0 0 Total Count 0: 0... - :0 :.. 1 O. • 15 39 5S _ Benefit 0 . 0 : U_ :: _18,310. 0: .:210 880. 222,410 451,600 This includes This includes This includes 42 retirees with annual benefit of $361,395 . 5 disableds with annual benefit of 561.416 . 8 survivors with annual benefit of 528,789 . 14 JUL-07-98 TUE 1009 • • P,25 Exhibit 6 Deferred Retirement Option Plan Profile Employee data needed for the valuation was obtained from the records 'furnished by the Arkansas Fire and Police Pension Review Board. The following table shows a detailed breakdown of the current participants on DROP by the number of participants and total annual DROP benefit. Age DROP Participants Years Since Electinz DROP 0-1 1-2 2_ I5 0 0 0! 0 0 0 0.: 0' V.O -.; Under 40 Cotmt Benefit 0 0 0 0 40-44 Count Benefit 1 23,705 1 25,555 0 0 0 0 1 1 0 0 0'' 49;200 45-49 Count Benefit 0 0 2 44,426 0 0 0 00 0 0'": 0 .:2: ..: - 44426 50-54 Count Benefit 0 0 0 0 0 0 0 0 1 0 0 0 ;" _' ::0 55.59 Count Benefit 0 0 0 0 0 0 0 0 0 0 0 0 ... 0 0: 60-64 Count Benefit 0 0 0 0 0 0 0 0 0 0 0 0 0. 0 o 0 '-0 0 Cr 0 65-69 Count Benefit 0 0 o 0 o 0 o 0 70-74 Count Benefit 0 0 0 0 0 0 0 0 0 0 0 0 0 0 75 & Over Count Benefit 0 0 0 0 0 0 0 0 0 0 0 0 0 0 o 0 0 0 o 0- 0 0 o 0 0 0 Jnknowr Age Count Benefit 0 0 Total Count Benefit 1 . 23;705' 3:.. 69,981 0 0 :..' . _. ': p. 0 . ... 0 . 0 0 0 4 93,686 I5