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
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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
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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.
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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.
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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
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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
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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
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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=
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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?
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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
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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
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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
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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