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HomeMy WebLinkAbout1999-12-30 - Agendas - FinalFAYET-TEVILLE • THE CITY OF FAYETTEVILLE, ARKANSAS FAYETTEVILLE FIRE PENSION AGENDA DECEMBER 30,1999 A meeting of the Fayetteville Fire Pension and Relief Fund will be held on December 30, 1999 at 11:00 a m in Room 326 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. 1. Approval of the minutes 2. Approval of the pension list 3. Investment report 4. State Insurance Turnback 113 WEST MOUNTAIN 72701 501 521-7700 FAX 501 575-8257 • • • MINUTES OF A MEETING OF THE FAYETTEVILLE FIRE PENSION AND RELIEF FUND NOVEMBER 18, 1999 A meeting of the Fayetteville Fire Pension and Relief Fund Board was held on November 18, 1999 at 11:00a.m. in Room 326 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. PRESENT: Marion Doss, Pete Reagan, Ron Wood, Darrell Judy, Heather Woodruff, and Marilyn Cramer. ABSENT: Mayor Hanna and John Dill MINUTES Mr. Judy moved to approve the minutes. Mr. Wood second the motion. Upon roll call the motion carried unanimously. Mr. Reagan noted the City Council had approved the millage for the Fire and Police Pensions. PENSION LIST Mr. Reagan noted there was a typo on Arnold Christy. He noted Mr. Bill Harris had passed away and his widow would be receiving his benefit of $65.00 per month. Mr. Doss moved to approve the pension List. Upon roll the motion carried unanimously. INVESTMENT REPORT There was no investment report provided. Next meeting was scheduled for December 30, 1999. Meeting adjourned at 11:10 a.m. • DEC 30'99 11:11 FR MERRILL LYNCH • 501 220 7431 TO 15015750257 P.02'02 Fayetteville Fire Dept. and Relief Fund Portfolio Performance 12/31/98 - 11./30/99 12/31/97 MLAM Private Portfolio Group 4,647,115 (started 12/1/98) Income Account 4,897,115 Ashland Asset Mgmt. 3 Month Tsy. Bills DJIA w/ Dividend Reinvest S&P 500 Index w/ Dividend Reinvest Long Term Tsy. Bonds High Grade Corp. Bonds CPL (Oct) MLAM Private Portfolio Group Income Account Ashland Asset Mgmt. May -96 DOW 1,561,424 11,106,027 12/31/97 + 5.33 + 24.87 + 33.36 + 15.38 + 13.42 + 1.7 + 16.97 + 6.38 + 30.8 12/31/98 4,565,099 5,339,191 2,085,712 11,990,002 12/31/98 + 5.23 + 18.12 + 28.59 + 13.78 + 10.47 + 1.55 - 2.16 + .01 + 34.78 Orig. Investment 12/31/98 $75,000 $109,600 * Income account: $129,000 sent to checking account thru 9/30/99 11/30/99 4304,043 5,087,272 2,460,913 12,252,228 11/30/99 +4.38 +20.26 +14.31 - 7.82 - 6.39 - x123 +3.19 - 2.33 +19.07 11/30/99 $103,076 • ARKANSAS FIRE & POLICE PENSION REVIEW BOARD Agenda Arkansas Fire and Police Pension Review Board 10:00 a.m., Tuesday, December 14, 1999 Suite 940, One Union National Plaza Building Little Rock, Arkansas P.O. DRAWER 34164 1..'TRE ROCK. ARKANSAS 72203 TELEPHONE (501) 682-1745 FAX: (501) 682-1751 1 Call to Order Recognition of a Quorum and Notification of the News Media SPECIAL ORDER OF BUSINESS: Seating of new employer representative on Board - Mr. Voy Gullentine, City of Osceola 2 Approval of Minutes of the September 28, 1999 Meeting Review of the November 3, 1999 Administrative Services Committee Minutes 3. Old Business Review of Procedure for Annual Police Supplement Program 4. New Business • a) 1998 PRB Audit - Mr. Bill Kinneman b) 2000 Budget c) Little Rock Police Pension Fund, discussion of removing actuarial soundness test from spouse benefits, pursuant to request of Lt. Farris Hensley 5. Opinions of the Attorney General 6. Other Business 7. Approval of Guest Parking' 8. Set Next Meeting Date and Adjourn • RECEIVED DEC 161999 CITY OF FAYETTEVILLE CITY CLERK'S OFFICE PRB Minutes September 28, 1999 Page 1of8 CORRECTION OF MINUTES MADE 10/25/99 PER REQUEST FROM MR. FERRIS HENSLEY. THE CORRECTIONS ARE IN BOLD, WITH OLD LANGUAGE STRUCK THROUGH. Minutes The Arkansas Fire and Police Pension Review Board Regular Meeting and Public Hearing The Arkansas Fire and Police Pension Review Board met on Tuesday, September 28, 1999 at 10:00 a.m. in their offices in the Union Plaza Budding, 124 West Capitol, Suite 940, Little Rock, Arkansas. Members Present: Bill Lundy, Fire Employee Member, Chair Dick Barclay, Director, Dept. of Finance & Admin. David Evans, Employer Member Jim Gates, Fire Employee Member Farris Hensley, Police Employee Member David Johnson, Public Member Tim Randolph, Police Member Members Absent: Catherine Cook, Employer Member Staff Present: Cathyrn Hinshaw, Executive Director David Clark, Assistant Director Elizabeth Stephens, Administrative Assistant Others Present for Board Meeting and Public Hearing: Steve Osborn, PRB Actuary, Osborn, Carrera & Associates Jody Carreiro, PRB Actuary, Osborn, Carreiro & Associates James Dickson, Trustee, Little Rock Pension Linda Bryant, Clerk/Treasurer, City of Greenwood Lee Harrod, Trustee, Little Rock Police Pension Fund Matt Rhea, Legislative Chair, Ark. State Firefighters Assoc. Larry Pritchett, Member, Texarkana Pension Board Ed Adcock, Attorney Chairman Lundy called the meeting to order at 10:05 am. He recognized a quo- rum and notification of the news media. Ms. Cook's absence was noted. The chair wel- comed Mr. Barclay to the board as the new board member. Chairman Lundy asked for approval of the minutes of the June 29, 1999 board meeting. Mr. Gates said a correc- • • • PRB Minutes September 28, 1999 Page2of8 tion needed to be made on page 8, in the third line from the bottom of second para- graph: ". . for a person with at least 235 years " This should read "25 years." Mr. Randolph asked for clarification on page 3 of the minutes. In the third para- graph from the bottom of the page, a vote was taken on a motion. Mr. Randolph said he could not find in the minutes where the motion was made. After further discussion, the board instructed staff to review the tape of the June 29 meeting for clarification, and re- port back to the board at the next meeting, and the approval of minutes was tabled. Mr. Randolph made this motion, and Mr. Hensley seconded. The motion passed unani- mously. Chairman Lundy said that he wants minutes of board meetings within three weeks of the meeting. It was the consensus of the board for staff to follow the chair- man's recommendation The special order of business was an administrative hearing regarding amend- ments to Board Rules 1, 3, 7, and 10, and promulgation of new Board Rule 11. A court reporter was present to record the minutes of the public hearing. The hearing started at 10:15 a.m. and closed at 10:26 a.m. . Under old business, the board voted to adopt the recommendation of the admin- istrative services committee to upgrade the executive director's salary to $66,000, effec- tive July 1, 1999. Chairman Lundy asked for a motion to adopt the recommendation, and adjust the budget for the increase. Mr. Gates made the motion, and Mr. Johnson seconded. The motion passed unanimously. Ms. Hinshaw thanked the board for the increase. The response to the Blytheville Fire Pension Board of Trustees June 17 letter was noted by the board. Chairman Lundy said at the last board meeting, Blytheville did not understand why their benefit increase request could not be granted. The actuaries discovered that Blytheville's accountant underreported how much money was in their DROP account. Chairman Lundy said the board heard from Mr. Turbeville, Blytheville's investment advisor, who was not satisfied with the board's response, because he said there was not enough detail. Since then, Chairman Lundy contacted a member of the Blytheville Fire Pension and Relief Board, Captain Larry Moore, and offered to come and meet with them. They are still working on a mutual meeting date. Chairman Lundy said he got the impression from Captain Moore that it was not as pressing an issue with him as it was with the investment advisor. While talking with Captain Moore, Chairman Lundy said he learned there are some internal problems in Blytheville's pension fund. Some of the retirees feel like they could have gotten a bigger benefit increase if they had not done some things with their DROP account. The seating of proxies on the board was discussed next. Chairman Lundy said the previous director of the Department of Finance and Administration (DFA) sent a let- ter to the board asking if Mr Shelby McCook could attend PRB meetings in his place. The law does not allow proxies. The board asked for an Attorney General's opinion on PRB Minutes September 28, 1999 Page 3 of 8 the matter, if the new statute will allow the director of DFA to appoint a proxy. The board has not received an answer yet, although the board has received a confirmation from the AG's office that they received the request. Mr. Barclay said he does plan to attend some board meetings, but he would like the board to go ahead and get the AG's opin- ion. Mr..Barclay said when he is unable to attend a meeting Mr. McCook will attend as an observer. The board reviewed the request from Ms. Kathleen Bourne for assistance with receipt of a benefit payment for her child. Chairman Lundy said Ms. Bourne has come before the board before with the same problem. She was divorced from a Little Rock police officer, who died and left a dependent child They are covered under the old re- tirement system. Ms. Bourne felt that her child was due a larger benefit than he was re- ceiving, and asked the PRB for assistance on the matter. The PRB initiated legislative action they thought would raise the benefit for her child. . However, the Little Rock board thinks that the legislation may not have been written properly to be retroactive for Ms. Boume's case. Mr. Hensley said the beard PRB voted to support legislation that would extend the deceased member's full benefit to his dependent child. Prior to the last Little Rock Police Pension Board meeting Mr Hensley said he received a letter in which Ms. Bourne asked the Little Rock board to consider it as her application for the dependent benefits under the new act. In her letter, Ms. Bourne asked for $300, which represented all the past benefit increases that retired Little Rock police officers had received. She asked for full pension benefits for her child, Matthew Howell, to be extended to him She also asked for $125 in surviving child benefits. She brought into question another act other than the one just passed the legislature. The Little Rock board immediately turned it over to their attorney for review, because there are two acts involved and many ques- tions..At-that-point, Ms. Bourne had previously mailed a letter to Representative Smith, and sent.a copy of her letter to each member of the Joint Interim Retirement Committee, asking for assistance from Rep. Smith. After the Little Rock board turned the letter over to their attorney, Mr. Ed Adcock, he researched the matter and provided the Little Rock board with a legal opinion. The formal action of the Little Rock board, which was taken at their last pension board meet- ing, was to deny Ms Boume's requests, for all of the items that Mr. Hensley mentioned. That should bring the PRB up to date on the matter. If the PRB wants additional infor- mation about the legal basis for the Little Rock board's actions, then Mr. Adcock can address thew questions. Ms. Hinshaw said she wanted to clarify for Mr. Hensley and everyone else the only reason Ms Bourne's letter is included in the board packet, is because Representa- tive Smith called Ms. Hinshaw and asked her to put it on the agenda. He is a legislator on the retirement committee. Chairman Lundy asked Mr. Hensley if his board had any discussion about just focusing on the recently passed act, because Mr. Hensley said that his board turned down Ms Boume's request based on everything she asked for Mr. 'Hensley said the legal basis for the denial was that the board's attorney told them • • • 4 PRB Minutes September 28, 1999 Page 4 of 8 that they did not have clear legislative authority to retroactively pay increase benefits for Matthew Howell, the surviving child. Mr. Randolph said the PRB's efforts have been towards to getting this child more benefits as soon as possible. He said he knew the PRB supported doing this, even though it is a local board matter. But there is not much else that the'PRB can do, unless there is some way to encourage an amendment to the act. Mr. Gates agreed with Mr. Randolph. Mr. Hensley said he did not think there is anyone on the Little Rock board who does not want Matthew Howell to get the benefits. The consensus of the Little Rock board is that they want clear authority to pay the benefit. Mr. Hensley said this is- sue is definitely going to be litigated. So before the next legislative session, it will possi- bly be resolved in court. Mr Evans asked Mr. Hensley if he was suggesting that the PRB wait for the issue to be resolved in court. Mr. Hensley said he does not see that the PRB has much choice, because the PRB does not have the authority to do anything else other than take the act before the legislature for an -amendment. The issue will probably be resolved by the court prior to the upcoming legislative session. Mr. Johnson said he agrees with Mr. Hensley. Mr. Osborn said when the legislature was reviewing the act, they assumed the cost included current, surviving, and future children. Chairman Lundy said the board • members assumed the same thing. And because Rep. Smith requested that this matter be reviewedby the board again, that staff write a letter to Rep. Smith and tell him that the PRB has discussed the issue, and it is the board's understanding that it is under court challenge, and there is nothing the PRB can do right now. He asked the board members if they wanted to take any action on the issue. Chairman Lundy said the Joint Interim Retirement Committee has held public meetings throughout the state. The chair of the committee, Senator Hopkins explained to the audience that the legislature does pass laws, but generally they leave it up to the state boards that have authority to form policies, to set those policies They tend to let boards pursue those policies until they find that something is wrong. Then they clarify or amend the legislation. Chairman Lundy said the state boards have some authority, if we are to believe what Senator Hopkins said. The chair said he does not have any prob- lem with the board telling local plans what they think is the intent of the law, based on the board's exposure during the legislative session, that the benefits be paid to the sur- viving children. Mr. Randolph said the letter to Rep. Smith should indicate the board's interpretation of this new law; however, some local boards have interpreted it differently or want clarification, and litigation is pending. It was the consensus of the board to stay the course. Ms Hinshaw said the minutes reflect there was no motion or consensus. Chairman Lundy confirmed this. The board discussed the procedure about how to distribute the annual Police • Supplement Plan money. Ms. Hinshaw reviewed her memorandum on the distribution procedure. The board asked Ms. Hinshaw to write a procedure for getting the police supplement turnback, and this was the outline. Chairman Lundy asked the other board members if they had any suggestions to make about the procedure. Mr. Randolph • PRB Minutes September 28, 1999 Page 5 of 8 asked Ms. Hinshaw how LOPFI handles distributing the Police Supplement money for local plans administered by LOPFI. Ms. Hinshaw said the money for these retirees is included in their monthly benefit checks. Mr. Randolph said this should be addressed in the procedure. Chairman Lundy suggesting adding an item 4. Mr Randolph said this sentence could be included under item 2, with a statement of how the money is distrib- uted to LOPFI. Then LOPFI is responsible for distributing it to the individual beneficiar- ies. Chairman Lundy asked Ms. Hinshaw if the LOPFI Board had adopted a procedure, or did staff just start doing it. Ms. Hinshaw said staff immediately started distributing the money. Ms. Hinshaw asked the board member if they wanted her to add an amendment to #2 that says, 'Warrants shall be cut to LOPFI for those plans they administer, and LOPFI shall have the responsibility of distributing the money." Mr. Randolph agreed with this wording. The board told Ms. Hinshaw they wanted to see the procedure back in the form of a full draft at the next board meeting. Under new business, the board approved staff actions regarding benefit in- creases: Fayetteville Police — approved 90% or 100% of salary, based on a cash flow study. Ms. Hinshaw said she has not heard back from Fayetteville as to whether they are going to pay the 90% or the 100% benefit. Russellville Police — approved 100% of salary to retirees. Salem Fire — approved $165 per month :for 20 years of service, based on a random search. They were denied a $300 per month base benefit. Mr. Randolph made the motion to approve staff action, and Mr. Gates seconded. The motion passed unanimously: The board reviewed actuarial opinions. Ms. Hinshaw said this is a new item on the :agenda that arose from discussions she had with Mr. Carreiro about 1999 legisla- tion. Chairman Lundy asked Mr. Carreiro if he had any comments about his correspon- dence. Mr. Carreiro said that the letter in the board packet, dated September 16th, was a response to the Paragould Police Pension Relief Fund. The plan administrator at Para- gould thought the plan had two more retirees eligible for the police supplement money. There was only one, and Ms. Hinshaw asked the plan to send more information on the member. In the last paragraph of his letter, Mr Carreiro suggested an administrative procedure, which he has since found out is not possible. The warrants went directly to the cities instead of the PRB. After Ms. Hinshaw receives the information she requested from Paragould, she will forward it to DFA and request a single warrant to pay the member. The overages and tunderages are odd issues with Act 1452. In the draft of the police supplement pro- cedure '[that .the board just adopted, it says that December 3151 is the date we use to de-. • • • PRB Minutes September 28, 1999 Page 6 of 8 termine who is retired. This is the most administratively wise thing to do. We have not heard any complaints about it. Just so the board is aware, he and Ms. Hinshaw had to make a judgment call and pick the date Chairman Lundy asked if the board needed to take any action regarding the letters. Ms. Hinshaw said not unless the board wanted to direct it differently from the actuary's recommendation. Mr. Carreiro said the second letter probably did not require any comment. His understanding of Act 1458, the benefit for surviving children of police officers, is that it has priority over the police supplement plan money. This is what he has been telling lo- cal plan members when they call and ask him. Mr. Carreiro said he did not know how Little Rock interpreted it in the Howell situation, but the way he reads it, they should have increased the benefit to $400, plus the $15 supplement. Unless the board tells him otherwise, he will continue to tell local plans that this is the way it is supposed to be done. There are still some outstanding questions about the act. Mr. Carreiro said he told Ms Hinshaw that they were increasing children's benefits up to $400 per month if the benefit were not otherwise increased: The law says that it is all survivors; it doesn't say widows or children. It merely saysall survivors. It was the actuary's opinion that the law did not include DROPs, or alternate payees of QDRO's. The opinion on the DROP • has come under criticism from Rep. Smith. He asked Mr. Carreiro to gather up his notes on the DROP, and previous AG's opinions that address whether DROP members are retired or active, and give everything to him Rep. Smith will present the information to the AG, and ask for his opinion as to whether or not DROP members are due the $15 per month supplement. Mr. Osborn said when the topic of the supplement came up be- fore there was discussion somewhere that the supplement was going to provide health insurance for retired police officers. If a member is on DROP, they are working and have health insurance, which is a reason DROP members were not included in the sup- plement. Mr. Carreiro said they did not include it when they costed the bill for the retire- ment committee, and it was not included here either. The board reviewed the actuary's budget request for 2000-2001. Mr. Osborn said their contract runs out at the end of the year, so normally they try to be proactive and have a proposal to the board by their September meeting. Mr. Osborn said the only thing they did not cover with the proposal is an act that changes how the turnback will be allocated for 2001 and forward. He said the board probably does not have to do any- thing about it until the first part of 2001. It seems to require the board to split up how all the turnback is going to be divided, but it is not very clear. Ms. Hinshaw asked if this is the metes and boundaries and population provision. Mr. Gates made a motion to retain the actuaries and adopt the new fee structure. Mr. Hensley seconded the motion. Mr. Barclay asked how much of a percentage in- crease the new fees represented. Mr. Osborn said between 5 and 6% over a two-year • period. Mr. Barclay asked if the board is required to do any competitive professional cess Hinshaw said no, it falls under the category of single -source, Chairman Lundy said they changed to Osborn, Carreiro and Associates from another • • PRB Minutes September 28, 1999 Page 7of8 actuarial firm to save money, and have access to a local actuarial firm. Mr. Johnson agreed that the actuaries do a splendid job. In the second to last paragraph on the second page of the budget proposal letter, Ms. Hinshaw said the board previously discussed the possibility of having the actuaries update financial and personnel data in years that the actuaries do not perform valua- tions. It would cost an additional $3,000 for this service. Ms. Hinshaw recommended adding this amount to the actuaries' proposed fee schedule. Chairman Lundy asked Mr. Gates if he wanted to amend his motion to include the $3,000 for updating financial and personnel data in off cycle valuation years. Mr. Gates said yes. The chair asked for a vote on the motion. It passed unanimously. Chairman Lundy said he had one more legislative issue to discuss. There is con- fusion among the public and ourselves as to who the Pension Review Board and who LOPFI is. Act 1288 has to do with local volunteer fire departments that do not have pen- sion systems. The law provides that local fire departments that want retirement cover- age under LOPFI have to pay a fee for an actuarial cost valuation. In the last session, Act 1288 was passed that allows for these cost valuations to be done at no cost to the local plans, that the PRB shall pick up the cost of these valuations. Chairman Lundy said that LOPFI's attorney has advised them that the law is very plain; it says the PRB will pay for the initial valuations. LOPFI and the PRB have different actuaries. Chairman Lundy brought up this issue at the LOPFI Board meeting, and the LOPFI Board will not accept the PRB's actuary to do initial LOPFI valuations. The chairman said he thinks it is a matter of confusion in determining who the two boards are because the staff works for both boards. Chairman Lundy said he per- sonally feels that the PRB should not be paying for the valuations, because it has noth- ing to do with the PRB. Mr. Gates asked if the board has the money to pay for the valuations. Chairman Lundy said the law provides for the board to levy up to an addi- tional 1% of insurance premium tax. But this takes money away from the local plans Mr. Randolph said the legislation sounds clear. Mr. Hensley asked if the LOPFI Board would agree to pay for these valuations until the law is amended, since it is obvi- ously dealing with their pension fund. Ms. Hinshaw said she could ask the LOPFI board. Chairman Lundy asked which actuary would do the work. Ms. Hinshaw said the LOPFI actuaries would. Chairman Lundy said that the PRB does not have a contract with the LOPFI actuaries. Mr. Randolph said the only part the PRB has in this is paying for the valuations. The board discussed the law further, but took no formal action. Mr. Hensley made a motion that the executive director approach the LOPE{ Board and ask them to pick up the cost of the initial valuations. Then have Ms. Hinshaw report back to the PRB with their answer at the next board meeting. The motion was seconded, and it passed unanimously. • • • PRB Minutes September 28, 1999 Page 8 of 8 • The next order of business was election of the chair. Chairman Lundy opened the floor for nominations. Mr. Gates nominated Mr. Lundy as chair. There were no other nominations. Chairman Lundy closed the floor for nominations. Mr. Randolph made a motion to re-elect Mr. Lundy as chair, by acclamation. Mr. Hensley seconded the mo- tion, and it passed unanimously. Chairman Lundy thanked the board members, and said it was an honor to serve as board chair. Mr. Gates asked Ms. Hinshaw if the insurance tumback checks had gone out. Ms. Hinshaw said no, and it is causing hardships for the cities. Chairman Lundy asked for approval of guest parking. Mr. Gates made the mo- tion, and Mr. Evans seconded. The motion passed unanimously. There was no other business to discuss. The next meeting date was set for Tuesday, December 14, 1999 at 10:00 a.m. Chairman Lundy asked for a motion to ad- journ. Mr. Hensley made the motion, and Mr. Randolph seconded. The meeting ad- journed at 11:30 a.m. Re pectfully Submitted, Eliza:eth Stephens Administrative Assistant