HomeMy WebLinkAbout2004-03-25 - Agendas - FinalFiremen's Pension and Relief Fund
Meeting Agenda
March 25, 2004
A meeting of the Fayetteville Firemen's Pension and Relief Fund will be held at 11:00 a.m. on
March 25, 2004 in Room 326 of the City Administration Building.
1. Approval of the Minutes:
• February 26, 2004
2. Approval of the Pension List:
• April 2004 Pension List
3. Longer Investments:
• Report
• Northern Trust Option Account Application
4. Old Business:
• Resolution Number 02-03 - Enacting a 10 Year DROP
• Resolution Number 04-03 — Working after DROP
5. New Business:
• Eddie Bachman Retirement
• Danny Farrar 20 Years of Service
• Retired Fire Fighters — Increase/Widows
• Dennis Mullens Letter From Dr. Mark F. Olsen
• Budget Information
• NCPERS 2004 Annual Conference
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Robert Johnson
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Sondra Smith
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Marion Doss
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Robert Johnson
Ronnie Wood
Sondra Smith
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Firemen's Pension and Relief Fund
Meeting Agenda
February 26, 2004
Fire Pension Minutes
February 26, 2004
Page 1 of 7
A Special meeting of the Fayetteville Firemen's Pension and Relief Fund was held at 1 1:00 a.m.
on February 26, 2004 in Room hof the City Administration Building.
5.24
Present: Pete Reagan, Robert Johnson, Marion Doss, Ronnie Wood, Sondra Smith,
Secretary, City Attorney Kit Williams, Marsha Farthing, Fire Chief Bosch.
The meeting was called to order by Marion Doss.
Approval of the Minutes:
Pete Reagan moved to approve the minutes. Ronnie Wood seconded the motion. Upon roll
call the motion passed. 5-0. Mayor Coody and Danny Farrar were absent.
Approval of the Pension List:
• February 2004 Pension List approval with 3% Temporary COLA added and March 2004 Pension
List approval.
•
Pete Reagan moved to approve the pension lists. Ronnie Wood seconded the motion. Upon
roll call the motion passed. 5-0. Mayor Coody and Danny Farrar were absent.
Longer Investments:
Marion Doss: We have a copy of the Longer Investment report; do we have any discussion on
their report?
Pete Reagan: This is just an informational item. Page 6 shows the total of our portfolio, it
shows,a 3.3% increase for the month of January. We are very proud of the performance level of
Longer Investments.
Old Business:
Resolution Number 02-03, Enacting a 10 Year DROP and Resolution Number 04-03,
Working after DROP:
Marion Doss: We have Resolution 02-03 and 04-03 written and ready to go before the City
Council.
Sondra Smith: It has not gone before the City Council yet.
• Kit Williams. I think it started to go then it was tabled.
Pete Reagan: Do we know why it was tabled.
Sondra Smith: It did not make it on the City Council's agenda.
•
Fire Pension Minutes
February 26, 2004
Page 2 of 7
Chief Bosch: I asked to take a look at those resolutions. I realized the actuarial impact those
proposed changes will have on the retirement system it self is nothing. There is no negative
impact on the system. My concern was will these changes have other additional impacts on the
department as a whole. I took a look at the resolutions and I drafted a memo. Let me summarize
it for you and you can read this at your leisure. I have two primary concerns, the first concern
that I have is that by extending the DROP plan we will in essence stifle the opportunity for
promotions within the department. The nine people that are eligible on the DROP plan currently
hold the ranks of 1 Assistant Chief, 5 Captains and 3 Driver/Operators. This will actually have
an impact and stifle about 7 key promotions within the department. That is a true concern that I
have, it kind of kills the initiative of some of these folks that want to move up in the
organization. My concern is that as the Fire Chief I am suppose to look out for the overall
physical impacts on the department. I think that by changing the plan we won't see a negative hit
on the department, it won't cost us any more money which we understand, but we won't be able
to show any type of salary savings through the normal attrition process. That comes to about the
equivalent of five salaries for entry level fire fighters. As we discuss the need to add additional
personnel and expand the department a change like this is totally contradictory to our ability to
do that. That is basically where this goes. I am declined not to support this recommendation,
however it is a Pension Board decision and you have the ability to take this to the City Council.
Kit Williams: I think they have already made that decision. They have already voted that way
and it will be before the City Council. Is that the meeting of March 16, 2004?
Sondra Smith: Yes it is suppose to be presented to the City Council on March 16, 2004.
Pete Reagan: To go before City Council at agenda session or to go before them at a Council
meeting.
Kit Williams: That is the City Council meeting date.
Chief Bosch: I might add that I think the 3% temporary COLA is a good idea.
Chief Bosch handed out a copy of his memo that was addressed to the Mayor.
Chief Bosch: My primary concern is that when we make a decision and again this is good for
10% of the department, but I am trying to look out for the whole 100%, I have to look at this
from the overall picture. When we try to move a decision forward like this if l don't take all
those factors into consideration then I am not doing my job. To make a decision based
specifically on the actuarially soundness without looking at the other factors I think really
challenges the issue.
Marion Doss: As a Pension Board member it is a benefit that is allowed by state law and a
benefit that the actuaries say we can do and the Arkansas Fire and Police Pension Review Board
says we can do it. That's the way I have to look at it. It is a benefit to our members and we
Fire Pension Minutes
February 26, 2004
Page3 of 7
• represent those members. If it is allowable and we can do it I think we should offer that benefit
if they want it. I am glad you put some thought into this and I want to read your memo.
Chief Bosch: I appreciate and respect your opinion. I respect all of your opinions.
Kit Williams: People are wearing different hats. The Pension Board has one hat you have a
different hat and the City Council has another hat.
Pete Reagan: Chief, I don't see any thing in here where you have addressed the cost of a new
hire coming on and what it is going to cost to train him to the level that we currently have. I also
don't see anything in here addressing the experience of a 20 year firefighter or a 20 year captain
versus an entry level firefighter. I think that that needs to be addressed. Basically what this is
looking at is dollars and I fully understand that, that is your job as head of the budget for the Fire
Department, but I also think that you have not addressed that issue.
Chief Bosch: The experience factor and the cost for training and the start up cost.
Pete Reagan: Yes.
Chief Bosch: Those are two excellent points. I didn't draft those in here, let me discuss that a
little bit and then I will do some homework on that. I think as far as the cost for training goes
that is built into the initial salary, we are going to have that cost for training whether it is an
experienced employee or a new employee. Granted there is going to be a little bit more training
on the front end that we would incur for minimum standards requirements. We are looking at
addressing that in a different avenue, with some policy changes on minimum standards for
hiring. That would kind of get that cost off our plate. The actual cost for that is about $700 to
$800 to actually train them to the entry level firefighter one, firefighter two and then the EMT
training is a little more than that.
Pete Reagan: But that's minimum right?
Chief Bosch: That is minimum that is entry level, granted that doesn't compensate for the
experience factor and I don't know how you can quantify the experience factor. It is an excellent
point and I agreed with you, I think you have a very sound and valid point but I don't know
exactly how we would quantify that. There is no way to put a dollar amount on your level of
experience opposed to other levels of experience. I guess we probably could but I don't know
how we would do it. It would be a very difficult calculation because everyone has different
experiences. Would that lead us into the argument that we should address our pay schedule
based on levels of experience?
Kit Williams: To some extent it is because longevity, the longer you are here you go to
different steps.
Marion Doss: I think it is to your credit that some of these guys want to stay here longer now. I
think there are some of them that at one point in their career they were trying to tough things out.
• I think they see that the department is changing and growing and I think they see that as a real
positive thing.
Fire Pension Minutes
February 26, 2004
Page 4 of 7
Pete Reagan: On page four your recommendation on the 3% COLA, the City Council does not
have to approve that.
Chief Bosch: Yes, 1 understand that, I did not understand that when I drafted this.
Kit Williams: I think the only reason the City Council is even addressing this issue is that it
does have a potential impact upon the Fire Department, so I think that is why the legislation has
the City Council's approval for this.
Pete Reagan: 1 was in the room when this was voted on and the Municipal League was not
going to support this unless they had approval by City Council and that is the reason that it is in
there. Has the Mayor seen this?
Chief Bosch: He received a copy of it yesterday, I don't know if he has read it or not.
•
Pete Reagan: So we don't know if this is going to be the Mayor's position, I guess we could
ask him.
Kit Williams: Yes, I would ask him.
Pete Reagan: Can we draft a memo from this board to him asking him if this is his position and
we would like to know what his position is going to be. It sounds like by Chief Bosch's memo
that we are going to take this to the City Council and be on opposing sides.
Sondra Smith: We can meet after this meeting and draft a memo and I will get the memo to
him today.
Pete Reagan: Okay.
Copy of the Summary from Martin and Kieklak:
Marion Doss: This is a copy of what they handed out at the last meeting.
Sondra Smith: I think Chief Bosch had some questions on the make up of the Firemen's
Pension Board. 1 asked Kit if he would answer your questions.
Marion Doss: We received an Attorney General's opinion that everyone that is on DROP is
considered retired as far as the Pension Board make up. Danny Farrar is the only active member
that is not on DROP, if he goes on DROP he will be considered retired so he will have to run for
election.
Pete Reagan: He will have his 20 years in tomorrow.
Chief Bosch: He has submitted an inquiry about the DROP plan and what his benefits would be.
• Sondra Smith: The other question that was asked is if everyone that is serving is considered
retired then how is Marion serving without being elected?
Fire Pension Minutes
February 26, 2004
Page of
IP Kit Williams: The statue lists who is going to serve. The statue states, the Fire Chief or if the
Fire Chief is not a member of the plan then the highest ranking member of the Fire Department
who is a member. The statue does not say active or retired, it just says member. Therefore
Marion does qualify as long as he is a member of the plan and a member of the Fire Department
and the highest ranking member.
•
Sondra Smith: Without having to be elected?
Marion Doss: I think you researched that before I signed up on DROP.
Kit Williams: We have elections coming up, whose term is up?
Pete Reagan: Mine is.
Sondra Smith: Danny Farrar, but he is automatically reelected as the active member.
Kit Williams: Unless he retires or goes on DROP.
Pete Reagan: We have to have nominations in April.
Election of Board
Sondra Smith: I have a copy of the nomination forms that I am proposing to send out attached
to the agenda for you to review. I would like to send this out March 1, 2004 but if Danny Farrar
signs up that position will be an elected position.
Pete Reagan: I would think he could continue to serve until his term is over.
Sondra Smith: His term will be up May 31, 2004. That means that position would have to be
elected.
Pete Reagan: We can touch base with him.
Marion Doss: Go ahead and send the nomination forms out.
Kit Williams: I don't know if someone's status changes during their term if we would have to
do something different at that time or not.
Pete Reagan: We haven't in the past. When I signed up on DROP I continued to serve.
Marion Doss: Should we list who is currently serving on the Board.
Sondra Smith: The nomination forms states that Pete Reagan is currently serving in the retired
member's position. I can send out with the nomination form a copy of everyone that is currently
serving on the Board at this time if you would like for me to.
Kit Williams: If you do that you need to show when their terms are up.
•
•
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Fire Pension M inules
February 26, 2004
Page 6 of 7
Sondra Smith: It shows their terms under their name.
Kit Williams: I think it would be good to have the board listed so the retirees will know who is
currently serving on the Board.
Sondra Smith: We do not send the nomination forms to the widows or dependents that are
drawing, just the retired firefighters.
Pete Reagan: Yes, just the retirees and the members on DROP.
Kit Williams: It doesn't really say in the statue who is allowed to elect but I know it is just the
actual retirees and not the survivor's or beneficiaries.
New Business:
Kelly Skelton College Registration
Marion Doss: You received the enrollment from Kelly Skelton.
Sondra Smith: I stressed to her and Accounting also stressed to her that she has to get the Proof
of Enrollment turned in sooner: I always send her a reminder notice.
NCPERS 2004 Annual Conference
Pete Reagan: If any of the Board members can go to this conference it is an excellent
conference. I will be unable to attend. I have attended two of these. They have a pre -conference
for new trustees. I would encourage anyone that can go to do so because it is a wealth of
knowledge.
Robert Johnson: Is that a major cost to our plan to send someone?
Pete Reagan: No.
Kit Williams: When you went Pete did the plan pay for the cost.
Pete Reagan: Yes. I would love to go but I am going to be at the National Fire Academy.
Pensions & Investments Publication Audit
Sondra Smith: Do you want to continue receiving this publication?
Marion Doss: It doesn't cost anything. Why don't we have it sent to the entire Pension Board.
Fire Pension Minutes
February 26, 2004
Page 7 of 7
The Monitor
Sondra Smith: A copy of the Monitor is attached to the agenda.
Ashland Management
Kit Williams: Ashland Management still has not responded to my letter that I sent them.
Pete Reagan: I think you did an excellent job in drafting that letter.
Kit Williams: I will let you know if they ever respond.
Pete Reagan: Kit, do you have the Resolutions for the 10 year DROP and Working after DROP
that will go before the Council completed?
Sondra Smith: The agenda item never went around. It was stopped by the Mayor, I sent it for
his signature and that is where it stopped.
Kit Williams: He has to forward it to the Council whether he likes it or not.
Sondra Smith: He wanted the Chief to write a memo and the Chief just finished the memo. I
have a copy of the staff review form and the backup documentation. I will get you a copy so you
can do the resolutions.
Kit Williams. Some of you Board members need to present your side of the issue and present
why the Board believes this is the right thing to do.
Meeting Adjourned at 11:40 AM.
LONGER INVESTMENTS INCORPORATED
A Registered Invatrnmt Advisor
March 5, 2004
City of Fayetteville Fire Pension and Relief Fund
Attn: Sondra Smith
113 West Mountain
Fayetteville, Arkansas 72701
Dear Sondra:
Northern Trust has notified our office that they have changed the company through which
they clear security trades. They have further requested that we provide an updated
Option Account Application for the Fayetteville Fire Pension and Relief Fund account in
order to complete the system changes.
The use of options for hedging purposes has been approved in the investment policy for
the account. Will you and the other members of the board please sign the enclosed form
where indicated and return it to our office in the envelope provided? We will submit the
form to Northern Trust for processing. The income and net worth information on the
Option Account Application is based on the annual income and value of the account. The
investment experience information is based on the trading history of the account.
Thank you for your assistance in this matter. Please feel free to call our office if you
have questions regarding the enclosed form.
Sincerely,
LAA
Tina M. Lamb
Client Services Manager
Enclosure
P.O. Bac 1269
liayellrvillr, Arkansas 72702
Trlq'hone: 501-443-5851
lol! free:800-827-7710
Fax: 501-443-7129
RECEi`.!ED
MAR 0 8 2004
CITY OF FAYETTEVILLE
CITY CLEF.K s
it
Northern Th t
Option Account Application
Northern Trust Securities, Inc.
Please complete the information a d sign where indicated
1. CUSTOMER INFORMATION
•
•
First Name
Middle Name
Age
Joint Tenant Name
Marital Status
NT9000558
Longer Investments Inc
Last Nar Fayetteville Fire Pension &
Relief Fund
PO Box 1269
No. of Dependents Fayetteville AR 72702-1269
0259
Have you granted trading authorization to another parry? % Yes D No
Age Mantel Status
If so: 1) Your agent must also complete an Options Account Agreement; 2) Please attach the trading authorization unless you have previously
provided it to us.
Please indicate the rdarionship between you and your agent (Investment advisor, family member, trustee, etc 1.9SwSri'c484 d\SDt
2. EMPLOYMENT AND FINANCIAL INFORMATION
Employer
Type of Business
Business Address
City
Occupation/ Position
State
If you are retired or NOT currendy employed, please provide the source of your income here:
Zip Code
3. ANNUAL INCOME
All this information must be provided in accordance with the requirements of the National Association of Securities Dealers, Inc. and the Options Exchange.
Approximate Annual Income from All Sources: (For joint account check your combined income.)
D Under $25,000 O $25,000-$50,000 • O $50,000-$100,000 g Over $100,000 Please state amount $ x01 I b I
Estimated Net Worth: (cvclueive ofhome and farm)
D Under $50,000 0 $50,000-$100,000 0 $100,000-$500,000 $Over $500,000 Please state amount $ I0,SEai r %'l 4
Investable Assets: (including cash and securities)
O Under $50,000 0 $50,000-$100,000 0 $100,000-$500,000 IQOver $500,000 Please state amount $ 1 0, 567 , Tf \ y
Tax Bracket: 0 15%. D 28%. 0 31n%' 0 36% 0 39.6%
Personal Information: Marital Sra us: 0 Single 0 Married
Number of Dependents
Date o Birth
1
Age
For assistance, please contact the Investor Services Center at (800) 621-4482. Please mail your form to: Northern Trust Securities, Inc., 801 South Canal C4S, Chicago, 11.60607.
3. ANNUAL INCOME'(Continted)
•
Bank Reference:
Name of Bank
Acco nt Number'
Branch / City
State
Zip Code
4. TRADING PLANS
Level 1
Level 2 ❑ Covered Call Writing,
Purchases,
Straddles and Combinations
(Purchase Only)
Level 3 0 'Covered Call Writing,
Purchases,
Straddles and Combinations
(Purchase Only),
Spreads
Level 4 0 *Covered Writing,
Purchases,
-
Straddles and Combinations,
Spreads,
Uncovered Writing
Level 5 0 *Covered Writing,
Purchases,
Spreads,
Straddles and Combinations,
Uncovered Writing
'Margin account. required
Equity Options
Covered Call Writing
Index Options
Not. applicable
Purchases
.Purchases
Straddles and Combinations
(Purchase Only)
Purchases
Straddles arid Combinations
(Purchase Only)
Purchases
Straddles and Combinations
Spreads,
Uncovered Writing
Trading Experience
❑ None O Moderate )extensive
O None 0 Moderate 0 Extensive
O None ❑ Moderate ❑ Extensive
O None 0 Moderate O Extensive
❑ None ❑ Moderate 0 Extensive
5. INVESTMENT OBJECTIVES
*Preservation of Capital. (iM) )1 Income (02), IF:Capital Appreciation (03) , ❑Speculation (04) ❑ Trading Profits (05)
❑ Other (06) (Please specify)
Optional Information
Risk Tolerance: O Conservative 0 Moderate 0 Aggressive 0 Combination
General Investment Knowledge:0 Extensive 0 Good 0 Limited
Specific Investment Knowledge: 0 Stocks O Bonds
0 Options ❑ Variable Contracts
0 Mutual Funds
❑ Limited Partnerships
Time Horizon: 0 Short (0-5) 0 Intermediate (6-10) 0 Long (over 10 years) 0 Combination
6. INVESTMENT EXPERIENCE
•
Investment knowledge:. • 0 Limited 0 Good eirExtensive
Number of years trading:
16
Frequency of option transactions
Stocks 16 Bonds
Current option accounts with other brokerage firms:
Commodities )6 Equity Options 1 6 Index Options
Size of transactions: $ 475b ($1,000, $5,000, $10,000, etc.)
Name el Finn
Cunene Positions
—2—
7. OPTION ACCOUNT AGREEMENT
1 agree with and represent to Northern Trust Securities, Inc. ("NTSI") as follows:
1. 1 understand that my account is tarried by National Financial Services LLC ("NES") and that all terms of this Agreement also apply berween me and NFS.
2. All transactions shall be subject to the constitutions, rules, regulations, customs and usages of The Options Clearing Corporation and any exchange or other market-
place where executed. In addition, I am aware of, and agree to be bound by, the rules of the National Association of Securities Dealers, Inc. (NASD) and the New York
Stock Exchange, Inc (NYSE) applicable to option contracts.
3. Any securities and funds held by you in any of my accounts may be held and used by you as security for the performance of my obligations to you under this agree -
mens.
4. In ase of my insolvency, death or the attachment of myproperty, you may, with respect to any open options contact position, rake such steps as you may consider
necessary or appropriate to protect yourself against loss. - -
5.1 will not enter any order for options until I have received, read and understood the appropriate Options Disclosure Document(s) of The Options Clearing
Corporation. I specifically affirm the following disclosures as set forth in said Document(s):
A. That both the purchase and the writing of options contacts involve a high degree of risk, are not suitable for many investors and, accordingly, should be entered
into only by Investors who understand the nature and extent of their rights and obligations and are fully aware of the inherent risk involved, especially during
extreme market volatility or trading volumes.
B. That I should not purchase any option unless 1 am able'to sustain a total loss of the premium and transaction costs and (i) that I should not write a all option
unless I either own the underlying security (or a security convertible, exchangeable or exercisable into such underlying security) or am able to sustain substantial
financial losses and (ii) that 1 should not write a put option unless I am able to sustain the loss resulting from purchasing the underlying security at the exercise price.
C. Thar the price of an options contact is affected by various factors such as the relationship between the exercise price and the market price of the underlying secu-
rity, the expiration date of the option and the price fluctuations or other characteristics of the underlying stock.
D. That the exchanges or other regulatory bodies may restrict transactions in particular options or the exercise of options contacts in their discretion from time to
time.
E. That all index option exercises are settled by cash payment and not by the delivery of securities; and that all index option exercises are based on the closing index
value and that any "in the money" :index options;exercised prior to the availability of the dosing index value face the risk of closing out of the money due to a sub-
sequcnt adverse change in the index-valuc: --• _ -
6. 1 have noted particularly those sections of The Options Clearing Corporation Disclosure Document(s) which summarize the risk factors involved in options trading
and I have determined that, in view of my financialsituation and investment objectives, options trading is suitable for me. 1 shall advise you of any changes in my
investment objectives; financial situation and needs insofar as such changes are material to my options transactions. The financial and other information listed on the
reverse side is accurate.
7. 1 am aware of your requirements and time limitations for accepting an exercise notice. In the event that I fail to instruct you not to exercise an option "in the money"
by 3/4 of a point or more by 2:30 p.m. (Eastern rime) on the business day immediately preceding the expiration date of the option, I understand that you will use your
best efforts to exercise such option and liquidate the underlying securities for my account and at my sole risk for which I shall be charged two commissions. I agree to
pay the full aggregate exercise price for rhe underlying securities covered by the option contract. I understand that 1 will be charged at last one commission in connec-
dotion with the exercising of any option. I further understand that you reserve the right to exercise any option which would not be profitable to me, for your own account.
111 fail to instruct you not to exercise an option "in the money" by 3/4 of a point or more by the rime sated above and you, for whatever reason, do not exercise an
option on my behalf, I hereby agree to waive any and all claims for 'damage or loss which 1 might have at the time or any time thereafter against you arising out of the
.. fact that the option was not exercised.
8. I understand that before writing any option 1 must have in my account a minimum equity or appropriate position in such amounts as you may specify from rime to
rime, and that no withdrawals of cash or securities will be permitted from the account which would reduce either the equity or position below your requirements. 1 fur-
ther understand that any orders ro sell any securities held in my account pursuant to such minimum maintenance requirements may be refused by you at your sole dis-
cretion, and I shall not hold you liable for any loss that I may sustain duc to your refusal ro permit the sale of said securities during such period.
9. Regarding any margin transactions 1 may make and supplementing the terms and conditions of my Margin Account Agreement, in the event 1 do not meet your mar-
gin calls promptly, you are authorized in your sole discretion, and without notification ro me, to take any and all steps necessary to protect yourself in connection with
put or call transactions made kr my account, induding without limitation the right to buy or sell short, or short exempt, for my account and risk any part or all of the
shares represented by options endorsed by you for my account, or to buy, sell or exercise any put or call options as you may deem necessary ro fully protea yourself. Any
and all losses and expenses, including attorneys' fees, incurred by you in this connexion will be reimbursed by me.
10. 1 shall have the sole responsibility to exercise, in a proper and timely manner, any right, privilege or obligarion of ail pui option call option or other option which
you may purchase, handle, endorse or carry for my account(s). You shall not be liable in connexion with rhe execution, handling, selling, purchasing, or endorsing of
options for my account.
11 -1, alone or in concert with others, will nor violate the position limits or the exercise limits of the options exchanges and the NASD or NYSE as set forth in The
Options Clearing Corporacion Disclosure Document(s).
12.1 understand and acknowledge that, when transactions on my behalf are ro be executed in options traded in more than one marketplace, in the absence of my specif-
ic instructions, you may use your discretion in selecting the market in which to enter my orders.
13. Securities in accounts carried by National Financial Services LLC ("NFS"), a Fidelity Investments company, are protected by the Securities Investor Protection
Corporation ("SIPC") up to $500,000 (induding cash daims limited to $100,000). NES has arranged for additional unlimited insurance protection for cash and securi-
ries to supplement its SIPC coverage. Neither coverage proiects against a decline in the market value of securities.
14. Them
is Agreement and its enforcement shall be governed by the laws of the Commonwealth of Massachusetts, its provisions shall inure to the benefit of yourr present
corporation and its successors, and shall inure to the benefit of and be binding upon my estate, executors, administrators, successors and assigns.
15. Except to rhe extent to which they conflict with this Agreement, the provisions of my Margin Account Agreement are incorporated herein by reference. In the event
of a conflict, rhe provisions of this Agreement shall control.
16. With reference to the ?Iloarion of exercise notices assigned, I understand that you will use the random selection method of allocation. This method randomly selects
from all customers short option positions, including positions established on the day of assignment, those option contracts which are subject to exercise. I further under-
stand that all short option positions are liable for assignment ser any rime. A derailed description of this method is available upon written request.
•
3—
7. OPT?ON ACCOUNT AGREEMENT (conr:,rued)
•
r, - ..
NOTICE TO CUSTOMER: •
Payment for Order How: NTSI or NFS transmits cuskomer orders for execution to various exchanges or market centers based on a number of factors. These include:
size of order, trading characteristic of rhe security, favorable execution prices (including the opportunity for price improvement), access to reliable market data, availabil-
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Please note: Orders placed through any telephone, electronic, or on-line trading systems cannot specify a particular market center for execution.
NTSI and/or NES receives remuneration, compensation or other consideration for directing customer orders for equity securities to particular broker/dealers or market
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8. PLEASE READ THE OPTION ACCOUNT AGREEMENT AND SIGN BELOW
I REPRESENT THAT I HAVE READ THE TERMS AND CONDITIONS GOVERNING THIS ACCOUNT INCLUDING THE SPECIAL STATEMENT FOR
UNCOVERED OPTION WRITERS AND AGREE TO BE BOUND BY SUCH TERMS AND CONDITIONS AS CURRENTLY IN EFFECT AND AS MAY
BE AMENDED FROM TIME TO TIME. THIS ACCOUNT IS GOVERNED BY A PRE -DISPUTE ARBITRATION AGREEMENT WHICH APPEARS
BELOW. I ACKNOWLEDGE RECEIPT OF THE PRE -DISPUTE ARBITRATION AGREEMENT.
In consideration of your accepting one or more accounts, I (we) hereby acknowledge that 1 (we) have read, understand and agree to the terms
set forth in the Option Account Agreement above.
Customer's Signature
Joint Tenant's Signature (J any)
Joint Account Holders (it any)
Joint Account Holders (if any)
In the case of joint account, all tenants must sign.
Dale
Date
Date
Dale
TT"
nu
n
For Internal Use Only
Approval to level _ Approval HOP Date
Options Disclosure Document sent
Investment Consultant
Date
Date
1
l
•
8..PkEASE READ THE OPTION ACCOUNT AGREEMENT AND SIGN BELOW (Continued)
PLEASE KEEP THIS DOCUMENT FOR YOUR RECORDS.
Dear Customer(s),
Inaccordancewith the rules of the New York Stock Exchange and rhe National Association of Securities Dealers, following is a SPECIAL STATEMENT
FOR UNCOVERED OPTION WRITERS. After reading the STATEMENT, please sign on page 4, tear at the perforation, and return the signature
portion to us in the enclosed envelope. -
Thank you.
9. SPECIAL STATEMENT FOR UNCOVERED OPTION WRITERS
There are special risks associated with uncovered option writing which expose the investor to potentially significant loss. Therefore, this type of strate-
gy may hot be suitable for all customers approved for options transactions.
1. The potential loss of uncovered call writing is unlimited. The writer
of an uncovered call is in an extremely risky position, and may incur
large losses if the value of the underlying instrument increases above
the exercise price.
2. As with writing uncovered calls, the risk of writing uncovered put
options is substantial: The writer of an uncovered put option bears
a risk of loss if the value of the underlying instrument declines
below the exercise price. Such loss could be substantial if there is a
significant decline in the value of the underlying instrument.
3. Uncovered option writing is thus suitable only for the knowledge-
able investor who understands die risks, has the financial capacity
and willingness to incur potentially substantial losses, and has suf-
ficient liquid assets to meet applicable margin requirements. In this
regard, if the value of the underlying instrument moves against an
uncovered writer's options position, the investor's broker may
request significant additional margin payments. If an investor does
nor make such margin payments, the broker may liquidate stock or
options positions in rhe investor's account, with little or no prior
notice in accordance with the investor's margin agreement.
4. For combination writing, where the investor writes both a put and
a call on the same underlying instrument, the potential risk is
unlimited.
5. If a secondary market in options were to become unavailable,
investors could not engage in closing transactions, and an option
writer would remain obligated until expiration or assignment.
6. The writer of an American-style option is subject to being assigned
an exercise at any time after he has written the option until the
option expires. By contrast, the writer of a European -style option is
subject to exercise assignment only during the exercise period.
NOTE: It is expected that you will read the booklet entitled "Characteristics and Risks of Standardized.Options" available from NTSI. In particular,
your attention is directed to the chapter entitled "Risks of Buying and Writing Options." This statement is not intended to enumerate all
of the risks entailed in writing uncovered options.
•
•
10.r.&ROKERAGE ACCOUNT PRE -DISPUTE ARBITRATION AGREEMENT
I AM AWARE OF THE FOLLOWING:
(A) ARBITRATION IS FINAL AND BINDING ON THE PARTIES
(B) THE PARTIES ARE WAIVING THEIR RIGHT TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT TO JURY TRIAL
(C) PRE -ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED THAN AND DIFFERENT FROM COURT
PROCEEDINGS.
(D) THE ARBITRATORS AWARD 15 NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING AND ANY
PARTY'S RIGHT TO APPEAL OR TO SEEK MODIFICATION OF RULINGS BY THE ARBITRATORS IS STRICTLY LIMITED.
(E) THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS WHO WERE OR ARE
AFFILIATED WITH THE SECURITIES INDUSTRY.
•
I AGREE THAT ALL CONTROVERSIES THAT MAY MUSE BETWEEN US CONCERNING ANY ORDER OR TRANSACTION, OR THE
CONTINUATION, PERFORMANCE OR BREACH OF THIS OR ANY OTHER AGREEMENT BETWEEN US, WHETHER ENTERED
INTO BEFORE, ON, OR AFTER THE DATE THIS ACCOUNT IS OPENED, SHALL BE DETERMINED BY ARBITRATION BEFORE A
PANEL OF INDEPENDENT ARBITRATORS SET UP BY EITHER THE NEW YORK STOCK EXCHANGE, INC., OR NATIONAL
ASSOCIATION OF SECURITIES DEALERS, INC., AS 1 MAY DESIGNATE. IF 1 DO NOT NOTIFY YOU IN WRITING WITHIN FIVE (5)
DAYS AFTER I RECEIVE FROM YOU A WRITTEN DEMAND FOR ARBITRATION, THEN I AUTHORIZE YOU TO MAKE SUCH A
DESIGNATION ON MY BEHALF. I UNDERSTAND THAT JUDGMENT UPON ANY ARBITRATION AWARD MAY BE ENTERED IN
ANY COURT OF COMPETENT JURISDICTION.
No person shall bring a putative or certified class action to arbitration, nor seek to enforce any pre -dispute arbitration agreement against any person who
has initiated in court a putative class action; who is a member of a putative class who has not opted out of the class with respect to any claims
encompassed by the putative class action until:
(i) the class certification is denied;
(ii) the class is decertified; or
(iii) the customer is excluded from the class by the court.
Such forbearance to enforce an agreement to arbitrate shall nor constitute a waiver of any rights under this agreement except to the extent stated
herein.
Northern Trust Securities, Inc., member NASD, SIPC clearing through National Financial Services LLC, Member NYSE, SIPC (11/00) 114335
P6-017-939
1.747211.100 (01/04)
•
•
FAYETTEVILLE
THE CITY OF FAYETTEVILLE, ARKANSAS
DEPARTMENTAL CORRESPONDENCE
To: Firemen's Pension and Relief Fund Board of Trustees
Sondra Smith2 City Clerk
From: Dan Coodgl
Date:
Subject:
March 3, 2004
Fire Pension Board Resolution 02-03 — Enacting a 10 year DROP
Fire Pension Resolution 04-03 — Working after DROP
When the issue of the 10 year DROP plan and working after DROP first surfaced at the
Pension Board meeting, some concerns were voiced by a couple of the members stating
they did not think it would be good for the department. At that point I asked Chief Bosch
to do some research and give me a report on his findings Chief Bosch determined that
the two plans would not be in the best interests of the department.
Since I rely on Chief Bosch to manage the Fire Department and keep it running as well as
possible, I will concur with his conclusions. Please note that I supported the temporary
3% COLA which was the third item on the agenda.
I will work for the continued improvement of the department as a whole at every
opportunity.
•
• ry G •
FAYETTEVILLE
THE CITY OF FAYETTEVILLE, ARKANSAS
DEPARTMENTAL CORRESPONDENCE
To: Firemen's Pension and Relief Fund Board of Trustees
Sondra Smiths City Clerk
From:
Date:
Subject:
Dan Coodl$
March 3, 2004
Fire Pension Board Resolution 02-03 — Enacting a 10 year DROP
Fire Pension Resolution 04-03 — Working after DROP
When the issue of the 10 year DROP plan and working after DROP first surfaced at the
Pension Board meeting, some concerns were voiced by a couple of the members stating
they did not think it would be good for the department. At that point I asked Chief Bosch
to do some research and give me a report on his findings. Chief Bosch determined that
the two plans would not be in the best interests of the department.
Since I rely on Chief Bosch to manage the Fire Department and keep it running as well as
possible, I will concur with his conclusions. Please note that I supported the temporary
3% COLA which was the third item on the agenda.
I will work for the continued improvement of the department as a whole at every
opportunity.
hi/ Lea 3/it /aq
CITY COUNCIL AGENDA MEMO
• To:
City Cecil Meeting of March 16, 2004
Mayor and City Council
From: Chris Bosch, Fire Chief atti\
Date: February 25, 2004
Subject: Proposed Council Resolutions 02-03, 03-03 & 04-03.
RECOMMENDATION
Staff recommends the City Council approve Resolution 03-03 allowing for the implementation of a 3%
temporary Cost of Living Allowance for members of the Firemen's Pension & Relief Fund. Staff
recommends City Council denial of proposed Resolutions 02-03 and 04-03, which would extend the current
DROP Retirement Plan from 5 to 10 years and allow those employees currently signed up for the DROP
Retirement Plan to work past their agreed upon DROP retirement date.
BACKGROUND
During the 2003 session of the Arkansas State Legislature, State Policy Makers received two pieces of
proposed legislation that, if passed, would change the conditions of the current Deferred Retirement Option
• Plan (DROP). With approval from the local Board of Trustees and the City Council Act 1369 will change
the terms of the current DROP to allow participants to .extend the original DROP agreement from a
maximum 5 -year term to a maximum 10 -year term. With approval from the local Board of Trustees and the
City Council, Act 1372 will allow participants to continue to work beyond the end of the 10 -year drop plan.
These proposed changes also recommend the implementation of a temporary 3% Cost of Living Allowance
(COLA) for current and retired members of the fund.
DISCUSSION
The Board of Trustees of the Fayetteville Firemen's Pension & Relief Fund approved these proposed
changes in December 2003. Once the Local Board of Trustees approved these changes, the Arkansas State
Fire and Police Pension Review Board received the changes and approved them in January 2004. The final
approval rests with the Fayetteville City Council.
The attached information identifies the actuarial soundness of the current fund and highlights the fact that
these changes will cause no harm to the soundness of the fund balance; however, prior to this report very
little research was conducted regarding the other impacts theseproposed changes will have on the
Department as a whole.
It is certain these changes will provide a true benefit for those employees covered under this retirement
system; however, currently there are only nine members of the Fayetteville Fire Department who are
• eligible to participate in this fund and stand to benefit from these changes. Each of these nine employees
1
1
•
•
410 City Citcil Meeting of March 16, 2004
holds ranking positions within the Department. Further, these nine members only constitute ten percent of
the entire organization. The breakdown of these nine positions is as follows:
IMPACTS
One (1) Assistant Chief
Five (5) Captains
Three (3) Driver/Operators.
After a careful review of the proposed retirement dates for the individuals covered under the current DROP
agreement, my Staff and I believe that changing the current guidelines of the DROP plan will be detrimental
to the Department is several ways. I have listed the two primary impacts of these changes in the following
paragraphs.
The implementation of these changes will hold up approximately seventeen (17) promotions within the
organization and will indefinitely restrict the opportunity for upward mobility throughout the ranks. For
example, if my Assistant Chief decides to extend his DROP date he will hold up four promotions by
eliminating the need to replace the Assistant Chief, a Battalion Chief, a Captain and a Driver Operator,
which are all progressive promotional steps within the organization. These changes will stifle promotional
opportunities and will hurt the Department's overall morale, creating even greater problems for the
organization in the very near future.
The implementation of these changes will also prohibit the Department from recognizing any projected
salary savings attained through attrition. Under the current DROP guidelines, over the next five years the
Department will realize an annual salary savings equivalent to the salary of five entry-level Fire Fighters.
This salary savings can be used to either hire additional Fire Fighters or offset the cost of salaries for the
Fire Fighters for Fire Station 7. By changing the rules of this plan, those savings will no longer be available.
Keep in mind that these savings projections include the cost of hiring replacement personnel and the cost of
promoting personnel to fill vacancies in the existing rank structure, which will occur through normal
attrition.
CONCLUSION
As previously stated, these proposed changes will offer a wonderful enhancement to the current retirement
benefit for the nine individuals currently eligible to take advantage of the DROP retirement; however, these
individuals represent only ten percent (10 %) of the overall Fire Department.
As the Fire Chief, it is my responsibility to look out for the welfare of the entire organization and I firmly
believe the implementation of these changes you will be creating a situation that could be detrimental to the
overall morale and welfare of the entire Fire Department.
Further, as the Fire Chief, this City Council has entrusted me with the responsibility of operating the Fire
Department in the most cost effective manner possible. This governing body has also instructed me to look
for budgetary savings in all aspects of my organization and to operate in such a way that allows me to meet
and exceed the community's needs in the most cost-effective manner. I believe that by implementing these
proposed changes it will be difficult for my Staff and me to recognized potential savings in our current and
projected budgets. My Staff and I have identified a progressive annual salary savings, which could
2
•
• City C•cil Meeting of March 16, 2004
adequately fund the annual salaries for five additional Fire Fighters; however, if approved these proposed
changes will not allow us to realize those savings. Further, changing the terms of the plan, at this point will
cause the Department to wait an additional five years before it can begin to realize those savings, which will
help to enhance service delivery.
In closing, I believe that by extending the DROP Plan from 5 to 10 years, and allowing these employees to
continue working past those agreed upon dates will be detnmental to the overall morale of the Department
and therefore must be rejected at this time. By basing the decision to change the current benefits program
solely on quantitative data provided by the actuary, without considering the qualitative impacts these
changes will have on the Department leads to ineffective decisions and I believe these changes will certainly
prove to be detrimental to the overall welfare of the organization
BUDGET IMPACT
Currently, based on the information provided by the Osborn, Carreiro & Associates, the overall impact to
the current fund is insignificant; however, this change in retirement benefits will not allow the Department
to recognize the estimated salary savings normally provided through the attrition process
3
•
•
From the Desk of the Fire Chief
Memo
To: Dan Coody, Mayor
From: Chris Bosch, Fire Chie
CC: Firemen's Pension & Relief Board
Date: February 25, 2004
Re: Changes to the DROP Plan
Fayetteville Fire Dept
303 W. Center St.
Fayetteville, AR. 73701
(479) 575-8365
Introduction
As you know, on February 2, 2004 I requested that Council Agenda Items 02-03 and
04-03 be pulled from the Council Agenda so I could have an opportunity to review
them and determine the level of impact these items would have on the Fire
Department as a whole After a careful review of these items I have developed the
following response to these items.
BACKGROUND
During the 2003 session of the Arkansas State Legislature, State Policy Makers received
two pieces of proposed legislation that, if passed, would change the conditions of the
current Deferred Retirement Option Plan (DROP). With approval from the local Board of
Trustees and the City Council Act 1369 will change the terms of the current DROP to
allow participants to extend the original DROP agreement from a maximum 5 -year term
to a maximum 10 -year term With approval from the local Board of Trustees and the City
Council, Act 1372 will allow participants to continue to work beyond the end of the 10 -
year drop plan.
These proposed changes also recommend the implementation of a temporary 3% Cost
of Living Allowance (COLA) for current and retired members of the fund:
1
•
DISCUSSION
The Board of Trustees of the Fayetteville Firemen's Pension & Relief Fund approved
these proposed changes in December 2003. Once the local Board of Trustees approved
these changes, the Arkansas State Fire and Police Pension Review Board received the
changes and approved them in January 2004. The final approval rests with the
Fayetteville City Council
The attached information identifies the actuanal soundness of the current fund and
highlights the fact that these changes will cause no harm to the soundness of the fund
balance; however, pnor to this report very little research was conducted regarding the
other impacts these proposed changes will have on the Department as a whole.
It is certain these changes will provide a true benefit for those employees covered under
this retirement system; however, currently there are only nine members of the
Fayetteville Fire Department who are eligible to participate in this fund and stand to
benefit from these changes. Each of these nine employees holds a ranking position
within the Department. Further, these nine members only constitute ten percent of the
entire organization. The breakdown of these nine positions reveals that these employees
also hold ranking positions within the organization
The positions discussed in the proceeding paragraph are as follows:
One (1) Assistant Chief
Five (5) Captains
Three (3) Dnver/Operators.
Impacts
After a careful review of the proposed retirement dates for the individuals covered under
the current DROP agreement, my Staff and I believe that changing the current guidelines
of the DROP plan will be detnmental to the Department in several ways. I have listed the
two primary impacts of these changes in the following paragraphs
The implementation of these changes will hold up approximately seventeen (17)
promotions within the organization and will indefinitely restrict the opportunity for upward
mobility throughout the ranks. For example, if my Assistant Chief decides to extend his
DROP date he will hold up four promotions by eliminating the need to replace the
Assistant Chief, a Battalion Chief, a Captain and a Driver Operator, which are all
progressive promotional steps within the organization. I believe these changes will stifle
promotional opportunities and will hurt the Department's overall morale, creating even
greater problems for the organization in the very near future.
The implementation of these changes will also prohibit the Department from recognizing
any projected salary savings attained through attntion. Under the current DROP
guidelines, over the next five years the Department will realize an annual salary savings
• Page 2
•
• •
equivalent to the salary of five entry-level Fire Fighters. This salary savings can be used
to either hire additional Fire Fighters or offset the cd§f bf salaries for the Fire Fighters for
Fire Station 7. By changing the rules of this plan, those savings will no longer be
available Keep in mind that these savings projections include the cost of hinng
replacement personnel and the cost of promoting personnel to fill vacancies in the
existing rank structure, which will occur through normal attntion.
CONCLUSION
As previously stated, these proposed changes will offer a wonderful enhancement to the
current retirement benefit plan for the nine individuals currently eligible to take advantage
of the DROP retirement, however, these individuals represent only ten percent (10 %) of
the overall Fire Department.
As the Fire Chief, it is my responsibility to look out for the welfare of the entire
organization and I firmly believe the implementation of these changes will create a
situation that could be detrimental to the overall morale and welfare of the entire Fire
Department.
Further, as the Fire Chief, the City Council has entrusted me with the responsibility of
operating the Fire Department in the most cost effective manner possible. This governing
body has instructed me to look for budgetary savings in all aspects of my organization
and to operate in such a way that allows me to meet and exceed the community's needs
in the most cost-effective manner. I believe that by implementing these proposed
changes it will be difficult for my Staff and I to recognized potential savings in our current
and projected budgets My Staff and I have identified a progressive annual salary
savings, which could adequately fund the annual salaries for five additional Fire Fighters;
however, if approved these proposed changes will not allow us to realize those savings.
Further, changing the terms of the plan, at this point will cause the Department to wait an
additional five years before it can begin to realize those savings, which will help to
enhance service delivery.
In closing, I believe that by extending the DROP Plan from 5 to 10 years, and allowing
those employees to continue working past the onginally agreed upon dates will be
detrimental to the overall morale of the Department and therefore must be rejected at this
time. Basing the decision to change the current benefits program solely on quantitative
data provided by the actuary, without considering the qualitative impacts these changes
will have on the Department, leads to ineffective decisions and will certainly be
detnmental to the overall welfare of the organization.
BUDGET IMPACT
Currently, based on the information provided by the Osborn, Carreiro & Associates, the
overall impact to the current fund is insignificant; however, this change in retirement
benefits will not allow the Department to recognize the estimated salary savings normally
provided through the attrition process.
• Page 3
•
RECOMMENDATION
•
• It is the recommendation of myself and my Staff that the City Council approve the
temporary 3% Cost of Living Allowance (COLA); but deny the proposed Resolutions 02-
03 and 04-03, which would modify the current terms of the existing DROP Retirement
Plan.
• Page 4
•
•
From the Desk of the Fire Chief
Memo
•
Fayetteville Fire Dept
303 W. Center St.
Fayetteville, AR. 73701
(479) 575-8365
To: Board of Directors, Firemen's Pension and Relief Fund
From: Chris Bosch, Fire Chie
Hugh Earnest ChiefAdministiative Officer'
CC: Sandra Smith, Crty Clerk
Dan Coody, Mayor
Date: February 2, 2004
Re: Resolutions 02-03 and 04-03
On Monday February 2, 2004, I received notice of your proposed changes to the
DROP Retirement System. These changes consist of implementing Acts 1369 and
1372, as approved by the Arkansas State Legislature dunng the 2003 session.
I have requested these two items be held from the February 17, 2004 City Council
Agenda so I may have an opportunity to review them and identify any potential
impacts, which could arise because of these proposed changes I will be conducting
this review over the next 30 days and will prepare a report for the City Council and
the Firemen's Pension and Relief Fund Board pnor to our placing them on the
Council's March 16, 2004 agenda.
If you have any questions regarding my request, please feel free to contact me. I will
be happy to visit with you at your convenience.
Thank you.
• •
Fayetteville Firemen's Pension and Relief Fund
City of Fayetteville Arkansas
Resolution Number 132c03
A Resolution to allow the Fayetteville Firemen's Pension and Relief Fund to enact the Act
1369 of 2003 instituting a 10 year DROP.
Whereas; The Fayetteville Firemen's Pension and Relief Fund met on December 18th, 2003
and passed a resolution to enact Act 1369 of 2003, for it's members. And,
Whereas; The Actuarial Firm of Osborn, Carreiro and Associates, have reported that these
increases in benefits, would be considered actuanally sound under the rules of the Arkansas Fire
and Police Pension Review Board. And,
(See page 2, 1st paragraph of actuarial report dated November 20th)
• Whereas; Act 1369 of 2003 requires the Pension Board to pass a resolution, as well as City
Council.
Therefore be it resolved; That the Fayetteville Firemen's Pension and Relief Fund,
City of Fayetteville Arkansas, pass this resolution, increasing the five year DROP plan to a ten
year DROP plan. A copy of this resolution has been forwarded to the City Clerk, Fayetteville
Arkansas, and The Arkansas Fire and Police Pension Review Board office in Little Rock
Arkansas.
PASSED and APPROVED this 18'" day of December, 2003.
•
•
ARKANSAS FIRE & POLICE PENSION REVIEW BOARD
PR
January 21, 2004
Board of Trustees
Fayetteville Fire Pension Fund
113 West Mountain
Fayetteville, AR 72701
Dear Board of Trustees:
RECEIVED
JAN 2 3 2004
ACCTG. DEPT.
P.O. DRAWER 34164
LITTLE ROCK, ARKANSAS 72203
TELEPHONE: (501) 682- 1745
Fax: (501) 682 - 1751
email: info I@ lopfi•prb: com
website: www.lopli-prb.com
This letter is in response to your letter ofJanuary 14th regarding resolutions for
three benefit increase proposals. The resolutions include the provisions under Act 1369
of 2003, which extends the DROP to 10 -years; implementing a temporary 3% COLA for
all pensioners; and Act 1372 of 2003, which allows Fund members to remain employed
after the DROP period ends.
Based on the letter from the actuary dated November 20, 2003 and a follow-up
email dated January 21, 2004 your Fund is able to implement these proposals and still
remain actuarially sound. Therefore, your benefit increase proposals are approved. To
properly implement the provisions under Act 1369 of 2003 and Act 1372 of 2003, it is
necessary to seek approval from your governing body i.e. City of Fayetteville via an
ordinance. Once this action is approved please forward a copy of the City's approval to
the PRB.
My decisions are subject to review by the PRB. The next meeting is scheduled
for March 10, 2004 in Little Rock. However, this letter serves as authorization that,
based on the results from the actuary, the temporary 3% COLA may be implemented
effective January 1, 2004 and Acts 1369 and 1372 of 2003 may be implemented after
approval of your local goveming body.
Please contact me at 682-1745 with any questions you may have.
Respectfully,
David B. Clark
Executive Director
Cc: PRB Chairman Bill Lundy
FAYETTELLE
•
THE CITY OF FAYETTEVILLE, ARKANSAS
•
January 14, 2004
Arkansas Fire & Police Pension Review Board (PRB)
PO Box 34164
Little Rock, AR 72203
RE• Fayetteville Fireman's Pension Board
Resolution No. 02-03 Enacting a 10 Year DROP
Resolution No. 03-03 Enacting a Temporary 3% COLA
Resolution No. 04-03 Enacting Working after DROP
Dear Sirs:
The Fayetteville Fireman's Pension Board passed the enclosed resolutions at a regular
meeting of the board on December 18, 2003. I have also enclosed a copy of the minutes
from the December. 18, 2003 meeting and a copy of the actuarial report. It is my
understanding that the resolutions must be approved by the Arkansas Fire & Police
Pension Review Board before they can become effective.
If you have any questions or need any further information from the board please contact
me at 479-575-8323. I look forward to your reply.
Sincerely,
Sondra Smith
City Clerk
Firemen's Pension Board Secretary
113 WEST MOUNTAIN 72701 479-521-7700
FAX 479-575-8257
0
11/20/2003 11:08 50137 847.
ii
OSBORN CARREIR — PAGE 02
Osborn, Carreiro & Associates, Inc.
• ACTUARIES • CONSULTANTS • ANALYSTS
November 20, 2003
Mr. Steve Davis
Finance and Internal Services Director
City of Fayetteville
113 West Mountain
Fayetteville, AR 72701
Dear Mr. Davis:
One Union National t'fara.Sulte 1690
124 West Capitol Avenue
LIMB Rncli, ANisniai 72201
(SO1137618043
This report presents the results of our January 1. 2003 actuarial study of the assets and liabilities
of the Fayetteville Firefighters Pension and Relief Fund (thc "Old Plan"). This report is .a
supplement to our report of August 5, 2003 providing information you have requested.
The purpose of this supplement is to project the old Plan costs under three scenarios:
(1) No change is made. The Old Plan remains' as is. This will correspond to the information
on page 6 of the August 5, 2003 report.
(2) The effect that either i51tOP extended from 5 years to l0.years or Continued
Employment after DROP.
1
(3) A temporary 3 year, 3"4 compound COLA is added to the Old Plan.
COMMENTS
A projection of the income, expenses, assets and stabilities of the Oid Plan arc shown on the
three attached pages: These projections are for the Old Plan only and do NOT include the effect
of a merger with LOPFI. The process, method, and assumptions are described fully in the
August 5t 2003 report. Please consider this infomtation in ecnlunetton With the full report.
The current plan as is (scenario 7) will be fully funded in 15 - 20 years. The plan is projected to •
always have assets sufficient to mcct the benefit obligations.