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HomeMy WebLinkAbout1981-08-14 Minutesi L•^ l n r. C L. it 1i MINUTES OF A POLICE PENSION BOARD MEETING A meeting of the Police Pension Board was held on August 14, 1981, at 9:00 a.m. in the Office of the Finance Director, City Administration Building, Fayetteville, Arkansas. PRESENT: Dan Epperly, Dr. James Mashburn, Eldon Roberts, Ronald Bumpass, Bob Jones, Scott Linebaugh, and Vivian Koettel ABSENT: None INVESTMENTS Chairman Bumpass called the meeting to order and opened the floor for discussion on investments in Savings and Loans. Mr. Linebaugh explained that in order to be insured for more than the $100,000 maximum by FSLIC, each member covered must be vested, which would mean having twenty years of service. Linebaugh reported that the City has pulled completely out of Savings and Loans now and that the Fire Pension is considering a policy of investing only the maximum of $100,000 in each Savings and Loan. This would mean a loss in interest, but should investments be made over the insured amount and the institution go bankrupt, then an even greater loss would be experienced. Mr. Linebaugh informed the Board that he was recommending that the Police Pension invest in Savings and Loans only up to the insured amount of $100,000. Also, Linebaugh stated that he felt the Police Pension Board should ask the Savings and Loans to pledge government securities to cover any deposits which are not insured by FSLIC. Director Bumpass stated that there are three funds which should each be eligible for insured deposits of up to $100,000. These are the City's General Fund, the Police Pension Fund, and the Fire Pension Fund. Dr. Mashburn.asked if investing in Savings and Loans is a legal action for pension funds and Linebaugh answered that it is legal for pension funds to be invested in Savings and Loans but not City funds. Dr. Mashburn stated that he would like to see the funds invested in the Savings and Loans which have home offices in Fayetteville, and not the ones with branch offices only. He said he does not want the funds to be sent out of the state for higher interest rates, but would like to see the money used in the Fayetteville and Northwest Arkansas region. Director Bumpass agreed. Upon further discussion, Dr. Mashburn moved that funds be invested in Savings and Loans with home offices in Fayetteville up to the insured amount of $100,000, that the City Funds be separated from the Police Pension Funds as discussed, and that the Savings and Loans be asked to pledge government securities for any deposit not insured by FSLIC. Mr. Epperly seconded the motion and the motion passed unanimously. PAYMENT FOR ACTUARIAL VALUATION Mr. Linebaugh stated that he had received a statement from Benefit Administration Services, Inc. for payment of the actuarial valuation and certification. The amount of the original statement was $640.20. However, Linebaugh stated that he had talked to Bob Hall, and the amount to be paid „.;.: POLICE PENSION BOARD -Minutes- 8-14-81, Page 2 is $490.20. The Board was promised that the charge for this service would not be more than the charge if the Municipal League had performed the service. Dr. Mashburn, seconded by Roberts, moved that payment be authorized in the amount of $490.20 as recommended by Treasurer Linebaugh. The motion passed unanimously. PENSION LAWS Linebaugh stated that no Attorney General's opinion had yet been received an the case of the amount of pension for Karen McWhorter. At the present time she is receiving the $250.00, with the understanding that if the Attorney General rules that she should be receiving more, then she will receive backpay. ACTUARIAL STUDY Discussion was held on the actuarial study which showed that the pension fund is not actuarially sound, but probably should be within two years. At the present time more money is being paid out than is being contributed. The amount paid in will change in 1982. The policement will put in 6% and the City will be required to contribute 3%, with a 1% increase each year until the City is also contributing 6%. Also, funds should be received from the liability insurance premiums in the State. It was decided that a letter should be written to the persons retired, explaining to them that the fund should be actuarially sound in a few years and then the Board would have the option of increasing benefits. Discussion was also held on the new pension fund to go into effect. Linebaugh explained that all new policemen would be in the new police pension controlled by the State beginning in 1983. Chief Jones explained that under the new pension plan, an officer cannot retire after twenty years of service, but must at least be 55 years old. The Board -discussed this and decided to try and get an opinion fromithe Board of Directors on trying to get legislation to change this back to twenty year retirement. BONDS Discussion was held on the bonds which the Police Pension Fund has that are not legal. The Board asked Linebaugh to check again with the authorities on this and get some idea on the bond market and how much money would be lost if the bonds are sold now. Also, discussion was held on how long it would take to recover a loss if one was experienced now. ADJOURNMENT There being no further discussion, the meeting adjourned.