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HomeMy WebLinkAbout1986-01-28 Minutesr .:, • MINUTES OF POLICEMEN'S PENSION FUND BOARD MEETING A meeting of the Policemen's Pension Fund Board was held on Tuesday, January 28, 1986 at 2:00 P.M. in Room 111 of City Hall, 113 West Mountain Street, Fayetteville, Arkansas. PRESENT: Acting City Manager Murphy, Finance Director Linebaugh, City Clerk Kennedy, Rick Hoyt, James Mashburn, Mike Mitchell, Eldon Roberts and Hollis Spencer. CALL TO ORDER The meeting was called to order at about 2:15 P.M., with all members present. JERRY SURLES HEARING The Board heard a request from Jerry Surles regarding a decision made by the Board at its September 25, 1985 meeting. On September 25, the Board denied a request from Surles that he be given credit for 17 months active duty time with the Washington County Sheriff's Department without being required to pay any additional money into the Pension Fund. Surles stated that, in 1973, the Board approved a similar request from A. D. Cooper; that seven to eight years later, Officer Bill Brooks used his Deputy Sheriff time; that in 1983 or 1984, Paul Wood applied to use Deputy Sheriff time, but that there was nothing in the Minutes to reflect whether payment was made into the Pension Fund. Surles stated that shortly after this time the "Sunset Rule" went into effect which -stated that henceforth retirees must pay into the Pension Fund. Surles'stated this was contrary to State law. Surles stated he was told in 1973 or 1974 that he would be permitted to use his Washington County time, without having to pay into the Fund. Surles stated he thought a precedent was set when the Board approved requests from Cooper, Brooks and Wood. Surles stated that, should he decide not to retire, in the next 17 months he might be eligible to receive a 3%-8% payincrease through the bonus plan. Surles stated he could draw $25-30,000 more in the next 17 months of employment. Surles also pointed out he was being asked to pay 6% into the Pension Fund as opposed to those using volunteer fire department time who only have to pay 4%. Hollis Spencer stated when he first began his term of service on the Pension Board he was not aware of the resolution passed in 1983. • Police Pension Board January 28, 1986 Page 2 Spencer stated that he discovered the last two employees who asked to use their Deputy Sheriff time had offered to pay into the Fund but were told it was not necessary. Spencer stated he thought others in the past had not been aware of the resolution and he thought that at least Surles' request should be heard again by the Board. Spencer added that he thought a precedent had been set in the past. Murphy asked about the probabilities of the Pension Fund becoming actuarily sound in the future. Linebaugh stated he thought actuarial soundness could be reached within the next couple years. Murphy remarked that, if the fund did become actuarily sound, there was a real possibility that there would be pay increases in pension benefits in the future. Linebaugh stated the City Attorney, in an Opinion written on this matter in 1983, advised that Act 70 was special legislation which would not hold up in court. Linebaugh stated McCord had advised the prior Board that they could legally ask anyone retiring to contribute to the Fund because it was special legislation. Eldon Roberts noted that the Board in the past had decided that, if everyone used county time without paying in the Fund, there would be .about ten years worth of time being used, with no payment being made Roberts stated that it was then that the Board voted to put the "Sunset Rule" into effect. Roberts stated he thought it was common knowledge around the Police Station that this rule had been adopted. Roberts pointed out that Surles was not being denied an early retirement, or the use of his County time. Surles quoted from an opinion from the City Attorney to Chief of Police Bob Jones dated August 2, 1982, stating that it would not be illegal for the Board to continue doing as it has in the past "...because neither Act No. 70 of 1953 nor Act No. 381 of 1973 has been repealed or declared by a court of competent jurisdiction to be unconstitutional." Roberts stated he thought the Board "owed its allegiance first to the Pension Plan." Linebaugh pointed out the possibility that, if there ever were not enough money in the Fund, the Pension Plan might be turned over to the State Pension Plan. In answer to a question from Mike Mitchell, it was agreed that a future Pension Board could choose not to continue the present policy set by this Board. Linebaugh pointed out that granting this request would mean reversing the resolution passed by the Pension Board in 1983. Linebaugh asked if there was a motion to change the resolution. There being no motions, es Police Pension Board January 28, 1986 Page 3 Linebaugh declared that the resolution remained in effect, meaning that those persons retiring with county time must make payment for that time. MINUTES The Minutes of the last meeting of September 25, 1985 were unanimously approved. FUTURE MEETINGS Hollis Spencer noted that, at the last meeting, there was discussion regarding holding quarterly meetings. Spencer pointed out that meetings have not been scheduled in this way. Linebaugh pointed out that, with the changes in management, delays were caused. It was agreed that meetings should be held on a scheduled basis, with meetings to be held quarterly on Thursdays at 4:00 P.M, rather than on Wednesdays as originally planned. Murphy asked that a calendar of meetings for 1986 be prepared. PENSION LIST Linebaugh noted the only change to the Pension List will be the addition of Jerry Surles, at $1,304.16, if he meets all requirements and wishes to be placed on the list. It was moved by Hoyt and seconded by Roberts to approve the Pension List as described by Linebaugh. The motion passed unanimously. FINANCIAL STATEMENTS Linebaugh asked the Board to review the December 31, 1985 Financial Statements. Linebaugh reported that, as of December 31, there were $2,951,826.40 in investments. Linebaugh noted that property tax of $89,800 was as estimated; that State Insurance Turnback and Court Fines and Fees were greater than estimated; interest and officer contri- butions were down slightly from what was estimated. Linebaugh reported pension withdrawals were greater than expected, audit expense was lower than expected; and pension expense was close to what was estimated. It was moved by Hollis Spencer, seconded by Eldon Roberts and unanimous to accept the Financial Statements as reported. Policemen's Pension Fund Board January 28, 1986 Page 4 INVESTMENTS IN 1985 Linebaugh distributed a report on the history of securities invested in 1985, showing interest received. Linebaugh asked for approval of securities purchased between September 25, 1985, and December 31, 1985, noting that investments were made according to guidelines set forth by the Board. Linebaugh advised the Board begin to consider investments with non -local banks, and advised investing in governmental securities. Mike Mitchell spoke in favor of the Board listening to a presentation from investment firms. Linebaugh stated he would not propose the Board invest its pension funds in stocks and bonds with an investment firm, such as the Fire Pension Board has done, but he encouraged the Board t� invest in securities with higher interest rates than Certificates Of Deposit. After further discussion, Linebaugh told the Board that investment • firms of Merrill -Lynch, A. G. Edwards and Prudential-Bache had made presentations to the Fire Pension Board. Linebaugh reported on those investments due to mature in February: February 18: $ 80,000 February 17: 282,000 February 27: 40,000 February 2: 334,000 February 24: 502,000 Linebaugh agreed with Rick Hoyt that the Board had decided at the last meeting to hold investments down to six month to one year terms and to invest only in T -Bills and bank and savings and loan C.D.'s. Dr. Mashburn made a motion that preference be given to local banks and savings and loan associations and, if they are not interested in bidding, to consider some other bank or savings and loan association, preferably in the State of Arkansas. The motion was seconded by Hoyt. Mike Mitchell stated he thought the Board should take the opportunity of considering the use of an investment firm, in order to reach actuarial soundness sooner. The motion passed unanimously. There was further discussion regarding plans for hearing a presentation from investment firms. Murphy suggested that, after presentations are made, Scott Linebaugh be asked to do an analysis on the "down • Policemen's Pension Fund Board January 28, 1986 Page 5 side". Murphy pointed out that the Board would benefit from hearing more than just the "sales pitch" from the investment firms It was generally decided that Linebaugh should contact the local firms of A. G. Edwards, Merrill -Lynch and Prudential-Bache regarding presen- tations to the Board, and that Linebaugh should present the "down side" analysis some time after the presentations have been made. It was moved by Hoyt, seconded by Roberts and unanimous to approve investments made between September 25 and December 31, 1985. OTHER BUSINESS Murphy pointed out that, since the "Sunset Rule" was established in 1983, it has become a contested issue, and he suggested the Board might reaffirm its position again,. by sending the resolution out to those persons who could be affected. Gerald Bradley raised the issue of those retirees who still collect only $250 per month. After discussion, Scott Linebaugh stated he would check into the possibility of having a private actuarial study done locally. ADJOURNMENT It was moved by Spencer, seconded by Roberts and unanimous to adjourn the meeting. The meeting was adjourned at about 3:46 P.M.