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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.
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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,
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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
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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.