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HomeMy WebLinkAbout1993-04-15 Minutes• MINUTES OF A POLICE PENSION BOARD MEETING A meeting of the Police Pension Board was held on April 15, 1993, at 2:30 p.m. in Room 326 of the City Administration Building, 113 W. Mountain, Fayetteville, Arkansas. PRESENT: Eldon Roberts, Rick Hoyt, Jerry Friend, Hollis Spencer, Dr. James Mashburn, Mayor Fred Hanna, City Clerk Sherry Thomas, City Attorney Jerry Rose, City Treasurer Glyndon Bunton, and Administrative Services Director Ben Mayes. CALL TO ORDER The meeting was called to order by Mayor Fred Hanna. MINUTES Spencer, seconded by Hoyt, made a motion to approve the minutes of the March 30, 1993 meeting. The motion passed unanimously. OLD BUSINESS DENNIS TAYLOR RETIREMENT Dr. Mashburn asked if a letter had been received from Dr. Heinzelmann regarding their conversation concerning Dennis Taylor. • Thomas stated she had sent a letter to Dr. Heinzelmann requesting • the documentation, but he has not yet answered. Dr. Mashburn asked that a follow up letter be sent to Dr. Heinelmann. CHARLES JOHNSON RETIREMENT REQUEST Roberts stated a letter has been received from Dr. Moore, the doctor the Police Pension Board requested Johnson to see. Dr. Mashburn stated he felt the letter was pretty self-explanatory. Dr. Moore states Johnson's finger has partial degenerative arthritis, like many people have during the normal aging process. Dr. Moore did not say there was any traumatic arthritis, which would have been the result of an accident. Bunton asked how long Johnson had been with the department. Roberts stated as of February 13, 1993, he has been employed 14 years. Bunton asked if Johnson had stated his plans regarding the recommended surgery by Dr. Moore. Roberts stated Johnson has not said. If Johnson gets medical help and does become fit, he would be required to return to the job, and his pension would stop since he has not worked 20 years. April 15, 1993 Mayor Hanna asked if there was a temporary retirement or disability that Johnson could use until he has the surgery and recovers. Dr. Mashburn asked how much sick leave Johnson has left. Roberts stated Johnson has been off on sick leave since September of last year. He also stated there is no provision in the state statute for any type of temporary retirement. Mayor Hanna asked if the cyst on Johnson's finger could be a result of a line of duty injury. Dr. Mashburn stated not necessarily. Besides, the degenerative arthritis is not a result of injury. Hoyt stated he has a problem with granting retirement when there is a chance of recovery with something that does not sound like major surgery. Having an operation on the finger seems reasonable. Mayor Hanna agreed with Hoyt. He stated it seems like the should have some procedure since the injury is not line of He stated Johnson could be paid the same as if he had a attack, ulcers, etc., until he is recovered and comes back to Spencer stated have surgery. Hoyt asked how this case. Board duty. heart work. the Board does not have the right to force him to the City's long term disability policy would affect Mayor Hanna stated he feels someone should not be retired when minor surgery could allow him to come back to work. Bunton stated he did not think the long term disability policy kicks in until after an employee is off 6 months without pay. Dr. Mashburn stated Dr. Moore's letter says he might be able to come back to work in about 3 months if he had surgery. Dr. Moore states as Johnson is now, he cannot effectively use his hand. If the Board retires him, they have the right to require Johnson to be re-evaluated every 6 months. Dr Mashburn stated he does not know if Johnson will be able to go back to work, but his injury could be helped. However, the decision about surgery is up to Johnson. If he is granted retirement at this time, he will get some income. He feels the obligation of this Board is to consider what is best for the officers. Mayor Hanna stated if Johnson is rehabilitated and feels he still cannot use his hand effectively, he would then be eligible for a medical retirement. Mayor Hanna stated if Johnson is retired now, he would get his sick leave and vacation pay for the 7 weeks he has not used, plus he would receive 1/2 of his regular salary. Mayor Hanna stated he did not feel this was exactly right. • • April 15, 1993 Dr. Mashburn stated he could be improved enough to go to work somewhere else, but maybe not enough for police work. Spencer stated the Police Department does not have the flexibility to assign him strictly to a light duty job. Dr. Mashburnstated there was not guarantee or assurance that after the surgery Johnson would be able to come back to work. Hoyt stated Johnson would not have had this time crunch (only 7 weeks of sick and vacation time left) if he had done something 5 months ago about his finger. One of the reasons the Board asked for the second opinion from Dr. Moore was to find out if there was something that could be done to help Johnson. Hoyt stated he agreed with Dr. Mashburn that the Board needed to be compassionate; however, the members of this Board were also elected to look out for the finances of the fund and not rubber stamp these medical retirements. Police Chief Richard Watson asked if the 10% permanent impairment stated by Dr. Moore is now or after surgery. Dr. Mashburn stated he feels the 10% is at this time. If Johnson has surgery, there could be some improvement. He stated the letter indicates Johnson cannot grip or hold much now. Chief Watson asked since Dr. Moore states there is a "permanent" disability, is there a chance the surgery might not remove the disability. Dr. Mashburn stated with He stated Johnson could opportunity to have the recovered, he could come surgery, there could be some improvement. beretired, and this would give him the surgery done. After he heals and has back to work. Friend stated Johnson has about 8 weeks of sick, vacation, and comp time left. Dr. Mashburn stated there would need to be about 3 months of time before he would be able to come back to work. He asked if Johnson was getting paid now. Hoyt stated Johnson was getting his regular pay by using his sick leave. Roberts stated he could stay Moore's letter stating Johnson of time, and if the long term then what? off work, and the Board has Dr. cannot do the job. If he runs out disability policy did not kick in, • Hoyt stated it was like Roberts had told him earlier, "you can't make me do something, but you can make me wish I had." He stated • • April 15, 1993 he does not feel bad about not voting for the retirement since Johnson could get some help. Friend stated he agrees. Dr. Moore does not state this surgery is dangerous or could make the condition worse. If after the surgery, Johnson is still disabled, the Board would reconsider the medical retirement. Spencer stated when Johnson runs out of sick leave, etc., what does he have to fall back on then. Mayor Hanna asked if he could apply for unemployment when he is off work and not receiving a paycheck. He stated he felt this is a situation that is not clearly defined. Dr. Mashburn suggested giving Johnson a chance to send the Board a letter about Dr. Moore's suggestion and what his intentions are regarding the surgery. At this point in the meeting, Beff Kent, the City's health benefits coordinator joined the meeting. Mayor Hanna asked Kent if a police officer was sick because of a hand injury and when his sick leave runs out, what avenue does he have to get compensation short of being medically retired? Kent stated since the injury is non work related, it is not covered by workers comp. After being off work for 6 months, the long term disability policy pays 60% of the regular income as long as the condition exists up to three years or to the age of 65. The benefits would be coordinated with any received from social security and/or any retirement benefits Mayor Hanna asked if Johnson could draw any social security benefits. Kent stated she did not feel he would be qualified. Gerald Bradley, Assistant Chief of Police, stated Johnson does not pay anything into social security. Dr. Mashburn asked if Johnson could sign up for unemployment. Kent stated she was not sure, but she could check. Hoyt stated he would like to see him get the operation. He is still getting paid. By not retiring, Johnson will still have health insurance coverage. After surgery, if he is still unable to work, he can reapply for retirement. If he leaves employment of the City, he can keep his health insurance policy for 18 months, but the premium is much higher than he is currently paying. • • • April 15, 1993 Dr. Mashburn made a motion to defer the retirement request and for a letter to be sent to Johnson about the letter from Dr. Moore where he states his condition might be helped through surgery, and it is the desire of this Board to know what his intentions are. Dr. Mashburn stated Hoyt made insurance. Dr. Mashburn stated prudently by trying to find out a good point about the health he feels the Board will be acting Johnson's intentions. Hoyt seconded Dr. Mashburn's motion. Roberts asked why the Board did.not take this same action with the other people that have been given medical retirements. He stated there were three people retired in 1988. He stated Mary Mueller's doctor stated he felt she might be helped through surgery. Friend stated this was true. But, he had specifically asked Dr. Mashburn if he felt Mueller's back injury was enough to retire on even if her other problem was corrected through surgery. Dr. Mashburn had told Friend he felt it was. Roberts asked if members of the Board felt they had the right to put the ball in Johnson's court like this. Chief Watson stated the 6 months required examination period might apply in this case. If Johnson has the surgery and at the end of 6 months he is well enough, the Board has the right to call him back to work. Right now, the department is short a supervisor, and when pulling someone into that position, it makes the department a patrolman short. Dr. Mashburn stated he would like to know from City Attorney Jerry Rose what rights this Board has in this case. Friend stated he felt the Board might need to defer a decision until,they get a letter from Dr. Moore. Roberts stated if the Board cannot force him to have the surgery, then waiting to find out his intentions should not apply to their making a decision. Roberts asked if there is any chance of Johnson getting better without surgery. Dr. Mashburn stated he would probably get worse. Roberts stated each 6 months, Johnson will have to send to the Board a letter about his condition., and the Board will have to stop his pension and bring him back to work if he is able. Friend stated Johnson has a right to refuse the surgery, he can be medically retired, and he may not ever get better. April 15, 1993 Bunton asked if Johnson has the surgery, can the Board require him to go through rehabilitation so he could return to work. Kent stated she thinks Dr. Moore is stating he does not think Johnson has met his maximum degree of improvement. Dr. Mashburn stated if this decision is deferred for 8 weeks, the amount of time he has left of benefits, he could be re-evaluated and see if there is any change in his condition. Or, the Board could retire him now and evaluate him in 6 months. At this point, City Attorney Jerry Rose joined the meeting.. Friend told Rose he would like letter that Dr. Moore feels he intentions regarding the surgery. to point out to Johnson in the can be helped, and ask him his He asked Rose's opinion on this. Rose stated he felt this was well within the rights of the Board to ask him his intentions. He feels they have a reasonable expectation under the law that he would do what is reasonable to improve his health. Dr. Mashburn stated maybe they should defer a decision and evaluate the situation in 8 weeks and not ask him his intentions. • Dr. Mashburn withdrew his earlier motion. Hoyt withdrew his second to the motion. Hoyt made a motion to defer action for 6 weeks until the Board sees what Johnson is going to do. Johnson has almost 8 weeks of paid time left. He stated the Board could send him a letter and request he attend the next meeting and tell the Board about his condition. There was no second, so the motion died. Chief Watson asked if Johnson stated he was not going to have the surgery, then what was the Board going to do? Friend stated he felt a decision should be deferred until the Board knows his intentions. Rose stated there was nothing wrong with that. Spencer stated Dr. Moore states he has a 10% disability at this time. The Board has the ability to re-evaluate him in 6 months. Mayor Hanna asked if Johnson could be put on a 6 month retirement. Roberts stated there was no provision for this. spencer, seconded by Roberts, made a motion to place Johnson on medical retirement. • • • April 15, 1993 Friend stated if the Board retires him and if he could be helped with surgery but he does not have it done, there isnothing this Board can do. Rose stated this is in the nature of malingering if he does not take reasonable efforts to correct the situation. Roberts asked what Rose thought a. court would do with this. Rose stated he would be very comfortable arguing in court that he should have had the surgery to see if the finger could be improved. Friend stated once the Board approves the retirement, would it be possible to "unretire" him because he should get the operation. Bunton stated he would like to keep the incentive intact for him to get improvement. Dr. Mashburn stated he feels an obligation and has always tried to point out to people about the possibility of receiving help for an injury or sickness. By a show of hands, the motion to approve the medical retirement failed by a vote of 2 to 5, with Hoyt, Friend, Dr. Mashburn, Bunton, and Hanna voting against the motion. Dr. Mashburn stated he felt the Board has an obligation to look after the retirement funds, but they also have an obligation to be humanitarians. Friend asked if Johnson wanted the Board to reconsider his retirement, does he have to reapply? Rose stated he would have to. Because the request has been denied, it will not automatically come back up before the Board. TOMMY HARTWICK Thomas stated Hartwick picked up his check for the refund of his pension contributions on April 12, 1993. NEW BUSINESS INVESTMENT REPORT Mike Kirkland, Dean Witter, introduced Ms. Kay Frank of Madison Investments, who was present to give a report on the Madison account. Frank stated Madison has had the account for about 3.3 years. The total return on the account for this period is about 38%. Last year the account was up about 6%, and it was up 15% in 1991. This April 15, 1993 year it is up about 2.7%. She felt this was good gains given the fairly conservative position they have in the market and compared to the performance of the market as a whole. Frank handed out a 'packet of charts and graphs showing the performance of the account. She stated 10 year treasury bonds had an average interest rate of a little over 9%. interest rates this year are at 6 3/4% In 1992 when the interest rates went up, the bond prices fell. During the second and third quarters of 1992, the stock market rallied because of consumer confidence. During the fourth quarter, there was uncertainty about the election. In 1992 interest rates started and ended the year at about the same level. Madison had a 6% return, and she felt that was okay considering the funds are not invested in very risky markets. Last year there was quite a bit of cash in the portfolio, and this was of their conservative investment nature with plans to get back into the market when the time was right. Madison has now taken the cash and is trying to enhance the yield by buying short term bonds. Frank stated there is currently a great deal of uncertainty in the market. Some argue that the economy is picking up, but with the tremendous national deficit, interest rates will rise. She • outlined the past 10 year historical performance of the market. Dr. Mashburn stated people need to be able to go back to work to improve the economy, and he does not see this happening. Frank agreed stating in the past, economic recovery has usually seen increased employment. Over the last two years, there have been increases in productivity with fewer people. This has been one of the problems of the employment issue. Employers are going to have to educate people to run the new machinery, etc. Bunton stated he feels this economic situation will last another 2 years. Frank stated in the mean time, if the inflation rate is at about 3%, earning 6, 7 or 8% returns on the bond portfolio is good. She stated people will have to scale down their expectations and not increase risk too much. Dr. Mashburn asked what Frank anticipated the rate of return to be for the fund over the next 6 months to a year. Frank stated the first quarter of 1993 has earned 3%. She feels there will be volatility in the bond market this year, but she believes an 8% return for the year is not an unreasonable goal. • April 15, 1993 Kirkland stated the fund has $600,000 of assets that mature in 1994. That should be an ideal time if the economy is turning around as expected by that time. Frank stated this type of market is where Madison usually does their best. ACORN INVESTMENTS Kirkland stated Acorn said they would come to the pension board meeting in July with their report. Dr. Mashburn stated that would be fine, but he would like to have a list of where the money is invested, which stocks, etc. Kirkland stated the March statements should be arriving soon, but because of the problems at the World Trade Center, they are late. He will make copies and distribute to the Pension Board members. He stated Acorn is invested 21% in cash, 38% in bonds, and 42% in stocks. The pension fund has been invested with Acorn for about 2.4 years, and the rate of return for that time is about 11.5%. He stated there is a lot of uncertainty in the stock market now, especially in the retail and drug industry stocks. However, the fund was at $1.489 million three months ago, and it is now up to • $1.502 million. Bunton asked what the average yield is on the stocks. Kirkland stated he will get that information for the Board. Kirkland stated Madison was up about $17,000 since January, which is about a 9.25% annualized rate of return. • Kirkland stated the Dean Witter CD is earning a little over 8%. In January there was $360,893 in the cash account. There were three checks written in the last three months for a total of $110,000. The total Dean Witter investment account was $3,249,482 in January and is now $3,171,900, which includes all withdrawals and increases to the account. Bunton asked the Pension Board members if they felt Kirkland has done what they wanted with the cash account. Roberts stated he had. Kirkland stated there is currently $72,113 in cash. CHARLES JOHNSON RETIREMENT REQUEST CONTINUED Dr. Mashburn stated he did not feel comfortable about what the Board has done regarding this retirement request. They voted not to grant a pension. • April 15, 1993 Roberts stated he would be talking with Johnson and let him know of the Board's decision. Hoyt stated he did not approve the request. However, he did not deny the retirement. He stated he feels there is a difference in these two issues. Dr. Mashburn asked what the Board had said that Roberts can tell Johnson. Roberts stated the Board denied his retirement. Thomas stated she would send Johnson a copy of the minutes along with a letter advising him of the Board's decision. Roberts stated he feels Johnson will ask him what he should do now. Bunton stated he should tell Johnson the Board was uncertain of his intentions. Hoyt stated it looks like Johnson should have attended this meeting. Bunton stated he felt things may have been different if Johnson had • attended to answer the Board's questions. • Roberts stated he was partly at fault for Johnson not attending. Johnson had asked if he should attend, and Roberts stated he told him he was sure welcome, Dennis Taylor had attended, but Mary Mueller had not attended, and it was sure not mandatory. Bunton suggested inviting him to the next meeting. Dr. Mashburn stated he feels the Board would have preferred to have denied the retirement at this time because Johnson has the opportunity to get medical help. PENSION BOARD ELECTION Roberts stated in May the Board would lose one of the active employee representatives, either Rick Hoyt or himself. There will be an additional retiree member elected. The make up of the Board is changing to reflect the number of active employee members versus the retired members. ADJOURNMENT The meeting adjourned at 4:29 p.m.