HomeMy WebLinkAbout1996-02-15 - Agendas - Final FAYETTEVI LLE
!*THE CITY OF FAYETTEVILLE, ARKANSAS TRACI PAUL, CIT/ CLERK
TO : Policemen's Pension Board Members
FROM: Traci Paul, City Clerk/Treasurer TP
DATE: January 30, 1996
SUBJECT: SPECIAL POLICE PENSION BOARD MEETING
There will be a Special Police Pension Board meeting on Thursday, February
15, 1996, at 1 :30 p.m., in room 111 of City Hall. Please call me at 575-8323 if
you will be unable to attend.
113WESTMOUNTAIN 72701 501575-8323
FAYETTEVI LLE
WE CITY OF FAYETTEVILLE, ARKANSAS . TRACI PAUL, CITY CLERK
TO : Policemen ' s Pension Board Members
FROM : Traci Paul , City Clerk/Treasurer Tp
DATE : February 5 , 1996
SUBJECT : Policemen ' s Pension Board Meeting
As you know , the next Policemen ' s Pension Board meeting is a
special meeting scheduled for Thursday , February 15 , 1996 , at 1 : 30
p . m . , , in room 111 of City Hall . The Board will be discussing a
possible increase in retiree benefits . Attached please find a
copy ,. of a memorandum from Cathyrn Hinshaw regarding increasing
benefits from local pension funds . Please review the memorandum
before the meeting . Thank you .
Attachments
Y
113 WEST MOUNTAIN 72701 501 575.5323
DARKANSAS FIRE & POLICE PENSION REVIEW BOARD
P.O. DRAWER 34164
LITTLE ROCK, ARKANSAS 72203
TELEPHONE (501 ) 682. 1745
FAX: (501 ) 682. 1751
MEMORANDUM ACCT. SfftI-r INFO .
TO LIZ IN) JA NI .
TO : LOCAL PENSION FUND BOARDS OF TRUSTEES bON ' T EXpECT-
FROM : ARKANSAS FIRE AND POLICE PENSION REVIEW BOARD REI'okT BACK
CATHYRN E . HINSHAW , EXECUTIVE DIRECTOR UN1'I-IL MAIc'CH 0k�
A1�121L .
RE : INCREASING BENEFITS FROM LOCAL PENSION FUNDS EL jON
MAY WANJT- TO
DATE : — January ,.._19-9-6�_.� � CALL ANb ASK FOS
I2ESI�ONSE.
There are two methods by which a local pension fund may
increase benefits to its members . The first is legislation which
mandates an increase . The second is by securing an actuarial
valuation which demonstrates that a pension fund can support the
cost of the increased benefit over a defined period of years .
Police and fire pension funds are required by law to process all
benefit increase requests through the Arkansas Fire and Police
Pension Review Board .
• If you wish to process a benefit increase through the
Pension Review Board , please use the following :
1 . The local Board of Trustees must adopt a resolution
to raise benefits to the new amount . The resolution must be signed
by 3 %4 ' s of the membership of the Board of Trustees
( 6 Trustees ) .
2 . The resolution must state how much the increase would
be and to whom it would apply - current retirants only ; future
retirants only ; current and future retirants ; current surviving
spouses and/or -children; future surviving-spouses and/-or children ; _
• current and future spouses and/or children ; current and future
retirants , spouses , and children . ( Police pension funds may
include dependent parents . )
3 . The completed resolution should be mailed to :
Arkansas Fire and Police Pension Review Board
P . 0 . Drawer 34164
Little Rock , Arkansas 72203
4 . The pension fund will be sent a bill for the
actuarial valuation and the pension fund should return a check
promptly for that amount to the above address , payable to " Arkansas
Local Police and Fire Retirement . System" . If a pension fund has
never changed its benefits before , - the fee is $ 475 for . the first
benefit proposal , and $ 250 for each additional proposal . If a
pension fund has already made benefit changes , the fee is $ 675 for
the first benefit increase proposal , and $ 250 for each additional
proposal . No actuarial work will be processed until the fee is
received .
5 . Volunteer pension funds may , if they wish , submit a
proposal to increase benefits to a specified amount and may also
request that if the first proposal cannot be approved , that the
actuary find the highest monthly benefit amount which can be paid
by the pension fund . This is called the " random search "
proposal . The " random search " service is provided for two
categories of volunteer plans : Standard benefit and non - standard
benefit plans .
A . STANDARD BENEFIT PLANS (Never Raised Benefits )
The requirements for this procedure are :
1 ) The first part of the proposal - must request a new rate
which is some multiple of $ 5 , not to exceed $ 95 ( $ 60 ,
$ 65 , $ 70 , $ 75 , $ 801 $ 85 , $ 90 , $ 95 ) .
2 ) The resolution from the local board of trustees must
state that if the first proposal cannot be approved ,
the board wishes the actuary to compute the next
• highest monthly benefit which can be paid . ( The
actuary will do the computation in increments of $ 5 ) .
3 ) The fee for this type of proposal is $ 500 .
B . NON STANDARD BENEFIT PLANS
The requirements for this procedure are :
1 ) The resolution from the local board of trustees must
state that if the first proposal cannot be approved ,
the board wishes the actuary to compute the next
highest monthly benefit which can be paid ."-( The
actuary will do the computation in increments of $ 5 ) .
2 ) The fee for this type of proposal is $ 975 .
If the Board of Trustees implements a benefit structure
resulting from a random search , the Board may not apply for another
random search for a 4 year period .
6 . Once a check and any additional information needed on
the fund has been received , it will be submitted to the actuary .
Actuarial valuations for benefit increases take 8 - 10 weeks .
7 . When the valuation results are received , the Executive
Director shall certify to the local Board whether or not the
increased benefit can be given .
8 . When an increase is granted , a copy of the
resolution , actuarial valuation , and the Executive Director ' s
certification must be filed by the local Board with the
circuit and city clerks of the county and city in which the pension
fund is located .
9 . The standards by which a benefit increase proposal
will be evaluated are attached ( PRE Rule #4 ) .
•
f
ARKANSAS FIRE AND POLICE PENSION REVIEW BOARD
BOARD RULE #4 Date Approved : May 30, 1985
As Amended : July 18, 1995
DEFINITION OF "ACTUARIAL SOUNDNESS"
Under law, the financial objectives of the local pension plans shall be to establish and
receive contributions which will remain approximately level from year to year and will not have to
be increased for future generations of citizens. The law specifies that this objective is achieved
when contributions received each year by a_pension fund are sufficient both, (1) to fully cover the
costs of benefit commitments being made to employees for their service being rendered in such
year and, (2) to make a level payment which, if paid annually over a reasonable period of future
years, will fully cover the unfunded costs of benefit commitments for service previously rendered.
1 . The financial objectives discussed above must be met in order for a fund to be considered
"actuarially sound".
2. All computations of actuarial condition shall be based upon assumptions of future financial
experiences and funding methods which are either established by or approved by the
Pension Review Board.
3. From the date of the adoption of this Board rule, the tests described below shall be used to
• evaluate benefit increase requests from the local funds and to determine if pension
recipients are eligible for benefits mandated by law for pension funds which are
"actuarially sound".
A fire or police pension fund that is designated as "actuarially sound" must meet one of the
following:
1 . The Contribution Test and the Short Condition Test; or
2. The Contribution Test and the Funded Percentage Test; or
3 . Cash Flow Projection Valuation.
Contribution Test
The contributions made to the Fund must be equal to or more than the actuarially computed
contributions to pay for the Fund's proposed total benefits. Such computed contributions shall
consist of
1 . Normal cost; and
2. An amortization of unfunded accrued liabilities over a period of future years, which period
is defined in the table below.
Arkansas Fire and Police Pension Review Board
Board Rule #4 as amended July 18, 1995 - page 2
Short Condition Test
The Pension Fund's current assets (cash and investments) must be sufficient to cover:
1 . Active member contributions on deposit; and
2. The proposed total liabilities for future benefits to present retired fives and inactive
members; and
3 . A portion of the proposed total liabilities for service already rendered by active members.
The portion is defined in the table below.
Funded Percentage Test w
The Pension Fund's current assets (cash and investments) must be sufficient to cover a portion of
the proposed total liabilities of all participants of the Pension Fund. The portion is defined in the
table below.
Testing Amortization of Amortization of Active Funded
Dates as of Unfunded Active Unfunded Retiree Liability-Short Percentage
January 1. Liabilities Liabilities Condition Test TS9
1994 18 9 55% 82%
1995 16 8 60% 840/6
1996 14 7 65% 866/o
1997 12 6 70% 880/0
1998 10 5 75% 900/0
1999 9 5 80% 920/6
2000 8 5 85% 94%
2001 7 5 90% 95%
2002 6 5 95% 96%
2003 Grafter 5 5 100% 97%
Cash Flow Prgjection Valuation
If the Pension Fund has 50 or more participants, the Fund may show actuarial soundness using a
Cash Flow Projection Valuation. This valuation will project the assets, future income, and future
benefit obligations of the Pension Fund. The assumptions used in this valuation shall be based
upon the same assumptions used by the Pension Review Board for regularly scheduled valuations.
The Cash Flow Valuation must show that the current assets projected with future income will
always be sufficient to cover all benefit obligations. A Cash Flow Valuation is not required do be
done on a regular basis, but will only be completed when requested by the Fund and at the
expense of the Pension Fund.
a
EXAMPLE
f RESOLUTION TO INCREASE BENEFITS
POLICE PENSION FUNDS
It is hereby resolved by the Board of Trustees of the City of
Police Pension and Relief Fund to increase benefits ,
pursuan to Ac 217 of 1979 , as amended , to ( present ) ( and
future ) ( retirants ) ( and surviving spouses ) .
The Board of Trustees further proposes that actuarial services be
secured through the office of the Arkansas Fire and Police Pension Review
Board . The Board hereby agrees to pay such charges and fees as are
required by the Pension Review Board to cover the cost of such actuarial
services .
1 . Whereas , the city of Pension Board of Trustees met
on and adop a reso u ion to increase benefits to
( presen an uture ) ( retirants ) ( and surviving spouses ) as follows :
CURRENT
Member Retiring Members Retiring .
Prior to 1-1 -87 After 12-31-86
YEARS OF SERVICE AMT . PER MONTH AMT, PER MONTH ATT PER MONTH
t
20 Years 508 Salary 508 Salary 608 Salary
21 Years 508 + 5 508 + $ 20 608 + $ 20
22 Years 508 + $10 508 + , $40 608 + $40
23 Years 508 + $15 508 + $60 608 + $60
24 Years 508 + $20 508 + $80 608 + $80
- 25 Years 508 + $25 50% *-''100,._. .., ;_:-. , , 608 + $100
Year 25 and beyond Members Retiring after n6-30-87 :
• - 508 + $100 + 1 . 258/Year Not to
exceed 758 salary
Minimum surviving spouse $ 350 . . 350
2 . Whereas , pursuant to Act 44 of 1983 , the Police
Pension Fund is required to pay surviving spouses of deceasedpolice
officers , respectively , an amount equal to the monthly pension benefit
being received by the retired police officers at the time of their deaths ;
regardless of whether a spouse is currently receiving a benefit or will
receive it in the future ; provided , it shall not be less than $_/month .
3 . Whereas , the benefits to the dependent children of deceased police
officers if the child is under eighteen ( 18 ) years of age and not yet
completed high school , or under 23 if enrolled in an institution of higher
learning , shall be $ 125 a month , pursuant to State law;
4 . Whereas , members qualifying for duty-disability after December 31 , 1986
shall receive a minimum 658 of final pay ; or the benefit paid normal
retirants , whichever is greater . Non-duty disability applicants receive
the benefit paid for normal retirement service . No member shall be retired
for disability due to natural causes unless he has served at least five ( 5 )
years .
Date
Chairman
Sec . /Treasurer
Member
•� Member
Member
Member
Member
A RESOLUTION TO INCREASE BENEFITS dWT
POLICE PENSION FUNDS
It is hereby resolved by the Board of Trustees of the City of Fayetteville Police
Pension and Relief Fund to increase benefits, pursuant to Act 217 of 1979, as amended, to
present and future retirants.
The Board of Trustees further proposes that actuarial services be secured through the
Office of the Arkansas Fire and Police Pension Review Board. The Board hereby agrees to
pay such charges and fees as are required by the Pension Review Board to cover the cost of
such actuarial services.
1 . Whereas, the City of Fayetteville Pension Board of Trustees met on February 15, 1996
and adopted a resolution to increase benefits to present and future retirants as follows:
Increase benefits for current retired members and the future retired
members of the Fayetteville Police Pension fund to 55 % of their original
salary at the time of their retirement, excluding all members who are
already receiving mandated increases which put them over the 55 % of
salary mark.
If the fund is determined not to be able to withstand a 55 % of salary
increase, the Board requests a 53 % of salary increase.
Both proposals are without any spousal benefits .
2. Whereas, pursuant to Act 44 of 1983, the Fayetteville Police Pension Fund is required
•' to pay surviving spouses of deceased police officers, respectively, an amount equal to the
monthly pension benefit being received by the retired police officers at the time of their
_ deaths; regardless of whether a spouse is currently receiving a benefit or will receive it in the
future; provided, it shall not be less than $350/month.
3 . Whereas, the benefits to the dependant children of deceased police officers if the child
is under eighteen ( 18) years of age and not yet completed high school, or under 23 if enrolled
in an institution of higher learning, shall be $ 125 a month, pursuant to state law;
4. Whereas, members qualifying for duty-disability after December 31 , 1986 shall receive
a minimum 65 % of final pay; or the benefit paid normal retirants, whichever is grater, Non-
duty disability applicants receive the benefit paid for normal retirement service. No member
shall be retired for disability due to natural causes unless he has served at least five (5) years.
PASSED AND APPROVED this 15thday of F ruary 1996.
Chairman
Treasurer
Mem r
Member
Memb
Member
.I
City of Fayetteville
Police Pension
Monthly
Date Salary Current Benefit
of at Monthly as a % of
Name Retirement Retirement Benefit Final Salary ~
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Bowen , John R 8 / 73 664 . 65 350 . 00 52 . 661
Cooper , Adrian J . 4 / 73 611 . 90 350 . 00 57 . 201r^�: � .
Day , William R . 1 / 64 330 . 00 350 . 00 106 . 060 ` f,
Little , Loyd F . 5 / 68 410 . 00 . 350 . 00 85 . 370 ;le
Lorch , Earl E . 7 / 72 630 . 00 350 . 00 55 . 560
McChristian , Richard H . 12 / 68 414 . 00 350. 00 84 . 540 , �, �
Murphy , Jake 7 / 65 310 . 00 350 . 00 112 . 90 % 1% ' ,F .
Ritchie „,, Elmo / 68 * * 485 . 00 350 . 00 72 . 16 %
Watts ,;, bearl 3 / 62 412 . 50 350 . 00 84 . 851
i I'j J
* * . The month of Mr . Ritchie ' s retirement is unknown ; however , the .
Personnel Action Sheet fui his final pay increase was effective
January 1 , 1968 and his date of death was October 16 , 1968 .
i
!A
2411-426 RETIREMENT AND PENSIONS 17g4 P .. 1705
(4) All applications and proof shall be retained in the custody of the bo (c) The
and due notice of that action shall be registered by the secretary in his offiY to In
(i) Every member of the department must file with the secretary the names m�s pen
of those persons to whom death benefits are to he paid and the relations of the (d)
beneficiary to the decedent. ce wit
r a(1) The
History. Acts 1937, No. 250, H 8, 13, 19; under the provisions of this act shall only be adopt a re,
Popes Dig., H 9863, 9868, 9874; Acts 1953, paid provided the retirement funds are actuar. Ship of tb
No. 86, § 2; 1965, No. 413, § 1; 1967, No. 127, Tally sound after the increase as determined by (2)(A)
§ 1; 1981, No. 582, § 1; 1983, No. 44, § 1; the actuary for the Arkansas Fire and Polio shall be
1985, No. 1027, § 1; A.S.A. 1947, §§ 19-1808, Pension Review Board." the exte
19-1813, 19.1819; Acts 1987, No. 618, § 1; Amendments. The 1993 amendment substi. in mem
1993, No. 1197, § 2. toted "three hundred fifty dollars ($350)" for pperiod c
A.C.R.C. Notes. Acts 1993, No. 1197, § 6, "two hundred fifty dollars ($250)" in (a). full yea
provided: 'The increased benefits provided for known
24.11.426. Optional vesting rights policy. fu(B) Z
(a)(1) Upon an actuarial determination that the fund will remain actuar• a her ofArkans
ially sound, the board of trustees of a local policemen's pension and relief fund
of first-class cities shall have the option to establish a vesting rights policy in view B
its policemen's pension and relief fund. t trustee
(2) The required actuarial evaluation shall be made by the actuary em- (3)(A)
ployed by the Arkansas Local Police and Fire Retirement System upon appli- mensl
'
cation to the Executive Director of the Arkansas Fire and Police Pension ben
? Review Board, who shall then report the actuarial findings in writing to the that al
board of trustees. sions c
(3) All costs for the evaluations shall be borne by the local funds. the pr(
r (b)(1) If approved, the vesting policy shall provide that in the event a mem- forth u
her with ten (10) years or more of credited service in the system ceases to be of the
employed as a member of the department and does not withdraw his accumu- propos
Y lated employee contributions to the system, the member shall be entitled to penslo
receive a pension up (B)
on reaching fifty-five (55) years of age and making appli- '
cation to the board of trustees. co(B)
(2) The pensions shall be computed at two and one-half percent (2424'0) of (4)(A)
salary at the time of separation from the department, multiplied by the num- the ac
ber ofears of credited service not to exceed twenty 20
Y Y ( ) ears.Y
directo
c Any member ma elect to withdraw his accumulated contributions
to
city in
the system at the time of separation from the department and to waive any (B) .
pension rights the member may have earned in the system. and a(
(d) This section shall not affect any other section of the policemen's pension (e) If
and relief funds of first-class cities. Board t)
governii
History. Acts 1983, No. 646, § 1; A.S.A. this nor
1947, § 19-1830. mission
't
until cc
r 441-427 Increase_in^benefits: (f) Tr
-- - -- - section
(a) The provisions of this section are intended to establish procedures relief fc
whereby the benefits to members and beneficiaries under the policemen's the fun
pension and relief funds within the respective municipalities of this state may (1) T.
be increased on an orderly and actuarially sound basis, and are further in- of the
tended to establish procedures for review and certification that the proposed (2) A
S increase in pension and relief fund benefits is actuarially feasible and sound under t
prior to the adoption or implementation thereof.
a , (b) It is not the intent of this section to repeal or modify any of the existing ities re
policemen's pension and relief fund laws of this state, and this section shall be (4)
construed to supplement, and to be in addition to, any such laws in nff rt income
..r
4 1705
LOCAL POLICE AND FIRE PENSION FUNDS 24-11-427
e board (c) The-board-of-trustees-of a-policemen's-pension-and-relief fund is autho=�
tA-increase benefits-increasemembers-and_beneficianes of-the-police-
e Office ,,,ed
ts-pension and=relief=fund�
is of hs m (d) Any proposed increase by the board of trustees shall be in strict compli-
e �Ce with the tfollowin rconditions: 1,
— ce The boar of trustees of t e policemen's pension and relief fund shall
li only be adpp oa re f the lution board aotptruse es outli i g=hean hpr opos d lincrease t ne be efits; (o VOTES
5.2-5)
re actuar- shtp The action proposed by the board of trustees under the resolution l
-mined by —shall
And Pu)ice shall be determined=by*actuariallevaluations g be actuarially feasible to
se
the extent that the unfunded liabilities resulting from the fund will bproposde increase
the
It substi. i er od oof not more than thirty (30) yeaer or benefici benefits rsrreducd by two (2) funded
ars for each '
350) for p 1988, based on the current available and
(al full year elapsed since January 1,
known revenue or income sources available to the retirement and pension y
fund;
(B)
is a mem-
(B) The actuarial-evaluations-shall be made by.an-actuary
ber of the American Academy of Actuaries and who is
actuar- employed by the
of fund Arkansas Fire and Police Pension Review Board;
(C) The Executive Director of the Arkansas Fire and Police Pension Re-
olicy in view Board shall state the .actuarial=findingsAn=writing, to the board of
trustees and shall certify the appropriate action to be taken;
r' em- — (3)(A) A copy of the resolution adopted by the board of trustees of the police-
appli- men's pension and relief fund outlining the propposed increase in member or
'ension beneficiary benefits is filed with the executive director
,who shall determine
to the that an actuarial evaluation has been made in accordance with the provi-
sions of this section and that the actuarial evaluation had determined that
S. the proposed increase in benefits may be funded over a period of time set
a me forth in subdivision (d)(2)(A), based on available or defined revenue sources I
s t of the relief fund, in which event the executive director may approve the
CCU proposed increase to member or beneficiary benefits under the policemen's s
itled to pension and relief fund;
appli- (B) ,The board of trustees of the policemen's pension and relief fund shall
'/x%) of
comply•with-the-appropriate action-as-approvd=by.the-executive-director;
— (4)(A) A copy of the resolutionladop- - by the board of trustees, a copy of
e num- the actuarial -evaluation, and a copy of the action=taken-byrthe-executive,.
41,
ions to . director-is filed with the circuit-clerk-and-the-city=clerk>of the county and s
city in which the policemen's pension and relief fund is located;
�e any ($) All actions taken by the executive director shall be subject to review . i
and acceptance by the Arkansas Fire and Police Pension Review Board.
ansion (e) If it is detenntned by the Arkansas Fire and Police Pension Review
Board that a local pension plan is not complying with the provisions of law
governing benefit increases, the executive director of the board shall certify
this noncompliance to the Insurance Commissioner, and the Insurance Com-
missioner shall withhold all moneys otherwise due the plan from the state
until compliance is achieved.
(F) The cost of the actuarial evaluation made under the provisions of this
section shall be paid by the board of trustees of the policemen's pension and
edures relief fund which proposes to increase member or beneficiary benefits under
s men's the fund. The actuarial evaluation shall include:
financial and actuarial status of the income and liabilities
.a may (1) The current
;er in- of the policemen's pension and relief fund;
posed (2) A detailed statement of theproposed benefit increases;
sound (3) A comparison reflecting that the level of contributions and other income
under the pension and relief fund is sufficient to amortize the unfunded liabil-
sting ities resulting from the benefit increase over a thirty-year period; and
;all be (4) An evaluation determining whether, in the opinion of the actuary, the
.effect. income under the policemen's pension and relief fund will be actuarially
Y
S011nd. k�