HomeMy WebLinkAbout1996-02-15 MinutesMINUTES OF A POLICE PENSION BOARD MEETING
A special meeting of the Police Pension Board was held on
February 15, 1996, at 1:30 p.m. in room 111 of the City
Administration Building, 113 West Mountain, Fayetteville,
Arkansas.
PRESENT: Mayor Fred Hanna (arrived late), Hollis Spencer, Randy
Bradley, Eldon Roberts, Dr. James Mashburn, and City
Clerk/Treasurer Traci Paul.
CALL TO ORDER
The meeting was called to order at 1:55 p.m. by Eldon Roberts.
BUSINESS
Benefit Increases
Eldon Roberts stated the purpose of the meeting is to discuss
benefit increases for members of the pension fund.
Bradley, seconded by Spencer, made a motion to request a benefit
increase for retired officers.
In answer to a question from Roberts, Bradley stated retired
officers only, excluding those receiving $350 per month.
Eldon Roberts distributed a list of the retirees who are
currently receiving $350 per month. Roberts stated according to
Cathyrn Hinshaw, there is a cap on retired salaries. A person
cannot receive a monthly benefit of more than 100% of his salary
at retirement. Roberts explained that the list that was
distributed is a list of people that have received mandated
increases and a computation of what percentage of salary they are
earning. Roberts stated two of the nine people listed are over
100% of salary, they are drawing more on retirement per month
than they were drawing when they were actively employed. Those
two people would not be entitled to any kind of an increase that
is requested by the Board. The other seven retirees listed would
be entitled to a benefit increase.
In answer to a question from Roberts, Bradley stated he is not in
favor of the people who are drawing $350 getting another
increase. They just received a 40% increase of $100.
Roberts stated the two people who are drawing more than 100% are
not in question but the others are not up to 100% of salary.
In answer to a question from Spencer, Roberts agreed that if the
Board votes for an increase, it would not affect the two people
who are already drawing over 100%.
February 15, 1996
Roberts explained that if the Board votes to request a percent of
salary increase, the people who are drawing more than 100% of
their salary would not receive any increase.
Bradley stated without some kind of legislation, they would never
be entitled to another increase.
Roberts suggested the Board attempt to change legislation in the
future to avoid excess money in the fund when everyone is at
100%.
Spencer asked if any projections had been done on what an
increase might cost the fund.
Roberts explained that the actuaries will determine how much an
increase will cost the fund and if the fund can stand it.
Spencer asked if the Board is going to make a specific request or
a request for what the actuaries think the fund can stand.
Roberts stated it will cost $475 for the first request and $250
each for the second, third, and forth request. For $450 the
Board may submit a request for an increase of 55% of salary.
Along with the first request, the Board may request an increase
of 53% of salary if the actuaries find that the fund cannot
withstand 55% of salary. The second request will cost the Board
$250. The pension fund will be billed for the actuarial
evaluation.
Mashburn asked if Bradley's motion contained an amount or a
percentage.
Bradley explained his motion was for an increase. He stated the
amount of the increase should be whatever the Board can agree on.
Mashburn stated the Board needs more information before a
decision can be made. He suggested the Board ask the actuaries
what amount of an increase the fund could stand.
Roberts explained that the actuaries would not approve an
increase that would not be financially sound. He stated full
paid police and fire cannot request a random search. This Board
must request a specific amount.
In answer to a question from Spencer regarding a memo from
Cathyrn Hinshaw, Roberts explained the section addressing a
random search is for volunteer pension plans.
Mashburn stated the investments have gone well this past year.
It can be like a rollercoaster. He suggested the Board be
cautious with their request.
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February 15, 1996
Roberts stated if a request is denied, it can be appealed to the
Pension Review Board. The Pension Review Board has never
overruled what the actuaries have suggested.
Mashburn asked if there was a waiting period before the Board
could make another request if the first action is denied.
After some discussion the Board concluded that there was not a
waiting period for a full paid pension funds.
Chief of Police Richard Watson stated the motion on the floor is
unfair to the 14 officers who are still working. Any request for
increased retirement benefits should be for retirees and future
retirees on the pension plan.
In answer to a question from Spencer, Roberts stated if 5596 of
salary was approved, then all retirees would go to 5596 of salary.
When officers retire in the future, they would retire at 5596.
Spencer asked if there will be any more mandated increases.
Roberts stated that is a possibility. City Attorney Jerry Rose
is researching that issue. It appears to be special legislation.
The same people are getting the pay raise every time. They are
drawing a small amount but they only paid a small amount into the
pension fund.
Mashburn stated it would be helpful to know the ages of the
people receiving pension funds.
In answer to a question from Spencer, Roberts stated the Board
could be mandated to increase benefits if a law is passed to do
so.
In answer to a question from Bradley regarding the charge for
submitting a request, Roberts explained that the recent mandated
increase would not count as a requested increase.
Roberts stated he could not support Bradley's motion. Future
retirees should be included in the motion. The Board could
decide not to include spouses. The Board has the option to
request an increase for current retirees only; current retirees
and future retirees; or current retirees, future retirees and
spouses.
Mashburn stated the Board needs to establish an amount.
Assistant Chief of Police - Administration Rick Hoyt urged the
Board to include future retirees in the motion.
Paul asked Bradley why he did not include future retirees in his
notion.
February 15, 1996
Bradley explained that he was considering changing his motion and
stated the active members of the pension fund will get a raise in
the future.
In answer to a question from Paul, Roberts agreed that anyone who
retired after an increase was approved would retire at 500 of
salary.
Roberts stated the fairest way to give a benefit increase is an
across the board percentage. Every person on the plan
contributed a percentage of their salary. The increase in
salaries over the years has had an effect on contributions. Some
people have contributed a small amount to the fund. To be fair,
they should not get a big raise for contributing a small amount.
Looking at the moral issue, some people are not making much money
to live on.
Spencer pointed out the only way the Board can find out what an
increase is going to cost is to submit a request for a benefit
increase.
In answer to a question from Bradley, Roberts stated the Board
can submit as many proposals as they wish. It will cost the
Board $475 for the first request. The second request will cost
410 $250. The Board can submit a first and second choice for a
requested increase at one time. The actuaries will compute an
1 increase using the first amount and if it is denied they will
compute an increase using the second amount.
The Board discussed two ideas for benefit increases. The first
was the difference in requesting an increase of a certain amount
of money per month and in requesting an increase of a certain
percentage of salary.
In answer to a question from Chief Watson, Roberts stated we
became actuarially sound in July of last year when the Pension
Review Board changed the definition of actuary soundness. At
that time, we were mandated to raise everyone to a $350 minimum.
Roberts explained that at that time he asked the actuary about a
benefit increase for everyone. Roberts stated without crunching
any numbers, he did not think we would be financially sound
enough for that.
Roberts urged the Board to request an increase and get a feel for
where it is at.
In answer to a question from Mashburn, Roberts stated a specific
amount must be requested. That amount will either be approved or
denied.
•
•
February 15, 1996
Roberts suggested someone research old records and find each
retired policeman's monthly salary at retirement. The amounts
documented should be the base salary before retirement.
The Board reviewed and discussed a list of retired policemen who
are receiving over 50% of there salary at retirement. The Board
agreed that anyone who is receiving a percentage of their salary
at retirement that is more than the requested increase would be
excluded from the request.
Spencer stated the Board may need to get more figures together
before a request is made.
Roberts reminded the retired members of the Board that they need
to elect another representative to sit on the Pension Board.
Mashburn suggested the motion be amended to include future
retirees.
Bradley withdrew his motion to raise benefits for retired
members.
Spencer withdrew his second.
Administrative Services Director Ben Mayes explained that
research could be done to establish base salaries for each
policeman at retirement but it really will not give an actuarial
assumption.
The Board discussed percentage possibilities for the request for
a benefit increase.
Mayor Hanna arrived.
Bradley stated the Board should determine a realistic figure and
submit it with an alternate.
The Board discussed the possibility of additional mandated
increases.
In answer to a question from Bradley, Roberts stated as a member
of the State Board he gets notification of any pending
legislation that pertains to pension.
Mashburn suggested the Board take input from others regarding the
proposed increase. Mashburn explained that Mayes could run some
figures to help the Board see the impact of an increase on the
fund.
February 15, 1996
Roberts stated the figure that Mayes submits to the Board of what
it would cost to raise everyone to 55% of salary may be an
astronomical figure but that does not mean the fund cannot stand
it. The figure is insignificant.
Discussion ensued regarding what percentage increase to request.
Chief of Police Watson requested the Board include future
retirees as well as current retirees in the request for an
increase.
The Board discussed the possible financial impact an increase
would have on the fund.
Discussion ensued regarding a 5% increase and how it would
increase the pay out to retirees.
Bradley requested a list of the final salaries of each retired
officer.
In response to a concern from Mashburn, Roberts stated the
actuaries will deny any request that they feel the fund cannot
stand.
Spencer, seconded by Bradley, made a motion to 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.
In answer to a question from Mashburn, Roberts stated it is the
Board's option to include spouses or not.
Upon a show of hands, the motion passed unanimously.
The meeting adjourned at 2:55 p.m.