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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. • 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.