HomeMy WebLinkAbout2001-07-19 - Agendas - Final . s
AGENDA
POLICE PENSION
JULY 199 2001
A meeting of the Fayetteville Police Pension and Relief Fund Board will be held on July 19,
2001 at 1 :30 p.m. in Room 326 of the City Administration Building located at 113 West
Mountain.
1 . Approval of the minutes
2. Pension list
Ron Haskins- approval of death-benefits
4. Election of Board members
5 . Administrative Fees for Amendment 59
6. Investment report
•
• MINUTES OF A MEETING
OF THE
FAYETTEVILLE POLICE PENSION AND RELIEF FUND BOARD
APRIL 19, 2001
A regular meeting of the Fayetteville Police Pension and Relief Fund Board was held on April 19, 2001 at 1 :30 p.m.
in Room 326 of the City Administration Building located at 113 West Mountain, Fayetteville, Arkansas.
PRESENT: Randy Bradley, Eldon Roberts, Dr. Mashburn, Jerry Friend, and Heather Woodruff.
ABSENT: Mayor Coody.
MINUTES
Mr. Mashburn moved to approve the minutes. Mr. Bradley seconded the motion. Upon roll call the motion carried
unanimously.
PENSION LIST
Mr. Roberts stated Mark Hanna's check had been changed to Janice Hanna, Mr. Bill Brooks had been removed from
this list.
GARY DUGGER
Mr. Roberts stated they had discussed this at their last two meetings. They had tentatively approved his retiring, but
they had found out that if he stayed a little longer his salary would increase a little, thereby, increasing his retirement.
At this point in time, he has retired and it was effective. They did turn around and hire him in a civilian position. They
could at this time formally approve the retirement of Gary Dugger.
• Mr. Mashburn moved to approve the retirement of Gary Dugger from the Fayetteville Police Department. The motion
was seconded by Jerry Friend. Upon roll call the motion carried unanimously.
BILL BROOKS
Mr. Roberts stated he had ordered a check in the amount of $200.00 be paid to the estate of Bill Brooks. This was
something that they did for every police officer as a death benefit. The State Law allowed them to pay the benefit. It
did not specify the amount, but that they must be uniform.
INVESTMENT REPORT
Ms. Elaine Longer, Longer Investments, stated they had just purchased Oracle at about a 2% allocation. The report
dated March 31, 2001, they were 30% equity. They had hedges on some of their core holdings. They had since closed
out those hedged positions. Year to date they had made about $ 10,000 on those hedges. From about September 30,
where Ore market had really declined they had made about $55,000 on those hedges. That did help in markets like this.
They had the opportunity to use those kinds of tools. The cash balances on March 31 , were about 7% of the total
portfolio value. From about March 31 thru yesterday, they had put about a million dollars back into the stock side of
the portfolio. The next report was dated April 18, 2001, they were at about 40% equity. They were still at the low end
of asset allocation. They had the flexibility to go to 50%. They were looking for the opportunities. They had the
opportunity to take advantage of some really good buys. They had put some cash back in September into a 6.25%
treasury which would come due on April 30, 2001. They had felt that it was a much higher yield than what they could
get on a money market. She thought this was a good place to store cash. She knew that they could convert it next day
settle if they wanted to use it for stocks. Their largest portfolio holdings had not changed much. Their realized gains
year to date were about $ 105,000. Net income was about $98,000. They did not have a lot of risk or maturity risk in .
the bonds. The market has improved and as the Fed has lowered short term interest rates and the long term interest rates
have come up. The ten year was about up to about a 5.3% and a three year was at about 5.75%. She thought the most
attractive part of the yield curve was out there to ten years. There would probably use that cash to extend the maturity.
The weighted average maturity on the bonds was three and a half years. The weighted average yield at maturity was
• 6.3%. They had a very high yield for a very short maturity. That was why she thought it best to get back up into the
longer term rates to extend the maturity and lock in those income yields. Bonds were 62% of the total. In their
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performance report, their average annual return was thru December 31 , 2000, was 12.5%, 6.6% on bonds, and 9% total.
The year-to-date return thru March 31 , 2001, was down about 4%. That compared to the S&P500 for the fust quarter
was down about 15%a. The Nasdaq was off about 10% for the first quarter. Since April the stock portion of the
portfolio had recovered nicely. They had plenty of purchasing power. They were well positioned now, they would be
hanging onto some cash. In the technology area on.March 31 was approximately 19:8% of total equity portfolio. By
April 18 they had moved it back up to 28%.
At.the last meeting they had requested they go over the policy guidelines again. The investment objectives were
to protect the funds assets while insuring the systematic and adequate funding of planned distributions. In that respect
the 6% average annual rate of return was necessary to satisfy the actuarial projections. Their returns had been
approximately 9% compounded annual return. She outlined the basic guidelines of their policy:
No amore 'than 2.5% of the total portfolio valued at cost may be invested in equities of any one company.
No more than 5.0% of the total equity portfolio valued at cost may be invested in equities of any one company.
No more than ll % of the total portfolio may be invested in any one debt security of one issuer. This does
not apply to U.S. Treasury or government agency securities.
Asset Allocation:
Cash.and Equivalents: 0%-25%
Fixed Income 25%-65%
Equities 35%-50%
Mr. Roberts stated they had asked her to look at their "investment policy, was their current policy still suitable?
Ms. Longer replied if their time horizon has changed. If they were getting to the point where the work force was sixty- •
five or higher and would retire within five years, that kind of situation may make it possible that they should look at
reducing equity exposure to 3040%. Because they did not know the average age of the participants of this plan, when
they started out they had a very long term time horizon before they changed the fund contribution to fund distribution.
The only thing that would really change their plan would be if that time horizon started to shrink, where they were faced
a serious tum from net funding, net cash inflow, to net cash outflow, to fund distributions. At that point they needed
to look at whether the cash flow that they had to have on the bonds alone could fund their projected distributions.
Mr. Roberts stated they were getting close to that. There was only seven of them still working that were on this old plan.
Everyone else was retired. Three of those seven were eligible to retire. Two more will be eligible within the next three
months. They bad one person who had two more years. Everyone else would be able to retire this year. He was not
sure if they need to change their philophy this year or not. If they were well enough off then they could begin to reduce
their exposure in the stock market. He did not know if they were there yet. He asked if she had a copy of their acturary
report. It hada lot of information about the ages of the people who were involved in this plan and the ages of their
spouses. He would get her a copy of one.
Ms. Longer stated that would be very belpful. What they would want to look at would be to see what their distribution
rate was in three years. They wanted to be sure they were satisfied with this number, which was the annual income.
If it was exceeded by the distribution, then they probably wanted adjust the cash flow income. They did not want to
leave stocks .completely, if at all possible, because thatwas the part that would give them increase in benefits.
Mr. Roberts stated they were getting limited on their income. For years they had been receiving half a mil. That just
got reduced to four tenths. Now, the active employees contribute 6% of their salary. They were now down to seven
people that were contributing six percent of their salary. The city put in 12% of their salary. The insurance tumback
that they normal received was understudy now and they did not know what was going to happen there. Eventually the
income, other than the income they could earn from their investments were going to go down considerably
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Ms. Longer stated they would go through the report and write down questions. The up coming changes needed to be
• incorporated into their plan. For a while'their portfolio was going to change. At the peak distribution level were going
to run more than their earnings.
Meeting adjourned at 2:50 p.m.
•
•
• JOINT SPECIAL MEETING
OF THE
FIRE AND POLICE PENSION BOARDS
-"MAY 175 2001
A special joint meeting of the Fayetteville Fire and Police Pension Boards was held on May 17,
2001 at 11 :00 a.m. in Room 326 of the City Administration Building located at 113 West
Mountain Street, Fayetteville, Arkansas.
PRESENT: Ron Wood, Danny Farrar, Marion Doss, Gene Warford, Eldon Roberts, Hollis
Spencer, John Maguire and Steve Davis.
Mr. Williams stated the judge had made his rulings that the attorney fees were 25% of the total
amount. The total amount which was determined to illegally exacted. It had been determined
that $213,469.50 had been paid to both the Pension Board, more than what the constitution
allowed. The judge had made the determination that the attorneys for the plaintiffs were entitled
to their 25% and they were entitled to it within fourteen days of the judges order. The judges
order was entered on May 11 , 2001 . It was filed on May 14, 2001 . He did not know exactly
what they means. He stated if they were to be more careful they needed to assume the fourteen
days stated on the I Vh. The total amount of the attorney's fees was $53,367.38. When they had
the funds and the checks were cut, he would write out a release so that they will be totally clear
• from the attorney. When they receive the money, they had to sign the release. They could not
come back again. In the future, there would be the remainder of the money that they would have
to pay. If they did not pay within the fourteen days, then the attorney could start charging
interest.
Mr. Roberts asked if their boards had to act on this. They did not have a quorum here.
Mr. Williams stated he would feel safer with a quorum. They might alert their investment people
that they would have to do this. He thought it would be better to officially do this. They did not
have an option, because the judge had ordered this. They could garnish this if they wanted to.
He asked that they get a quorum as quickly as they could to go ahead and authorize this action.
Mr. Roberts asked if they were going to be required to pay all of this back, aside from attorney
fees or was it a portion of what was actually returned.
Mr. Williams stated it was his understanding that there was a set amount that they agreed to pay.
He was not involved in this case. He knew that not even half of the money was returned. The
25% had been based on the entire amount, not what had been returned. He thought that once
they paid the attorney fees, then it would only be the amount that the tax payers actually asked for
back. They had already rolled back the millage at the County. He thought that in order to get
back to a higher millage, that the City Council couldnot just go back to the higher millage, but
they would need a vote of the people to go back to the original millage. He knew that the various
• other entities were facing terrible problems with this and had voted to go back to the millage,
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Fire and Police Special Meeting
May 17, 2001
Page 2
even though, it had been rolled back temporary by this suit. He thought .they could go back to the
citizens and have it reinstated.
Mr. Davis stated the $21'3,000 that the ,court system had "declared illegally exacted. That was the
total. That ',included the legal fees and the refund amount. The only payments which had to come
out of the money the legal fees at $53,000 and ourportion of what the taxpayers actually
claimed. The 'County was going to send out the first checks on the refund on June 30.
Special meetings were set for Monday, May 21 , 2001 at 1 :30p.m. and 2:00 p.m. for Police and
Fire Pension Boards
•
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• MINUTES OF A MEETING
OF THE
FAYETTEVILLE POLICE PENSION AND RELIEF FUND BOARD
MAY 219 2001
A special meeting of the Fayetteville Police Pension and Relief Fund Board was held on May 21 ,
2001 in Room! 326 of the City Administration Building.
PRESENT: Mayor Coody, Eldon Roberts, Jerry Friend, Hollis Spencer, Dr. Mashburn, Randy
Bradley, Heather Woodruff, Steve Davis, Kit Williams and John Maguire.
Mr. Williams stated they would need a motion to pay the amount ordered by the Judge for the
attorney's fees that amount is $26,683.69. He added the Fire Pension Fund would be responsible
for the other half.
Mr. Roberts sta ted he had contacted their investment person and asked them to get with our
accounting department to make sure that amount was in our checking account in order to pay this
bill.
Mr. Williams explained the judge had ordered this amount to be paid. There was a stipulated
amount of $21f3,000. Attorney fees were twenty-five percent of that.
• Mr. Spencer moved to pay the bill for attorney fees. Mr. Roberts seconded the motion. The
motion carried unanimously.
Mr. Williams stated there was also a bill from the County which represented one-half of what
was owed to the tax payers.
Dr. Mashburn asked if this took into account the people who did not request their money back.
He had not requested his money back. He wanted it to stay where it could do the most good.
Mr. Williams Ieplied it did. This was only the amount that was actually going to paid back to the
tax payers. In response to questions from Mr. Roberts, Mr. Williams stated in order for the
attorneys to collect their check they would have to sign a release stating the attorney fees were
paid in full.
Mr. Roberts asked when the other half of the County's fees would be due.
Mr. Williams replied it would be next year. There would also be some administrative fees,
however, that would be a pretty small amount.
Mr. Roberts ml ved to pay the refund amount to the county. Mr. Friend seconded the motion.
The motion carried unanimously_ .
• Meeting adjourned.
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POLICE PENSION FUND
AUGUST, 2001
• EMP# NAME GROSS ARK SUPPORT FED. TAX ST. TAX NET
154 ALLEN, CHARLES 2,229.53 ✓ 220.00 ✓ 66.89 1 ,942.64 `
152 ARNOLD, WILLADEAN 838.00 838.00
130 BAYLES, DON 19369.31 ✓ 11369.31 /
107 BLACK, JOE P 970.99 ✓ 100.00 20.00 ✓ 850.99 ✓
120 BOW EN, A 598.19 ✓ 10.00 ✓ 588.19 ✓
147 BRADLEY,, GERALD 41157:85✓ 940.53✓ 17.32 ✓ 31200.00 ✓
139 BRADLEY, RANDALL 2,467.20✓ 382.00 ✓ 100.00 ✓ 11985.20 ✓
157 CARROLL,RONALDL 3, 132.22 ✓ 435.00 ' 180.00 2,517.22
151 COLE, RUSTON 2,644.53. 600.00 200.00 ✓ 1 ,844.53'
109 COOPER, ADRIAN 550.71 550.71 ✓
111 DAY, LUCILLE 350.00 ✓ 350.00 ✓
108 DENNIS, WARREN 1 , 187.71 ` 1 ,187.71 ✓
160 DUGGER,GARY 21729.07 ✓ 300.00 ✓ 120.00 ✓ 29309.07 ✓
125 FLOWERS', HAROLD 744.10 ✓ 744.10 ✓
140 FOSTER, BILLIE D. 21766.68 ✓ 300.00 ✓ 120.00 ✓ 2,346.68 ✓
148 FRIEND, JERRY 2,719.53 725.00 ✓ 150.00 ✓" 1 ,844.53 ✓
145 HANNA, MARK 0.00
161 HANNA, JANICE 2,361 . 11 ✓ 225.00 75.00 ✓ 2,061 .11 ✓
162 HASKINS, IRENE 374.85✓ 374.85
146 HUTCHENS, BERNICE 874.85 ✓ 130.00 ✓ 744.85 ✓
143 JOHNSON) CHARLES 2, 118.14 ✓ 42.67 ✓ 21075.47 ✓
103 JOHNSON; WENDELL 675.55 ✓ 675.55 ✓
118 JONES, BOB 2,847.00 23847.00✓
144 KILGORE, DONALD 1765.31 19.72 r 11745.59 ✓
• 129 LAWSON, FORREST 1 ,352.48 ✓ 200.00 ` 11152.48 ✓
150 LITTLE, PATSY R 350.00 ✓ 350.00 ✓
153 LORCH, DONNA G 350.00 ✓ 350.00
156 MARTIN, KENNETH 3185.49 ✓ 500.00✓ 140.00 ✓ 2,545.49 ✓
128 MCCAWLEY, LARRY 1 ,461 .94 -✓ 180.00 ✓ 20.00✓ 1 ,261 .94✓
116 MCCHRISTIAN, MARIE 350.00 ' 350.00✓
126 MCWHORTER, KAREN 485:02 ✓ 485.02✓
136 MITCHELO MICHAEL 11988.56✓ 150.00 1 ,838.56 ✓
141 MUELLER, ROSEMARY 1 ,780.38 1 ,780.38 ✓
158 MUNSON,ANGELA 3,621 .36 ✓ 500.00 ✓ 183.00 2,938.36 ✓
112 MURPHY, JAKE 350.00 ✓ 350.00✓
137 PERDUE, LARRY 2,003.55 ✓ 200.00 ✓ 25.00 11778.55 '
132 PHILLIPS, HOMER GENE 1 ,513.40 ✓ 300.00✓ 11213.40✓
105 PRESTON,�GEORGEDAVII 1 ,381 .37 ✓ 67.43 ✓ 196.37✓ 1117.57✓
135 RICKMAN, LOREN 1 ,924.54 ✓, 230.00 ✓ 65.00✓ 1 ,629.54 `
104 RIGGINS, RAYMOND C 1 ,440.01 ✓ 125.00✓ 25.00 ✓ 1 ,290.01 ✓
159 SCHUSTER,JOHN H. 2,689.07 ✓ 340.00 ✓ 110.00 ✓ 2,239.07 /
122 SKELTON, FRANK 713.67✓ 713.67✓
123 SPENCER,iHOLLIS 1 ,186.65 ✓ 150.00 ✓ 36.65 ✓ 1 ,000.00 ✓
155 STOUT, BETTY 415.25 ✓ 415.25 ✓
133 SURLES, JERRY 2,347.50 ✓ 412.50 / 50.00'✓ 1 ,885.00 ✓
142 TAYLOR, DENNIS 1 ,780.38 ✓ 65.00 65.00 1 ,650.38
106 UPTON, FRANKLIN 911 .84 ✓ 10.00 ✓ 901 .84 ✓
110 WATTS, BEULAH 350.00 ✓ 350.00 ✓
149 WILLIAMS, JOYCE 11217.07 ✓ 217.07 ✓ 15000.00 ✓
134 WITT, DON, 1 ,524.09 ✓ 115.00 '✓ 64.00' 1 ,345.09
• 127 WOOD, PAUL J - _ 1 ,363.72 ✓ -- -- -- ---- --�- - 1 ,363.72 ✓
+ $78,509.77 $0.00 $8,129.53 $2,091 .62 $68,288.62
78509.77
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T0: Traci Paul , City Clerk/Treasurer and
Policemen' s Pension Board Members
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ktxom: Hollis Spencer
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DATE: July 18, 2001
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SUBJECT: Police Pension Board Member
A telephone poll was done by Margaret Murphy and myself within the last few
days, and thirty-eight, (38), members were contacted of which all asked that
Randy Bradley continue to serve another term as Police Pension Board
Commission member.
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Washington County, Arkansas Invoice
Comptroller's Office
• 280 N College, Suite 100 DATE INVOICE #
Fayetteville, AR 72701 sizlrol 2000-95
BILL TO
City of Fayetteville
- Attn: Heather Woodruff
113 W Mountain f
Fayetteville, AR 72701 ;
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P.O. NO. TERMS PROJECT
QUANTITY DESCRIPTION RATE AMOUNT
Administrative Costs on Amendment 59 Settllement 29514.04 29514.04
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•
Osborn , Carreiro & Associates , Inc . One Union National Plaza,Suite 1690
' 17.4 West Capitol Avenue
• ACTUARIES !• CONSULTANTS ANALYSTS Little Rock, Arkansas 72201
(501 )376-8043
August 17, 2000
Ms. Cathyrn Hinshaw, Executive Director
Arkansas Fire and Police Pension Review Board
One Union National Plaza
124 West Capitol, Suite 940
Little Rock, AR 72201
1
Dear Cathyrn:
Enclosed is a revisf d actuarial report for the Fayetteville Police Pension Fund as of December 31 , 1999.
The valuation wasrevised because the original report used the 100% of pay benefit level that was
approved. However, the city only increased benefits to 90% of pay.
I apologize for any inconvenience this may have caused.
• Sincerely,
Steve Osborn, F.S.L. M.A.A.A.
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Osborn , Carreiro & Associates , Inc . One Union National Plaza,Sulte 1690
124 West Capitol Avenue
• Arkansas 72201
ACTUARIES • CONSULTANTS • ANALYSTS Little Rock, (501 )376-8043
August 17, 2000
Board of Trustees
Fayetteville Police Pension Fund
Gentlemen:
This report presents the results of our actuarial valuation of the assets and liabilities of the
' Fayetteville Police Pension Fund as of December 31 , 1999.
This valuation is required by Arkansas Code Annotated 24-11 -205. The purpose of this report is to
'• (1 ) evaluate the actuarial status of the Fund, (2) determine the level contribution requirement needed,
(3) review the development of the Fund over the past several years, and (4) present certain actuarial
items on page 9 for disclosure under Governmental Accounting Standards. This report is not
' intended for any other purpose.
The member and financial information used in this report was supplied by the Arkansas Fire &
Police Pension Review Board, whose cooperation is appreciated. We did not audit this information,
although we did review it for reasonableness and consistency.
I certify that this report has been prepared in accordance with generally accepted actuarial principles
and practices. In my opinion, the actuarial methods used are appropriate and the actuarial
assumptions produce results which, in the aggregate, are reasonable.
Sincerely,
r z a '
Steve Osborn, F.S.A., M.A.A.A.
Actuary
' TABLE OF CONTENTS
EXL-1'IBIT 1 CONTRIBUTIONS
EXHIBIT 2 COST AND LIABILITIES
EXHIBIT 3 SUMMARY OF FINANCIAL INFORMATION
' EXHIBIT 4 COMPARISON WITH PRIOR YEARS
EXHIBIT 5 SHORT CONDITION TEST
EXHIBIT 6 EMPLOYEE AND RETIREE PROFILES
EXH11BIT '7 PRINCIPLE PROVISIONS OF THE PLAN
0EXHIBIT '8 ACTUARIAL METHODS AND ASSUMPTIONS
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rEXHIBIT 1
CONTRIBUTIONS
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The following contribution level reflects the payment of the current year Normal Cost for benefits
r attributable to said year (see Exhibit 2) plus an amount sufficient to pay off the Unfunded Actuarial
Liability over a 8-year period (5-year period for any unfunded retiree liability). These costs DO
NOT include the contributions due to the Local Police and Firefighters Retirement System ("LOPFI")
rfor persons hired after 1982.
r2000 Necessary Annual Contribution to pay:
r 1 Normal Cost, plus $ 218 094
■ 2 Pay off the Unfunded Actuarial
Accrued Liability 6582411
r3 Total necessary $ 876,505
r . Less
4 Expected Employee Contribution 282947
r (6.00% of salary)
Necessary Employer Contribution $ 847,558
r (This is the amount needed in
addition to investment income)
' Covered Payroll $ 482,457
rNecessary Employer Rate 175.68%
' These contributions assume that the dollar contribution grows at a rate of 4% per year. The
contributions are assumed to be made continuously throughout the year.
The actual 1999 contribution was $618,023 from the employer.
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EXHIBIT 2
COSTS AND LIABILITIES
December 31 , 1999
' A Normal Cost Dollar Percent
' (Cost to fund current active members) Amount of qay
1 Regular Retirement Benefits $ 202, 144 41 .90%
' 2 Voluntary Termination Benefits 35673 0. 76%
3 Survivors' Benefits 5,981 1 .24%
4 Disability Benefits 6,296 1 .30%
'TOTAL $ 218,094 45.20%
B Actuarial Accrued Liability
1 Active Lives
Regular Retirement Benefits $ 5,3115233 •
Voluntary Termination Benefits 0
Survivors' Benefits 474
IDisability Benefits 11703
TOTAL ACTIVE LIVES 1$ 55313;410
2 'Inactive Lives
Retirees $ 598309658
Disability Retirees 3;495;696
Widows & Children 721 ,416
tTOTAL INACTIVE LIVES $ 1070472770
3 Total Liability $ 15,361 , 180
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C ,Ass ets $ 1025725573
D Unfunded Actuarial Accrued Liability `$ 417883607
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' • EXHIBIT 3
SUMMARY OF FINANCIAL INFORMATION
(Items D-E, and G determined by Osborn, Carreiro and Associates, Inc.)
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Year Ended Year Ended Year Ended
A. INCOME 12/31/1997 12/31/1998 12/31/1999
1 Contributions
' Employee $ 315663 $ 31 ,882 $ 29,940
1 Donations 420 401 331
Employer/Court Fines/Other 192,089 189,475 183,581
Insurance Tax 1582283 169,271 170,356
Local Millage 2373469 246,287 2645086
Adjustment to prior year 0 0 0
asset value
• 2 Net Investment Income 8742170 838,702 387,891
TOTAL INCOME $ 1 ,494,094 $ 1 ,476,018 $ 12036, 185
' B. EXPENSES
1 Administrative $ 32000 $ 31725 $ 4,825
' 2. Benefits 453,553 479,245 650,771
3 Refunds 0 0 0
TOTAL EXPENSES $ 4562553 $ 482,970 $ 655,596
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' EXHIBIT 3 (Continued)
' C ASSETS (at book value) 12/31/1997 12/3111998 12131/1999
1 Cash & :Checking .Accounts ;$ 10 $ 0 $ 0
' 2 'Bank Deposits 16;086 3,476 22,846
' 3 Savings and Loan Deposits 0 0 0
4 Other Cash Equivalents 911 ,757 496,526 50,981
' 5 US Govt. Securities 320329039 3,7012380 315929780
6 Non-US Govt Securities 0 0 0
7 Mortgages 0 0 0
18 Corporate Bonds 1 ;1745980 1;740,520 251612348
9 Cammon ,Stocks 33907„641 4;0509975 4;5732841 •
10 Other 83,;946 1269620 104;739
11 Payables 0 0 (61449)
TOTAL ASSETS S 9,126,449 $ 10;119,497 $ 10;50010$6
j� D. RATIO OF ASSETS TO
ANNUAL EXPENSES: 20.0 21 .0 16.0
E. NET INVESTMENT RETURN: 10.7% 9. 1 % 3.8%
(Book Value Basis)
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• Exhibit 3 (Continued)
12/31/1995 12/31/1996 12/31/1997 12/31/1998 12/31/1999
' F. TOTAL MARKET VALUE
1 . Market Value, end of year 71675,316 8,455,191 91970,550 11,3745032 11,665,225
(Used for GASB calculations, page 9)
' 2. Market Value, beginning of year 7;6752316 8,455, 191 9,970,550 113374,032
' G. DEVELOPMENT OF ACTUARIAL VALUE OF ASSETS
1 . Actuarial Value of Assets, be ginning of year 7,187,710 7,806,933 826552598 9,692,117
' 2. Non Investment Net Cash Flow 147,798 1633371 154,346 (7,302)
3. Development of Investment Income
(a) Total Market Investment Income (17I-172-1-1) 632,077 13351,988 1,249, 136 298,495
(b) Amount for Immediate Recognition (6% G) 4313263 468,416 519,336 581,527
(c) Amount for Phased In Recognition (Il-I2) 2003814 883,572 729,800 (2833032)
(d) Phased In Recognition
Current year : 20% of 3(c) 0 403163 176,714 145,960 (56,606)
First Prior Year 0 409163 176,714 145,960
' • Second Prior Year 0 40, 163 176,714
Third Prior Year 0 40,163
Fourth Prior Year 0
Total Phased In Recognition 40, 163 216,877 362,837 3062231
(e) Actuarial Value Investment Income 471,425 685,293 8823173 887,758
( 3(b) + 3(d) )
4. Actuarial Value of Assets, End of year
( 1 + 2 + 3(e) ) 7,1871710 7,806,933 8,655,598 9,6921117 1%5722573
5. Net Investment Return on the 6.49% 8.69% 10. 10% 9.16%
Actuarial Value of Assets
Note: The Pension Review Board's Board Rule #11 first applies this methodology to determine the Actuarial Value
' of Assets for the 12/31/99 actuarial valuation report. Different methods were used to determine the Actuarial
Value of Assets for the 12/31/98 and earlier reports.
• 8
tEXIIIBIT 3 (Continued)
•
' ACCOUNTING INFORMATION
' This page is included to provide the information required by the Governmental Accounting Standards Board
Statement No. 25 and 27, effective January 1 , 1998. The values below are based on the assumptions contained
in Exhibit '8.
The Annual Pension Cost disclosed in this exhibit will almost always differ from the actual cash contribution to
the fund. We must emphasize that these disclosures are shown in the city's financial statements; Sound
actuarial projections should be used to determine the actual cash contribution requirements.
' RECONCILIATION 'OF 'NET PENSION OBLIGATION (NPO)
1998 1999 2000
' 1 . Actuarially Required Contribution 0 0 697,323
2. Interest on NPO (138,229) (167,336) (1959708)
3. Adjustment to (1) (25$, 144) .(312,502) (448,481)
4. Annual Pension Cost (1)+.(2)-(3) 119,915 1452166 9509096
5. ?actual Contribution Made 605;033 618,023
6. Increase in NPO (4)-(5) (485, 118) .(4723857)
7. NPO Beginning of Year (21303,818) (21788,936) (3,2613793)
8. NPO End of Year (21788;936) (3,261 ,793) •
' REQUIRED 'SUPPLEMENTARY 'INFORMATION
(a) (b) (c) (d) (e) (f) (8)
Unfunded
Entry Age Accrued UAL as a %
Actuarial Market Actuarial .Liability Funded Annual of Covered
Valuation Value of Accrued (UAL) Ratio Covered Payroll
Date Plan Assets* Liability (c)-(b.) (b)/(c) Payroll (d)/(f)
12/31/1993 622932999 71526,922 172322923 83.6% 536,070 230.0%
12/31/1995 73187,710 8,1771365 989,655 87.9% 518,643 190.8%
12/31/1997 91126,449 8,870,503 (255,946) 102.9% 491 ,422 -52. 1 %
i� 12/31/1999 111665,225 15;361 ;180 3;6953955 75.9% 482;457 766. 1%
,Note: 1'2/31/5993 and 12/31/1995 are at amortized cost value.
9 •
EXHIBIT 4
COMPARISON WITH PRIOR YEARS
This exhibit compares current valuation results with those of prior years.
Full Paid Actuarial Computed
Active Members E=Iover Contribution Total Plan
Unfunded Normal
Valuation Annual Percent Dollar Actuarial Cost Funded
Date No. Payroll of Pay Amount Assets Liability Percent Percent
12/31 /1982 * 48 775,875 30.8% 239, 145 1 ,968, 196 1 ,564,043 23.5% 55.7%
12/31/1984 38 - 691 ,245 32.9% 2273671 2,6371566 1 ,685,881 23.7% 61 .0%
12/31/1986 29 6049566 35.5% 214,342 3,2512235 1 ,7121937 23.9% 65.5%
12/31/1987 * 28 666,941 37.8% 252,114 3,374,250 2,065,775 24.6% 62.0%
12/31/1989 25 6343711 38.8% 2463132 4,009,866 21175,493 27.2% 64.8%
12/31/1991 24 675,900 35.9% 2429541 51144,950 1 ,632,194 28.2% 75.9%
12/31/1993 17 536,070 37.2% 199,314 6,2932999 12232,923 27.8% 83 .6%
12/31/1995 * 15 518,643 37.5% 194,517 7,187,710 989,655 27.7% 87.9%
'. 12/31/1997 12 4911422 15. 1% 742142 9,126,449 (255,946) 26.9% 102.9%
12/31/1999 * 11 482,457 175.7% 8472558 10,572,573 42788,608 45.2% 68.8%
' • " Benefits or assumptions changed
Note: Normal cost prior to 12/31/89 is net of 6% employee contributions.
• 10
� J
i
' EXHIBIT 'S
SHORT CONDITION TEST
t
' The Arkansas General Assembly has stated that the funding objective for these plans is to pay for
benefits with contributions that remain level as a percentage of employee payroll. Thus, the long-
term condition test is met when the actual contributions are fairly level and are paid when due.
A short condition test can be used to measure a plan's progress. Under the short condition ;test, the
' fund's !assetsare compared with:
0 ;Active member contributions;
2) The liabilities for future benefits to :the ;present retirees and inactive members;
3)
The liabilities for service already rendered by active members.
If the plan has been following level cost funding, liability (1 ) and liability .(2) above will almost
always be fully covered by the rest of the present assets. In addition, liability (3) above will at least
partially funded. The larger the funded portion of liability (3), the stronger the -condition of the fund.
For a closed fund i.e., one like yours, where no new members are .admitted), the funded portion of •
' liability (3) should be steadily increasing.
The following table illustrates the history of the short condition test for this plan:
Computed Actuarial Liabilities Portion of Liabilities
covered by Assets
1(11) (2) f(3)
Active Retirees Actives-
Valuation Members and Employer Valuation
Dale 'Contributions Inactives Financed Assets (1) (2) (3)
I' 12/31/1982 141 ,635 1 ,538,508 1 ,8521096 1,968, 196 100% 100% 16%
12/31/1984 186,492 22220;660 1 ,916,295 2;637,566 100% 100% 12%
12/31 /1986 200,487 2,9823120 1 ;7813565 3;2511235 1.00% 100% 4%
12/31/1987 229,457 3;0955232 2,115,336 31374,250 100% 100% 2%
' 12/31/1989 2662726 31719,388 2, 199,245 4;009,866 100% 100% 1%
12/31/1991 336,940 3,6742180 217663024 5,144,950 100% 100% 41%
' 12/31/1993 299,612 4;8341716 ,2,392,594 6;2933999 100% 100% 48%
;12/31/1995 319,728 5,358, 162 2149%475 7,187,710 100% 100% 60%
12/311/1997 317;594 5.19441842 2,608,067 9,126,449 100% 100% 1110%
12/311/119,99 3475267 10;047;770 439665144 ;10;572,573 '100% 100% 40X6
11 •
I X
1 `
• Exhibit 6
Employee Profile
' Employee data needed for the valuation was obtained from the records famished
by the Arkansas Fire and Police Pension Review Board. The following table
shows a detailed breakdown of the present participants by the number of
participants and total salary.
Actives
Years of Service
30 and
Age 0-5 5-10 10-15 15-20 20-25 25-30 Over Total
Under Count 0 0 0 0 0 0 0 ;+Y
25 Salary 0 0 0 0 0 0 0
' 25-29 Count 0 0 0 0 0 0 0 0;
Salary 0 0 0 0 0 0 0 ��
' 30-34 Count 0 0 0 0 0 0 0 '"
Salary 0 0 0 0 0 0 0011
35-39 Count 0 0 0 0 0 0 0 1by
• Salary 0 0 0 0 0 0 0
4044 Count 0 0 0 4 1 0 0 �Lid ,7'5�
Sal 0 0 0 154,495 30,264 0 0 K l
Salary ,,,{,�84,;;�59.
45-49 Count 0 0 0 1 1 0 O
NA
QN1'� '. 2t
N� a.uxr2-sS
Salary 0 0 0 40,575 57,554 0 0 rg 98,129
50-54 Count 0 0 0 2 0 0 1 �a�3
Sal 0 0 0 70 664 0 0 61,540
Salary 1 2,20'4;
55-59 Count 0 0 0 0 0 0 0NZINA0_
Salary 0 0 0 0 0 0 0
60-64 Count 0 0 0 0 0 0 1 +1':
-I
Salary 0 0 0 0 0 0 673364 �� 67,�64,:
65 & Count 0 0 0 0 0 0 0 " 0
Over Sal 0 0 0 0 0 0 0Yr:O,
unknown Count 0 0 0 0 0 0 0 o
' Age Salary 0 0 �? 0 0 0 0 0 ;�'^; 0
TOtal
Countf pb� �kpr' Onaa,r� �sb�tiG � ?� 23� �' Z� i�j�l+la
Salary tt PO ". Q t`�s i. ] h 0 ���55�734 s8 �,818x � a 0 c28,90t� 483e��6i
r
' • 12
' EXEMT6
•
Inactive Profile
Employee data needed for the valuation was obtained from the records furnished by the
Arkansas Fire and Police Pension Review Board. The following table shows a detailed
breakdown of the present payees by the number of payees and total annual benefit.
Retirees and Survivors
' Years Since Retirement
10 and
Age 0-1 1-2 23 3-4 4-5 5-10 Over Total
' Under Count 0 0 0 0 0 0 1 d
1
40 Benefit 0 0 0 0 0 0 42800 4;800�
40.44 cCount 0 0 0 1 0 1 1 .3i
; .
Benefit 0 0 0 31 ;914 0 21 ,364 28,513 81;7914
4549 Count 0 0 0 0 .0 1 0 14,;
Benefit 0 0 0 0 0 21 ,545 0 ' 3545k
' 50-5'4 Count 0 1 0 0 1 3 0 , •,� i 'd
Benefit 0 38,226 0 0 32,814 80,685 0 1'51;725
55-59 Count 0 .0 1 0 0 3 8 ` x'414'3'
;058 •
Benefit 0 0 26,934 _0 0 66,116 127,008 . x20;058 :
60-64 Count 0 0 0 0 0 1 5 61
Benefit 0 0 0 0 0 24,043 96,513 (20;556;;
65-69 ;Count 0 10 0 0 0 1 5 : 41,
Benefit 0 110 0 10 0 33,380 619759 , '95;'1391
70-74 Count 0 0 0 0 0 0 6 ,, . 1 4A
Benefit 0 0 0 0 0 0 48,266 . , ;,9481266;
75-79 Count 0 0 0 0 0 0 5 i ', :j[ ?5
Benefit 0 0 0 0 0 0 50,643 ` ?50;643'!
80.84 Count 0 0 0 0 .0 0 0 A'
' Benefit 0 0 0 0 0 0 0 a t0`
:85 .& Count 0 0 0 0 .0 0 2 „
Over Benefit 0 .0 0 0 0 0 132544
' t nlmown Count 0 0 0 0 0 0 01:0'
Age Benefit 0 0 0 0 0 0 0 .. r'ry,r, ei0
Total Count 0 1 1 i : 10 33 ' 43°
Benefit 0 ,38,226 '26,934 .31,914 32,814 247, 1, 31 � �r4391';046 t808;Ofi '.
This includes 22 retirees with annual benefit of $454,908 .
This includes 15 disableds with annual benefit of $282,297 .
This includes 1.0 survivors with annual benefit of $703862 .
13 •
y
I `
' T EXHIBIT 7
•
' PRINCIPLE PROVISIONS OF THE PLAN
' EMPLOYEE Member of Police Department
EMPLOYER Fayetteville Police Department
' MEMBERSHIP Condition of Employment. Police officers hired after 1982 must join the
statewide Local Police and Firefighters Retirement System
ICREDITABLE SERVICE Determined on basis of service since employment
CONTRIBUTIONS
Employee 6.00% of salary. Refundable if member terminates before retirement
eligibility.
' Employer 1 . Matching contribution equal to employee contribution
2. State Insurance Premium Tax tumback
3 . Local Millage
I4. 10% of all fines & forfeitures collected by the Police Department.
FINAL SALARY Highest salary for any continuous twelve-month period of time worked
e • prior to retirement.
f RETIREMENT BENEFITS
' Eliizibility 20 Years of Service regardless of age.
Benefit 90% of Final Salary, but not less than $4,200. If service exceeds 20 years,
the annual benefit is increased by $240 for each year over 20, up to $ 1 ,200/
year extra.
' If service is more than 25 years, member receives an extra 1 .25% (for each
year over 25) of Final Salary, payable once the retiree reaches age 60. The
benefit cannot exceed 100% of Final Salary.
' DEATH BENEFITS
Eligibility Death of an active member or member receiving benefits.
' Benefit 1 . Widow receives same amount as member is receiving or eligible
for, excluding the 1 .25% additional formula for service over 25
' years.
2. Each child under age 18 (23 if still in school) receives $ 1 ,500/year.
3 . If no widow or children, widowed mother receives $ 1 ,500/year.
I . 14
1
1 EXHIBIT 7 (Continued)
•
1 DISABILITY BENEFITS
1
Eligibility Permanent pbysical or mental disability. Five year service requirement
unless disability is incurred in the line of duty.
1 Bene' at Non-duty disability
Retirement benefit but not less than $4,200/year.
1 Dutv related disability
,Retirement benefit but less than 65% of Final 'Salary and not
'less than $4,200/year.
1
1
�I
�I
1
1
1
I15
III
i �
is EXHIBIT 8
• ACTUARIAL METHODS AND ASSUMPTIONS
_I
i The assumptions for this valuation have been selected in accordance with Actuarial Standards of Practice No. 27.
The asset valuation method is prescribed in Arkansas Code Annotated 24-11 -207 to be the amortized cost
method. This prescribed asset valuation method directly impacts the investment return assumption. The
' assumed salary growth is restricted by A.C.A. 24-11 -205 in relation to the investment return assumption.
ACTUARIAL COST METHOD The "entry age normal' cost method has been used. .
' PRE-RETIREMENT MORTALITY Deaths have been projected on the basis of the 1971 Group
Annuity Table for Males, set back five years for females.
Mortality rates at a few sample ages are:
Age Mortality rate per 1 .000
25 0.619
i 35 1 . 122
45 2.922
55 8.519
iPOST RETIREMENT MORTALITY The 1971 Group Annuity Mortality Table was used. For
females, the male table was used with a five-year setback. The
i • life expectancy according to this table is as follows:
Age Males Females
i 55 22.71 27.99
65 15. 11 19.24
iVOLUNTARY TERMINATIONS Annual termination rates at a few sample ages are:
Age Termination rate per 1 .000
' 20 50
25 45
30 39
' 35 23
40 9
45 5
' 50 5
55 5
i
• 16
i .
EXHIBIT 8 (continued) •
' When a person had less than 4 years of service, we assumed
that his chances of voluntary termination were a multiple of
' thereafter rates, with the following multiples being used:
1 st year 2.85
2nd year '2.00
3rd year 1,50
4th year 1 , 15
' ASSUMED INVESTMENT RETURN 6.0%
' DISABILITIES We continued the disability rates used in prior reports.
Disability rates at a few sample ages are:
Am Disability rate ner 1 ,000
20 0.8
25 0.8
30 0.8
' 35 0.8
40 2.0
45' 4.9 •S0 4.9
155 8.9
60 14. 1
One third of the disabilities were assumed to be service related.
For mortality after disability, we assumed rates based on the
Eleventh Actuarial Valuation of the Railroad Retirement
System, for occupational disabilities
IASSET VALUATION Book Value
' 17
1 t
• EXHIBIT 8 (continued)
— SAL--AR-Y-GROWTH—_. We have used the salary scale used in prior reports. Annual
assumed growth at a few sample ages is:
' ANNUAL SALARY INCREASE
Age Base Merit Total
I 20 4.0% 4.0% 8.0%
25 4.0% 3.2% 7.2%
30 4.0% 2.8% 6.8%
' 35 4.0% 2.5% 6.5%
40 4.0% 2.2% 6.2%
45 4.0% 1 .7% 5.7%
f 50 4.0% 1 .2% 5.2%
55 4.0% 0.7% 4.7%
60 4.0% 0.2% 4.2%
' . EXPECTED RETIREMENT PATTERN Since the plan allows full benefits at ages younger than the
traditional "65", an assumption that will have an important
impact is what percentage of people who are eligible for this
' early retirement will actually take advantage of it.
This will depend on intangible things such as the economy,
health, financial ability to retire, Social Security eligibility, and
I • work patterns. Based on recent experience, we are using the
following assumed rates, effective 12/31/91 :
' Retirement rate per 1 .000
Age
40-44 200
I 45-50 250
51 250
52-58 250
I 59 250
60+ 1 ,000
' Note: A member was assumed to be eligible for
retirement after attaining age 40 with 20 years of
I service. It is also assumed that twice the normal
number will retire in the first year of eligibility.
I
''• 18