HomeMy WebLinkAbout2002-07-18 - Agendas - Final FAYETTEVILLE
THE CITY OF FAYETTEWLLE, ARKANSAS
POLICE PENSION AND RELIEF FUND
AGENDA
JULY 189 2002
A meeting of- the Fayetteville Police Pension. and Review Board will be held on July 18,
2002 at 1 :30 p.m. in Room 326 of the City Administration Building located at 113 West
Mountain Street, Fayetteville, Arkansas.
1 . Approval of the minutes
2. Review of Pension List
3 . Investment Report
• 4. Other Business
113 WEST MOUNTAIN 77701 479-621-7700
FAX 474-575-M7
e �.
• MINUTES OF A MEETING
OF THE
FAYETTEVILLE POLICE PENSION AND RELIEF FUND BOARD
APRIL 18, 2002
A meeting of the Fayetteville Police Pension and Relief Fund Board was held on April
18, 2002 at 1 :30 p.m. in Room 326 of the City Administration Building located at 113
West Mountain Street, Fayetteville, Arkansas.
PRESENT: Eldon Roberts, Randy Bradley, Dr. Mashburn, Jerry Friend, Heather
Woodruff, Marsha Farthing and Ted Webber.
MINUTES
Dr. Mashburn moved to approve the minutes. Mr. Bradley seconded. The motion carried
unanimously.
OTHER BUSINESS
Mr. Roberts stated Marsha Farthing from the Accounting Department was present to
discuss the mailing out of the pension checks to retired people. Most people believed that
they were receive their checks by the fifteenth of each month. He had been receiving
phone calls that they had not been receiving their checks on time. He suggested that they
mail the checks by the tenth. If they could not do that, then they needed to send a letter
• out to the retirees stating they would not receive their checks until the twentieth.
Mr. Friend asked if the date was arbitrary.
Ms. Farthing stated she had looked through all the state laws regarding this board. She
did not see anything about when they should send out the checks. She thought the best
thing to do was to mail out the checks earlier:
Mr. Roberts stated the second thing he wanted to talk to Marsha about was how much it
would cost to raise the Police Officers to 100% of salary and the widows to 75% of
salary. Some of the retirees would not receive anything because they were already
making more than 100% of salary. His intensions were to bring this back before the
board. He did not intend to go back to Little Rock with this. We had a letter on file
staring that they board could increase the benefits to 100%. It did not have an expiration
date on it.
SOCIAL SECURITY BENEFITS
Ms. Laura Bender, Social Security Office, stated when Social Security was set up they
devised a benefit formula whereby someone who was working and have very low
earnings would get about 60% of their average earnings back in Social Security.
Someone with very high earnings would get approximately 25% of their earnings back in
Social Security. It had been waited this way because they felt that people with lower
earnings have fewer opportunities for savings and investing for retirement. They were
• often employed in jobs where they did not have a retirement plan. In 1983, they
• recognized that people who had a pension from work that was not covered by Social
Security, yet had had some Social Security work in their lifetime were wanting Social
Security benefits and they were getting that higher percentage, as if they had no other
annuity or pensions. So Congress passed the Winfall provision to try to balance that out.
Basically, when someone retires, the computation that they went through, they broke
their average earning of their lifetime, in today' s dollars. They broke them down into
three tiers. The first tier was approximately $580 of that the average worker will get back
90% of those earnings in Social Security. Earnings above the $580 a lower percentage is
applied. What they have done for people with a pension from work, not covered by
Social Security, that 90% factor on the fust tier is reduced to 40%. That kind of balances
out the inequity. There are a couple of exceptions to that. The first and primary exception
to that someone who had thirty years of covered earnings under Social Security in
addition to what they earned in their pension. If they had thirty years of work outside of
the government pension, then the reduction was not going to apply. There were a few
other exceptions for people who were working for non-profit organizations, people who
on their last day of employment were converted to a job covered by Social Security on or
before the last day of employment or people who reach age 62 prior to December 31 ,
1983 . The main thing for people to recognize was that the benefit statements that they
get from Social Security, they did not necessary know that they were getting an annuity
from a non-covered work activity. When they applied for Social Security and they found
out that they had a government pension, then they applied the offset. What they would
actually get from Social Security was a lower figure than what they were expecting. It
• was important for them to know that this was coming down the road. She thought it was
a good idea for them to go out to all their people currently receiving a pension in advance
of age 62, but also, have all of their officers aware of this well in advance so that they
could take that into account when they were planning their benefits for the future. He
would be willing to address a group of their current employees.
In response to questions from Mr. Roberts, Ms. Bender stated there were some web-sites
with some legislative bills that were pending in Congress. There were a couple of them
where they were looking at revising this. There were a couple of them where they
looking at revising Government Pension off-sets. They were discussing softening some
of them. What she believed was that if they did revise it, it would not go away
completely, but they may change it from 40% to 60%. There was also another provision
called Government Pension Offset for the spouse of people who draw. If they had a
police officer who was covered under a government pension and a spouse who worked
under Social Security covered employment, the retired officer could not go and draw a
spouses benefit off of Social Security on their spouse, without having the government
pension come into play there. That was another provision that they were looking at
overhauling. She had heard that they were looking at a one-third offset. For survivors it
did not come into play.
•
• INVESTMENT REPORT
Ms. Elaine Longer presented the investment report. The Combined Portfolio as of March
31 , 2002, was about 35% equity, when the take the stocks plus the equity mutual fund. It
was still at the low end of their policy guidelines, which call for 35-50% stock. They had
a little in real estate investment. Corporate Bonds make up about 15% of total. US
Treasury Bonds make up about 15% of total. The Government Agency Security are
about 35%. They were about 35% equity and approximately 65% bonds, which was on
the conservative side. Their market value of the total portfolio was approximately 10.5
million. The next report was their Stock Report. They still had 1 .2 million in Bonds that
at any point in time can go into the stock market. It did not feel that they were at that
point in time. Rather than having the money sit in money markets; they had them
invested to earn over 6% while they were waiting. Their Largest Equity Holdings were
Pfizer, Exxon Mobil, Citi Group, General Dynamics, and Sun Guard Systems being in
the top five. None of their stocks exceed 5% of equity. They had a well diverse
portfolio. Realized Gains, year to date, were approximately $3,400. Net Income,
dividends and interest received on the portfolio, .was about $97,000. Their total portfolio
income, if they were to look at everything that came in was about $451 ,000. That was a
4.4% yield on the total portfolio, including their stocks. In the Bond Report, they had
been diligent as far as credit quality in the bond portfolio. Their corporate bonds
represented approximately 24% of the bond portfolio. The rest is Treasuries and
agencies. They have been able to take advantage of the increase in interest rates that they
had in the first quarter, to add some more 6% coupon in the government agency
• securities.
Mr. Webber asked if they had, any bonds in the companies that were suspect to
accounting irregularities.
Ms. Longer stated they had monitored the credit quality. Everything was above an A
rating. They only thing was that they did own some GE Capital, it was triple A, but the
market has really moved to the point where a double A was coming. She was expecting a
down grade on GE Capital from a triple A to a double A. It would still be within the
credit rating.
On their Total Portfolio Income Yield, the yield on book value of their bond fund
has stayed at 6.2%. Their total portfolio income yield has gone up to 4.4% because more
of the portfolio was in bonds. The weighted average maturity on their bonds was
approximately 6.2 years. As interest rates go up, they were constantly rolling their
shorter maturities and callable bonds out there to lock out those high yields. Even though
last year the interest rates dropped dramatically, the income on their bond fund stayed
stable. Now that interest rates were rising, they did not have a long enough maturity to
really hurt them. Their distributions to date have been about $ 182,000. Their return
history, 9.5% on stocks, 6.7% on bonds, and 7.9% total. That was net of all expenses.
They were over weighted on capital goods. They were under weighted on
Consumer. They still had Wal-mart and Proctor and Gamble. They were over weighted
on energy. Energy was approximately 12% of equity verses about a 6.5% weighting in
the S&P500. That was a good defensive play too. The energy stocks had a real good
• dividend yield. They were about even weighted on financial and health care. They were
Y
under weighted in technology. They were light on the equity side. The stock market has
come off of its high. Everyone thinks that it had to go back up, but the fact of the matter
is that the earnings last year had fallen off. Earning fell more than the market fell. Even
though the stock market was down two years in a roll, the valuation is not key because
the earnings have come down farther than the market. They were still playing it
conservatively.
OTHER BUSINESS
Mr. Roberts stated they had a second installment coming due on the Amendment 59
refund. He questioned how much the attorneys had been awarded and if their fee had
been reduced by the court.
Mr. Bradley moved to pay the second half of the tax refund owed to the County on the
due date. Mr. Friend seconded. The motion carried unanimously.
Meeting adjourned at 2:45 p.m.
•
•
PR
ARKANSAS FIRE & POLICE PENSION REVIEW BOARD
® P.O. DRAWER 34164
C E E LITTLE ROCK, ARKANSAS 72203
200E TELEPHONE: (501 ) 662 - 1745
jo� 2 6 FAx: (501 ) 662 - 1751
email: info@iopfi-prb.com
website: www.lopfi-prb.com
TO: Board of Trustees
Police Pension and Relief Fund of FAYETTEVILLE
FROM: Arkansas Fire and Police Pension Review Board
RE: 2001 Pension Fund Actuarial Valuation
DATE: June 25, 2002
In accordance with State law, the actuary under contract to this office periodically tests
all local fire and police pension funds for actuarial soundness. The 2001 actuarial study
of your pension fund is attached. The financial tests for the pension fund are to answer
the following questions:
• YES NO
1 . Is there enough annual income to the pension X
fund to fully fund it? (See page 4 of the report.)
2. Are there enough assets in the pension fund
to cover all active member contributions, all
payments to current beneficiaries, and at least
95% of future payments earned by active members
(See page 11 of the report), OR are current assets
sufficient to cover 96% of all accrued actuarial X
liabilities (See page 10 of the report).
3. Is this pension fund considered actuarially X
sound under State law?
•
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FAYETTEVILLE POLICE PENSION FUND
ACTUARIAL VALUATION
AS OF DECEMBER 31 2001
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Osborn , Carreiro & Associates, Inc . One Union at •�fe16W
124 WestCapew Avenue
ACTUARIES CONSULTANTS • ANALYSTS uttte Rock, ArMamu 72001
• (501)376.8043
I
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June 20, 2002
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 , 2001 .
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,
19 (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. 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,
Steve Osborn, F.S.A., M.A.A.A.
' Actuary
1 :
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TABLE OF CONTENTS
IEXHIBIT I CONTRIBUTIONS
EXHIBIT 2 COST AND LIABILITIES
I' EXHIBIT 3 SUMMARY OF FINANCIAL INFORMATION
' EXHIBIT 4 COMPARISON WITH PRIOR YEARS
EXHIBIT 5 SHORT CONDITION TEST
• EXHIBIT 6 EMPLOYEE AND RETIREE PROFILES
IEXHIBIT 7 PRINCIPLE PROVISIONS OF THE PLAN
EXHIBIT 8 ACTUARIAL METHODS AND ASSUMPTIONS
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' • EX D3IT 1
CONTRIBUTIONS
I
The following contribution level reflects the payment of the current year Normal Cost for benefits
attributable to said year (see Exhibit 2) plus an amount sufficient to pay off the Unfunded Actuarial
Liability over a 6-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")
' for persons hired after 1982.
I2002 Necessary Annual Contribution to pay:
1 Normal Cost, plus $ 159,803
' 2 Pay off the Unfunded Actuarial
Accrued Liability 833,107
3 Total necessary $ 992,910
' • Less
4 Expected Employee Contribution - 239059
' (6.00% of salary)
Necessary Employer Contribution $ 969,851
(This is the amount needed in
addition to investment income)
Covered Payroll $ 384,312
INecessary Employer Rate 252.36%
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 2001 contribution was $556,908 from the employer.
�• 4
�• EXHIBIT 2
COSTS AND LIABILITIES
I
December 31 , 2001
A Normal Cost Dollar Percent
(Cost to fund current active members) Amount ofof pay
1 Regular Retirement Benefits $ 1483750 38.71%
I 2 Voluntary Termination Benefits 2,031 0.53%
3 Survivors' Benefits - 49505 1 . 17%
4 Disability Benefits 49517 1 . 18%
' TOTAL $ 159,803 41.59%
' B Actuarial Accrued Liability
1 Active Lives
�• Regular Retirement Benefits $ 4,413,822
Voluntary Termination Benefits 0
Survivors' Benefits 0
' Disability Benefits 0
TOTAL ACTIVE LIVES $ 4,4132822
' 2 Inactive Lives
' Retirees $ 7, 166,453
Disability Retirees 315709469
Widows & Children 752,059
' TOTAL INACTIVE LIVES $ 1134883981
3 Total Liability $ 15,902,803
C Assets $ 11 ,353,564
iD Unfunded Actuarial Accrued Liability $ 4,5491239
1
�• ' S
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` EXHIBIT 3
• SUMMARY OF FINANCIAL INFORMATION
iR (Items D-E, and G determined by Osborn, Carreiro and Associates, Inc.)
Year Ended Year Ended Year Ended
A. INCOME 12/31/1999 12/31/2000 12/31/2001
' 1 Employee Contributions $ 29,940 $ 28,412 $ 249363
2 Emnlover Contributions
Employer/Court Fines/Other 183,581 1839834 178,168
Insurance Tax 170,356 1609748 151 ,366
I Local Millage 2647086 274,399 227,374
3 Other Income
Guarantee Fund 0 0 0
LOPFI Subsidy 0 0 0
Act 1452 Supplement 0 0 20,415
Other Income/Donations 331 300 (452920)
IAdjustment to prior year 0 0 0
asset value
• 4 Net Investment Income 3879891 353,232 4419400
TOTAL INCOME $ 190369185 $ 11000,925 $ 997,166
B. EXPENSES
1 Administrative $ 41825 $ 3,000 $ 3,032
I 2 Benefits Paid
Monthly Benefits 6509771 892,592 945,121
Supplements 0 0 209415
DROP Payouts 0 0 0
S Refunds 0 0 0
ITOTAL EXPENSES $ 655,596 $ 895,592 $ 968,568
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( • 6
EXHIBIT 3 (Continued)
C ASSETS !at book value) 12/31/1999 12/31/2000 12/31/2001
1 Cash & Checking Accounts $ 0 $ 0 $ 0
2 Bank Deposits 22,846 6,149 72461
3 Savings and Loan Deposits 0 0 0
4 Other Cash Equivalents 502981 556,257 1882276
5 US Govt. Securities 325923780 317952671 4,314,961
6 Non-US Govt Securities 0 0 0
7 Mortgages 0 0 0
1 8 Corporate Bonds 2,1619348 2,2961916 1 ,812,057
9 Common Stocks 49573,841 3,845,361 4,202,728
10 Other 104,739 110,555 123,609
I 1 Payables (62449) (59490) (15,075)
• TOTAL ASSETS $ 109500,086 $ 103605,419 $ 1026349017
' D. RATIO OF ASSETS TO
ANNUAL EXPENSES: 16.0 11 .8 11 .0
I E. NTT INVESTMENT'RETURN: 3.8% 3.4% 4.2%
(Book Value Basis)
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e
Exhibit 3 (Continued)
12/31/1997 12/31 /1998 12/31 /1999 12/31 /2000 12/31/2001
F. TOTAL MARKET VALUE
I . Market Value, end of year 9,970,550 11 ,374,032 11 ,665,225 1194129261 10,7809521
(Used for GASB calculations, page 9)
2. Market Value, beginning of year 8,4551191 9,9702550 11 ,374,032 112665,225 112412,261
G. DEVELOPMENT OF ACTUARIAL VALUE OF ASSETS
1 . Actuarial Value of Assets, beginning of year 7,806,933 826557597 9,692,117 10,572,573 11,137,375
2. Non Investment Net Cash Flow 163,371 154,346 (7,302) (247,899) (412,802)
3. Development of Investment Income
(a) Total Market Investment Income (FI -F2-G2) 1,351 ,988 192499136 298,495 (5,065) (218,938)
(b) Amount for Immediate Recognition (6% GI) 468,416 519,336 581 ,527 , 634,354 668,243
(c) Amount for Phased In Recognition (a-b) 883;572 729,800 (283,032) (6399419) (887,181)
(d) Phased In Recognition
Current year : 20% of3(c) 176,714 145,960 (56,606) (1279884) (177,436)
First Prior Year 409163 176,714 145,960 (56,60(i) (127,884)
Second Prior Year 40,163 176,714 145,960 (56,606)
Third Prior Year 40163 176,714 145,960
Fourth Prior Year 40,163 176,714
' Total Phased In Recognition . 216,877 3629837 306,231 178,347 (39,252)
(e) Actuarial Value Investment Income 685,293 882,173 887,758 812,702 628,991
( 3(b) + 3(d) )
4. Actuarial Value of Assets, End of year
( I + 2 + 3(e) ) 8,6559597 92692,117 109572,573 11 ,137,375 11,353,564
t5. Net Investment Return on the 8.7% 10.1 % 9.2% 7.8% 5.8%
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
E)MIIIBIT 3 (Continued)
ACCOUNTING INFORMATION
' This page is included to provide the information required by the Governmental Accounting Standards Board
Statement No. 25 and 27. 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)
' 2000 2001 2002
1 . Actuarially Required Contribution 697,323 697,323 1 ,092,437
2. Interest on NPO (195,708) (175,841) (153,789)
' 3. Adjustment to (1) (448,481) (402,954) (461 ,224)
4. Annual Pension Cost (1) +(2)-(3) 950,096 924,436 1 ,399,872
5. Actual Contribution Made 6189981 • 556,908
' 6. Increase in NPO (4)-(5) 3312115 367,528
7. NPO Beginning of Year (312619793) (2,930,678) (2,5639150)
8. NPO End of Year (2,930,678) (2,5633150)
REQUIRED SUPPLEMENTARY INFORMATION
(a) . (b) (c) (d) (e) M. (9)
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 6,2937999 7,526,922 19232,923 83.6% 5369070 230.0%
' 12/31/1995 7,1871710 8,1771365 9899655 87.9% 518,643 190.8%
12/31/1997 9,970,550 89870,503 (1,1009047) 112.4% 491 ,422 -223.8%
12/31/1999 11 ,6657225 15,3612180 396952955 75.9% 482,457 766.1%
' 12/31/2001 10,780,521 15,9029803 5,122,282 67.8% 384,312 1332.8%
* Note: 12/31/1993 and 12/31/1995 are at amortized cost value.
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�• EXHIBIT 4
COMPARISON WITH PRIOR YEARS
This exhibit compares current valuation results with those of prior years.
Full Paid Actuarial Computed
Active Members E=loyer 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 115642043 23.5% 55.7%
12/31/1984 38 691 ,245 32.9% 227,671 2,637,566 196859881 23.7% 61.0%
12/31/1986 29 6049566 35.5% 214,342 32511235 1 ,712,937 23.9% 65.5%
12/31/1987 28 666,941 37.8% 2522114 • 3,374,250 2,0659775 24.6% 62.0%
12/31/1989 25 6349711 38.8% 2462132 4,009,866 2,175,493 27.2% 64.8%
12/31/1991 24 6752900 35.9% 242;541 5,144,950 1,632,194 28.2% 75.9%
12/31/1993 17 536,070 37.2% 199,314 6,2931999 1 ,232,923 27.8% 83.6% .
12/31/1995 • 15 518,643 37.5% 194,517 7,1871710 9892655 27.7% 87.9%
12/31/1997 12, 491 ,422 15.1 % 749142 921269449 (255,946) 26.9% 102.9%
12/31/1999 • 11 482,457 175.7% 8479558 101572,573 4,788,608 45.2% . 68.8%
12/31/2001 7 384,312 252.4% 969,851 11,353,564 41549,239. 41 .6% 71.4%
�, ■ Benefits or assumptions changed
Note: Normal cost prior to 12/31/89 is net of 6% employee contributions.
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rIF.
I• EXHIBIT 5
SHORT CONDITION TEST
I
' 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.
IA short condition test can be used to measure a plan's progress. Under the short condition test, the
fund's assets are compared with:
I1) 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
I 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) (2) (3)
Active Retirees Actives-
Valuation Members and Employer Valuation
' Date Contributions Inactives Financed Assets (1) (2) (3)
12/31/1982 1413635 1 ,5382508 1 ,8522096 12968, 196 100% 100% 16%
' 12/31/1984 186,492 2,2201660 1 ,916,295 2,6373566 100% 100% 12%
12/31/1986 200,487 2,9821120 1 ,7811565 31251 ,235 100% 1000/0 4%
12/31/1987 229,457 31095,232 2,115,336 39374,250 100% 100% . 2%
' 12/31/1989 266,726 327192388 2,199,245 41009,866 100% 100% 1%
12/31/1991 336,940 39674,180 29766,024 52144,950 1000/0 100% 41%
12/31/1993 299,612 4,834,716 2,3929594 67293,999 100% 100% 48%
' 12/31/1995 319,728 59358,162 2,499,475 7,187,710 100% 100% 60%
12/31/1997 3172594 5,9441842 2,608,067 991262449 100% 100% 110%
12/31 /1999 347,267 10,047,770 4,9669144 1095725573 100% 100% 4%
12/31/2001 2919291 11 ,4889981 4,1229531 11,3531564 100% 96% 0%
11
Exhibit 6
I• Employee Profile
I 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 participants by the number of
participants and total salary.
Actives
Years of Service
I 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 ;
' 25 Salary 0 0 0 0 0 0 0 ,i S
25-29 Count 0 0 0 0 0 0 0 .354,.;;e" 0
Sal 0 0 0 0 0 0 0 ; gg
N F
30-34 Count 0 0 0 0 0 0 0 `� ;uD
Salary 0 0 0 0 0 0 0
35-39 Count 0 0 0 0 0 0 0 MN
Salary 0 0 0 0 0 0 0
40-44 Count 0 0 0 2 1 0 0 a3.;
•
Salary 0 0 0 919039 485382 0 0 . 139;421;,
45-49 Count 0 0 0 0 0 1 0 " z"
I
Salary 0 0 0 0 0 61 ,121 0 11
50-54 Count 0 0 0 0 1 0 I ,
Salary 0 0 0 0 48,544 0 649613
I 55-59 Count 0 10 0 0 0 0 0 e ��vy,�
Salary 0 0 0 0 0 0 0 .F:,tl�41{,��,.ad..
60-64 Count 0 0 10 0 0 0 1 ' , , " °= a
Salary 0 0 0 0 0 0 709612
65 & Count 0 0 0 0 . 0 0 0 x " '
Over Salary 0 0 0 0 0 0 0 "
' Unknown Count 0 0 0 0 0 0 0 z ° a
A e Salary 0 0 0 0 0 0 0 :;;;, ;; 3;0.
I Total ' WIN,
` '.<;-;Y�A11^.Y;4Qyv�34L9 Count 2f: "a NSal R
"PrI
I
' • 12
I
EXHIBIT6
'• 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 2-3 34 4-5 5-10 Over Total
Under Count 0 0 1 0 0 0 0 1::
40 Benefit 0 0 4,200 0 0 0 0 +fd2Q6!
40-44 Count 0 1 0 0 0 1 0
I Benefit 0 32,269 0 0 0 21 ,184 0 53, 13'
45-49 Count 0 1 0 0 1 1 1 4','.
Benefit 0 373587 0 0 31 ,734 21 ,365 289333 1119410141
' 50-54 Count 1 1 1 0 0 1 0 4:
Benefit 32,749 • 43,456 38,226 0 0 49,894 0 164;325
55-59 Count 0 0 0 0 0 3 6 9
Benefit 0 0 0 0 0 87,658 _ 86,684 174,342
• 60-64 Count 0 0 1 0 1 1 6 9.
Benefit 0 0 18, 161 0 26,754 211365 1152896 1$ 1;106;
65-69 Count 0 0 1 0 0 1 5 0'
Benefit 0 0 1%498 0 0 33,200 92,327 136;OZS
70-74 Count 0 0 0 0 0 0 4 4
Benefit 0 0 0 0 0 0 34,821 3400i
I 75-79 Count 0 0 1 0 0 0 7 8
Benefit 0 0 6,609 0 0 0 57,983 6402
80-84 Count 0 0 0 0 0 0 0 0
I Benefit 0 0 0 0 0 0 0 0
85 & Count 0 1 0 0 0 0 1 2
Over Benefit 0 41200 0 0 0 0 8,564 12 761i,1
' Unknown Count 0 0 0 0 0 0 0 D;
Age Benefit 0 0 . 0 0 0 0 0 0;
Total Count 1 4 5 0 2 8 300
Benefit 32,749 1179512 17;694 0 58;488 234;666 424;608 945;?1: '
This includes 24 retirees with annual benefit of $546,868 .
This includes 15 disableds with annual benefit of $323,790
I This includes 11 survivors with annual benefit of $75,059
• 13
1
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
CREDITABLE SERVICE Determined on basis of service since employment
CONTRIBUTIONS
m to ee 6.00% of salary. Refundable if member terminates before retirement
eligibility.
Emnlover 1 . Matching contribution equal to employee contribution
2. State Insurance Premium Tax tumback
3. Local Millage
4. 10% of all fines & forfeitures collected by the Police Department.
FINAL SALARY Highest salary for any continuous twelve-month period of time worked
prior to retirement.
�• RETIREMENT BENEFITS
Eligibility20 Years of Service regardless of age.
1 ene 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
AEligibility Death of an active member or member receiving benefits.
Benefit 1 . Widow receives same amount as member is receiving or eligible
to receive, 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.
If no surviving spouse, children receive spouse's benefit to age
18.
3. If no widow or children, widowed mother receives $1;500/year.
�• 14
jr
1 EXHIBIT 7 (Continued)
DISABILITY BENEFITS
'
Eligibilily Permanent physical or mental disability. Five year service requirement
unless disability is incurred in the line of duty.
' Benefit Non-duty disability
Retirement benefit but not less than $4,200/year.
' Duty related disability
Retirement benefit but not less than 65% of Final Salary and not
less than $4,200/year.
1
1
1
15
t
EXHIBIT 8
'• ACTUARIAL METHODS AND ASSUMPTIONS
' 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. 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
' 35 1 . 122
45 2.922
55 8.519
' POST RETIREMENT MORTALITY The 1971 Group Annuity Mortality Table was used. For
females, the male table was used with a five-year setback. The
' life expectancy according to this table is as follows:
• A Males Females
'
55 22.71 27.99
65 .15.11 19.24
' VOLUNTARY TERMINATIONS Annual termination rates at a few sample ages are:
An Termination rate per 1.000
I 20 50
25 45
30 39
35 23
40 9
45 5
'
50 5
55 5
1
16
1 `
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:
1st year 2.85
t 2nd year 2.00
3rd year 1 .50
4th year 1 . 15
' ASSUMED INVESTMENT RETURN 6.0%
t DISABILITIES We continued the disability rates used in prior reports.
Disability rates at a few sample ages are:
Age Disability rate oer 1 .000
20 0.8
25 0.8
30 0.8
' 35 0.8
40 2.0
45 2.6
50 4.9
55 8.9
60 14. 1
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
' ASSET VALUATION See Exhibit 3, Part G
1
r 17
EXHIBIT 8 (continued)
SALARY 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
' 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%
' 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
work patterns. Based on recent experience, we are using the
following assumed rates:
Age' Retirement rate = 1 ,000
40-44 200
' 45-50 250
51 250
52-58 250
'
59 250
60+ . 11000
' Note: A member was assumed to be eligible for
retirement after attaining age 40 with 20 years of
' service. It is also assumed that twice the normal
number will retire in the fust year of eligibility.
18
1
FAYETTEVI LLE
• THE CITY OF FAYETTEVILLE, i RKANSAS
CITY ATTORNEY C IVISION
Kit Williams 113 WEST MOUNTAI 4, 72701
PHONE: 501- 75-8313
CITY ATTORNEY FAX: 501- 575-8315
June 14, 2002
Mr. Roger Haney
Washington County Treasurer HAND-DELIVERED
280 N. College
Fayetteville, AR 72701
Dear Roger:
Enclosed please find the final two checks in the amount of $18,717.79 each
to fully pay the Fayetteville Police Pension Board's and Fayetteville Firefighters
Pension Board's share of the settlement of the property tax roll-back suit (Hicks
v. Fayetteville, et. al CIV 98-1403)
• With kindest regards,
Kit Williams
Fayetteville City Attorney
KW/jh
cc: Fayetteville Police Pension Board
Fayetteville Firefighter's Pension Board
•
CITY Of ETTEVILLE, ARKANSAS CHECK NO. 1002, : )
DA INVOICE NO. DESCRIPTION AMOUNT
5/ 031 002 0000016705 Pymnt of Refund Claims in Hicks 18 , 717 . ;
CHECK AMOUNT $189717. T'
i
DET4C KAEFOAYOURREC[q :5
s • 1
wXT CI
xv + ■ • •x• II
\
G �i' fi ,+
iia t Lf:EiiQ}#�$ � Mit�B.S.'s`�a
+ gyp °' s ./
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blk�6sMuux� �.fr .
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II■ i002SSS1r 1:08 290 139 2 : 000L06340i111
l CIN of F I YMEVILLE, ARKANSAS CHECK NO. 100211 : 3
DATI INVOICE NO. DESCRIPTION AMOUNT
S /03 002 0000016706 _Pymnt of Refund Claims in Hicks
CHECK AMOUNT $1 $7717.7)1
WTACHR FORYOARi:ci' •,
• JEW � . . • A
� �t'4a tet` L ri �ry v
arr rrS'S< � ,,•'! ; j ? 4 b£7{ , : .. r< r
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hon », i .Z �.�p Y 4R. �nh4+-��i,-. A mµk {qaf !}, Wit , y ) �Y i r• I i l
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Wal
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110100 2 4 6811' 1008 2 9008 7 24 S73960pin
CITY DUPLICATE of �AYETTEVILLE, ARKANSAS CHECK NO. 1002168
DATE INVOICE NO. DESCRIPTION AMOUNT
5/ 03 /2002 0000016706 Pymnt of Refund Claims in Hicks 18 , 717 . 79
•-a . . 41 i" 1��
r
JUN 1 0 2002
CHECK AMOUNT $185717.79
DETACH HERE FOR YWR RECORDS
r
,
CHECK NO. 1002168
CITY o_ f FAYETTEVILLE
110 rAYETTEVKA
ILLE. ARNSAS
FAY ETTEVIDATE
POLICE PENSION VOID IF NOT
.nuur 6�HN
6�10�2002 60 DAYS IN
81�-87/829
AMOUNT
PAY TO THE ORDER OF
* * * * * *18717 DOLLARS AND 79 CENTS $182717.79
Washington County (gip
• Attn: Roger Haney Ivc IABLE
280 N College ABLE
L Fayetteville AR 72701 TIABLE
NON-NEGOTIABLE
lie L002L6811• 1 : 0829008721 : S73960L1I•
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