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HomeMy WebLinkAbout2003-07-17 - Agendas - Final Police Pension And Relief Fund Agenda July 17, 2003 A special meeting of the Fayetteville Policemen's Pension and Relief Fund Board was held on July 17, 2003 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 April 17, 2003 and April 24, 2003 . 2. Approval of Pension List 3 . Investment Report 4. Parking Permits • 5. Approval of $ 1 ,500.00 Expense for Consolidation Study 6. House Bilis 1122, 1226, 1228, 1239, and 1254. 7. . Signed Investment Policy 8. LOPFI Information 9. Other business ►7- Police Pension Minutes April 17. 2003 Page 1 of 16 Minutes Of A Meeting Of The Police Pension Board Of Trustees April 17, 2003 A meeting of the Fayetteville Fire Pension Board was held on April 17, 2003 at 11 :00 a.m. in Room 111 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. PRESENT: Dr. James Mashburn, Randy Bradley, Jerry Friend, Eldon Roberts, Jerry Surles, Steve Davis, Marsha Farthing, Kit Williams, City Attorney, Sondra Smith, City Clerk, Longer Investment and the Audience. Eldon Roberts called the meeting to order. Minutes from the January 16, 2003 meeting were distributed along with the revised minutes from the October 17, 2002 and July 18, 2002 meetings. Approval of the January 16, 2003 minutes: The minutes from the January 16 meeting were discussed and corrections were identified. • Approval of the revised minutes from October 17 and July 18, 2002: Jerry Friend moved to set a special meeting on Thursday, April 24 at 1 :30 to approve the revised minutes of the October 17, 2002 and July 18, 2002 meetings and the January 16, 2003 minutes. Eldon Roberts seconded. Motion carried unanimously. Approval of Retirement for Deputy Chief Tim Helder: Eldon Roberts: Chief Helder retired from Police Department after 21 years of service. His retirement was effective on April 6, 2003. His retirement was voluntary and needs to be approved by the Police Pension Board. Dr. Mashburn moved to approve the retirement of Deputy Chief Tim Helder. Randy Bradley seconded. The motion carried unanimously. Review of Pension List: The Pension Lists for April and May were distributed and reviewed by the board members. Police Pension Minutes April 17, 2003 Page 2 of 16 • Investment Report — Longer Investments: Elaine Longer with Longer Investments: The first report is the portfolio appraisal for the end of the quarter, March 31 ". That is there for accounting purposes because you need a quarter end cutoff. Page 8, is a more recent portfolio printout. Going back to June 30'h we had intended to discuss this in the meeting too, but we had dropped down to a fairly low assest allocation to equities at about 20% and even knowing that in the long term scheme of things that was fairly underweighted and conservative giving your policy, but at the time we didn't see any reason to push the petal to the metal just to be within policy guidelines showing the market still had a lot of risk. To give you a progression on June 30, we were at 19.8% equities on September 30, we were at 18.3% equities and by December 31 we had increased the equity allocation to 27% so during that October dip we get down to 7200 or so we were able to start doing some buying. On March 31 , you are still at 27% and on April 16 at 29%, so you can see the progression to get a little bit more. We have had a great opportunity to slowly increase the equity allocation and get back into a closer range with what your investment guidelines are. We have done that as bonds have matured or been called; we call that cash for stock side, so we have been able to earn 6 to 6'/4 percent on the reserve while we were waiting to do a more accurate equity-purchasing program. So your current portfolio is listed as April 15 and you have about 3% in real estate investment trust, 29% in stocks, 10% in corporate bonds and corporate preferred securities, which are a method of debt, 9% in US treasury bonds, 46% in government agency securities which include Federal Bond Credit, Federal Home Loan, . Federal National Mortgage Association, the government sponsored enterprises. This quarter with some of the money that matured off of fixed income securities we invested in the GNMA (General National Mortgage Association) pool which is a 5 %: percent government guaranteed income. GNMA's are a little bit messier than a straight bond because it's like a home mortgage with every interest payment you are going to get some principal payment. So you see that 300,000 ended up going down a little bit each time that's because you get your interest payment and your principal but 5 %: percent .in government guaranteed security with an extended maturity is still a real attractive thing and we can keep up with the accounting on our computers, it is just that it will look different than most bonds that you have in your portfolio. So the total value is about 9.8 million. If you look at the last column, we are going to yield a little bit more on the fixed income report but the total income yield on portfolio even with 29% invested in stock is 4.8%. That is the income that comes in from bonds and dividends on stocks; and our target has always been to go for a 4% income yield and we are up to 4.8%. That provides a lot of downside protection in a market like this because you are bringing in that 4.8% no matter what stocks do. The next report on page 14 just breaks out the stock accounts back to March 31 . The largest holdings report on page 17 just shows the largest stocks as a percent of portfolio both on a historical cost basis as a percent of equity but also on total portfolio and they are well within the guidelines of 5% of equity not to be overexposed to any individual stock and so General Dynamics, Citigroup, Pfizer, Alcoa, and Exxon are the largest holdings. Through March 31 , the realized gain loss position was a loss of $ 17,000, net income, that is the income received on bonds and dividends, was $93,000. The next report is a summary of your bond part of the portfolio. There are bonds in both • the stock and bond account but we segment it so that we've got the bonds that are held in Police Pension Minutes April 17, 2003 Page 3 of 16 • the stock account. If they were fully invested in stocks you would be at a full stock position, but we haven't been there for awhile so we still do have bonds over there. All of your bonds are investment grade. You have not suffered any kind of disruption to the portfolio because of what has been going on in the credit markets that we've seen in the past two years a large increase in the credit risk in bond market. We have presold some bonds, for instance Ford, General Chrysler, and General Motors running in front of a potential downgrade and most of those bonds have been downgraded. Your bond portfolio is A rated bonds or better, government securities, and government agencies (high quality). On page 23, this a report that we do each time it breaks out your yield on book value. On your fixed income securities alone is still 6. 1 % and on the total portfolio about 4.9%. That compares to last year you were running about 6% on fixed income and last year we saw a dramatic decline in interest rates. But we have been able to maintain your portfolio income yield by extending maturities during opportunistic times. A lot of times we don't wait for a bond to mature or get called if we see a spike up in interest rates that we can take advantage of, we go looking for anything that is callable or matures in the next 12 months so we are preselling all the time. So we have been able to keep your income yield at about 6% even though the market interest rates have dropped down to about 4% on the 10 year maturity and about 5% on a 30 year bond. The weighted average maturity is only 7 years which means that you don't have a lot of price risk in your portfolio if interest rates go back up; you are at a 6. 1% yield without holding a lot of 30 year bonds, so your income yield has come up since year-end to 6. 10% and your weighted average maturity is about 7 years that compares to 7. 1 years at year-end. The next report on page 24 shows the distributions that have taken place year to date. You have had a couple of contributions from litigations that were won. The next page, on page 25, just shows your return history. What is really interesting about the return history through year end is that we just recently did a pension report on Monday and went back and looked at the 5 year returns now in stocks as measured by S&P are about a minus 9.6% and is measured by the NASDAQ down about 14 and if you go all the way back to a ten year period and look at how far back do you have to go now where stocks have out performed bonds you have to go back to prior to 1987. So you actually have now a 15 year history where the compound annual return on fixed income is actually higher than the compound annual return on stocks, which is really unprecedented. This is really an amazing time. The 3 years back to back that we've been through in the negative stock market we haven't had 3 consecutive years of negative return since 1939- 1941 . That compares to about minus 40% on the S&P and minus 67% on the NASDAQ, so you have had the negative returns in stocks like other investors but the returns we have been able to achieve in the bond market have offset that so that the big impact to the real core, the capital of the account has been minimal and we still have capital to build on. That is the thing about a bear market like this; if you go down 33% then you have to make 50% on what is left to break even. If you can just minimize that downward hit then you've got all the capital to rebuild and we are starting into the rebuilding process now. So your average annual return at the end of 1999 on the total portfolio was about 9% even though you haven't been hit hard three years of standing still in the water which has been a good performance but it still leaks away of what the annualized return is even so at 6.5% or 6.8%, which is the 13 year average annual return, that still more than satisfies your • actuary assumptions of 6%. 1 think it also demonstrates the importance of the bond part Police Pension Minutes April 17, 2003 Page 4 of 16 • of the portfolio and is holding the value together. At the bottom of the page it just shows the summary from inception to date, the contributions, distributions, and the components of return. You can see now that the net income and changing accrued income as the components of return have overtaken the realized and unrealized gains, which are the growth components. That will not last forever; it' s interesting the relative performance in the past 3 years bonds versus stocks. The fixed income part of the portfolio has returned close to 35% and while the market has gone down so you have this divergence between bonds and stocks that has produced about a 50% spread in performance over the last 3 years now you are sort of at the opposite end of spectrum. In 1999, we got pretty overvalued on stocks relative to bonds and now we are sort of swinging over to where the bonds still overvalued relative to stocks are after this 3 year period. The last time that we were together we talked about how we viewed the stocks and weight them based on their S&P rating, how we assign a numerical value to that so that we don't have to look at each individual stock satisfying a certain S&P rating but we look at the whole portfolio and what the S&P weighted average rating would be and this is written in your investment policy that the weighted average needs to be B+ or better which would be a 4 or lower; and you are at a 3. 1 . So you are right at approximately A- on your stocks that you own. The last report is the industry weighting report that we include for more interest if people are interested in looking at it. It take the stocks in your stock portfolio and puts them in the way we look at them, economic sectors ratings which are capital goods. Within capital goods you have several industries aerospace and defense, electrical equipment, machinery, and manufacturing. So you kind of look at how the ratings sort of stack up in your economic sectors. We are a little bit more exposed to economic recovery through the capital goods exposure that we have and also the cyclical industry exposure where underweight consumer'because a lot of the consumer stocks have the place to be in the past two or three years the ones like Proctor Gamble, Clorox, Coca-Cola, Wal-mart, and Pepsi and those security type stocks are really not where the cheap stocks are. Where we are shopping is with companies that really haven't participated or have had a significant decline in past several years, so we are weighted more heavily on the cyclical side looking for rebound in the economy and we're increasing our exposure to the technology just a little bit at a time. As we said at the last meeting we were sort of sticking one toe at a time in the water. We have just over the past 9 months or so nibbled away at some of ' the technology stocks. Most recently we added IBM before their earnings report; the earnings that come out this week on Microsoft, Intel, and IBM have all been greeted favorably by the markets. I think you are getting sort of a collective sign of relief out there that things are not quite as bad as people had expected. And we still have some of the MDY, which are mid cap depositories and SPY, which is the S&P 500 proxy. We have about 13% of equity exposure in those two. We use that as a tool for allocation to the equity market, we have some of those on and as the market ran up during the initial stage IRAQ war we had 1,000 point run up in a very short time period. We took some of that off; it's a way we can reduce equity exposure without disrupting the portfolio structure and then we have cash again. The market backed off about 500 points from that high and we bought them back in. So it is kind of a lever that we use just to have a 5 or 7% swing factor in the allocation to the stock market without having to sell 10 different positions or disrupt the portfolio. As things settle down we will be using that more as • purchasing power to add to our core positions, but in this kind of volatile trading range Police Pension Minutes April 17, 2003 Page 5 of 16 • down market it is a real good tool to use. We had talked about some of the changes that we recommended to the investment policy at the last meeting but I don't think that there was a quorum to address them. Basically, after dealing with the firemen and helping them to arrive at a new investment policy that really addressed what they needed to be doing and incorporated what their portfolio structure would look like we went back and reviewed your policy to make sure that it was still current and all regards with what is going on in the portfolio. We only made a few changes; they are all in bold and basically it just represents what is actually going on in the portfolio and mostly from the administrative standpoint I am going to let Kim cover all of those bold points and just tell you in more detail because then what we will do is ask you to approve the changes either at this meeting or if you want more time to look at it, we could meet tomorrow and discuss it again. I think that they are all good changes to make because when we did go in and look at your' policy and there were some things that probably needed to be updated. Kim Cooper: All the changes are listed in bold on the policy, so the 151 page there are no changes that we are recommending. On the second page, we just added some text that we put in all our clients' investment policies under number 4 and it had to do with the fact that we don't make a phone call to you every time we place a trade. They are all done on a discretionary basis; all your transactions are listed on your monthly statement. Elaine Longer: Some of this is because of the changes that are imposed upon us by the • SEC as registered investment managers because of the scandals and all of that. The SEC now has a 50% increase in their budget so they are coming around and making us do more disclosures so this is nothing new that we do buys and sells without calling you but now it has to be in everything that we do. Kim Cooper: Under 4A, the information that has been added there has to do with the credit rating on the portfolio. Nothing has changed in the way that we do it but had just added the text to show the way we look at stocks that are not rated. What we do is we assign a rating higher than any of the worst ratings on the stocks so that it won't affect your portfolio at all and won't make it look like it's higher than what it is with non-rated stocks in there. So we just assign a rating lower than D- to it. On page 3C we have added instead of "all bonds carry an investment rating of A" we've added "a rating of investment grade." The reason we put that in there is because last year when there were some downgrades in some of the automotive bonds we had to come to the meeting and ask for special permission to hold the bonds until we could get out of it at a good price for you. So this will just keep it at investment grade but not hold it at that rating of A. Under D, refers to the money market funds that you hold. Your current policy says "just good quality" and we think it very important that funds should be held in the US Treasury Money Market Funds then there is no risk to principle there, so we like to put "US Government Money Market Funds." Under E, we added that investing in international securities will be limited to 10% of equity portfolio at cost; that is something that has been discussed in meetings in the past but has never been officially put in your investment policy so we have added that. Under F, the needs of options for hedging your • portfolio that has also been discussed at meetings but had not officially been put in Police Pension Minutes April 17, 2003 Page 6 of 16 . policy. On page 4, this is number 9 that's another thing that has been added by the SEC the way that we look, which brokers we use for doing transactions, it can't be just based on commission or just based on price, we have to also look at the level of service that they provided, under a whole picture opposed to just commissions only. Under liquidity, number B at the bottom of the page we added a paragraph related to what your annual benefit payments are and what your annual contributions are to the plan just to help us in planning; we talked about this at the last meeting and we do now have what your monthly amount, the maximum monthly amount that will come out so that we know that in advance every month sometimes it may be reduced somewhat but we will always have enough cash in the account to meet your distributions without having to sell something on a next day basis that we had talked about. But we will just need to get those figures from the accounting department to fill that in. On page 5, number 1 changing money market to say "US Government" as opposed to "good quality." Number 2, changing your minimum bond rating to invest grade and the holdings in any one issue we changed that from 15 to I1 and that's to match what is listed earlier in the policy on page 4. It indicates that 11 % of your fixed income portfolio can only be held without board approval. So we just changed that so it matched the rest of the policy and also that does not apply to treasuries or government agencies securities. Under equities, we have taken out "private placements are permissible." We don't feel that is appropriate for your portfolio. On page 6E we have taken out that the board would use payments through commissions to pay for performance service if that is something you would want to do we really don't have a way that commission could be used to pay for that type of service so we just took that last sentence out. As I said a lot of this has been approved in the past • and other things are just housekeeping type issues. Elaine Longer: Any questions on any of those? Jerry Friend: Page 3, options may be used for hedging only, what' s the other? Elaine Longer: There are two ways to use options; one is to use an option against an underlying position so when we are selling a covered call, we're selling a call on a stock we own if it gets called away from us there is no loss; there's a loss of appreciation potential to print on a hedge. You could use options for leverage or speculation if you go out and buy or sell options naked is the way it is called that you don't hold the 'underlying security, then it is pure speculation. Jerry Friend: We don't want to be speculating. Elaine Longer: No and all of our policies, everything that we are approved to do on the options is just as hedging. Eldon Roberts: Do you have questions in mind? Do you feel comfortable with waiting on this until a week from today? Elaine Longer: Yes • Police Pension Minutes April 17, 2003 Page 7 of 16 • Eldon Roberts: So you all can take this home and read it. Steve Davis — Investment's: Eldon Roberts: Steve Davis is the City's Chief Financial Officer and . Chief Administrator of Finances. I had the occasion to talk to Steve the other day and spoke to him for some time about how long he thought we should sit here as a board and watch the investments continue to go down though no problem with you all. I think you all have done a superb job, may have kept our losses lower than anyone else could have. So no one feels bad toward you all, but I know what fiduciary responsibility means. I read nearly everyday in my office on the information I get from different investment firms and seminars. I feel like at least somewhere down the road we need to have someone look at this and advise us on how low we go. What you said the amount of our portfolio is today is $2 million dollars down from a couple of years ago. I know everyone else is in the same boat but that doesn't make me feel well just because everybody else is too. But I just wanted to visit with Steve about this and he told me at that point in time when I asked him those questions be said, "Well let me tell you something else that we are looking at here in the city. The city is possibly looking at the old fire plan and old police plan putting those together and turning those over to the state for administration." So I asked Steve if he would like to come to the next pension board meeting, which is today, and kind of break the ice and explain to the board and the people that are here what exactly their thoughts and ideas are. So Steve took me up on that and here he is. • Jerry Friend: Elaine do you have time to stay for this? Elaine Longer: I'm fine. Steve Davis: Between 2004-2005 .the City is going to come under new guidelines for accounting purposes; we will begin bookkeeping all our contingeni liabilities. Between the police pension plan and fire pension plan there are approximately $9 million unfunded approved pension liability that we would have to put in general budget. Jerry Friend: Do you know how that divides up? Steve Davis: It is about half or about equal. I don't know the exact general split but a little bit over 4 million for each fund. Under state law there are this pension board and the fire pension board can stay in existence and basically there are a couple of questions that I have related to this pension board and the fire pension board staying local. We don't really know for sure what would happen when you get to the point where we are about out of money, whether your benefits would be cut to stretch it out through the remainder of the beneficiaries wives or whether the City. would have to take general revenue and fund the current expense. We don't know exactly how that will work out. Indications are that it would be pension benefits would be cut or the City would have to step up and send more money over to the pension boards. Going through our City Council and funding pension benefits for retired workers in the future might be problematical if they have to choose between funding pension expense for retired employees or funding current expenses for current service deliveries. I don't know how Police Pension Minutes April 17, 2003 Page 8 of 16 the City Council would react. The other option would be send both pension plans down •. to Little Rock and let LOPFI Board manage the pension plans. They would take the City's approved pension liability and amortize it over 30 years. There are still some options on benefits that would be available at the time it ships down. The primary purpose of me for being here today was I wanted to share my theory in the City. We were wanting to develop a more thorough report in writing for distribution to this board and the fire pension board for consideration sometime this summer, hopefully at the next quarter meeting for you all which I.guess is in July. Is that correct? Eldon Roberts: Yes, the next regularly scheduled meeting is in July. Steve Davis: We need to start thinking about what the options are from not only the two pension board's perspective but also the City at large perspective to do what is best for all concerned. This report will be developed by my staff and we will distribute it. The City Council, as I understand the state law, cannot move these without; the way the mechanism is that the pension boards petition City Council to move the pension plans from the local governments to state governments so that really tells me City Council can't come in and just move it unless the plan is in a serious financial problem. Kit Williams: The good news on that position is that the pensions would not be cut by the state if they were moved to the LOPFI plan. • Steve Davis: Well, that's what this report will flush out, I don't think they would be cut but I want to make sure. Jerry Friend: But they are going to amortize these plans, but it says that they may be cut. Steve Davis: They will amortize the actuarial unfunded liabilities. They would amortize the 9 million dollars. Randy Bradley: Who came up with this figure, where and how? Steve Davis: What the unfunded? Randy Bradley: The $4 million. Eldon Roberts: Probably the last actuarial evaluation we had. We haven't been actuarially sound since we raised the benefits to 90%. Randy Bradley: Where did the.$4 million come from that was not mentioned before? Eldon Roberts: It's in the actuary report. We have not been actuarially sound since we raised our benefits to 90% of salary, it started downhill along with the increase in benefits being nearly doubled, then the investment end of the situation made a lot less money. • Police Pension Minutes April 17, 2003 Page 9 of 16 • You know everybody is in that boat. I have my doubts if it will ever be actuary sound again. Steve Davis: June 25, 2002, the actuary report from the Finch Arkansas Fire Pension Review Board placed the unfunded actuarial accrued liability for this pension at $4,549,239. Eldon Roberts: We need to thank our lucky stars that we got actuary sound enough in 1999 or whenever it was to be able to give a benefit increase though Little Rock and get it granted. You all are recipients of that, but ever since that point in time that hasn't been a chance of getting a benefit increase because of where we stand actuarially. I asked Steve some pretty pointed questions when he brought this up the other day. I asked him what happens to the benefits. I know that 50% is all that we were ever promised basically, he told me nothing would happen, and nothing would change. I asked him about additional benefits that some of us have whenever we reach age 60, he said nothing would change there and another thing he said that sounded even better was that we would be guaranteed a cost of living increase of 3% a year. Steve Davis: That's an option. The City could request LOPFI Board to grant the close pension participants a cost of living increase and it would be the same as the COLI that the LOPFI members currently have which would be 3%. It would be factored into the 30-year amortization. • Eldon Roberts: I'm hearing you say that the City could ask the LOPFI Board to do that? What would it take to get the City to ask them to do that? Steve Davis: Well, we've got a couple of steps to go through first. My staff has to prepare this report that will examine what could happen if the plan stays local, what could happen if it goes to Little Rock, what could happen in both scenarios, and then if this board and the fire pension board choose to request City Council to move it, then City Council can say in order to do this. That would be a City Council decision that could be requested by either pension board or both pension boards, that we want you to move it there and we would like to take advantage of the 3% cost of living. Eldon Roberts: Which the City would ultimately pay, because somebody has to pay it. It would be the City and they would understand that they were going to pay that 3% if they were going to grant it to us. Jerry Friend: Why would the City pay the 3%? I wouldn't if I was the City. Kit Williams: Nine million dollar debt that they are looking at; I don't know if they are going to make that bigger. Chief Hoyt: It seems to me that I don't know if it is clear or unclear whether the City can do this without the pension board initiating it? So it sounds to me like the pension board holds the cards though. Police Pension Minutes April 17, 2003 Page 10 of 16 • Steve Davis: My reading of it, it indicates that the pension board does hold the cards. Kit Williams: It holds the cards on getting it transferred but not on future benefits. Chief Hoyt: I understand that, but it looks to me like they hold the cards as to say, look we are not doing this unless the stipulation is that there is a benefit increase in the future or the 3%. Or we are not turning it over to the City Council. Eldon Roberts: At least the benefits that we are currently drawing are protected some. Kit Williams: But that endangers future benefits. It's like playing chicken and then if the City Council says okay we are going to fund you when you run out of money, then you are playing with your future benefits and really taking a big chance. Randy Bradley: I think we need to see the report. Steve Davis: Yes, you need to see the report and I didn't want to just dump the report on you or the fire pension board; I wanted to have this initial conversation first. I will come back at your nekt pension board and I will get the reports to the City Clerk so that she can distribute them prior to the meeting. • Marsha Farthing: Cathym Hinshaw said she would be glad to come if you are. interested. She would be glad to come and talk to you about this. Chief Hoyt: How much is the City going to save by not having to mess with this? Steve Davis: I'm not sure what the City will save or if there will be a savings. A discussion followed on what the City might save or if they would save any. Eldon Roberts: I guess the next thing to do is to let Steve get his report together. I'll not be in position to vote on it when the time comes but the rest of these people will and whoever takes my place here will be able to, but you are going have to be able to convince them, because I know the policeman pretty well; beyond a shadow of a doubt which way is the best way. Jerry Friend: It is going to take a lot of convincing before I trust the State. Eldon Roberts: I'm not saying that doing that is not the best way to go. Be ready for some pointed questions and have all your ducks in a row. Randy Bradley: I want to thank Elaine Longer for what all she has done for us. Eldon Roberts: Anybody have any further questions for Steve? Marsha do you have • anything?. Police Pension Minules April 17, 2003 Page 11 of 16 • Marsha Farthing: You all still do have another option to increase your millage. Eldon Roberts: Does that take a vote of the people? Dr. Mashburn: Right. Marsha Farthing: That will get you back to where you are on a level playing field. Eldon Roberts: How high would they have to go? Marsha Farthing: I would go ahead and get the one mil. Steve Davis: Right now it is at .4. Dr. Mashburn: Right, if it turns around and starts going back up equivalent to the past three years that it has dropped, it's not necessarily being used but it would be a whole a lot better off. Steve Davis: Just reading out of the actuary report, in 2001 your total income was $997,000 and your total expenses were $969,000, looking at your 2002 financial, your income was $437,000 and your expenses were $1 ,000,062. So there were $625,000 • expenses over revenue. At that rate, your 9.8 million dollars will last 16.3 years. Jerry Friend: But this downturn in the economy is not going to last that long. Steve Davis: Also remember, what the economy did after Gulf I, it didn't come back. Kit Williams: One of the problems is your principle has been knocked down by this, even when it starts going back up its not going to fill back. Eldon Roberts: You've got to play a lot of catch up to ever get back to where you were. Steve Davis: We are bringing this to you to prepare you for a report that is going to get to you in July. Jerry Friend: Right and we can't really argue either way until we see the report. Steve Davis: That' s right and hopefully there won't be an argument then, it will just be a discussion of the details. Jerry Friend: It will still be an argument. Eldon Roberts: Anybody have any further questions of Steve or Marsha about this? The report will be out by the next meeting. All the members will have it to look over and • go over it. Police Pension Minutes April 17, 2003 Page 12 of 16 • Jerry Friend: Can that report go to Elaine Longer also? Steve Davis: Absolutely. Do you want us to give her an advance copy? Jerry Friend: She has advised us on a lot of things and I would like to have her input. Eldon Roberts: Okay, no further questions of Steve? Thank you Steve and Marsha for coming by. Election of Policemen's Pension and Relief Board of Trustees: Eldon Roberts: The seventh item on the agenda is the Election of Policemen's Pension and Relief Board of Trustees. I assume we are talking about the retired member that has been elected to serve in Hollis Spencer's place. Sondra Smith: There are other terns that according to my records that expire in April of this year. According to the records that I have which I am not for sure if they are correct, there was a term that expired last year, did you do an election last year? You should be doing an election every year. Eldon Roberts: Amongst the retired people? • Sondra Smith: Members of the board. Eldon Roberts: They are staggered terms they all don't come due at the same time. I don't know who you refer to? Sondra Smith: Did you all do an election last year? There was an expired tern last year. Jerry Friend: I got called last year. Eldon Roberts: The law doesn't spell out how those elections are to be done because I have looked at it time and time again. What the retired people generally do is they take a phone poll of all the retired people and get a consensus of someone to serve and then it is brought before the board. I think Randy has the results of the last one. Because it doesn't say it has to be a written ballot or a secret ballot or that you have to have a meeting with nominations. Sondra Smith: I put a copy of the state statues so you all could look at that in your packet. But I think Randy's term is the one that is up this year. Isn't it? Randy Bradley: To be honest with you, I couldn't tell you. • Sondra Smith: I think it is. Police Pension Minutes April 17, 2003 Page 13 of 16 • Eldon Roberts: I know mine would have up anyway in May but of course the State Legislature has done away with my position totally so this is the last meeting. Jerry Friend: We really need to elect two. Sondra Smith: Right. Sondra Smith: I think Eldon and Randy' s expire at the end of April. Eldon Roberts: Somebody that is already here and someone to take my place. This is the last meeting other than the special meeting that we've got targeted a week from today. Randy Bradley: Mine expires at the end of April. Sondra Smith: I think it expires at the end of April. I will bring that to our meeting next week and then we can look at and determine what we want to do. Eldon Roberts: The Doctor is elected by the rest of the board members. Sondra Smith: That is my understanding; he is appointed or elected by the board. Eldon Roberts: It is hard to keep track of all them because they are staggered. Sondra Smith: It says one member shall be a reputable physician and he shall represent the Board of Trustees. Eldon Roberts: There is no representation on the active side now, it is all retired people. Jerry Surles: Can you still be elected by the local board? Kit Williams: I don't think so. Eldon Roberts: Not unless I was retired. Jerry Surles: To fill one of these spots that's coming open. Eldon Roberts: If I was retired would be the only way. Every police member on this board has to be a retired police officer. Kit Williams: Once you get to 75%. Jerry Friend: But you could come to every meeting and advise us. Eldon Roberts: I will be sitting right out there. I won't have a vote but I' ll have a voice. • Police Pension Minutes April 17, 2003 Page 14 of 16 • Randy Bradley: Here are the results of the election of Jerry Surles if they need to be filed anywhere. Sondra Smith: Okay. Eldon Roberts: This is an election we had just because a member passed away. I don't know if his time was up. Sondra Smith: His time was not up. . Kit Williams: Why don't you make a motion to accept the election results and just acknowledge them in the minutes? Dr. Mashburn moved to accept the election results of Jerry Surles as the replacement for Hollis Spencer. Jerry Friend seconded. Motion carried unanimously. Randy Bradley: So we need to be coming up with a couple of candidates then to replace. • Eldon Roberts: Well at least one candidate to replace my position. But one of you all may be run again. Randy Bradley: But you will have to be elected. Kit Williams: There are some good things about having some transition, some knowledge about what has gone on in the past especially with some of these big decisions coming up. Randy Bradley: That one is a very big decision. Eldon Roberts: We are not very likely to have to look to someone else for guidance, you all may be on that rather than taking City's guidance. Jerry Surles: I think that Steve needs to send that report to all the pension members not just the Board. Randy Bradley: I want every single member to look at it and get an opinion on it. Eldon Roberts: I understood him to say the other day that the 3% deal was pretty much a given, but it doesn't sound so good today. The City has to stand good for the short fall, that's why they want the plan to go down there to give them more time. I don't know if they will be necessarily in favor of giving us a 3% raise every year. But I don't know if • we have a chance of getting one staying like it is either. You all will have to weigh all Police Pension Minutes April 17, 2003 Page 15 of 16 • that, I won't be involved other than sitting out there listening; you all will have to take a vote on it when the time comes. Chief Hoyt: Currently, does the current plan offer a cost living? Eldon Roberts: No sir. LOPFI does, but not the old plan. We received a benefit increase in 1999 of 90% but there has not been an increase since. It will be awhile before there is one. That was for current retirees and future retirees. Jerry Friend: That was quite a cost of living increase. Eldon Roberts: That was. Jerry Surles: 3% would be good if you could get it. Eldon Roberts: Yes it would be annually. Jerry Friend: But what do you have to give up to get it? Eldon Roberts: The City has to give up. They have to give up tax money; they have to come up with revenue that is what they have to give up. Jerry Friend: But there is no reason for them to do it. Eldon Roberts: The other option is, apparently the way they are looking at it, and the report will bare this out, sometime in the future they have us projected as going broke, before everybody has quit drawing a pension. That will be a problem too when that comes. Jerry Friend: I would want another opinion. Eldon Roberts: You may well want to go outside anybody in the City or anybody associated with this board in any manner, shape, or form and get an outside opinion on which is the best route to go here. Before you do that, you are going to have to see what each route offers. Randy Bradley: Elaine says history is on our side, it is going to turn around, not to the point it was a couple of years ago, I don't think we will see that for a long time. Eldon Roberts: Any other business to come before the board? Jerry Surles: Answer one question for me; on the widow's benefits do they get our 90% now? Eldon Roberts: No, 50%. �. Police Pcnsion Minutes April 17, 2003 Page 16 of 16 Kit Williams: We got an Attorney General's opinion on that. That was my opinion and I thought that was the way it read but we've got an Attorney General's opinion to clarify it. Eldon Roberts: When we asked for the benefit increase to 90%, we had two or three scenarios that we could ask for. One was for current retirees only, not even future retirees, one was for current and future retirees and one was for current and future retirees, and spouses. We opted to go with the one that we thought would cost the least. So we could get it passed in Little Rock and that was to leave the widows off of it and leave it at 50%, the benefit increase would not apply to those, we got it through Little Rock and got it passed. You got your 901/o but with the widows staying at 50%, it cost more if the widows were going to draw 90% too. Jerry Surles: I was just curious because I know the Fire Department got their widows 90%. And there is no way of us getting that for ours. Kit Williams: I don't think there is according to the state statues; of course they have different statues for the different pension funds. They use slightly different language and actually your statue was contradictory. It has two different sections that said different things. One section said amount equal to the pension and the other section said shall not exceed one half of the salary. So I wrote to the Attorney General and said which one do you follow? And that said shall not exceed half the salary. • Eldon Roberts: We brought that up it had to do with Irene Haskins whenever Ronald passed away, and I didn't know where to go with this, pay her 90% or drop her back to 50% of what Ronald was making when he retired. So I brought it up and pointed it out to . Kit that we had two conflicting statements in this one code, so we asked the Attorney General' s opinion. Kit Williams: I agree with the Attorney General' s opinion that was my opinion before I sent it out, that the other one, the not to exceed language, was much stronger and clearer than the other language. Eldon Roberts: The next meeting will be this special called meeting on Thursday a week from today at 1 :30. Meeting adjourned at 2:50 PM. Police Pmsion April 24, 2003 Page 1 of 5 • Minutes of a Meeting Of the Police Pension Board of Trustees April 24, 2003 A meeting of the Fayetteville Police Pension and Relief Fund Board was held on April 24, 2003 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, Jerry Surles, Jerry Friend, Dr. James Mashburn, and Sondra Smith, City Clerk. MINUTES: Approval of the January 16, 2003 minutes: Randy Bradley moved to approve the January 16, 2003 minutes as amended. Dr. Mashburn seconded. Motion carried unanimously. Approval of the revised minutes from October 17 and July 18, 2002: Jerry Friend moved to approve as amended the minutes of the July 18, 2002 minutes and the October 17, 2002 minutes. Randy Bradley seconded. Upon roll call the motion carried unanimously. • ELECTION: Election of Policemen's Pension and Relief Board of Trustees: Dr. Mashburn moved to approve the election of Jerry Friend and Jerry Surles to the Police Pension Board with a term end date of April 30, 2004. Randy Bradley seconded. The motion carried unanimously. Randy Bradley moved to elect Dr. James Mashburn to serve on the Police Pension Board with a term end date of April 30, 2005. Jerry Friend seconded. The motion carried unanimously. OTHER BUSINESS: LOPFI Discussion: Jerry Friend: The way he talked the other day it was not cut and dry over here. Eldon Roberts: I do know it is for the LOPFI people. If you vote to move our plan in with theirs, I don't know if we are going to be governed by the same set of rules or not, but the City is obligated to pay whatever it takes to keep the LOPFI plan a float. Police Pension April 24, 2003 Page 2 of 5 • Jerry Friend: I think if we move the LOPFI that once the deal was done then we would be good forever. The actual move the way Mr. Davis talked, to get them to take this plan they are going to say to the City you are going to have to pay all this money. Eldon Roberts: The City Council would have to sign off on this as well as this Board. I think they would be willing to take on that unfunded liability, but they amortize it over 30 years. What they are looking at if I understood Steve right, next year or the year after that there is a law that governs the City's-principle's or policies in the state of Arkansas and it is a violation of law for the City to operate in the red, they have to have a budget in the black each year. They law is going to change the City's bookkeeping principles and the City will have to show the old Fire and Police plans unfunded liability which is roughly $9 million between the two of them as a debt. I guess it would affect how they are able to do bonds, but to me they are'm violation of a state law that says they cannot operate in the red. Dr. Mashburn: Eldon what is the pay for LOPFI. Eldon Roberts: It is set by state law. The City just this last go around increased, they went to what they call Benefit Level II for LOPFI, they have to have 28 years in now before they can retire and get their full amount, it is around 80%, but they have a guaranteed 3% COLA compounded every year. At one time it was just 3% of your salary, but now it is compounded. A lot of the guys that are on the new plan thought we were • lucky because we are getting 90% of salary now then they are beginning to quiet down because they know we have gone down a couple of million, they have moved up to 80% plus a 3% COLA, they have gotten some changes made in this last legislature session that was in their favor, now they are not so concerned that we have a better plan than they do. Dr. Mashburn: If they switch this plan to LOPTI will they still pay the same benefits? Eldon Roberts: I asked Steve Davis when he .hit me with this the other day, what will that do to the benefit level that people are currently drawing. He said not one thing; it will stay just like it is. This unfunded liability is tied directly to the benefit, so whenever LOPFI takes on this deal they will realize this debt matches this 90% of salary. I have read the law and it pretty much states that if the old plan consolidates with LOPFI, there . is no change in any benefit, the board cannot discriminate against any one individual or any group of people that is in the plan and no changes can be made. A lot of people want to know why would LOPFI want to take on that $9 million debt, well they are not taking on that debt, they are not the ones paying that debt, the City is, LOPFI will be making a little money to manage the plan, Yz of a percent. Dr: Mashburn: Is the Fire Department still in their independent plan or are they going to LOPFI or to something like LOPFI? Sondra Smith: Steve Davis has made the same presentation to them. • Police Pension April 24, 2003 Page 3 of 5 Jerry Friend: That's what I heard Steve say is the City had to make up any shortage. I am asking myself why the City Board would vote to pay good money to help us keep 90% when all they guaranteed us was 50%. Jerry Friend: If LOPFI says we will take their plan but we need $500,000.00 to keep them at 90% then what is to keep the City from saying no we can't do that. Eldon Roberts: You are not going to need $500,000.00 you are going to need four something million, amortized over 30 years. Jerry Friend: If I was an elected official, I would be thinking how am I going to tell people that I voted, we only guaranteed these guys 50%, here I am using their tax money, and living high on the hog. That's how some of them are going to feel. That is my worry. Dr. Mashburn: The last three years have been downer years, until that point we were looking good and doing great. I do not know how much longer it will remain like the past three years. I can't see the next 10 years remaining that way, I think sometime and I don't know whether it will be sooner or later, but I think during the next 10 years you are going to see another period of good times and it will go back up. Whether the bad times remain long enough that we continue to go broke in the meantime who knows. • Eldon Roberts: Everybody speculates, but if the City agrees to keep our benefit at 90% of salary from now on until the last person draws it, irregardless of what the market does, but then over here if we keep it here locally, and it goes on for five more years, who is going to step up to the plate here and make that difference or who is going to come along and say okay let's cut benefits back to 50%. I don't know the answer to that. Jerry Friend: What if we are over here and things turn around and we can get 200%. Eldon Roberts: This is the bird in the bush. Jerry Friend: What if the bird in the bush and things tum around and we can say we can get 200%. Eldon Roberts: We can get more that 100% of salary but it has to go through Little Rock down there and you have to be actuarially sound and we are $4 million in the hole. We are not going to be actuarially sound tomorrow folks. Dr. Mashburn: It is too bad we didn't get 100% raise. Eldon Roberts: That is what we should have done; we were authorized to do that. They recommended in the letter that we go 90% but that we were allowed to do 100% of salary. You won't find very many people that retire at 90% of their salary. We just need to find out more. • Police Pension April 24, 2003 - Page 4 of 5 • Dr. Mashburn: Could we get LOPFI to come up and give us a presentation. Jerry Friend: I would like to get the information from the City and let LOPFI look at it before they come up. Dr. Mashburn: Eldon you stay on as an advisory to us. Eldon Roberts: I intend on coming to the meetings, I will not have a vote, but I intend on coming to the meetings and listening to what goes on. I don't have a clue as to what to do here either, none of us do, and we just don't have enough information. I just threw out some things I think we need answers to. If somebody comes in here and sits down and tells us if LOPFI takes our plan, and this board votes to do it and the City Council votes to do it and it is a done deal it goes down there, that LOPFI is governed under the same rules and principles with us old retired people if they turn over to LOPFI as the current LOPFI members, which is that they continue to pay those benefits, if the plan goes down financially the City pays more. The reason it came into existence was these old plans were faltering in the late 70's and early 80's and that is when they did away with and stopped all these old pension plans across the state and created a new LOPFI system for every police officer and fire fighter that went to work January 1 , 1982. They set up that rule that the Cities would pay whatever LOPFI actuarialist said they would owed to keep them going. • Randy Bradley: That doesn't sound right to be paying 40% to one police department and 90% to another. Eldon Roberts: We are not using LOPFI's money to pay us, they are going to take our assets that we have invested and the City is going to keep paying on that unfunded liability. LOPFI is not paying one dime's worth of debt. The City will have to pay towards that unfunded liability, but it will be a number that they can live with. Randy Bradley: So it will be coming out of what remains in this fund. Eldon Roberts: What do you want me to do from this point on? Jerry Surles: Wait until we hear back from Steve Davis. Randy Bradley: In the meantime if you have time and don't mind can you talk to someone at LOPFI. Eldon Roberts: Okay. Cathryn can tell me and I would take it to the bank what she tells me, she has been down there and she knows what is going on. Jerry Surles: If we are moved down there to LOPFI, is the City obligated to pay 90% of my benefit that I am receiving now until it no longer needs to be paid. Police Pension April 24, 2003 Pagc 5 of 5 Eldon Roberts: She can tell me that, she may also be able to tell me what happens if we • don't move it down there and we sit right here and we finally get to the point that we are not financially sound enough to continue paying these benefits at 90%, does the City come in and start making up the short fall or do they do they come in and say we are going to keep paying but only at 50% .of what you were promised when you went to work here. Randy Bradley: Do what we can before the next meeting and let us know what you find out. Eldon Roberts: The 3% COLA, for everybody to get a 3% raise on your pension somebody has to pay that, it has to come from somewhere. A discussion followed on COLA. Eldon Robert: The person that did the actuarial evaluation for the state plan said several years ago that if we just continue to maintain 6% return on our plans we would be okay. We may be now when you average that all in. I am pretty sure that they were talking about at 50% of salary, and then we jumped up and increased our benefits to nearly double. I think some people think that as long as we can average 6% on our returns according to those actuarial figures that we are going to be okay, that is way before we even increased to 55% and then on up to 90%. It would be hard to say that the 6% would • keep carrying you along when they figured it on 6% of benefits. Jerry Friend: I am not sure he did, did we not have an actuary when we gave that raise. Eldon Roberts: We had to have and we were strong enough then to pass it, but I am just saying I don't think 6% will be enough to carry us along the long haul since we nearly doubled our benefits. He projected that out on a sheet of paper for every year up through way up into the 2000's and showed how much money we should have in the plan, total assets and we where ahead of that and that was at earnings of 6%. It made it look like we were okay and we probably were, when we were paying 50% of salary but then we nearly doubled that. Randy Bradley: 6% of nine million is $540,000.00 we pay out a lot more than that a year. Eldon Roberts: I believe that the paper was fair on it's face had benefits remained at 50% of salary. Eldon requested a copy of the report that Steve Davis is completing when he gets it done. Meting Adjourned at 2:25 PM, • POLICE PENSION FUND JULY 2003 6800-9800 6800-9M 5335-00 5335-05 . EMP# NAME GROSS YTD Wages Suppl. YTD Suppl. Fed Tax ST. TAX NET 154 ALLEN, CHARLES 2,229.53 13,377.18 0.00 300.00 220.00 66.89 1 ,942.64 152 ARNOLD. WILLADEAN 838.00 5,028.00 0.00 300.00 838.00 • 130 BAYLES, DON 1 ,369.31 8,215.86 0.00 300.00 1 ,369.31 107 BLACK, JOE P 970.99 5,825.94 0.00 300.00 100.00 20.00 850.99 - 120 BOWEN, J R 598.19 3,589.14 0.00 300.00 10.00 588.19 147 BRADLEY. GERALD 4,157.85 24,947.10 0.00 300.00 940.53 17.32 3,200.00 139 BRADLEY, RANDALL 2,467.20 14,603.20 0.00 300.00 382.00 100.00 1 ,985.20 167 BROWN, JOHN 3,762.70 20,298.02 0.00 600.00 200.00 2,962.70 157 CARROLL,RONALO L 1,816.69 10,900.14 . 0.00 300.00 250.00 105.00 1 ,461 .69 151 COLE, RUSTON 2,644.53 15,867.18 0.00 300.00 600.00 200.00 1 ,844.53 109 COOPER, ADRIAN 550.71 3,304.26 0.00 300.00 550.71 111, DAY, LUCILLE (Deceased) 700.00 100.00 0.00 108 DENNIS, WARREN 1 ,187.71 7,126.26 0.00 300.00 0.00 1,187.71 160 DUGGER,GARY 2,729.07 16,374.42 0.00 300.00 300.00 120.00 2,309.07 125 FLOWERS, HAROLD 744.10 4,464.60 0.00 300.00 744.10 140 FOSTER, BILLIE D. 2,766.66 16,600.08 0.00 300.00 300.00 120.00 . 2,346.66 148 FRIEND, JERRY 2,719.53 16,317.18 0.00 300.00 725.00 150.00 1 ,844.53 161 HANNA, JANICE 1 ,688.55 10,131 .30 175.00 50.00 1 ,463.55 145 HANNA, MARK 672.56 4,035.36 0.00 500.00 672.56 162 HASKINS, IRENE 374.85 2,249.10 0.00 300.00 374.65 103 HELDER, TIM 5,036.02 14,045.72 - 750.00 250.00 4,096.02 146 HUTCHENS, BERNICE 874.85 5,249.10 0.00 300.00 130.00 744.85 143 JOHNSON, CHARLES 2,118.14 12,708.84 0.00 300.00 42.67 2,075.47 103 JOHNSON, WENDELL 675.55 4,053.30 0.00 300.00 675.55 118 JONES, BOB 2,847.00 17,062.00 0.00 300.00 0.00 2,847.00 144 KILGORE, DONALD 1 ,765.31 10,591 .86 0.00 300.00 19.72 1 ,745.59 129 LAWSON, FORREST 1 ,352.46 6,114.88 0.00 300.00 350.00 1 ,002.48 150 LITTLE. PATSY R 350.00 2,100.00 0.00 300.00 350.00 153 LORCH, DONNA G 350.00 2,100.00 - 0.00 300.00 350.00 • 156 MARTIN, KENNETH 3,185.49 19,112.94 . 0.00 300.00 500.00 140.00 2,545.49 128 MCCAWLEY, LARRY 1 ,461 .94 8,771 .64 0.00 300.00 180.00 20.00 1 ,261.94 116 MCCHRISTIAN, MARIE 350.00 2,100.00 0.00 300.00 350.00 126 MCWHORTER, KAREN 485.02 2,910.12 0.00 300.00 485.02 136 MITCHELL, MICHAEL 1 ,988.56 11 ,931 .36 - 0.00 300.00 150.00 1 ,838.56 - 141 MUELLER, ROSEMARY 1 ,760.38 10,682.28 0.00 300.00 1 ,760.38 158 MUNSON,ANGELA 3,621 .36 21 ,728.16 0.00 300.00 500.00 183.00 2,938.36 112 MURPHY, JAKE 350.00 2,100.00 0.00 300.00 0.00 350.00 137 PERDUE, LARRY 2,003.55 12,021 .30 0.00 300.00 200.00 25.00 - 1 ,778.55 164 PERSHALL, ROBIN 1 ,315.53 7,893.16 290.00 92.00 933.53 132 PHILLIPS, HOMER GENE 1 ,513.40 9,080.40 0.00 300.00 300.00 1 ,213.40 105 PRESTON, GEORGE DAVID 1 ,381 .37 6,288.22 0.00 300.00 67.43 196.37 1 ,117.57 135 RICKMAN, LOREN 1 ,924.54 11 .547.24 0.00 300.00 230.00 65.00 1 ,629.54 104 RIGGINS, RAYMOND C 1 ,440.01 8,640.06 0.00 300.00 125.00 25.00 1 ,290.01 159 SCHUSTER,JOHN H. . 2,689.07 16,134.42 0.00 300.00 340.00 110.00 2,239.07 122 SKELTON, FRANK 713.67 4,282.02 0.00 300.00 713.67 123 SPENCER, HOLLIS (Deceased)* 2,373.30 100.00 0.00 168 STANLEY, MELVIN 4,209.58 22,708.70 0.00 200.00 1 ,100.00 300.00 2,809.58 155 STOUT, BETTY 415.25 2,491 .50 0.00 300.00 0.00 415.25 133 SURLES, JERRY 2,347.50 14,085.00 . 0.00 300.00 412.50 50.00 1 ,885.00 142 TAYLOR, DENNIS 1 ,780.38 10,682.28 0.00 300.00 105.00 40.00 1 ,635.38 106 UPTON, FRANKLIN - 911.64 5,471 .04 0.00 300.00 10.00 901.84 163 WATSON, RICHARD 6,811 .00 40,866.00 0.00 200.00 1 ,950.00 400.00 4,461.00 110 WATTS, BEULAH (Deceased) 2,100.00 300.00 0.00 149 WILLIAMS. JOYCE 1 ,217.07 7,302.42 0.00 300.00 217.07 1 ,000.00 134 WITT, DON 1 ,524.09 9,144.54 0.00 300.00 115.00 64.00 1 ,345.09 127 WOOD, PAUL J 1 ,363.72 8,182.32 0.00 300.00 0.00 1 ,363.72 96,442.42 562,830.46 0.00 15,200.00 12,624.53 3,171 .97 80,645.92 • '3200.00 pall rIN de beeerde 6800-9800 6800-6800 533500 5335-05 Total Year to Date 563,030.46 15,200.00 578.230.46 POLICE PENSION FUND August, 2003 69000800 seaatmao 631.00 533505 EMP# NAME GROSS YTD Wages Suppl. YTD Suppl. Fed Tax ST. TAX NET 154 ALLEN, CHARLES 2,229.53 15,606.71 0.00 300.00 220.00 66.89 1,942.64 152 ARNOLD, WILLADEAN 838.00 5,866.00 0.00 300.00 838.00 130 BAYLES, DON 1 ,369.31 9,585.17 0.00 300.00 1 ,369.31 107 BLACK, JOE P 970.99 6,796.93 - 0.00 300.00 100.00 20.00 850.99 120 BOWEN, J R 598.19 4,187.33 0.00 300.00 10.00 588.19 147 BRADLEY, GERALD 4,157.85 29,104.95 0.00 300.00 940.53 17.32 3,200.00 139 BRADLEY, RANDALL 2,467.20 17,270.40 0.00 . 300.00 382.00 100.00 1 ,985.20 167 BROWN, JOHN 3,762.70 24,060.72 0.00 600.00 200.00 2,962.70 157 CARROLL,RONALD L 1,816.69 12,716.83 0.00 300.00 250.00 105.00 1,461.69 151 COLE, RUSTON 2,644.53 18,511 .71 0.00 300.00 600.00 200.00 1,844.53 109 COOPER, ADRIAN 550.71 3,854.97 0.00 300.00 550.71 111 DAY, LUCILLE (Deceesedl 700.00 100.00 a 0.00 108 DENNIS, WARREN 1,187.71 8,313.97 0.00 300.00 0.00 1,187.71 160 DUGGER,GARY 2,729.07 19,103.49 0.00 300.00 300.00 120.00 2,309.07 125 FLOWERS, HAROLD 744.10 5,208.70 0.00 300.00 744.10 140 FOSTER, BILLIE D. 2,766.68 19,366.76 0.00 300.00 300.00 120.00 2,346.68 148 FRIEND, JERRY 2,719.53 19,036.71 0.00 300.00 725.00 150.00 1 ,844.53 161 HANNA, JANICE 1,688.55 11,819.85 175.00 50.00 1 ,463.55 145 HANNA, MARK 672.56 4,707.92 0.00 500.00 672.56 162 HASKINS, IRENE 374.85 2.623.95 0.00 300.00 374.85 - 103 HELDER, TIM 5,036.02 19,081 .74 750.00 250.00 4,036.02 146 HUTCHENS, BERNICE 874.85 6,123.95 0.00 300.00 130.00 744.85 143 JOHNSON, CHARLES 2,118.14 14,826.98 0.00 300.00 42.67 2,075.47 103 JOHNSON, WENDELL 675.55 4,728.85 0.00 300.00 675.55 118 JONES, BOB 2,847.00 19,929.00 0.00 300.00 0.00 2,847.00 144 KILGORE, DONALD 1 ,765.31 12,357.17 0.00 300.00 19.72 1 ,745.59 129 LAWSON, FORREST 1,352.48 9,467.36 0.00 300.00 350.00 1 ,002.48 150 LITTLE, PATSY R 350.00 2,450.00 0.00 300.00 350.00 153 LORCH, DONNA G 350.00 2,450.00 0.00 300.00 350.00 156 MARTIN, KENNETH 3,185.49 22,298.43 0.00 300.00 500.00 140.00 2,545.49 128 MCCAWLEY, LARRY 1,461.94 10,233.58- 0.00 300.00 180.00 20.00 1,261.94 • 116 MCCHRISTIAN, MARIE 350.00 2,450.00 0.00 300.00 350.00 126 MCWHORTER, KAREN 485.02 3,395.14 0.00 300.00 485.02 136 MITCHELL, MICHAEL 1 ,988.56 13,919.92 0.00 300.00 150.00 1,838.56 141 MUELLER, ROSEMARY 1,780.38 12,462.66 0.00 300.00 1 ,780.38 158 MUNSONANGELA 3,621.36 25,349.52 0.00 300.00 500.00 183.00 2,938.36 112 MURPHY, JAKE 350.00 2,450.00 0.00 300.00 0.00 350.00 137 PERDUE, LARRY _ 2,003.55 14,024.85 0.00 300.00 200.00 25.00 1 ,778.55 164 PERSHALL, ROBIN 1,315.53 9,208.71 - 290.00 92.00 933.53 132 PHILLIPS, HOMER GENE 1,513.40 10,593.80 0.00 300.00 300.00 1,213.40 105 PRESTON, GEORGE DAVID - 1,381 .37 9,669.59 0.00 300.00 67.43 196.37 1,117.57 135 RICKMAN, LOREN 1 ,924.54 13,471.78 0.00 300.00 230.00 65.00 1,629.54 104 RIGGINS, RAYMOND C 1,440.01 10,080.07 0.00 300.00 125.00 25.00 1 ,290.01 159 SCHUSTER,JOHN H. 2,689.07 '18,823.49 0.00 300.00 340.00 110.00 2,239.07 122 SKELTON, FRANK 713.67 4,995.69 0.00 300.00 713.67 123 SPENCER, HOLLIS IDaceasedl' 2,373.30 100.00 0.00 168 STANLEY, MELVIN 4,209.56 26,918.28 0.00 200.00 1,100.00 300.00 2,809.58 155 STOUT, BETTY 415.25 2,906.75 0.00 300.00 0.00 415.25 133 SURLES, JERRY 2,347.50 16,432.50 0.00 300.00 412.50 50.00 1,885.00 - 142 TAYLOR, DENNIS 1,780.38 12,462.66 0.00 300.00 105.00_ 40.00 1,635.38 106 UPTON,FRANKLIN 911.84 6,382.88 0.00 300.00 10.00 901.84 163 WATSON, RICHARD 6,811.00 47,677.00 0.00 200.00 1,950.00 400.00 4,461.00 110 WATTS, BEULAH (Deceased) 2,100.00 . 300.00 0.00 - 149WILLIAMS, JOYCE 1 ,217.07 8,519.49 0.00 300.00 21707 1,000.00 134 WITT, DON 1 ,524.09 10,668.63 0.00 300.00 115.00 64.00 1 ,345.09 127 WOOD,PAULJ 1 ,363.72 9546.04 0.00 300.00 0.00 1 ,363.72 96 442.42 659 272.88 0.00 15 200.00 12 624.53 3 171.97 80,645.92 •$MW paid W desM benefits 6800-88M 68009aW 533500 533505 - TOW Year tD Date 659,472.88 15,200.00 674,672.88 • FAYETTEVI LLE THE CITY OF FAYETTEVILLE, ARKANSAS • DEPARTMENTAL CORRESPONDENCE To: Policemen's and Firemen's Pension and Relief Board Thru: Steve Davis, Finance and Internal Services Direct From: Marsha Farthing, Accounting Manager "6 Subject: Consolidation study Date: July 8, 2003 Cathryn Hinshaw of the Arkansas Local Police and Fire Retirement System requested that the City give her permission to conduct a consolidation study on each of the old • pension plans to determine the contribution rates the City would have if the old . retirement plans were combined with the LOPE plan. She asked permission.to proceed immediately so the reports would be completed before the July 1711' meeting. The studies would be required for the consolidation process and can be used for one year. The Mayor and the Finance and Internal Services Director gave their approval to proceed with the studies. I am requesting the Boards' approval to obtain these studies at a cost of $ 1 ,500 to each pension plan. • r Stricken language would be deleted from and underlined language would be added to the law as it existed prior to this session of the General Assembly. 1 State of Arkansas 2 84th General Assembly A Bill Act 674 of 2003 3 Regular Session, 2003 HOUSE BILL 1122 4 5 By: Representative R. Smith 6 By: SenatorJ. Jeffress RECEIVED 7 8 MAY 15 2003 9 For An Act To Be Entitled CITY OF FAYETTEVILU 10 AN ACT TO CLARIFY THE AUTHORITY OF POLICE AND CITY CLERK'S OFFICE 11 FIRE PENSION AND RELIEF FUNDS TO INCREASE THE 12 BENEFITS FOR SURVIVING SPOUSES AND BENEFICIARIES 13 AFTER THE DEATH OF AN ACTIVE OR RETIRED MEMBER ; 14 AND FOR OTHER PURPOSES , 15 Subtitle 17; TO CLARIFY .THE ;AUTHORITY OF - POLICE _AND 18 _ FIRE PENSION AND ; RELIEF FUNDS _ TO - �-r 19 _ . . ... . _ INCREASE BENEFITS -FOR -.-SURVIVING SPOUSES .. __.. ,. . . . - ;.:.. _ 20 - AND BENEFICIARIES _AFTER THE_DEATH _OF ;AN . 21 ACTIVE OR RETIRED MEMBER . 22 23 24 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS : 25 26 SECTION 1 . Arkansas Code § 24 - 11 -425 ( f ) , concerning pension benefits 27 in the event of the death of an active or retired member of a police pension 28 and relief fund , is amended to read as follows : 29 ( f)M The sum total of the pension to be paid the surviving spouse or 30 the qualifying child of the deceased police officer shall not exceed . one-half 31 ( 1 / 2 ) of the salary attached to the rank the police officer held at the time 32 of his or her death. 33 ( 2 ) However , the limit on the sum total amount under subdivision 34 ( f ) ( 1 ) of this section may be exceeded through benefit increases authorized 35 under § 24- 11 - 102 . 36 Ill l l loll��ll l l lO 11 01172003EAN1450.VJF188 J HB1122 1 SECTION 2 , Arkansas Code § 24 - 11 -820 (b ) ( 3 ) , concerning pension 2 benefits in the event of the death of an active or retired member of a 3 firemen ' s pension and relief fund , is amended to read as follows : 4 ( 3 ) (A) The sum total of the pension to be paid the spouse or the 5 qualifying children of volunteer or part-paid fire fighters shall not exceed 6 one -half ( 1 ( 2 ) of the salary attached to the rank the member held at the time 7 of his or her death as an active member of a volunteer or part -paid fire 8 department , nor shall it be less than thirty dollars ( $30 . 00 ) per month . 9 ( B ) However the limit on the sum total amount under 10 subdivision (b ) ( 3 ) (A) of this section may be exceeded through benefit 11 increases authorized under § 24- 11 - 102 . 12 13 14 APPROVED : 3126 /2003 15 1'6 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 3'4 35 36 2 01:172003EAN1450 . VJF188 Stricken language would be deleted from and underlined language would be added to the law as it existed prior to this session of the General Assembly. 1 State of Arkansas As Engrossed: H314103 H413103 2 84th General Assembly A Bill Act 1371 of 2003 3 Regular Session, 2003 HOUSE BILL 1226 4 5 By: Representative R. Smith C 6 By: Senators J. Bookout, J. Jeffress, Faris RECEIVED 7 MAY 15 2003 8 CITY OF FAYETTEVILL; 9 For An Act To Be Entitled CITY CLERKSOFR:C 10 AN ACT TO ALLOW THE PARTICIPANTS OF POLICE AND 11 FIRE DEFERRED RETIREMENT OPTION PLANS TO CONTINUE 12 WITH THE DEPOSIT OF FUNDS IN THE DROP PLAN AFTER 13 THE EXPIRATION OF THE PARTICIPATION PERIOD IN THE 14 DROP PLAN ; AND FOR OTHER PURPOSES . 15 . 16 , , . . Subtitle 17 / ..: TO ALLOW PARTICIPANTS IN POLICE AND FIRE 18 DEFERRED RETIREMENT OPTION PLANS TO • 19 CONTINUE THE DEPOSIT OF FUNDS IN THE ,.: :20 : DROP PLAN . , 21 22 23 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS : 24 25 SECTION 1 . Arkansas Code 5 24 - 11 -434 ( f) , concerning the deferred : 26 retirement option plan for policemen ' s pension and relief funds , is amended 27 to read as follows : 28 ( f )1) A participant in the plan shall receive , at the option of the 29 participant , a lump sum payment from the account equal to the payments to the 30 account or a true annuity based upon the account of the participant or may 31 elect any other method of payment if approved by the board of trustees . 32 (2) If approved by a majority vote of the governing body of the 33 sponsoring municipality and the board of trustees a participant in the 34 deferred retirement option plan may defer .receiving payment of the 35 participant ' s account and continue with the funds deposited in the plan . 36 ( 3 ) (A) Interest credited to the continuing deposit of funds in 01272003EAN1100.CDS097 r 3 As Engrossed: H3/4/03 H4/3/03 HB1226 1 the plan under subdivision ( f) ( 2 ) of this section shall be calculated in the 2 same manner as interest under subdivision ( e ) ( 2 ) of this section . 3 ( B ) However , the minimum interest rate shall not be less 4 than zero percent (0%) . 5 ( 4 ) The payment of funds accumulated while participating in the 6 deferred retirement option plan may only be deferred one ( 1 ) time . These 7 funds must be distributed or annuitized by December 3I of the year a member 8 attains age seventy and a half ( 7015. ) • 9 10 SECTION 2 . Arkansas Code § 24 - 11 -434 , concerning the deferred 11 retirement option plan for policemen ' s pension and relief funds , is amended 12 to add an additional subsection to read as follows : 13 (j ) The Arkansas Fire and Police Pension Review Board may promulgate 14 regulations to make the plan under this section comply with the requirements 15 of this section and with the applicable portions of the federal Internal 16 Revenue Code , as it existed on January 1 , -2003 , _ ... 17 18 SECTION 3 . Arkansas Code $ 24 - 11 =B30 ( f ) , concerning the deferred 19 retirement option plan for firemen' s pension and relief funds , is amended to , 20 read 'as follows : 21 (f ) ( 1 ) A participant in the plan shall receive at the option of the 22 participant a lump sum payment from the account equal to the payments to the 23 account or a true annuity based upon the account of the participant or may 24 elect any other method of payment if approved by the board of trustees . 25 (2 ) If approved by a majority vote of the governing body of the 26 sponsoring municipality and the board of trustees , a participant in the 27 deferred retirement option plan may defer receiving payment of the 28 participant' s account and continue with the funds deposited in the plan . 29 ( 3 ) (A) Interest credited to the continuing deposit of funds in 30 the plan under subdivision ( f ) ( 2 ) of this section shall be calculated in the 31 same manner as interest under subdivision ( e ) ( 2 ) of this section . 32 ( B ) However, the minimum interest rate shall not be less 33 than zero percent (OX) . 34. (4) The payment of funds accumulated while participating in the i 35 deferred retirement option plan may only be deferred one ( 1 ) time . ,These 36 funds must be distributed or annuitized by December 31 of the year a member 2 01272003EAN1100 . CDS097 y �rY $ " As Engrossed: H3/4/03 H4/3/03 HB1226 1 attains age seventy, and a half (70'-�. ) . 2 3 SECTION 4 . Arkansas Code § 24- 11 -830 , concerning the deferred 4 retirement option plan for firemen ' s pension and relief funds , is amended to 5 add an additional subsection to read as follows : 6 (h) The Arkansas Fire and Police Pension Review Board may promulgate 7 regulations to make the plan under this section comply with the requirements 8 of this section and with the applicable portions of the federal Internal 9 Revenue Code , as it existed on January 1 , 2003 . 10 /s/ R , Smith 11 12 13 APPROVED: 4/15/2003 14 15 16 17 . 18 , 19 : '- 20 21 22 23 24 25 26 , 27 28 29 30 31 32 33 34 35 36 3 01272003EAN1100 , CDS097