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HomeMy WebLinkAbout2007-03-29 MinutesFiremen's Pension and Relief Fund Board of Trustees Meeting Minutes March 29, 2007 Page 1 of 12 Firemen's Pension and Relief Fund Meeting Minutes March 29, 2007 A meeting of the Fayetteville Firemen's Pension and Relief Fund was held at 11:00 AM on March 29, 2007 in Room 326 of the City Administration Building Marion Doss called the meeting to order Present: Marion Doss, Pete Reagan, Ron Wood, City Clerk Sondra Smith, City Attorney Kit Williams, Chief Johnson, Paul Becker, Amber Wood, and Trish Leach, Accounting. Absent: Mayor Coody, Marshall E. Mahan and Gene Warford Approval of the February 22, 2007 MeetinE Minutes: Ron Wood moved to approve the February 22, 2007 Meeting Minutes. Marion Doss seconded the motion. Upon roll call the motion passed 4-0. Mayor Coody, Marshall E. Mahan and Gene Warford were absent. Approval of the Pension List: Approval of the April, 2007 Pension List There were no changes to the pension List from the previous month Pete Reagan moved to approve the March, 2007 Pension List. Ron Wood seconded the motion. Upon roll call the motion passed 4-0. Mayor Coody, Marshall E. Mahan and Gene Warford were absent. New Business: Kim Skelton — Proof of Enrollment Sondra Smith: Ms. Skelton is still enrolled in college and she has not turned twenty three yet. Old Business: Dennis Mullens retirement classification (Tabled from the February 22, 2007 meeting.) Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes March 29, 2007 Page 2 of 12 Marion Doss: We tabled this at the last meeting. He sent a letter requesting his retirement be changed to a disability retirement for IRS purposes. We really don't know if we can do that or not. Kit Williams: We also requested some additional information on him. Did we get anything? Sondra Smith: I haven't sent anything. I didn't know who was going to request additional information. Kit Williams: I did not ask. I did not communicate with him. Sondra Smith: I didn't either. Do I need to do that? I will if I need to. Kit Williams: I thought we asked for something from the CPA didn't we? Sondra Smith: We got off on a different subject and we never decided. Marion Doss: The Fire Chief made a statement that we might see more of this in the future. I took that to mean that as health related problems come up and we find that exposures are causing health problems there might be things like that in the future. Someone else on the board took it to mean that everybody else would jump on the band wagon if that happened. For instance heart disease at one time was not a job related disability and in some states it is for fire fighters now. That is what I thought he meant by the statement, that there may be things like that in the future as people find out about the things that cause illnesses that they may have been exposed to previously. Sondra Smith: I know you talked about getting in touch with his CPA and his CPA proving that it's allowable under the IRS rules. That he would have to prove that can be done. Marion Doss: That sounds like a good idea. I think that we need to contact someone from PRB and see if that's been done in the state before and see what their thoughts are on doing it retro active. Sondra Smith: Trish has already done that. Marion Doss: Oh have you. Trish Leach: I spoke to LOPFI and they have never reclassified anyone. Sondra Smith: We talked about that at the last meeting and they've never done that. Marion Doss: Did you ask them if any of the old pension funds had ever done that? Trish Leach: No, we just discussed LOPFI because they are so much larger. They are a good gage for what we do and they are right there with PRB. I assume they consult each other. Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes March 29, 2007 Page 3 of 12 Marion Doss: That is what I would think too. Kit Williams: The letter we got from the doctor really wasn't clear. What he wrote was extremely short and wasn't clear. There are a lot of problems with this application. Marion Doss: My sympathy is with Dennis and I can understand completely. I just don't know if we have the right to do that. I guess if his CPA could prove that then I guess the burden of proof would be on them if they want that changed. Kit Williams: I guess the first thing is if the CPA can establish that this would be something that might actually make a difference. I think until he can do that we really shouldn't go out on a limb and do something that has not been done anywhere in the state yet. It could be for naught anyone the IRS is not real sympathetic on giving people a break. Pete Reagan: If a doctor says that a guy is disabled, then he's disabled. Dennis is not asking for any extra money, all he is asking for is a disability impairment. His doctor says he has diminished lung capacity. I just read the minutes and I take exception to some of the comments made by the chairman about people coming back and doing this and everybody's going to want to do it. Dennis was a fire fighter back in the time when we did not have air packs and we can all remember that. I came on just as we got air packs. So you are going to see a lot of this. All he is asking for is a benefit that is not going to cost this board anything. To the point of LOPFI and PRB we have a retiree from Fayetteville on LOPFI, his name is Ted Youman's and he does not get a disability pension even though he was disabled off the job. His check from LOPFI is not marked disabled even though he is on disability pension. Now what they are doing at LOPFI I have no idea but there are problems there and it is not clear with the IRS on how to do it. All Dennis is looking for is something that says that his check will be considered disabled. For tax purposes that's all it is. Marion Doss: To clarify, if I left that impression, I didn't say that people are going to jump in and start doing that. What I said was we might find exposure things that cause illnesses and that there might be things discovered in the future. I didn't say people are going to start coming back and doing this. I meant there is a possibility of finding that we were exposed to something ten or twenty years ago that impaired our health. That is a very real possibility. That is what I meant by that. Pete Reagan: There are all kinds of new studies out and heart disease is the number one. Marion Doss: Right. Matter of fact I read something about that regarding fire fighters a few days ago in a newspaper article. Trish Leach: According to our research we have done a lot of looking into what the IRS says. He retired when he reached the determination for retirement. He put in his twenty years and he was at the age where he could and that was when he retired. According to them it's retirement Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes March 29, 2007 Page 4 of 12 it's not disability. Disability would be where you went off on disability before you reached the age of retirement. He met the retirement determination. Pete Reagan: Right. Trish Leach: In everything we are reading we don't see where we can change it. Sondra Smith: What they are saying is that they have to change the 1099R. Paul Becker: He made a declaration and he petitioned to retire with retirement benefits. Pete Reagan: I understand that. Paul Becker: Be realistic everybody feels sorry for him. Nobody wants to see this happen. If we could do something about it we would. The fact of the matter is when he petitioned he petitioned for retirement. He did not petition for disability. Our position is we don't think we have the authority to change that. Pete Reagan: Does the IRS regulations say that we can't do it? Trish Leach: It says that when someone that is retired on disability reaches the required age or the years of service to be retired then the classification changes to retired. There is a code for disabled or regular retirement. Reading the IRS stuff is much like reading anything a lawyer writes. It seems pretty plain that when you reach the age that you are considered retired that code changes to "retirement", even if he had originally went out on disability with us and he did not. So that is where we think we are. We don't think we have an option because he had his twenty years in when he retired. Pete Reagan: I understand. Kit Williams: I think there are two major burdens that he would have to have before this board should do anything. One is bringing his CPA in and explaining why that's not correct. Why he can now be classified as disability and that will give him some advantage with the IRS. Second thing is he would have to have a lot better medical evidence for this board to look at than that very very short letter that was submitted that was not clear. Pete Reagan: Under HEPPA I don't think we can look at his records. Kit Williams: If he wants this board to make a determination then he is going to have to submit something this board can consider. Trish Leach: I don't care if the CPA comes and says whatever he wants to say. What I think we need for the city is a ruling in writing from the IRS that we can change it. So if something comes up later on we are protected if we do this. They can petition the IRS for this. Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes March 29, 2007 Page 5 of 12 Kit Williams: I don't know that this board can actually make a determination. He is already retired I think it's probably beyond our jurisdiction now to do anything to change it. Ron Wood: Would that not be an IRS decision? The bottom line is would that not be left to the IRS to make that decision? Paul Becker: I don't think so. I think it is what where the terms when he left employment. I don't think the IRS is going say what were the terms in which he left employment. I don't think it's an IRS's decision. You could try and petition them. Kit Williams: If he wants to claim that he is disabled now he might be able to go to the IRS and say this should be disabled pay now. I just don't think we have jurisdiction to change somebody's classification at this point and time. Marion Doss: I think those are all points taken. I just don't know. I don't know if the IRS is going to care much about what we say after the fact. That is what I'm concerned with. They are the ones that need to say its okay. I don't know whether we can or not either. Kit Williams: It's certainly the IRS's final decision. Trish said she read the regulations. I have a little bit of familiarity with that too. You get a certain break if you are disabled but that ends when you reach regular retirement because the IRS is going to want to tax it. I think some of the disability stuff you don't have to be taxed or you are taxed at a different rate. Pete Reagan: The city has an employee pension fund doesn't it? Kit Williams: No, we have a 401 C3 which is really separately owned by each pensioner so it's not a defined pension plan like the police and fire have, although we would like to have one. Pete Reagan: I would suggest you get started on one. It's not a bad deal Kit. Kit Williams: I think it would be a good deal except I don't think the city can afford it. Sondra Smith: We might bankrupt the city if we did that. Kit Williams: It would be nice to have but there has been no inclination that the City Council would want to do that because I think it would be a very expensive proposition for the city to do. Pete Reagan: Do you suggest that we ask the IRS for a ruling? Trish Leach: I suggest that we tell Dennis Mullens that he needs to pursue this with the IRS and if they can come back to us with something in writing from the IRS that says we can do this then we will discuss it again. Kit Williams: I think it should really be his burden with him and his CPA to do that. Frankly I don't think he's going to get anywhere. If they want to go to the IRS and come back and show Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes March 29, 2007 Page 6 of 12 that we are wrong, that we actually have some authority to do this and that it will make some difference then I think the board should look at then. I think the burden is on him at this point in time and his CPA to show us that everything that we think is wrong. Sondra Smith: Does the board want a letter to go to Dennis Mullens or to his CPA? Kit Williams: It needs to go to Dennis. Marion Doss: We don't even know who his CPA is. Kit Williams: It's up to him to deal with the CPA. Marion Doss: Gene Warford called me after the last meeting and Gene said his CPA said that we could do it. Kit Williams: The CPA can get something from the IRS saying that we have the right to do it then at that point we can look at it very seriously. We could then determine what kind of medical evidence we need to satisfy that he was disabled from a job related situation and make a decision then. But, I think we need to have something from the CPA showing the IRS ruled in this way to give us the power to do it. Pete Reagan: I think it looks bad as a board and we are representing the retirees and we know that there's going to be a bunch more of this as we all get older. Dennis has sought advice from his CPA and has petitioned us to change it. I think it is this board's problem to deal with and I think we should ask the IRS if we can legally do it as a board. We have been petitioned by a retiree. Marion Doss: What Pete says sounds good, about us asking the IRS if we can do it. There is nothing wrong with Dennis asking his CPA to pursue it also. One thing that comes to mind is in the Vietnam War when they were using Agent Orange there was no problem. Dennis said he was in an area where they were used that and they didn't recognize it for years and finally the government admitted it and so the VA now recognizes that problem. That is kind of the same thing it's a delayed thing. It wasn't a problem then but now they realize that it did cause health problems. Ron Wood: What kind of steps would we need to take to petition the IRS? Kit Williams: I don't know. Pete Reagan: All we are doing is asking them if we can change it. Ron Wood: If we get a yes or a no from the IRS. Trish Leach: I'm a CPA and I'm sure there is a health group because I get emails and books from them. If you all want to go down that road we will. We'll put something in writing and Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes March 29, 2007 Page 7 of 12 bring it back to the board with the contact number and get you can approve it at the next meeting and we will send it to them, if you want to go that direction. Pete Reagan: I would prefer that. Ron Wood: I would too. I feel like Pete he has petitioned the board and I think the board needs to do as much as we can do. Kit Williams: The city is the one actually doing the work. So it is up to Mr. Becker and his staff if they willing to take on this extra work because the board is not doing this. Paul Becker: We will write a letter but that's about it. We are not going to spend an inordinate amount of time. Personally I don't think we are going to get anywhere with the IRS. I've been a Certified Public Accountant for over thirty years. We will attempt to make contact and see if we can get a quick answer to it but it are not going to spend a massive about of time. Marion Doss: I feet like the city staff would have a lot better luck at making contact than me, Ronnie or Pete could. I don't have any idea who to call. Paul Becker: We'll spend some time; I'm just saying were not going to spend an inordinate amount of time. Trish Leach: I don't think it will be quickly as far as getting somewhere with it but we will at least go down the road. Pete Reagan: Thank you. Marion Doss: I think any movement is positive. I don't expect it to go quickly. I think it will take time. I appreciate your offer on that. Sondra Smith: Do we still need to send a letter to Dennis Mullens or not? Kit Williams: I think you should still send him a letter saying that the city is going to spend a little bit of effort to see if in fact the IRS has rulings on this but he should also be working on it with his CPA because maybe his CPA already has the ruling or already knows something. Marion Doss: It would be good to make contact with Dennis that way he will know that we are considering it and trying to do what we can. Kit Williams: Consider about whether or not you have the power to do it. Marion Doss: That sounds good. Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes March 29, 2007 Page 8 of 12 Appointment of Pension Board representative for the Baxter International lawsuit case Pete Reagan moved to table the Appointment of a Pension Board representative for the Baxter International lawsuit to the next meeting. Ron Wood seconded the motion. Upon roll call the motion passed 4-0. Mayor Coody, Marshall E. Mahan and Gene Warford were absent. Kit Williams: I will inform the attorney that we are having difficulty finding a representative and that no one has volunteered to represent the board. Marion Doss: I brought Pete's name forward at the last meeting. I didn't talk to him I just assumed that he would. Pete Reagan: I stated the reasons that I don't feel like I can and that would not do the board justice nor would it do my other obligations justice. Kit Williams: That is a duty that we have to have if you want to be the lead plaintiff but on the other hand there is only about $13,000 out there if they were totally successful that is at risk or that we might be able to recover back for the pension. I realize being a representative would be a time commitment. I don't know how long but at least a number of days. I will communicate that to Mark Martin and indicate that at this time we do not have someone that is ready to step forward. Pension Protection Act (tabled from the February 22, 2007 meeting) Paul Becker: The issue was whether or not we legally were responsible for making deductions for pensioner's insurance for those who deal directly with insurance companies. We have no statutory requirements, we are not required by the IRS to perform the duties and we really don't have the staff time. I mentioned last time that we would look and see if we had anybody who could do it or be willing to do it on an individual basis and charge the individual pensioner for the process but that is not feasible. We do not anybody that could do that at this point. Kit Williams: Does it require overtime? Paul Becker: It would require overtime. Someone would have to be willing to do it on their own. We cannot be reimbursed by the pension fund directly because it doesn't serve the entire pensioner's. Pete Reagan: How much time do you estimate it will take to do this? Paul Becker: It depends on how many people. Pete Reagan: I'm not sure I understand all of this. If we had 10 people sign up to do this and the checks are printed by computers so all that it is going to take is some computer entry. Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes March 29, 2007 Page 9 of 12 Paul Becker: No, everybody could have a different premium time you would have to go in and analyze each insurance company. Pete Reagan: I'm sure the petitioner would supply that information to accounting. I'm going to use me for an example if I was using my insurance company it's going to be on the same day every month or whenever the checks are written. I don't really foresee this as being as time consuming as what it is lead to be. Paul Becker: Well it is. Pete Reagan: You're in the business I'm not. Paul Becker: You have to do this for each individual. Pete Reagan: I understand. Paul Becker: That can all change. There are also liability issues, we statutorily don't have a requirement, and we don't have the time. Pete Reagan: Well we'll have to find someone to do it then. I'm interested in doing it; it will save me money on my taxes. I guess I'll sign up to do it. Trish Leach: If all the pensioners were like you Pete, I can see where you would think it would not be time consuming but all of our pensioners are not as on top of their stuff as you are. Our concerns are we have pensioners that we have trouble getting affidavits from and we have pensioners that don't cash their checks which we are always chasing. Pete Reagan: I understand. Trish Leach: It's those people. If we signed up to deduct their insurance and then for some reason their insurance changed and we weren't given notification that their premium changed or the place where the payment went was different and the pensioner's insurance company dropped them, where does that leave us? It's different because you handle your business different than a lot of the pensioners do. That is one of our concerns. Sondra Smith: Trish isn't it only the first $3,000 of premiums that is pretaxed? So if someone's premium is $10,000 only $3,000 of that will be pretaxed and the rest will not be pretaxed. Pete Reagan: Right, it would just be a supplement type deal. Trish Leach: When we were discussing how we could make it work we said we would have to pay all the insurance premiums for the year. When the city's premium goes up we receive notification. You said there might be 10 people but there might be 50 people and all those Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes March 29, 2007 Page 10 of 12 premiums are different and companies change and are bought out. A pensioner thinks we are handling everything for him but if we don't receive the information there is a big issue there that I would be concerned about because if you lose your health insurance coverage it's hard to get back. Kit Williams: Especially at our age. Pete Reagan: It's just going to be for the ones that are between 50 and 62 or 65. Sondra Smith: I hope this board doesn't think we are just not willing to work for this board. I don't think you realize how much time we put in for the pension plans. Just getting the affidavits back for this board has taken us four months. We started in December and it has taken that much time, additional phone calls, additional letters and it is something that shouldn't take that much time. The pensioners should be willing to turn that affidavit back in. We have other situations that come up. We had to go down to the city hospital and visit a pensioner because of problems that arose with their pension. There are all kinds of things that we do. It's not that we don't want to help; it's not that we are just being stubborn; it's just that we are strapped and our time is maxed out. Pete Reagan: I understand that and I want to go on record thanking everyone for their assistance with all our duties as this board, but this board is constituted to try to make sure we take care of our retirees. Marion Doss: I also appreciate the extra effort you go through getting those affidavits. I know a lot of big cities or organizations if they didn't get the affidavit back there just wouldn't be a check the next month and I really appreciate you all taking that extra time. Sondra Smith: That's just one thing, that's not all the things they go through in accounting, there are changes of addresses, and we could go on and on. Marion Doss: I appreciate the help when I got ready to retire I didn't know there was as much paperwork involved. I thought it was just the simple matter of turning in a letter of resignation and walking out the door. Trish Leach: We wish we could make everyone be on direct deposit. If they don't cash their check we have to chase it down, have they lost the check and we don't give up until we get in touch with someone. We feel your pain. Sondra Smith: Yes, we do. Can I ask is there any additional information that you need before the next meeting or are you just wanting more people here to talk about it? Is there something that we need to do for you before the next meeting? Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes March 29, 2007 Page 11 of 12 Pete Reagan: I don't know how many of our retirees would use this. I'm going to guess probably 15 to 20. I plan on talking to them to see if they are interested in doing it. I personally am interested in doing it. It's going to save me money at the end of the year. Sondra Smith: Another thing Pete if we offer it to the Fire Pension we have to do it for the Police Pension. It maybe 15 to 20 on this board but it also maybe 20 to 30 on the other board. That is the reason it's more involved than what you realize. Kit Williams: That is part of the problem about them finding someone willing to work overtime to do it. There are two things, one is that and second thing is the potential liability. The liability if something happened and they lose their insurance coverage and someone goes into the hospital with massive bills then who pays the bills if we haven't sent the premiums in, because we didn't get a notice of the new insurance company, or the new place to send the bill. That concerns accounting to accept potentially hundreds of thousand of dollars of liability. Trish Leach: President Bush had a proposal and I haven't keep track of where it's going but if his bill passes then you could get a credit on your taxes for health insurance. So this wouldn't be necessary. Paul Becker: The fact of the matter is we have limited staff, we have a multitude responsibilities, and we just have to make a decision at some point in time whether we can do it or not. Kit Williams: With sales tax revenue down I doubt if new staff is on the horizon. Pete Reagan moved to table the Pension Protection Act to the next meeting. Ron Wood seconded the motion. Upon roll call the motion passed 4-0. Mayor Coody, Marshall E. Mahan and Gene Warford were absent. Longer Investments: Letter regarding Northern Trust Company's transaction fee on the January statement. Sondra Smith: The first item under Longer Investments is a letter from Kim Cooper stating that the transaction fee for 2006 in the amount of $2,100 that was on the January Northern Trust statement was incorrect and will be removed on the next Northern Trust statement. Marion Doss: Thank you. Equity Overage — Equity Allocation is at 54.6% Marion Doss: We have the equity overage we have to act on. Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes March 29, 2007 Page 12 of 12 Sondra Smith: Yes, we have to move to approve the equity overage. Pete Reagan moved to approve the equity overage. Ron Wood seconded the motion. Upon roll call the motion passed 4-0. Mayor Coody, Marshall E. Mahan and Gene Warford were absent. Monthly Report A copy of the Longer Investments monthly report was given to the board. Marion Doss: Does anyone have any comments on the monthly report? Informational: Pete Reagan: Just for the boards information I requested Elaine Longer to review our actuary to confirm the investment returns for the last four years that were used on your actuary. I sent that to her in an email a couple days ago. Marion Doss: Okay. Did you think there might be a discrepancy? Pete Reagan: I was asked to do so by a member of the Arkansas Pension Review Board. Marion Doss: Okay. Thank you. Meeting Adjourned at 11:45 PM