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HomeMy WebLinkAbout2006-08-31 MinutesFiremen's Pension and Relief Fund Board of Trustees Meeting Minutes August 31, 2006 Page t of 7 Firemen's Pension and Relief Fund Meeting Minutes August 31, 2006 A meeting of the Fayetteville Firemen's Pension and Relief Fund was held at 11:00 AM on August 31, 2006 in Room 326 of the City Administration Building Mayor Coody called the meeting to order Present: Mayor Coody, Marion Doss, Dennis Ledbetter, Ronnie Wood, City Clerk Sondra Smith, City Attorney Kit Williams, Trish Leach, Accounting, and Nancy Allen. Dennis Ledbetter was absent until 11:15 AM. Absent: Pete Reagan and Ted O'Neal Approval of the July 20, 2006 Meeting Minutes: Mayor Coody: Are there any corrections that need to be made on the minutes? Sondra Smith: They probably haven't read them because I didn't get them finished until last night. They may need to look at them real quick. Marion Doss moved to approve the July 20, 2006 Meeting Minutes. Ronnie Wood seconded the motion. Upon roll call the motion passed 4-0. Dennis Ledbetter, Ted O'Neal and Pete Reagan were absent. Approval of the Pension Lists: Approval of the Revised March, 2006 Pension List: Sondra Smith: Because we approve the Pension List actually before the checks go out sometimes there will be changes. I asked Accounting to give us a new revised list when changes are made. In March I noticed they went back and voided Dwayne McChristian's check because he had not turned in his affidavit so that is the reason you have a new March list to approve. Approval of the September, 2006 Pension List: Sondra Smith: On the September Pension List, Mildred Tune and Paul Blackard deceased. It also reflects the Future Supplement amount that we finally received. That list will be totally different because those two pensioners' amounts have been removed from the September list and Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes August 31, 2006 Page 2 of 7 your Future Supplement has been added. The October list will change again because the Future Supplement amount will not be paid again. That is a one time lump sum distribution. Trish Leach: Yes. Looking at that list when we get that money one of the first things we do is we go through and make sure that we received the correct amount of money, because last year they tried to short us a little bit. I have $103.68 next to Mildred Tune's name and of course she won't receive that. That was an error on my part so we will get that fixed. I was breaking it out to make sure we received all the money we should. They would give us money for her; it just wouldn't go to her that extra money will just sit in the fund. They don't want it returned or any thing. That is an error that jumps out and I should have caught that. I apologize. Marion Doss moved to approve the Pension List as corrected. Ronnie Wood seconded the motion. Upon roll call the motion passed 4-0. Dennis Ledbetter, Ted O'Neal and Pete Reagan were absent. New Business: Mildred Tune Deceased — August 14, 2006 A Copy of the obituary was given to the Board. Paul Blackard Deceased — July 17, 2006 A Copy of the obituary was given to the Board. Supplemental Amount Received A copy of the Supplemental Amount that was received was given to the Board. Extension of Temporary COLA: Kit Williams: This is where my memo comes into affect. I was not here at the last meeting but I have been provided a copy of the Actuarial Report and of course I wanted to advise you on several of the statutes involved. The initial legislative intent is that no benefit enhancement shall be implemented if it would cause the publicly supported retirement systems unfunded actuarial accrued liabilities to exceed a 30 year amortization. As the Board of Trustees you have a fiduciary duty to all pensioners, all beneficiaries including yourselves to manage the funds so that any proposed increase in the pension relief fund will not result in the deterioration of actuarial soundness. Mayor Coody: This is the same for the Police. Kit Williams: Not exactly but it is close. The State Pension and Relief Board requires this actuarial report every two years. In this report they ask, is there enough income to fully fund a Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes August 31, 2006 Page 3 of 7 pension fund and they say "No" they don't have enough current assets. Is the fund considered actuarially sound under state law, "No"? If you look at the next page in Exhibit 2 of that the amount of the assets you have is about $10 million and the total liability is $20 million so the unfunded amount is almost $10 million. If you look at Exhibit 4 of the next page you can see how the funded percent has dived. It has taken a terrible sinking, if you look back at 1999 it was at 95%, then in 2001 when benefits were enhanced it went down to 75%, again in 2003 benefits were enhanced and it went to 60% and in 2005 again with additional benefits enhanced it went down to about 50%. I am very concerned. You realize that the statues say that if at any time there should not be sufficient money in the fund to pay each person the full amount in which he or she is entitled the beneficiary shall be paid by prorating the fund available among them. It won't be too tong if there is only half enough money to pay that the fund is going to run out. Mayor Coody: Or the benefits get cut in half. Kit Williams: Well they have to get it cut in half right now. The fund will simply run out and then the only thing I think that will be coming in to finance this is the millage of four tenths of one mil divided among all the beneficiaries prorated. You would not have the previous savings and investments. It's not a very good result. I certainly think that any attempt at enhancements at this point and time are... Mayor Coody: Irresponsible? Kit Williams: I don't know how you could justify them. I think that even spending money, even though it's not much money, to have a cash flow method checked is not wise. I have prepared a resolution to that affect because I was instructed that was what this Board wanted to do. I have a resolution to authorize the expenditure of Fayetteville Firefighters Pension Relief Fund monies to pay for a cash flow projection evaluation study by the Arkansas Fire and Police Pension Board. That's not a giant expenditure but I just don't understand how if we only have 50% of the money needed to fund your pension how you all could be considering a benefit enhancement. Marion Doss: I think there are some guarantees associated with LOPFI for these old funds that have problems but I'm not exactly sure about those. I think in light of what you said we should table this until the next meeting when the full Board is here. I would rather everybody bear what you have to say about it rather than me or Ronnie trying to explain it to everybody. Kit Williams: Sure. I'll give Sondra the resolution so she can put it in the next agenda. Can you give the other members who weren't here a copy of this? Sondra Smith: Yes, we couldn't vote on it today anyway because it takes six out of seven to pass the increase. Mayor Coody: I see the benefits increased. Were those cash flow verses... Kit Williams: Do you remember weren't they all cash flow? Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes August 31, 2006 Page 4 of 7 Marion Doss: They were all cash flow. Yes. Mayor Coody: They show a different result than this chart shows. Why would they think it was actuarial sound? Was it because of a cash flow study? Kit Williams: No. They don't think it was actuarially sound because that is a different study. It met the cash flow test it never met the actuarially soundness test. The cash flow test only looks over 20 years or something. Marion Doss: I don't know. I do know that the first benefit increase or the one we gave three years ago we used the cash flow method because it seemed like it was more favorable than the other method. Kit Williams: The other method would not allow it. It has not been actuarially sound for quite a while. Marion Doss: Yes. Sondra Smith: Also in your minutes when you have a chance to totally read them Elaine Longer said at your last meeting that from inception to date there's been $622,000 that came into the fund and $4,017,000 that has gone out so that shows that the fund is dwindling slowly over a number of years. Kit Williams: Well it's not slowly. There is only $10,000,000 left. How long does it take before you get to zero? Sondra Smith: Right. Kit Williams: And of course as the fund goes down you have fewer earnings. Sondra Smith: Well some of these are due to lump sum distribution amounts because of people being on the DROP list. Kit Williams: Do we have any more DROP people left? Sondra Smith: Yes. Marion Doss: I believe there are two more. Sondra Smith: There are three more Marshall Mahan, Joey Pierce, and Ted O'Neal. Mayor Coody: So if this is sent to LOPFI the City..... Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes August 31, 2006 Page 5 of 7 Kit Williams: If you send it to LOPFI the City would have to pay and if you don't send it to LOPFI then the benefits are reduced. Mayor Coody: You were saying that the State could take it over but that means city tax payers are still liable? Marion Doss: I'm not exactly sure how all that works. Mayor Coody: That's the way I understand it. Kit Williams: The City Council would have to agree to do that and the current unfunded actuarial liability at this point is $9.8 million. I don't see the City Council deciding to do that. Mayor Coody: No. $9.8 million that would take 1 mil per year for 10 years just to come up with $10,000,000. Kit Williams: The Police fund is not in as bad of shape as your fund but it still would cost money also if that was sent to the State, to LOPFI. Sondra Smith: Another thing that we probably need to talk about and see if there is a way we can do is anybody that's on the fund currently we need to know about marriages, divorces anything like that because that affects the report that Accounting has to send to have this study done and if they don't have the correct information to send to them then they are not completing this study correctly. Marion Doss: Well actually under this old plan if I understand it right if someone for instance marries after they are retired I don't think that the spouse is covered. Kit Williams: That would be another benefit enhancement that I think you would have to do. I think they've allowed that now but they didn't use to allow it. Again, I think a benefit enhancement is not something that you should be looking at right now. Marion Doss: I didn't know if that was ever passed or not. Kit Williams: You had to be married at the time of retirement. Marion Doss: Yes. Kit Williams: There is and I don't know maybe it's just for Police or Fire or maybe both but there is a provision now that would allow a board with a benefit enhancement provision to actually provide that benefit. Marion Doss: I don't think this board ever did that. Kit Williams: So far none of that has been done by either you or the police. Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes August 31, 2006 Page 6 of 7 Mayor Coody: Any other questions on this? Do you want to table this until the next meeting? Marion Doss: Yes I think that would be a good idea. Mayor Coody: Thanks Kit. Kim Skelton Letter Requesting Copy of College Enrollment Sondra Smith: This is just something that I do every semester when college starts to make sure that we get proof of enrollment that she is attending school. A lot of times they can't get that until the second or third week of school so I should have it by the next meeting. Kit Williams: How old is she now? Sondra Smith: She's not 23 yet, I think she's 21. I have her date of birth. Old Business: There was no old business. Longer Investments: Approval of Equity Overage — Equities area at 52.5% Sondra Smith: We have to approve any Equity Overage. Mayor Coody: 50 % is what we... Kit Williams: That's the policy. Sondra Smith: Our policy is 25-50% and we said they could go plus or minus 5% with approval. Marion Doss: With approval. Sondra Smith: It is at 52.5%. Mayor Coody: Do you have any argument with that? Marion Doss moved to approve the Equity Overage. Ronnie Wood seconded the motion. Upon roll call the motion passed 5-0. Ted O'Neal and Pete Reagan were absent. Firemen's Pension and Relief Fund Board of Trustees Meeting Minutes August 31, 2006 Page 7 of 7 Monthly Report: Mayor Coody: Monthly report, anything new on that? Kit Williams: Did they submit one? Sondra Smith: Yes. Kit Williams: We just need to tell her we need $20 million in there. Mayor Coody: Any other questions on this. Marion Doss: I guess all we can do on her report is acknowledge it. Sondra Smith: You don't have to vote on anything. Kit Williams: She comes every quarter is that right? Marion Doss: Yes. Sondra Smith: Yes. Is there anything else that the board has that maybe I might have missed? It's been a hectic month for my office. Meeting Adjourned at 11:25 AM