Loading...
HomeMy WebLinkAbout2004-08-26 MinutesFiremen's Pension Meeting Minutes Page L of 6 Firemen's Pension and Relief Fund Meeting Minutes August 26, 2004 A meeting of the Fayetteville Firemen's Pension and Relief Fund was held at 11:00 a.m. on August 26, 2004 in Room 326 of the City Administration Building. PRESENT: Marion Doss, Pete Reagan, Danny Farrar, Robert Johnson, Mayor Coody, Sondra Smith and Marsha Farthing ABSENT: Ronnie Wood Mayor Coody arrived at 11:15 am. Marion Doss called the meeting to order. Approval of the July 29, 2004 Minutes Pete Reagan moved to approve the July 29, 2004 minutes. Robert Johnson seconded the motion. Upon roll call the motion carried 5-0. Mayor Coody and Ronnie Wood were absent. Approval of the September 2004 Pension List Pete Reagan moved to approve the September Pension List. Robert Johnson seconded the motion. Upon roll call the motion passed 4-0. Mayor Coody and Ronnie Wood were absent. Danny Farrar was absent during the vote. Longer Investments: Marion Doss: It is up 3.8%. New Business: 2004 Future Supplement Fund Distribution Sondra Smith: That is the amount that was included in the August Pension checks. Marion Doss: Okay that's the same as last year correct, not the same amount but the same thing. Firemen's Pension Meeting Minutes Page 2 of 6 Pete Reagan: Right. Sondra Smith: I think they will receive that supplement through 2004 and then they may have to extend it again is that right Marsha? Marsha Farthing: I think so. Pete Reagan: That is the left over money in the insurance turn back fund. They are trying to keep that balance zero. 2003 Actuarial Valuation Pete Reagan: I haven't had time to compare it to last year. Marsha Farthing: It still shows that your fund is not fully funded using the type of actuary study that they use. Probably next year there will be a liability to book citywide for this fund if the trend continues as is. If you will look at Page 9 you will see the net pension obligation at the end of the year. That negative number meant that it was an asset that was good, but that negative number has been declining. I feel certain at the end of 2004 when they do this study it will show that you have a pension obligation at this point which will be a liability of the city. Marion Doss: Do you think that will be a time that the city will again recommend changing to LOPFI? Marsha Farthing: Possibly. Pete Reagan: What does it mean when we have to book the liability? Marsha Farthing: It just means it shows up on our financial statements and affects the city overall. It's really just on the top statement under the General Government type activities that section will show a liability for pension obligation. It will be whatever that amount turns out to be. Pete Reagan: Does it affect the bond rating? Marsha Farthing: It would if there was a big unfunded amount. If you look at the trend, I assume it will be somewhere around $400,000 to $500,000 next year. It looks like you are declining your balance about $1 million per year. You have $400,000 there as an asset so it will probably be a $400,000 to $500,000 liability if the trend continues as is. I have forgotten when the actuary said you should look at it again, if it was three years down the road that we should look at it again. That will be a decision that the Finance Director Steve, the Mayor and you should discuss. Firemen's Pension Meeting Minutes Page 3 of 6 Pete Reagan: I think it was three years. Marsha Farthing: We are going to have to have an actuary report completed every year, this is usually done every other year, we can't do that anymore for my financial reporting purposes we are going to have to have that completed every year. I haven't quite figured out how we'll do that and I am not sure who will bear the cost of the study. That is something that we will have to discuss also. Pete Reagan: Is this one of those mandates from the federal government on reporting that was changed. Marsha Farthing: Yes, it is not really from the federal government but it is from the Accounting Standard Board and the new GASB 34 rules. Pete Reagan: On the bottom of Page 9 in the second set of columns, unfunded accrued liability under D, that is showing $9,208,000 in unfunded liability. Marsha Farthing: That number is not a number I use for any financial purposes. That looks really bad; they are saying you are only funding 53% of what you need. Marion Coody entered the meeting at 11:15 am. Pete Reagan: I am just real curious how they came up with that. We've caught these folks before not having the full information. It's not that they were making mistakes they just didn't have all the information. They are showing from 2001 to 2003 an increase of $4,600,000 in unfunded liability. I don't see how that can be possible. I really don't. Marsha Farthing: Those were the years that we had really bad rates of return on your investments and then your value lost. It has turned around a little bit now. Pete Reagan: Sure I can understand that. Robert Johnson: But the number doesn't reflect it. Sondra Smith: Look at the numbers from 1999 to 2001. Pete Reagan: That's when we had the benefit increase and we knew that was going to happen. We didn't know it was going to go to $5 million. This is a closed end fund too. Marsha Farthing: You are contributing less and less as the actives pull out, so every year what you are contributing to this fund has dwindled down. Pete Reagan: The same for employees in the city. Marsha Farthing: Eventually when everybody is retired there will be nobody contributing there will just be money coming out. You still have your turn back and your property tax. Firemen's Pension Meeting Minutes Page 4 of 6 Marion Doss: Which is a good thing as long as people are working like the DROP employees, they are paying into the fund plus the turn back is prorated on the number of employees. When we all leave the turn back will be going to LOPFI employees for active members, I'm not sure. Marsha Farthing: Yes it is. That's the other thing that hurts us. Marion Doss: It's too bad that turn back could not continue to be prorated into the fund based on the number of retires. Pete Reagan: It is. Marion Doss: But it is only on the ones that are active isn't it. Pete Reagan: Oh no. Marion Doss: It's not? So we'll still continue getting turn back funds? Mayor Coody: Marsha why don't you get with me to bring me up to speed on this because these numbers are huge. Who is going to have to make up the unfunded part? Marsha Farthing: That is when we talked about sending it to Little Rock and prorating. The city will ultimately be responsible for any unfunded liability. Marion Doss: To me that's what sounded good about going with LOPFI, but then we received that $400,000 last year for the fund since we didn't go to LOPFI. Marsha Farthing: The actuary actually advised us not to send it at this point. He said to wait a couple of more years to maximize what we would get in the turn back. Mayor Coody: Right, is that working out as planned? Pete Reagan: I think it is now that we're back on the positive side on our investments. Marsha Farthing: Your investments have turned around. Mayor Coody: Yes, since we started using Longer. We should have done that years ago. You should have done that years ago. That has cost millions of dollars, wasting millions of dollars. Pete Reagan: The last three years were the worst. Marion Doss: We did well before that. Mayor Coody: Well, I could have done well before that. Firemen's Pension Meeting Minutes Page 5 of 6 Marion Doss: Like I said we were getting a good return for quite a while. Mayor Coody: From 1997 to 1999 it went up about 10%, it should have done better than that in 1997 and 1999. Well what's done is done we just have to find a way to cover the losses. I'll be back in a minute. Skelton College Enrollment Sondra Smith: Kelly Skelton sent her pre -enrollment form again like she does every year. She can't get her enrollment form until they see if any classes are dropped which will probably be in about two weeks. I called Kim Skelton and told her that I needed her enrollment form. I will send her a letter to remind her. Spector, Roseman & Kodroff Legal Representatives Sondra Smith: This is a firm that sent a letter stating that they can represent us in litigation if we ever need them to. Budget Report for 06/30/04 Marion Doss: That is our standard report that we get from the Accounting Department. Danny Farrar arrived back at the meeting Benefit Increase Proposal Pete Reagan: I think it would be proper for you Danny to make the motion for a resolution since you suggested this. Sondra Smith: You might want to tell Danny about the actuarial report first. Pete Reagan: I'm not worried about the actuarial report. We've got lots of money, don't worry about it. Marion Doss: This is a letter from the actuary people. Pete Reagan: It is $1,800 per year. Firemen's Pension Meeting Minutes Page 6 of 6 Sondra Smith: Yes, it is not that much. Marion Doss: The actuary states that it will not affect the plan significantly. Originally we thought we were raising them up like everyone else anyway and then we found out that we couldn't. We are going back to what we thought we were doing in the first place. Danny Farrar moved to draft a resolution to enact the benefit increase for the volunteer firefighter's widows that are currently not receiving the maximum $100.00 per month. Pete Reagan seconded the motion. Upon roll call the motion passed 5-0. Ronnie Wood was absent. Mayor Coody was absent during the vote. Sondra Smith: We need to draft a resolution; does it need to go before the City Council? Marion Doss: No it doesn't have to go before the City Council. Pete Reagan: We need to send a copy of the resolution to PRB Sondra Smith: I will get with our City Attorney on the resolution and try to have it at the next meeting for you to sign. Pete Reagan: I don't think we need to sign it. Marion Doss: I think you can send it to them, they will send you a letter back stating it is okay to increase the amount. It can be effective on the day that we passed our resolution. Sondra Smith: So we will go back and give them back pay? Pete Reagan: It will be for September. Sondra Smith: Normally someone on the Board signs the resolution. Marion Doss: We will be glad to sign it. Pete Reagan moved to adjourn. Danny Farrar seconded the motion. The motion passed. Meeting adjourned at 11:25 pm.