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HomeMy WebLinkAbout2003-11-25 MinutesFiremen's Pension and Relief Fund Special Meeting Minutes November 25, 2003 Page l of 5 Firemen's Pension and Relief Fund Special Meeting Minutes November 25, 2003 A Special meeting of the Fayetteville Firemen's Pension and Relief Fund was held at 11:00 a.m. on November 25, 2003 in Room 313 of the City Administration Building. Present: Danny Farrar, Pete Reagan, Robert Johnson, Marion Doss, Ronnie Wood, Mayor Coody, Sondra Smith, and Chief Bosch. The meeting was called to order by Mayor Coody. Resolution to extend the DROP period from 5 to 10 years. Resolution to approve working after DROP. Resolution to approve a temporary 3% compound COLA. Mayor Coody: There is only one order of business and that is the discussion of ACT's 1369, 1372 of 2003 for its active members. I just got a copy of this and I am not all that familiar with this particular situation. I know this would change the DROP from five to ten years and people who have signed up for the DROP would now be able to extend their eligibility for an additional five years with a larger lump sum payment, is this correct. I need to know more about this because this is going to involve big money and I don't know the details and what all is involved. I see that Carreiro says that the cash flow evaluation may be actuarially sound but not with a 3% permanent COLA, that perhaps it can be with a 3% temporary COLA. To be physically responsible I need to know more about what we would be obligating ourselves to in the long term so I would like to ask if we can put this off for a while until we get a chance to look at it. The last thing I want to do is make a snap decision. It may be good for nine people but bad for the other fifty people that are already retired, I don't know if that is the case or not but I have an obligation to all the people that have already retired too. This fund is not as sound as many of us would like for it to be, that is why we are thinking about sending it to Little Rock. We are going to have some big shortfalls to make up when the fund does head south and if it becomes actuarially sound for a short period of time that may not be a good enough reason to jump in there and approve something in something that is not as stable as we would like for it to be. I just need to know more about it. Pete Reagan: The reason I asked for this special meeting, I had one of the guys at the Fire Department that is on the DROP tell me that his end date of DROP was February 1, 2004. Mayor Coody: So that would be the end of his five years? Pete Reagan: Yes. He was asking to either extend employment or enact a ten year DROP and that is the reason that we asked for the costing of this by the actuary. Firemen's Pension and Relief Fund Special Meeting Minutes November 25, 2003 Page 2 of 5 Mayor Coody: When were these Acts of 2003 approved, this was last legislative session so that would have been several months ago and he just came forward in the last few days? Pete Reagan: No. It's been when we were looking at taking this fund to LOPFI for management, that's when we asked Steve Davis if he would find out what the costing of these two benefit increases would be from the actuary. We actually got them back after our meeting started last Thursday. Mayor Coody: I see. Chief Bosch: What is the date do you know? Pete Reagan: Sondra looked up the date and it is May 1, 2004. Sondra Smith: Dennis Ledbetter, according to this, if this is correct, his DROP date is February 1, 2004, so if it is not Dennis the next person on DROP is Eddie Baughman and his is May 1, 2004. Chief Bosch: May 1. Marion Doss: Both of those people asked about this because they were both concerned, they both asked about this and that is what started the project going. The hold up was the actuary. Pete Reagan: The reason that I asked for this special meeting is the Pension Review Board also has to approve this and they are scheduled to meet December 17, 2003 in Little Rock, they will not meet again until March. I was under the impression and I guess Eddie Baughman is too, because he said his time was up in February and he's the one asking for it to be extended. Now that we have looked at this we now have some time if it is true that Dennis is retiring. Chief Bosch: Dennis is looking at retirement; he is looking at leaving next month. I have not seen anything official, but I think that is his intent. He told me verbally, I don't count on anything until I see it in writing. Mayor Coody: So we have a little bit of time. Sondra Smith: My problem is I have not had a chance to look at the information; this is a big decision to make without being able to review the information. I do not want to do anything that is not just and right. I am sure it will probably be okay, the actuary says it is but I would like to look at the information before I vote on anything. I do not have a problem with the temporary 3% COLA, because that is temporary. The thing I am concerned about is the DROP and the effect that might have, I need to get with Steve Davis and get numbers to see what kind of effect that will have on the plan. Marion Doss: It looks to me like it will be better for the plan, one thing the DROP is not 90% if they go ten years, when they start that second five years it drops to 75% is that right? Firemen's Pension and Relief Fund Special Meeting Minutes November 25, 2003 Page 3 of 5 Pete Reagan: Right. Chief Bosch: So there actual retirement amount drops to 75%. Marion Doss: The amount that goes into the DROP fund. They are still employed and paying into the fund also. I think it is better for the fund than if they leave and they have the total amount coming out. Sondra Smith: 75% more is going to be paid to them in a lump sum, at the end of five years out of the fund that could amount to a large amount if all of them want to extend their DROP. Pete Reagan: They would be drawing it anyway if they retired at the end of their five years, so that is a wash. Marion Doss: They get their DROP, they get the money they put into the DROP plus they draw their retirement. Sondra Smith: They get that DROP as a lump sum and that comes out as a lump sum distribution from this fund. Mayor Coody: And they draw their retirement and they stay on salary and continue to build retirement? Sondra Smith: They don't draw their retirement, they draw their salary and then their retirement money is set aside and paid out in a lump sum distribution. Robert Johnson: When does the Pension Review Board meet? Pete Reagan: December 17, 2003. Chief Bosch: When do they meet again? Pete Reagan: They meet every quarter; they will meet again in March. Mayor Coody: One thing that concerns me is where it says a 3% permanent COLA cannot be sustained under the current assumptions, it would have to be a 3% temporary COLA and then be reviewed, that's close, to say temporary maybe it will work but permanently no it will not work, that doesn't make it sound like it is good for the fund. I have a lot of homework to do on this because we have a bunch of people involved. I know it would be good for a hand full of folks but I want to make sure that we don't do something that is good for a few that hurts the others. Marion Doss: The 3% COLA would affect everybody but the ten year DROP would affect just nine members that are still working. The working after DROP I don't look for anyone to do that, because if I understand the working after DROP, you quit paying into the DROP, you can't draw your money, you don't draw your retirement, you just work for a regular salary and the money stays there in the fund. Firemen's Pension and Relief Fund Special Meeting Minutes November 25, 2003 Page 4 of 5 Pete Reagan: Yes and the employee does not pay their 6% to the fund and the city does not match that contribution, actually that is a wash and a 12% savings to the city. Mayor Coody: I am getting conflicting information. Pete Reagan: There are two different ACTS, the ten year DROP is one and the working after DROP is a different one. Mayor Coody: Alright. It's tough for me to walk in and sit down and know what is going on. The last thing I want to do is to make a quick decision that I will regret from now on. Marion Doss: We are the same way. Chief Bosch: Not being a board member, how long does it take to call a special meeting, just public notice, and 24 hours. Ledbetter is looking at leaving in December, I will talk to him some more to see where he is at with that, if he decides to leave then theoretically we do not need to have this to the Pension Review Board in December, we can get it to them in March. That would give us some time to talk about this, look at this and think about it, based on what Ledbetter does, if Ledbetter says I would like to stay we can call a special meeting between now and December 16, 2003. Is that correct? Mayor Coody: If Ledbetter at this late date should say that he wants to stay on and we have to make a snap decision, the odds are the snap decision would not be positive. Chief Bosch: I would hate for you to make a decision that might be bad for the fund. Marion Doss: That is the way we are, because this affects all of us and we have to answer to all these people that are drawing. Pete Reagan: I understand, but in speaking with Kathryn Hinshaw she said that she has to have a resolution in her hand a day and a week before that meeting so she can get it on the agenda. This is going to hinge on what Ledbetter wants to do. Chief Bosch: I will ask him today and see what his intentions are. Pete Reagan: If he decides that he is retiring then we can handle this at the next meeting. Sondra Smith: If not we can call a special meeting around the first week in December and still get it to them in time. I apologize for not having time to review this but the smoking issue has engulfed my life and I didn't receive this information until Thursday afternoon. Ronnie Wood: I appreciate the fact that you are taking the time to review this. Danny Farrar: The temporary 3% COLA, that is for everyone that is drawing retirement. It amounts to about $54. Firemen's Pension and Relief Fund Special Meeting Minutes November 25, 2003 Page 5 of 5 Pete Reagan: It was my understanding that it was for full paid only, when we had actuaries performed in the past that is the reason that I brought that up. A discussion followed on the actuary report not being completed in a timely manner, the numbers on the report and the fund. There was also a discussion on the DROP plan and how the plan works. Pete Reagan: We can get with Steve and get his opinion. Meeting Adjourned at 11:30 AM